Is There a Need for Strings to be Attached With Government Green Technology Funding?

by | Dec 18, 2023 | 2023, Logging & Sawmilling Journal, November/December, The Last Word

The Origin Materials chemical plant in the city of Sarnia, in southwestern Ontario, began commercial production this past summer, and converts wood residues into the building blocks used to produce plastic materials for containers like pop bottles, clothing, textiles, car parts, tires, carpeting, toys and fuels.

While the start-up should be a cause for celebration within the forest industry, that grand opening was somewhat muted in the fact that this company is taking its show on the road to Louisiana, after accepting $23 million in federal funding in 2019 to build its first commercial plant in Canada. Partial funding for the $130 million plant was provided through the federal government’s Innovation, Science and Technology fund.

It’s disappointing that the Canadian forest industry, which are Canadian taxpayers, will seemingly not benefit further from the ramping up of this technology, despite the fact that Canadian tax dollars were used to pay for a significant portion of this commercial demonstration plant.

When we asked whether they approached any Canadian forest companies to potentially partner with them on the commercial ramp-up of this technology, and if not, why not, Origin Materials did not respond to this query from Logging and Sawmilling Journal.

It makes one wonder if this is another example of a federal government so anxious to advance its green agenda that it sometimes fails to think of the finer details—like including a condition on that funding that if the technology proves itself here, then there is some requirement by the beneficiary of the funding to ramp up commercial production in Canada and with Canadian industry partners.

That does not appear to be the case in this instance.

To be fair, Canada is deriving some benefit from partially bankrolling the construction of this chemical plant in that it will consume about 25,000 metric tons of wood residues annually from area forest product manufacturers like Townsend Lumber in Tillsonburg, Ontario. And it is providing about 25 skilled jobs at its Sarnia plant, which will primarily focus on the production of a chemical called chloromethyl furfural (CMF).

Origin Materials was co-founded by John Bissell and Ryan Smith in 2008, who were chemical engineering students at the University of California-Davis. Motivated by the trend toward decarbonization of the environment, their goal was to develop a chemical extraction technology using non-food biomass to eventually produce the key chemical building blocks used to make plastics currently produced from fossil fuels.

In a recent interview with a publication focused on the chemical industry, Bissell said that the company can use a wide range of plants containing a raw material called lignocellulose, but they chose wood residue, a cheap and available raw material with an established supply chain. Wood materials like wood chips, sawdust and bark are commonly transported to and from forest production facilities.

According to Bissell, it is the company’s intention to also use forestry residues as its feedstock at a larger commercial plant in Geismer, Louisiana, slated for Phase 1 completion in late-2026, according to the company’s most recent financial disclosure.

Origin Materials chose Sarnia for its first commercial-scale plant largely due to a recruitment effort by the former executive director of Sarnia’s Bioindustrial Innovation Canada site after he crossed paths with Bissell at a conference in 2011. Kudos for this successful recruitment, but it still raises the question of the federal government signing a $23 million cheque for plant construction, apparently with no strings attached, related to eventual ramp-up of the technology in Canada.

The Sarnia plant is a commercial plant and Origin Materials will derive revenue from it. But it has another fundamental role, which is to analyze and demonstrate the chemical manufacturing process from the raw material up to the point where the end product is identical to other chemicals currently used in plastics manufacturing from fossil-fuel sources. Bissell said that getting to that point is, “pretty novel, actually.”

So while the company’s decision to scale up commercially south of the border leaves a bitter taste for Canadian taxpayers, the federal government and recruiters would probably answer criticism of the $23 million contribution to this Sarnia plant as, ‘that’s the chance you take.’

Origin Materials can’t really be faulted either, because as a start-up, it’s common to follow the money wherever you can get it. Financing is usually the hardest challenge when attempting to scale up. If the commitment was to only build the first commercial plant in Canada and the federal government agreed, then legally speaking, the contract has been fulfilled. Still, the optics aren’t exactly rosy.

Perhaps there is still an opportunity to find a partner within Canada’s forest sector with large stacks of undedicated forest residues, and deep pockets, to partner with Origin Materials, because there is no doubt that the future is bright for plastic packaging and materials with building blocks derived from sustainable resources.

The company has already caught the attention of mega-corporations like Nestle, Coca-Cola and PepsiCo.

Origin Materials is a good news business story. Hopefully a pathway can still be found to write a Canadian chapter to that story beyond Sarnia.

Tony Kryzanowski

Author

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