Commercializing New Technologies For A Sustainable World With Tom Van Aken Of Avantium

Many people have tried innovating and coming up with new ideas for a more sustainable world, but only a few have made a dent. The process is long, and it takes more than a brilliant mind to develop a breakthrough product that would revolutionize the use of plastic. One of those few is Avantium. In this episode, CEO Tom van Aken shares their initiatives that would soon revolutionize plant-to-plastics technology, and conversion of industrial sugars, in addition to using plant-based carbon sources. He also shares the importance of getting the right partners on board to commercialize new technologies and how that consortium fosters trust, cooperation, and collaboration in moving everything to a renewable and sustainable level.

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Commercializing New Technologies For A Sustainable World With Tom Van Aken Of Avantium

In this episode, I am speaking with Tom van Aken, the CEO of Avantium, a pioneer in the renewable and sustainable chemistry space. Their flagship product is PEF, which is a replacement for PET. We are, hopefully, going to get a chance to talk about that because Avantium is doing some very cool partnerships in getting that product placed. Tom has been with the company since 2002 and has been CEO since 2005, making him one of the longest-running CEOs in the Netherlands. We are going to have a great conversation. Tom, welcome to the chemical show.

Thank you, Victoria. It’s very nice to be here.

I’m delighted to have you here. What is your origin story? How did you get interested in renewable chemistry, and how did you come to join Avantium?

I first joined Avantium in 2002. At the moment, I am very much interested in innovation. I briefly worked at DSM and worked more in the biotechnology industry. I realized that disruptive innovation was much more taking place in startup companies rather than these large corporate organizations. I wanted to be part of a journey like that, so I joined Avantium.

At that moment, it was a high-throughput experimentation company very much focused on catalysis R&D. After I became CEO in 2005, we changed the company. We directed it in the direction of renewable chemistry first as an alternative to moving away from using fossil feedstock. We try to use renewable feedstocks in all fairness because we feel the world will be running out of oil at a certain moment. Later on, we realized that to see and do things more sustainably and fit with a circular economy, renewable chemistry was the way to go. That’s where we have been going since that time.

Tell us a little bit about the process and the products. What is the feedstock? What is it that you are making?

We are one of the newest kids on the block, in that sense. The chemical industry is very much relying on the use of fossil feedstock but we are only working on things that are renewable. We use renewable carbon in the form of plant-based sugars as feedstock. They can come from various crops or various sources of biomass. We use a catalytic process to convert sugars into different chemicals. The most advanced technology that we have is focused on FDCA, which is Furandicarboxylic acid. We started a project in 2006. We have been working on that already for quite a while. Based on FDCA, you can then move into different types of polymers.

In 2010, we realized that the biggest opportunity will be in PEF, which is a new polyester that we are developing and commercializing. This has been a phenomenal journey to build a company from scratch and develop a new monomer but also developing a new polymer. I don’t think that there are many startups that have such an ambition. It has been a phenomenal journey with the team to go from an R&D organization and move more towards a commercial operation. That will ultimately license the technology and make this one of the new, large chemical businesses based on renewables.

That is pretty impressive. You guys are in the process of building a commercial plant, is that right?

You sometimes need that adrenaline rush going into the next stage of the journey. Using that adrenaline, you can overcome all kinds of setbacks. Click To Tweet

Yes. In 2011, we opened our pilot plants for making FDCA. Largely, we made our final investment decision for building a commercial skill FDCA plant here in the North of the Netherlands. We are running that construction project. We expect the plant to be mechanically complete by the end of ‘23. That means that in 2024, FDCA and PEF will be on the markets. This is the first time that the world can see what it can do with the FDCA monomer and PEF polymer.

We have very high expectations of the commercial potential of this new polymer. It’s a bit of the dream of any chemist that you start with something in the lab, see it through to piloting and scaling it, and it’s going to go commercial. This explains why many people are excited about this company but more importantly, why they are so excited about PEF.

That is awesome. It has been a long journey. We talked before we got started here about the parallel between Avantium and LanzaTech. I interviewed Jennifer Holmgren in episode 60. They have also been in business for about twenty years. It seems like, all of a sudden, there’s this rapid success. Avantium has been in business for about twenty years. You are starting to see that commercial success. It’s been quite a journey.

