Newlight AirCarbon: bioplastics breakthrough?

Newlight is a private company, founded in 2003, based in California, aiming to convert (bio-)methane and air into polyhydroxybutyrate (PHB), a type of polyhydroxyalkanoate (PHA), a biodegradable bio-plastic which is marketed as AirCarbon. The product is said to be carbon negative, biodegradable, strong, “never soggy”, dishwasher safe. Our AirCarbon technology review found some good underlying innovations, but was unable to de-risk cost and capex aspirations.

Global plastic demand likely rises from 470MTpa in 2022 to almost 800MTpa by 2050 (model here). Biodegradable bioplastics are a particularly fast-growing segment of the market (overview here).

Hence this data-file presents our conclusions from reviewing patents filed by Newlight, a private company that is commercializing AirCarbon, a biodegradable bioplastic, polyhydroxybutyrate, which is a type of polyhydroxyalkanoate.

What is PHB? Polyhydroxybutyrate is a type of bioplastic produced by micro-organisms (especially methane-consuming bacteria), in response to physiological stress, as a form of energy storage when nutrients are scarce.

Newlight is already delivering AirCarbon to brands such as Nike, Target, Shake Shack, US Foods, H&M, Ben & Jerrys, and hotel chains, from its Eagle 3 demonstration plant, which produced 60M “units” in 2022 (although this might imply relatively small volumes, of around 300Tpa, if we assume a mix of 0.5 gram straws and 10 gram cutlery items?).

Newlight’s goal through 2025+ is to scale up production into the 10s and 100s of kTpa, and displace synthetic plastics, especially in the $140bn pa foodware market, $30bn pa fashion products market, $64bn pa diaper/personal care market and automotive industries.

Does Newlight have a breakthrough technology for PHB production? Producing PHB from methane is complex with over 10 different processing stages. The patents focus particularly upon one stage, which may be a rate limiting stage, enhancing the production of one out of two possible variants of an enzyme. Details, numbers and yields have been gleaned from reviewing Newlight’s patents and are noted in the data-file.

Is PHB carbon negative? Reading between the lines of its patents, we think methane is most likely to be sourced from landfill gas. And the process screens as carbon negative relative to a baseline alternative where the landfill gas or methane was simply vented to the atmosphere. In our view, this is not strictly ‘carbon negative’, but may be ‘Scope 4 negative‘.

What does PHB cost? Attempts to commercialize PHB bioplastics go back to ICI in the 1980s, but have struggled to compete economically. PHAs on the market today tend to have a cost of $2.5 – 6/kg, versus synthetic plastics closer to $1-1.5/kg.

What are the capex costs of producing bioplastics? We would typically assume $1,300/Tpa for an ethane cracker, $1,500/Tpa for an integrated crude to chemicals plant, but think bioplastics plant capex will be in the range of $10,000-50,000/Tpa.

Can we de-risk a breakthrough in our AirCarbon technology review? The purpose of our patent reviews is to use an apples-to-apples framework, to assess whether we can de-risk technologies in our roadmap to net zero. We were not entirely able to de-risk a widespread breakthrough in our AirCarbon technology review, for reasons noted in the data-file.

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