As more and more companies are demonstrating, organic plastic is now a viable alternative. Soon, maybe we can choose between conventional plastic bottles and others we can use as fertilizer. And we’re not just talking about shampoo bottles: plastic is everywhere.

Organic plastic has arrived.

Why make a shampoo bottle from petroleum products (as is the case with the plastic PET, used extensively in all types of consumer products), when it can be manufactured from agricultural waste? The cheaper price of PET with respect to organic plastics is becoming less and less of a reason.

This is, as News.com reports, the premise of the American company Segetis.

Conventional plastic is everywhere.

It is something that, as consumers, we haven’t questioned until now. For the average American or European consumer, the main factors for buying a cosmetic or hygiene product are still those that they teach in industrial design and business schools: product quality and the client’s perception of it, brand value, attractiveness of packaging, availability in distribution centers, conventional advertising and advertising at point of sale, etcetera.

Things seem to be changing, however. One example can be found in the world of information technology: the consulting and research firm Gartner Group estimates that, in 2010, more than a third of businesses will take into account one or more environmental criterion when purchasing materials and technological products, among the 6 factors that determine their investment in information technologies (IT).

Since the spring of 2007, the European Union has used a new method of analysis, control and evaluation of all the chemical substances that they produce and sell in the common European space: the Reach directive, whose compliance is obligatory for all businesses. The US equivalent to this norm- the US Toxic Substances Control Act-, although weak, is usually reinforced, according to specialists. As with all chemical derivatives, plastics must comply with Reach.

Containers and packaging to return to the land

Coming into compliance with the strict norms in Europe, North America and other high income countries, several companies seem to be in agreement with the ideas expressed in the book Cradle to Cradle: Remaking The Way We Make Things, whose authors, a German chemist and an American architect, fight for “eco-effectiveness”.

“Eco-effectiveness” advocates that products be designed to always conserve their value, to be able to be completely reused time and again or to be able to be broken down biologically with the speed of an organic product exposed to the elements (a fruit that falls to the ground; food remains that become home compost, etcetera).

Segetis is part of a growing number of firms that are trying to completely displace the use of petroleum in the products we use every day: containers, cosmetics bottles, countertops, kitchenware and even furniture. Not to mention toys or clothing and furniture fabrics.

This small company lost its anonymity on May 1, 2007, the day they announced they had secured 17 million in financing from a venture capital firm to develop an entire range of packaging products from organic plastic.

Segetis is a firm headquartered in Minneapolis, Minnesota, that is part of a growing number of companies trying to respond to the change in our cultural and consumption habits.

As the concern over use of toxic, contaminating and non-biodegradable products grows, these businesses see clear opportunities. Segetis’ business model stems from the growing number of people prepared to pay a bit more for an ethical product.

Segetis claims that the organic resin they have created could be used as well in the production of biodiesel and other products. The company was founded by Sergey Selifonov, who has worked at several Silicon Valley start-ups and as a researcher for the Institute of Biochemistry and Physiology of Microorganisms, a division of the Russian Academy of Science.

The use of organic material instead of plastic resins derived from petroleum, like PET, are among the advantages whose strategic importance in the international components industry increases daily:

• Organic plastic drastically reduces the pollution produced during a product’s manufacture, without diminishing the material’s performance.
• The recycling process for organic plastic would be simpler and more effective than with conventional plastic.
• The price of plastic products would no longer be dependent on the price of petroleum in the market for chemical commodities, dominated by large companies, some of which have direct interests in the Middle East.

The world market for plastic resins is tightly connected to that of petroleum (and, by extension, with politics?). An example: the Saudi firm Sabic, the largest petrochemical company in the Persian Gulf, is 70% controlled by the government of Saudi Arabia. Sabic is the third largest producer in the world of polyethylenes and fourth of polyolefins and polypropylene.

Sabic Europe supplies 20% of polyethylene film resins for Europe’s flexible packagine market, according to a company press release from 2005.

Both the resins- the plastic material derived from petroleum used to manufacture products, including containers, bags, bottles, countertops, household appliances, electronic and data processing machines or components for the auto industry- as well as the actual products manufactured from these, are contaminants, more difficult to recycle than organic plastic with a price dependent on the unstable value of the commodity.

Paradoxically, and as with the oil companies (Exxon, Chevron, BP, Shell, Total, ENI, Repsol YPF) where their after-tax earnings in each fiscal quarter, as well as their shareholder dividends, rise when the price of petroleum rises, instead of falling, the suppliers of resins for plastic see profit windfalls when there is geopolitical instability.

The same phenomenon that occurs with fuel – instability in the Persian Gulf is equal to a rise in the price of crude, that is equal to a rise in gas prices, that is equal to, curiously, more benefits for the companies-, can be seen in the lucrative world market for resins created by plastic production.