One of the questions I have for you on that is, what has been the challenge in terms of development and perseverance? Avantium started in a different place, which is catalysis versus where it is now, although it still has catalysis as its backbone. How has that process evolved, and how have you been able to see it through the ups and downs over the years?

If you look at an innovation project like this, it has many different aspects. You need to first solve chemistry. You then start looking more at engineering and economics. As it is a new polymer, you also have to develop the applications and the end markets and find partners that are interested in that. You need to build a team to do that and find the financial resource to do it.

In that sense, LanzaTech and Avantium are similar to what they’ve gone through because both companies didn’t have an ongoing business. They didn’t have existing cashflow to be funding these types of developments. We had to raise that money from investors. Our company has gone public in 2017, so we also have access to the capital markets.

Jennifer mentioned that they had raised about €5 million, which is maybe a bit more than what we’ve done but it is a similar ballpark. That’s an extremely challenging journey to go through because these types of innovation projects take a long time. They are risky, and that combination is very difficult to get finance. One of the real challenges for people like us is to find investors that are willing to put in money for a project that has such a long time horizon. The beauty is that if it is successful, the potential is also phenomenal. This is not just a local specialty. What we are working on has the potential to become one of the large polymers in the world.

In that sense, it makes it so exciting to work here and to keep going despite the fact that it takes longer and you have all kinds of setbacks. It’s that conviction that this is going to be one of the new plastics that are plant-based. It’s not relying on petroleum. It has super performance. It is fully circular. We can do something that’s both good for the environment but also something that’s going to help the plastics in the packaging industry move to something that’s more sustainable.

You are right. It’s like the game of golf every time you get a good hit. It’s what keeps you going. It’s all the terribleness and you’re ready to be done, and then it is like, “That was awesome. Let’s keep moving.” I suppose, in terms of the whole aspect of innovation and innovating with new technology, each success creates momentum and drives you forward.

 

You sometimes need that adrenaline rush to be going to the next stage of the journey. Using that adrenaline, you can overcome all kinds of setbacks. All of these companies are going through significant difficulties. Many people have said beforehand, “There are not that many companies that have successfully developed a new polymer and brought it to the market.” Many people have told me in those years, “This is not going to work.”

I’m extremely proud of the team that we have been able to move ahead, push ahead, and overcome these challenges. We are at a phase where we can see PEF products, PEF bottles, and PEF packaging coming to your supermarket and into your refrigerator in the coming years. That’s a very exciting prospect and rewarding.

To your point, there are always naysayers in everything that you do. I’ve certainly seen it as I’ve developed my own consulting business and my show. Developing a polymer is probably a bit more daunting but you have to take your advice from people that have done it and not from those that have never even tried it.

That’s the case. The team is people that are on the payroll but also we have many people that have consulted us and that have coached us through this journey. Indeed, there are many people that believe that these disruptions don’t take place or maybe they didn’t want them to take place. There are always people that believe in innovation like, “This is going to be successful.” You need to rely on them, their creative ideas, and their brilliant minds to overcome some of these major challenges. The team sets it apart.

Let’s talk a little bit about customers and the customer experience. One of the biggest challenges, I would imagine, in commercializing new products of any variety is figuring out what it is that the customer wants. You can have the field of dreams that if you build it, they will come. It’s this whole aspect of how you figure out what your customers want, and they know that you are developing a product and a solution that they are interested in. How have you gone about figuring that out?

There are a few things that I can answer to this. First of all, thinking from a customer’s perspective is something you should do from the get-go. Ultimately, it’s the consumer and the customer that needs to embrace the product. If that’s not going to be the case, there’s no real market for this. We had this in mind from the start.

Also, I sincerely believe that it is ultimately the consumer that is going to drive this transition from a set of fossil one-way plastics that we are used to into renewable, sheer-color materials. The consumer will ultimately determine how quickly that is going to be adopted. Everyone is talking about what the government can do. The government can help, accelerate, or slow things down but ultimately, it’s the market and the consumer that is in charge.

This is a technology company. We are not a real chemical company. We are a technology company that wants to license our technologies and enable other companies to produce FDCA, PEF, and some of the other technologies that we have in the pipeline. You need to find partners that can help you to reach the customer. That is not something that is an easy question to what partner to find. You can think about it but are they also going to be interested?

