The Green Gold Rush

What do we mean by Green Gold? 

Green Gold can take different forms according to the market segments and challenges to be met. 

For Agrochemicals, there are many challenges and one of them is to replace aromatic solvents with safer solutions. 

In this specific case, Green Gold is characterized in the form of "Green" Solvents. These Green Solvent are a response to the Human & Environmental Challenges. However, depending on the technical solutions chosen, the raw materials used are insufficient to meet both current and medium-term demand. 

What are the reasons of this interest? 

The tightening of regulations on Agrochemicals by Governments around the world push the industry toward a "cleaner, safer and higher efficiency" environment. This challenge not only concerns Agrochemicals Industry, it goes far beyond as well as its implications. 

The switch of Aromatic Hydrocarbon Solvent (fossil resources based) to Green Solvent is not recent. According to the market segments, this dynamic was engaged several years ago. It responded to different concerns, as such Human Protection, but the main motivations for this change were the various regulations. 

Why is the market imbalanced? 

Contrary to popular thinking, Green Solvent do not necessary imply vegetable solvent. For Agrochemicals, as the concern is/was to replace the fossil sources by eco-friendly solvent, this would make possible to combine vegetable & synthetic solutions, when other markets are only based on vegetable technologies. 

However, it must be noted that the structural movement (all sectors combined) assisting this change is strongly oriented towards vegetable (oleochemicals) technologies. This structural movement is at its beginning with sizeable challenges: the different market segments compete for the same resources and vegetable solutions have -for main characteristic- that their capacities are not inexhaustible. To this, the vegetable structure itself is a limiting factor. 

Factors aggravating the market imbalance

Covid-19 has upset the fragile balance in place and external events, such as the demand for biodiesel, have accelerated market mutations. 

The resurgence of the classical “Feed or Food” debate is the consequence of the use, for industrial purposes, of raw materials dedicated to human and animal food. Indeed, most of biodiesel program are and will continue to be on agricultural feedstock.

Specificities of the solutions selected by Agrochemicals 

As already highlighted, vegetables technologies occupy a pro-eminent position in term of alternative technical routes. This is this route that the Agrochemicals Industry has choose but with a non-negligeable specificity. 

When the Agrochemicals Industry initiated its mutation several years ago, the main selected technical route for replacing the Aromatic Hydrocarbon Solvent has been based on oleochemicals1 solutions and more specifically on the short fatty acid chain (also called light cut). However, this technical choice is already restrictive itself. It is restrictive because the feedstock solutions are limited (mainly two) and the proportion of short fatty acid chain is weak (7%) compared to middle fatty acid chain (55 %). Finally, as one of the two upstream feedstocks (Coconut Oil) is food dedicated, the upstream feedstock to be considered for Industry is Palm Kernel Oil (PKO). 

Consequences of the choices made by Agrochemicals 

The selected technical route for Green Solvent is based on the short fatty acid chain. As described above, the upstream flow doesn’t offer a lot of possibilities. Another point of attention is that the light cut manufacturing process is the resultant of the fractional distillation of the middle-cut. The short chains are therefore not produced for themselves but are considered as co-products, Finally, if the constraints were not sufficient, another factor influencing the availability of short chains must be considered: the short chains correspond to fatty acids in C8 & C10 and each of them is impacted by the demand for the other. If one of the two acids suffers from a lack of demand, it leads to a limitation of production for both. 

The supply of this category of fatty acid is already complex in a balanced market. 

So, imagine the consequences in a totally destabilized market. Destabilized by exponential demand and the repercussions of the Covid 19 crisis (logistical challenges, production problem). 

All the conditions are met for a nightmarish supply situation: not enough product, random deliveries. With the recent and upcoming arrivals of new formulations based on short chain fatty acids, the Green Gold Rush is not about to end!!

¹ chemical compound derived industrially from animal or vegetable oils or fats