The moment for organic plastic?

Maybe consumers are still not ready to demand at the supermarket and at the polls that the products we consume come with packaging of organic plastic. To begin with, many of them don’t see much wrong with it.

According to a recent poll, 70% of Americans don’t know that plastic is made from petroleum. Of those surveyed, nearly 40% think that conventional plastic will biodegrade underground, in home compost, in landfills, or in the ocean (just to clarify, it won’t biodegrade in any of these locations).

The upside for businesses interested in producing organic plastics: half of those polled said they would be “likely or very likely to pay 5-10% more for a natural, biodegradable plastic.”

And many businesses believe that the moment has arrived to produce in mass this new material. Given the rise in cost of products derived from petroleum, the production of organic plastic resins now aren’t so costly, comparatively.

Segetis, Cereplast, Archer Daniels Midland-Metabolix

In addition to Segetis, that has benefited from the new consensus among analysts in securing 17 million dollars in investment from the always active U.S. venture capital industry, other firms are following the same path in North America.

Cereplast, maker of plastic cutlery and cups, is, according to Michael Kanellos, trying to assure the innocuousness of its products through the use of organic plastics. Perhaps it is the best way to not have to worry about the public-mindedness of the hikers and other presumed nature lovers that litter the last virgin spots of the planet, the Himalayas and tropical rain forests. If you can’t control them- which seems to be what Cereplast thinks-, then provide them with wrappers that end up decomposing and becoming fertilizer for the plants.

The U.S. multinational specialized in agricultural products, whose environmental record until now has problematic, has also entered into the organic plastic market and not to launch an of-the-moment marketing campaign for social responsibility.

Archer Daniels Midland (ADM), in alliance with the biotech firm Metabolix, presented in April 2007 a plan to produce a plastic whose use would benefit, as notes Martin LaMonica in News.com, from backyard composters to marine animals. Mister authors of Cradle to Cradle, it seems the executives have begun to read your book. The biodegradable plastic of Metabolix and ADM will be ready for commercialization in 2008.

“Natural” plastic now has a commerical name, Mirel. While it will cost more than the petroleum-based plastic PET, the Metabolix experts hope to sell it as a “premium” product (capable of being differentiated by it’s added value) appealing to consumers concerned about the environment, those who would pay a little more for a product capable of being used as fertilizer for our plants.

ADM, in charge of manufacturing the Mirel plastic, hopes to have a plant in Clinton, Iowa operating in the second half of 2008. The prime material used is corn, a very extensive crop- and one with large subsidies- in the United States. To avoid any possible controversy regarding the use of corn, a crop whose price has risen with the increased interest in biofuels, those at ADM assure that they can make the plastic with other sources of sugar.

The “green” packaging trademark

The concept behind Mirel is to position products or their packaging as a biodegradable alternative to contaminating conventional plastics. Businesses can use the Mirel logo to indicate that the packaging respects the environment and will decompose within several months.

According to the firm, Metabolix is negotiating with 40 companies interested in the idea for 60 possible uses, from coffee cups to plastic bags.

Besides Segetis, Cereplast and Archer Daniels Midland-Metabolix, other companies, like American Excelsior, are incorporating the resins of organic plastics in their new products. This last firm has just developed a new line of plastic stakes to maintain erosion protection blankets, similar to those that we see on hillsides at risk of collapse along the highway.

According to Jerry Bohannon, director of earth science for the company, the plastic stakes are more suitable than metal because they don’t rust or need to be removed at the end of their useful life by specialized teams, as is the case with metals.

Besides the consumer markets, more specialized sectors are looking for new opportunities for disposable plastics, capable of being absorbed by their environment or recycled in accordance with more conventional methods by, for example, making more organic plastic.

Although consumer perception is different, plastic is crucial to all industries. Its presence in our everyday life, in the form of electrical appliances, containers, textile fibers, car parts, furniture or even construction and aeronautics (not to mention drivers licenses or credit cards), is oppressive.

For example, in Spain, the fourth largest economy in the euro zone after Germany, France and Italy, there are more than 3,700 chemical businesses, generating 10% of the country’s GDP and more than 500,000 jobs.

The necessity to comply with the Reach norms and the new opportunities represented by organic plastics could help Europe to lead a new market, as promising for businesses as for consumers, even if the main beneficiary is the environment. Eco-effectiveness has begun to show its face.

Or, at least, this is the thinking of the most prestigious venture capitalists in the U.S., those responsible for- and beneficiaries of- the technology boom of the past decades in Silicon Valley.

Vinod Khosla, one of the most recognizable names in venture capital, is investing significantly in the so-called “greentech” or “cleantech”. If Khosla is doing it, say many, than we’re not talking about a passing trend.