The Graduate has one of the most memorable lines in movie history. "There's a great future in plastics," the protagonist Ben is advised, and it's a piece of advice that turned out to be prescient. Driven by steady improvements in cost, quality and choice in the petrochemical industry, plastics have become ubiquitous for packaging, containers, fabrics, coatings and other customer durables. Petrochemicals also deliver the key ingredients for cosmetics, personal care and many of our food and pharmaceutical products.

Today, a new prediction is made. Bioplastics and - more generally - chemicals derived from biological raw materials like wood and straw are being touted as the next big thing for the chemical industry and its customers. The technology that will make this possible, industrial biotechnology, abbreviated as IB, is regarded by many as a potential game-changer. This possibility is not just of interest for the chemical industry itself; all the main chemical-using sectors such as food and drink, pulp and paper, textiles, automotive, aerospace and packaging would be impacted. There would be considerable opportunity and change in upstream supply as well, since bio-feedstocks may include dedicated crops and by-products like straw and wood, as well as domestic and industrial waste.

Among the more attractive benefits of this technology for both companies and consumers are the new and different functionalities of biological feedstocks. They can offer innovative and better products and may, in addition, reduce environmental impacts. Indeed, IB advocates boast about lower net carbon emissions (since growing the feedstock would absorb carbon dioxide from the atmosphere) and reduced waste volumes (as many of the bio-derived products would be biodegradable) compared to those of normal petrochemicals. On the political-economic side, a bio-economy would rely less on oil imports from parts of the world deemed relatively unstable.

Bioplastics and chemicals derived from biological raw materials are being hailed as the next big thing for the chemical industry, a development that could have a huge impact on both that industry and the many others that depend on it.

This technology has its critics, but its proponents believe it has the potential to introduce all kinds of new products and reduce dependence on oil.

Here the authors look at potential business models for this small but growing technology. They single out three possible futures and estimate how this promising new area could develop over the coming years.

While the world is indeed running short on resources and high on greenhouse gases, a sizeable group of critics suggest that the expectations are exaggerated. They argue that IB remains of little importance for chemical production overall, especially where IB products are more expensive than alternatives, and that industry should not exploit valuable farmland that can be used to grow food and animal feed. In addition, they highlight the fact that the petrochemical industry is not a key contributor to climate change - of all the crude oil that is produced, only about 5% is used by the petrochemical industry. It uses that oil very efficiently, converting it into useful products first and eventually into energy when it is burned in incinerators, thus providing double use.

Clearly, the debate between advocates and critics of IB shows that something is at stake. It puts IB firmly on the agenda for many executives across the chemical industry, its suppliers and all those industries that ultimately derive their products from chemical raw materials. In this article, we will discuss the key issues faced by executives with regard to IB:

• What are we talking about? What is the current contribution of IB to the chemical industry, in size and types
of products?

• How can IB develop? What is the future development path, and what are the key determinants?

• What would it mean to business? How can companies in the chemical as well as chemical-using industries benefit from these developments?

The Nature and Size of The Bio-Chemicals Market
As with so many emerging technologies, considerable uncertainty exists about the size and indeed the composition of the IB-enabled bio-chemicals market. To allow a good understanding of the opportunities, it is important to distinguish between the three different IB technology platforms by which bio-chemicals can be derived: through dedicated production, derived from biofuels, and in planta. Moreover, as in the traditional petrochemical industry, it is necessary to distinguish between high- and low-volume chemicals. Table 1 summarizes the key features of the six resulting segments and provides commercial and technological examples.