Bio-plastics emerge as green alternative revenue play for sugar producers

With a high differential in pricing vis-a-vis normal plastics, and backed by a generous Uttar Pradesh policy, sugar producers eye new opportunities in the climate-friendly product

As ethanol emerges as a source of alternative revenue for sugar companies due to differential pricing formulas and fixed buying by oil marketing companies, bio-plastics or Polylactic Acid (PLA)-based plastics are also gradually becoming a new avenue for sugar companies looking to diversify their revenue stream. One kilogramme of PLA-based bio-plastics is priced multiple times more than normal plastic. 

 

Not surprisingly, Balrampur Chini Mills, one of India’s largest integrated sugar companies, in February this year announced a Rs 2,000 crore forward integration project which will be the country’s first-ever 'industrial bio-plastic' plant. 

 

To boost the sector, the Uttar Pradesh government earlier this year also announced a bio-plastics policy with a slew of incentives for companies that invest more than Rs 1,000 crore in this area, also a first in the country.  

 

While bio-plastics have been in vogue for the last several years – broadly comprising plastics that are produced from renewable resources and not fossil fuels – their usage and importance has picked up of late due to environmental hazards associated with other plastics. 

 

Environmental concerns, problems in disposing of conventional plastics, and the dangers associated with its usage are some of the factors that are propelling consumers to opt for bio-plastics. 

 

Sugarcane based bio-plastics is just one form of the range of bio-plastics, which are made from a variety of sources, including corn, starch, soy proteins, waste materials, and sugar.  

 

What are sugarcane-based bio-plastics? 

 

PLA is produced from sugar using a process that absorbs carbon dioxide (CO2). It is 100 per cent industrially compostable, ensuring that it never persists in the environment like fossil-based plastics do. 

 

The biogenic carbon released during PLA's decomposition is part of the short-term carbon cycle, maintaining a neutral and potentially negative carbon balance. 

 

PLA made from plant starch or glucose is compostable in industrial facilities and can be anaerobically broken down along with other food waste, sewage, agricultural residue, dung, and other organic wastes to make biogas and fertiliser from. 

 

The biogas produced can be used to generate green electricity, CBG, or to replace cooking fuel. 

 

The Science behind PLA 

 

The production of PLA is divided into three main processes. 

 

Fermentation: Sugar from sugarcane plants is extracted and stored in large tanks with water. Bacteria necessary for the fermentation process is then added. Over time, the bacteria eat up the sugar and convert it into a chemical called Lactic Acid. 

 

Purification: The lactic acid is then purified through stages of filtration and treatments. 

 

Polymerization: This is the critical part, and in which chemistry plays a key role. The lactic acid molecule is made up of carbon, hydrogen, and oxygen atoms. In polymerization, several lactic acid molecules are combined to make a long chain which is the bio-plastic. The lactic acid is first heated to remove the water molecules that get released in the process. 

 

During this, two molecules of lactic acid come together to make a ring formation called lactide. These lactide rings are now ready to be made into plastic. To do so, the lactide rings are again heated with a catalyst to make the lactides open their rings from one side and make a straight line instead. These open rings now join to each other to make a long chain of molecules. The long chain of molecules is called a polymer; in this case, PLA. 

 

PLA, a versatile biopolymer, is increasingly popular due to its availability in various forms: pellets (for injection moulding, extrusion, and thermoforming), filament (for 3D printing), film (transparent and flexible), sheet (mouldable into various shapes), fibre (ideal for textiles), and foam (light and insulating for packaging). 

 

UP takes the policy lead  

 

The sector has got a shot in the arm ever since Uttar Pradesh, one of India’s largest sugar producing states and home to the largest number of private sugar millers, announced a bioplastics policy of its own, the first such nationwide. 

 

The policy provides for a 50 per cent subsidy on capital investment for seven years for companies that invest Rs 1,000 crore or more in bioplastics for seven years. They will also be eligible for an interest subvention for a period of seven years, plus 100 per cent reimbursement of state GST for 10 years. 