I believe that there is an element of luck here because several years ago, we worked together with the Coca-Cola Company and with Danone. Those are two reputable consumer goods companies. They were very clear in their ambition to move to sustainable materials. They knew this was going to take time but probably, it has taken more time than what they had hoped or planned for.

Think from a customer's perspective from the get-go because, ultimately, the customer needs to embrace the product. Click To Tweet

These visionary people in these organizations have signed development agreements. They made investments in the company, and that allowed us to move forward. We found other companies that are consumer companies but also converters that work with us to bring PEF bottles, PEF films, and also PEF fibers to the market.

We have signed up ten offtake agreements for the first plant. We have reputable brand owners there, such as Carlsberg and InBev. We’re working with converters. We are working with Louis Vuitton on cosmetics and perfume packaging. The beauty of that is that it enables us to attract good people because this creates positive momentum and positive press.

For investors, it is extremely important that you get that stamp of validation that this is a material that is going to be used in these high-end markets. That puts you on the map. If you look at the commercial pipeline, we have a very strong commercial momentum that is building on these first partnerships that we signed. I don’t think you can overestimate the importance of getting the right partners onboard. Sometimes, you need a bit of luck and some visionary people that help you through those difficult times.

We can’t lose sight of luck. It’s also the hard work and bringing it together. Partnerships are critical on this whole path to commercializing new technologies. What is interesting is that Avantium has taken a different approach from what some other companies have done in terms of forming consortia or communities to bring a number of people together into that.

One of the examples is PEFernce, which has been super successful. LVMH, Louis Vuitton for the people that don’t know. I was super impressed by that. Carlsberg Beer and others have been part of that consortia and are signing off-take agreements with that. How did you decide on this community or consortia approach? Many people go one by one to try to tackle these.

If you look at bringing a new polymer to the market, it’s not that if we work with one brand on it that we can meet everything that they require. You need other companies in the mix as well. For PEF, there were two things that were super important to them, which was that there needs to be a supply chain. It’s all the way from the raw material from plant-based sugar to chemical plants and polymerization company converters before it goes to the brand owner. We formed consortia that bring all these different partners in such a supply chain together.

The funny thing is that if you look at the companies in the supply chain, they don’t only want to rely on one brand owner. They want to make sure that we have been to different markets and different segments. That’s why we’ve worked together with a group of brand owners in different markets. The most interesting part was that they started to exchange all kinds of ideas about what you can do with PEF in terms of how you can process it or recycle it. It’s a new monomer and a new polymer, so there are many things that we had to find out.

The great thing is it’s not just Avantium that tells them, “You should try this or you should do this.” They start exchanging their own information. That’s the beauty if you have a good consortium. You take care of all the intellectual property on how that has been divided and managed. You create an atmosphere where people can exchange information more freely, so the innovation goes faster.

We have done a similar thing on fibers. For PEF fibers, we are working with multiple companies in apparel and textile applications together with companies that are helping us to develop the spinning technology and are helping us on how to best process PEF fiber. We take the same approach. This works well if you work together. It goes much faster than if you have these one-on-one partnerships. In that sense, it’s something that we deeply believe in that is helping us accelerate success.

 

You touched on getting some of this structure sorted out around IP, etc. that allows you to have that degree of trust, cooperation, and collaboration inside of it. What would be the 1, 2 or 3 things that you say are critical to making that collaboration happen?

Many people will look at the legal things but ultimately, it’s much more. You need to create this atmosphere of trust because that’s when people start exchanging real, meaningful information. Trust is something that you have to build very slowly. A critical element of that is face-to-face meetings, which during the pandemic, was something that was extremely difficult. We would get people together who would take examples. They would take bottles or films and show them to the other partners. They were also proud of what they were developing, so they could show that. That is something that created a level of trust.

It’s also the feeling that I’m not the only person or organization working on this because next to me, there is a beer company, a toy company like Lego or a company working on detergents. They are all working on PEF, so they know that what they are doing gives people more comfort. They are working on something which is truly relevant. It built that confidence also that this material is going to be commercialized.

That is the most difficult thing. When you bring a new partner to the market, everyone keeps being uncertain, “It won’t come to the market or is it going to be one of those projects that end before it is in the supermarket?” That is the easier thing for us because they can see the plant being constructed. It is much easier because people know that this will come. The difficulty for them is that there is not much material available. You need to be fast. Otherwise, you are going to be too late.

