Brazil's 'Organic' Plastics

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Dow raised its global plastics prices by 20% on June 1, blaming high costs of its energy and feedstocks, which rose 42% in the first quarter. Those items account for about half of plastic's manufacturing costs. As oil trades near $135 a barrel, local sugar cane ethanol, a basic ingredient of Brazil's new plastics—sells for around half that, or $70 a barrel. By converting ethanol to plastic for export, Brazil could also avoid steep tariffs imposed on its biofuels in the U.S. and Europe, where ethanol from grains costs more than twice as much to make as it does in Brazil. "Brazil will bring green plastics out of the boutique and into the mainstream," says Paulo Schirch, Brazil director for Solvay, which plans to make some of its own plastic in Brazil using ethanol, sea salt, and hydropower.

At Dow, the process involves fermenting cane juice into ethanol and heating it into a gas. The gas then undergoes polymerization, which is the chemical reaction that creates plastics. Sugar cane leftovers known as bagasse are burned to power the plant and generate surplus electricity to power towns nearby. A natural fertilizer byproduct, known as vinasse, helps grow more cane.

Should Sugar Be Used for Plastics?

Not everyone believes that sugar cane should be used for plastics. Dow and Braskem plan to burn 300 million gallons of ethanol in 2012, around 6% of Brazil's current output. Critics say using edible crops for energy has fueled the runup in global food prices. Some say cane farming is pushing Brazil's agricultural frontier north into the Amazon forest, and that pre-harvest cane-burning, a common practice, lifts Brazil's carbon emissions.

And, like conventional plastic, Brazil's cane plastic won't break down easily in the environment. That which isn't recycled may end up in landfills, or worse, swirling around the Great Garbage Patch, a Pacific Ocean vortex that eventually sucks in large volumes of plastic floating at sea.

Dow and Braskem defend their plans. "Our whole industry agrees that plastics have to be more sustainable," says Mauro Gregorio, head of alternative feedstocks at Dow. "There's no effort to fool the public."

Wall Street: Already a Player

At least for now, Brazil's green plastics enjoy several advantages over other bioplastics. The plant-based materials are as resilient as petroplastic and may cost significantly less to make, while many other bioplastics are far more expensive, says Antonio Morschbaker, a chemical engineer at Braskem. Bioplastics like Mirel, made by Cambridge (Mass.)-based Metabolix (MBLX), are painstakingly cultivated from vats of mutant bacteria that consume corn. Mirel, which decomposes nicely in most environments, is expected to cost around $2 per pound, while Brazil's green plastic may sell for less than 40¢ per pound.

Dow plans to team with Crystalsev, a Brazilian cane processor partially owned by Goldman Sachs (GS), to build a 770 million-pounds-per-year green plastics plant in southeast Brazil. The companies won't discuss cost, but Brazilian press reports put the figure at close to $1 billion. Braskem says its first plant, in Rio Grande do Sul State of southern Brazil, will cost up to $300 million and make 440 million pounds a year. Braskem says its customers, ranging from toy companies to water bottle makers, have already asked to buy three times more sugar cane plastic than its first plant will produce.

The tough part, Gregorio says, may be cutting and pasting the Brazilian model to other regions where ethanol is expensive. Dow is experimenting with bio-engineered crops to see if that's possible, but Gregorio thinks the biggest nonfossil fuel plastic works will be built in tropical countries, at least in the near term.

"Energy Cane"

Morschbaker has a longstanding connection to cane: His family owned Brazil's first mechanized sugar mill in the 1870s in Rio de Janeiro. But the Braskem engineer has always been drawn to uses of the plant beyond sweetener. "It should really be called energy cane," he says.

He thinks concerns about Brazil's cane farming have been overblown. By converting just 5% of lands now used for cattle grazing to sugar cane, he claims, Brazil could make enough plastic to fuel a sixth of world demand without sacrificing any trees. Producers in São Paulo State, Brazil's sugar cane heartland, say they have been mechanizing the harvest and will entirely phase out crop burning by 2017.

Morschbaker muses about some of the oddities that could result from organically derived plastics: Astroturf made of actual grass, for instance. Liquor bottles made of alcohol, gas tanks fashioned from ethanol, even bulletproof vests that originate in a garden. Brazil President Luiz Inacio Lula da Silva has suggested an even more ambitious goal: In April, he challenged the nation's automakers to make a roadworthy car from sugar cane plastics. The only drawback he mentioned: "People may try to lick it."

Editor's note: An earlier version of this story incorrectly stated that Nova Chemicals of Canada was considering a bioplastics investment in Brazil. It should have stated that Nova, a Brazilian chemicals company owned by Petrobras, is considering the investment.

Schneyer is a special correspondent based in Rio de Janeiro.