 

In addition, all bio-plastics manufacturing units will get duty-free electricity for no less than 10 years, along with stamp duty exemption; remission will also be applicable for all transactions made one year before or after the policy cut-off date. 

 

The overall benefits under the policy shall not exceed 200 per cent of the investments made, the official document says. 

 

“Beyond financial incentives, the policy fosters innovation by supporting research and development in new bioplastic materials and their end-of-life solutions. It gives opportunities beyond the SMEs, including the waste management service providers, municipalities, and recycling operators to participate in the bioplastic supply chain as well,” a state government official said. 

 

First-mover play by Balrampur Chini 

 

One of India’s largest integrated sugar companies, Balrampur Chini Mills said it would invest Rs 2,000 crore in the first-ever 'industrial bio-plastic' plant in India. 

 

The Kolkata-based company said this diversification with its upcoming PLA manufacturing venture is well-aligned with climate sustainability goals envisioned in the country. 

 

"The new project aims to propel India towards net zero emissions by 2070 with an estimated investment of Rs 2,000 crores in phases over the next 30 months," Balrampur Chini Executive Director Avantika Saraogi had said in February, when the initiative was announced. 

 

Some reports say the project has a revenue potential of around Rs 1,700 cr-Rs 1,800 cr, and is expected to come up near the company’s Kumbhi sugar mill in Uttar Pradesh. 

 

"Expected to be completed within 30 months, the new venture will mark the establishment of the first-ever industrial bio-plastic plant in India. The state-of-the-art PLA factory will command a whopping capacity at a global scale of 75,000 tonne per annum," the company said. 

 

The new venture is also facilitated by BCML's minority stake acquisition in Konkan Speciality Polyproducts Private Limited (Konspec), a leading player in the sphere of specialty polymers and biopolymers, intermediaries, and chemicals, the statement said. 

 

“Our plant will also be completely fueled by bio energy, green energy, renewable energy, whatever you want to call it. This is also going to be a global first, so the environmental impact of our PLA will be even, like I would say, a fraction of what it is in the whole world today,” Saraogi recently told Business Standard. 

 

Sugar Supply Shock 

 

The key question, though, is if India has enough sugar to meet all the competing demands from various user industries. 

 

Saraogi says this is not a concern given sugar consumption due to bio-plastics will only be a fraction of what India annually consumes in the form of sweetener. 

 

In the 2024-25 sugar marketing year, India is expected to consume around 29 million tonnes of sugar. 

 

On why would an industry which still gets almost 80 per cent of its revenues from sugar despite diversifying into ethanol look to further lower its share of the product, Saraogi says that she would like to reduce the share of sugar in the market as people are not able to consume it all, leading to exports or absorption into ethanol blending. 

 

She pointed out that having almost 80 per cent of revenue coming from a single source is not a very healthy thing for the industry, either.  

 

As for scaling up, Saraogi said that it is very much in the works. “Look, we are getting into a new vertical and if things go well, why wouldn't we scale it up? That's the whole point, right? We have to obviously balance it off (with sugar), as you said in the beginning, right? That sugar is regulated. So we'll have to balance it off, see the government's agenda and our agenda is the same because we are not a company who is just here to make some money. My responsibility is not money. My responsibility is nation-building. My responsibility is supporting all the people who are associated with us. I feel the pressure to do good for the rural economies, for the Indian economy and for all our stakeholders,” she said. 

 

But with sugar production expected to dip by almost 4 million tonnes in the 2024-25 season that started in October, it remains to be seen whether the industry can afford another competing demand on the sweetener. 

 

“Yes, bio-plastics would definitely create an additional revenue stream for the sugar industry but it remains to be seen how much sugar can be diverted for this in times of shortage, unless of course there is a quantum jump in India’s sugarcane acreage or production of sugar,” a senior industry official, who didn’t wish to be named said.