If it’s successful and customers want to buy the products that are made with these materials, there will be tremendous demand on when you can produce.

Before, people think, “This is all being one straight line to success.” If you look at the history of Avantium, you can also see some of the difficulties also for our partners. When we started with PEFerence, we had BASF as a member of the consumers. We had a JV with BASF to build polymers at their side of the network. Unfortunately, that JV didn’t work out as we had expected. We had to dismantle that JV. I had to set up a new strategy to bring this product to the market.

Times are much more difficult to keep everyone onboard and avoid the people jumping from the ship that they think is going to be sinking. We’ve had some tough times. It’s also because of the help of our partners that we always had the confidence that this was going to be sorted and we would find a way to get the material on the market.

It would be easy for people to say, “You are in the right place at the right time.” A lot of that is true, given the focus on sustainability. It’s a twenty-year journey, so I don’t think you know. My guess is that many years ago when you started working with Avantium, the path was not clear. You didn’t necessarily know when the end game was going to hit and how this focus on sustainability and renewable products was going to manifest.

I still believe that this transition to sustainability is going painfully slow. My anticipation was that this transition would go faster. We have the wind in our sails when it comes to the need for sustainability and the need for more circular materials. I’m still concerned that what’s happening is still going way too slow to address the incredible challenges that we have to move away from these fossil resources to drastically reduce carbon emissions and move to a circular plastic economy. We are still at the start of this transition. People will tell you, “Were you too early? Were you too late?” It’s difficult to get your timing right in this space.

You need to create an atmosphere of trust because that's when people really start exchanging real, meaningful information. Click To Tweet

I agree. We are still in the early days. Even with these ambitions that companies, countries, and governments have around 2030 and 2050, it’s hard to sometimes see how we move everything to a renewable and sustainable level to hit those targets. Experts have said that more than 50% of the technology we need to make this transition has not even been developed yet. We know, and you know personally, it’s not an overnight thing to develop these technologies.

The interesting thing is that this whole transition for many people in the industry may be a bit of a threat but I see it much more as an opportunity. That’s why I would encourage people to study chemical engineering or chemistry. Look at all the products we are still making from petroleum. If we need to make them from renewable carbon, a lot of things are going to be developed. There are huge opportunities in this space for new technologies, new companies, and new products.

Once this is done, and PEF is on the market and then becomes one of these major polymers, there are still many other things to do. We are still working on CO2 chemicals, second-generation feedstock, and completely new polyesters. There is so much to do to make the transition happen. It will provide huge opportunities for a company like ours.

That’s a great point because we should be attracting more people to the industry, chemistry, chemical engineering, and the sciences. We need those bright minds to create the next wave of products and innovations that we need for the transition.

We have 250 people in the company. They come from all over the globe. We are very diverse. It’s an encouraging development if you look around a company like ours. You can see that this is relevant not only for people in this part of the globe. It’s relevant for people everywhere. It is attracting people from everywhere because they see this is great science. It’s a great opportunity. Great products are being developed. That’s where people want to be part of. That puts us in a good position to recruit the talent that we need to be successful.

Let’s talk a little bit about economics. One of the hurdles to this energy transition and product’s transition into a more sustainable world is the sheer economics of things. New products and new materials are more expensive. The scale is not there. Maybe the fundamental economics are not there. People have become accustomed to cheap and cheerful products. That’s one of the reasons why recycling is so challenging.

We have this proliferation of physical products that people are using on a daily basis. A lot of it has to do with fundamental economics. People want cheap things. How is that going to change? Do you see it changing? Do you think customers are willing to pay a higher price? Some of your early partners here with offtake agreements, at least a few of them, are targeting a higher-end market where people are less price-sensitive. How do you think about and wrestle with the whole economics of this in what it takes to make it in every household?

It’s a very relevant point. We have to benefit that PEF has some outstanding performance characteristics. We have a very high barrier. You can replace high-end products with more expensive materials with PEF, which means we can dictate a higher price in the beginning. The next step is to build large skill factories to go down the cost curve and get to the economy of skill.

The interesting thing that I’ve always heard from brand owners is, “The customer is not willing to pay.” I’ve heard that so many times but no offense, I don’t believe any of that. They were focused on going on the lowest-cost solutions. There are many examples where people have proven that there is a real market for things. People are prepared to pay a premium as long as the products better, more sustainable, and it’s better for the environment.

