Cereplast unveils bio-based compostable Styrofoam substitute

Hawthorne, Calif.-based Cereplast (OTCBB:CERP) said it has developed an environmentally friendly competitor to polystyrene foam, more commonly known by the trademark Styrofoam.

The breakthrough resin encompasses three cleantech benefits: the process eliminates the use of petroleum; the finished product is biodegradable in three months; and the production requires less energy than with typical polystyrene because it operates at temperatures 50 percent lower.

Packaging alone accounts for about 10 percent of the environmental impact of anything bought (see Packaging: The most important part of what you buy?).Polystyrene foam continues to be one of the most popular packaging materials because it’s inexpensive. Air is injected into the plastic during production to form bubbles, creating more packaging material using less resin. But the resulting material poses problems upon disposal.

“On one hand it’s good because the product is lighter, so that helps in terms of use of raw materials and cost of transportation. But the negative is that, because it’s very light, it can fly away very easily and end up polluting the streams and oceans,” Cereplast founder and CEO Frederic Scheer told the Cleantech Group. “Also, it’s very difficult, i.e. impossible, to recycle the foam, so it’s not being done. The foam we’re making can be composted in 180 days.”

Cereplast plans to manufacture and sell the resin to packaging companies, in addition to licensing the technology to those potential clients starting this summer. Scheer said the drop-in solution runs on existing machinery, which keeps the price low. Cereplast’s polystyrene process operates at about 185 degrees Fahrenheit, while traditional polystyrene requires temperatures of about 400 to 500 degrees, Scheer said.

The starch composition has no adverse effect on shelf life on the product, which is about five years, Scheer said. For now, the resulting bio-based product is about 20 percent to 25 percent more expensive than polystyrene foam, he said, but it’s cheaper than other plastic packaging and other bioplastics.

“There’s tremendous demand coming from plastics fabricators to access foamable products, but they want a substitute,” Scheer said. “We may be a little more expensive, but we are now within few percentage points, and that’s making this product very attractive.”

The resin uses industrial starches from corn, tapioca, wheat and potatoes that aren’t suitable for human consumption. Scheer said inedible corn makes up about 60 percent of what’s produced in the U.S. each year, so the company is not taking away from the food supply, which has been a criticism of first-generation corn-based ethanol (see Sowing a solution for sustainable biofuel production). Similar starches are used by the paper industry, and the decline in printed products such as newspapers has resulted in excess feedstock, Scheer said.

The starch replaces petroleum in the polystyrene. The chemical and plastic industries use about 8 percent of imported oil in the U.S., making them vulnerable to price fluctuations.

“The amount of investment that has been made in bioplastics is so little compared to the investment in ethanol,” Scheer said. “With the new [Obama] administration putting an emphasis on energy independence, if we can make bioplastic from a renewable resource it translates into 8 percent of imported oil saved.”

Scheer said the company is chasing a growing field. The market for expanded polystyrene is about $5 billion each year in the U.S., or about 6 billion pounds. But much like bans of plastic bags, an increasing number of communities are demanding alternative products, Scheer said (see BDP bags up bioplastics for biodegradable alternative).

“We have a lot of counties and cities banning the use of polystyrene because it costs them a tremendous amount of money to clean up all the litter,” he said.

Cereplast has two production facilities with a combined production capacity of about 90 million pounds a year of resin for its line of compostable and hybrid plastics. About 10 million pounds of resin was produced last year, with about 20 million planned for this year, Scheer said. One factory is in California, while the newest facility in Indiana was expected to be the largest bioplastic production facility in the world (see Largest bioplastic facility in the world announced).

Cereplast scaled back its production plans in recent months because the economic climate made it difficult to secure the financing to expand production, Scheer said. The company secured a $2.6 million equity round and a $20 million credit line in September and December of 2008, respectively (see Small deals in wind, bioplastic, lighting lead the week). The company raised $700,000 this year and is seeking an additional $3 million to roll out new and existing products, Scheer said.

The new licensing structure has the potential to help Cereplast land contracts with large packaging companies, which require large quantities of resin in a short time, said René Nicolodi, senior sustainability analyst at Zuercher Kantonalbank (Zurich Cantonal Bank), which began looking at Cereplast in 2007 as a potential investment from a sustainability perspective.

“It's quite important to note that their business plan or model until very recently was to ramp up their own production facilities for a variety of products, and that's capital intensive, so it's a challenging thing to achieve," Nicolodi said. “The change in the business model to license out the production to the clients makes sense from my point of view."

Competitors include Plantic Technologies, Metabolix and Novamont. Scheer said other companies have introduced bio-based substitutes for polystyrene that have substantially higher density, requiring the use of more resin. Traditional polystyrene has a density of about 4.5 pounds per cubic foot, while Cereplast’s new product is about 5 pounds per cubic foot.

Scheer said the technology is being tested by two independent laboratories.