Fuels and chemicals produced from bio-based feed stocks, such as waste wood and agricultural co-products, offer incredible potential.They can help to reduce demand for non-renewable fossil hydrocarbons such as oil and gas. They are completely renewable,often help to reduce atmospheric carbon emissions, can improve national fuel security and can play a key role in the emerging concept of a "circular economy", helping to minimize the consumption of non-renewable materials.
From a business perspective, using and manufacturing bio-based products can present a completely disruptive approach to conventional fuels and chemicals. They offer opportunities for new entrants to disrupt existing markets, and for incumbents to defend their businesses against emerging threats. Some bio-based materials are produced from low-value or waste materials whose potential is under-exploited, providing an opportunity to create completely new market niches. This creates opportunities for agricultural commodity companies to derive new materials from crop co-products, for food companies to find ways to repurpose waste materials, and for chemical companies to create entirely new product lines.
Yet despite this promise, the sector's development has historically been disappointing. In particular, segments such as "second-generation" biofuels (Box 1) have been - at least to date - a perpetual"jam tomorrow" story - perennially on the cusp of materializing as a major market, but never quite breaking through. The environment today is even more challenging for many bio-based products due to four main hurdles:
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