 

There are always limitations. It doesn’t mean that you can charge whatever you would need. You ultimately need to be in a place where there is at least visibility of something that is price and performance-competitive. We are focused on bringing the cost of PEF and other technologies that we are developing down to make sure that we can penetrate these large markets where the price is important. You can start off in the high-end markets where people are prepared to pay a higher price. You can see it in many other industries. If you look at the meat industry or you have organic fruit, that also started with a certain premium. People were prepared to pay for it.

This is something that is also a bit of a learning journey. I don’t know everything. We are just trying to understand what our customer’s prepared to pay. I often ask, in particular, the younger consumers, “You want something that’s more sustainable. Are you also willing to pay?” Most of the time, they say yes but some people would say, “It’s 10% or 20%.” In that sense, it’s always interesting.

I will take an example of orange juice. We make a bowl of orange juice. Fresh orange juice is expensive compared to the bowl. If the bowl becomes a bit more expensive, do you think that the consumer is going to notice? What the consumer finds more important is that there are no all kinds of chemicals being added to the fruit juice but that you have packaging that keeps it fresh and in good condition. That is where products like PEF can play a role. Maybe it’s a bit more expensive than these ultra-cheap PET bottles.

If you compare it with glass or with other multilayer products, you can see it is something that brings value. We find many customers that are willing to pay for it. I find this an extremely interesting topic but we have to be open-minded. We don’t have to completely be in a tunnel where everything needs to be ultra-cheap. That’s simply not representing reality.

You are right. If the value proposition is strong enough, people are willing to pay. We know that. We see that all over the place. On a relative basis, the cost of the polymer is only a fraction of the overall cost of the finished product.

I’m always amazed that making a new bottle is cheaper than recycling a used bottle. It should be cheaper to have a recycled bottle than to use virgin, raw materials. That’s something I’m always wrestling with.

I agree. All kinds of consumer goods are cheaper to buy new ones than to repair them. I don’t want to have to throw it out. It needs a widget of whatever the widget is that it needs. Yet, it’s cheaper to dispose of it and buy a new one than it is to buy the replacement part.

I’m convinced that is something we will witness over the coming years that’s going to change. That is the wrong mentality. That’s not going to help us to bring us to the circular economy. I’m optimistic that’s going to change.

I hope we see that in our lifetimes. I’m planning to live for a long time, so I should see it. That should be the answer. Tom, this has been good. What is next for you and Avantium? What’s your focus here for 2023?

The most difficult thing when you bring a new product to the market is uncertainty on whether it will be one of the projects that end before it gets in the supermarket. Click To Tweet

In that sense, it’s exciting to be part of this business because we plan to build our plants and get PEF on the markets in 2024. That is going to be rewarding for everyone who has contributed to this to see the product on the market. Immediately, we are going to then see the licensing business because we are a technology licensing business. We build the first product, then we are also licensed to make sure that other companies can produce this around the globe under our license. From ‘24 onwards, we are going to see that taking place.

We have other products in the pipeline that are going to come close. The first is a plant-based glycol. Mono-ethylene glycol is the other element you need to make PEF or PET. We want to make sure that we make it in a very competitive way from plant-based sugars. We are moving to second-generation feedstock using CO2 or carbon dioxide. We use that to make chemicals and polymers. It’s going to take a while before we are ready with bringing all those innovations to the markets. The most exciting part for me is completing the transition from an R&D company to a commercial organization. This is a super exciting time to be part of it.

That is going to be awesome. Tom, thanks for joining me. I’ve enjoyed talking with you, and I know others have as well. Thanks for joining us on The Chemical Show.

Thank you for having me.

Thank you, everyone, for reading. Keep tuning in, liking, and sharing the show. We’ve got more great episodes coming. Thank you.

 

 Important Links

• Avantium
• Jennifer Holmgren – Past Episode
• PEFernce

 

About Tom Van Aken

Tom van Aken is CEO of Avantium, a pioneer in renewable and sustainable chemistry. Before his appointment as CEO in 2005, Tom was Avantium’s Vice President of Business Development (2002–2004) and Vice President of Global Marketing and Sales (2004–2005). Prior to joining Avantium, he was Business Development Director at DSM Fine Chemicals, Inc. He earned a master’s degree in Chemistry from the University of Utrecht, the Netherlands.

 

 

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