Biodegradable Plastic Market

Market Overview

The global biodegradable plastic market size was valued at USD 2.23 billion in 2022. It is projected to reach USD 6.97 billion by 2031, growing at a CAGR of 13.5% during the forecast period (2023–2031).

While currently more expensive than plastics made from petroleum, biobased and biodegradable plastics are a perfect replacement for conventional plastic. The market for biodegradable plastic is still growing, and growth opportunities are expanding as consumer awareness of biobased goods rises. Due to high price issues, PHA, one of the biodegradable plastic types, has yet to be commercialized on a large scale. Several manufacturers are currently choosing various strategies to reduce the price of PHA and sustain ongoing demand. Only 15 to 20 manufacturers are currently active in this market, and they primarily handle the initial raw material processing themselves. The production capacities of these manufacturers are changing quickly due to the high demand for biodegradable plastic, and similar trends are anticipated throughout the forecast period. Asia-Pacific is where the majority of biobased/biodegradable plastics are made. The market has tremendous growth potential in the coming years due to the consistent yearly expansion of production capacities. The price of biodegradable plastics is anticipated to decrease as demand increases. The packaging industry is the largest consumer of the world's biodegradable plastic market. Regulatory agencies are pressuring manufacturers to develop inventive, effective prepackaging strategies.

Market Dynamics

What Are the Main Factors Driving the Market for Biodegradable Plastic?

Growth In The Use Of Biodegradable Plastics By Consumers And Eco-Friendly Nature

When compared to traditional synthetic plastic, biodegradable plastic has the potential to reduce carbon dioxide emissions by 30% to 70%. However, because the material is non-toxic and quickly degrades, it has no adverse environmental effects. Additionally, the degradation of bioplastic produces minimal greenhouse gas emissions. Biodegradable plastic reduces carbon footprint by 42%. Leading corporations like Coca-Cola, Nestle, Nike, and Ford are interested in producing and using biobased biodegradable plastic materials across various applications due to these advanced technical properties and functionalities. The adoption of bio-based and biodegradable plastic materials is driven by a rise in consumer awareness of the use of sustainable products connected to pressing environmental issues, such as global warming. Users increasingly favor bioplastics in various industries, including catering, packaging, agriculture, and automotive. Plastics that degrade naturally are appropriate for organic farming. Farmers in horticulture and agriculture use biodegradable mulching films.

High Demand for Biodegradable Plastic in A Food Packaging Application

This plastic is being phased out in favor of less toxic, biodegradable, decomposable, and environmentally friendly plastic. Due to the global ban on single-use plastic, the demand for biodegradable plastic is increasing. Biodegradable plastics use biomass residues to create various packaging items, including bottles, loose-fill, cups, pots, bowls, flexible films, and more. The demand for coatings and edible films is expanding quickly, aiding in the market’s expansion. The use of biodegradable plastic in meat-prepared foods and dairy products is gaining momentum, and this is likely the central market where rapid growth is predicted. The demand for environmentally friendly packaging is growing daily due to population growth, rapid demographic shifts, and lifestyle changes. The demand for biodegradable plastic is anticipated to experience promising growth opportunities over the coming years because it is anticipated to be the best solution for this complex situation.

What Are the Challenges for Biodegradable Plastic Market?

High Cost of Biodegradable Plastic

One of the major problems facing the global market for biodegradable plastic is the high cost of biodegradable products. The cost of biodegradable products is twice that of conventional petroleum plastics. High R&D costs primarily cause this, as high construction costs for polymer plants, high raw material costs, and small production volumes. The manufacturers are investing significant money to improve R&D to increase production efficiency. With the increase in petroleum prices, some biodegradable plastic resins are anticipated to reach price parity with conventional plastics. Conventional plastic resin typically costs $1.2/Kg, whereas biodegradable resin costs about $3/Kg. High resin prices are also anticipated to pose a challenge to the expansion of the market as a whole.

What Are the Future Opportunities for Biodegradable Plastic?

The Rise in CSR Activities and Decreasing Dependence on Petroleum Resource

Companies are turning to sustainable and environmentally friendly alternatives as consumer environmental concerns increase to build and strengthen their brand image. For instance, top businesses are concentrating on using bio-based PLA, PSA, and other bottles for beverage packaging, like Coca-Cola and PepsiCo. This problem can be solved by the fluctuating price of crude oil, which drives up the cost of heteroblastic. This problem can be solved by improving R&D and reducing reliance on petroleum resources. The industry is expected to adopt a forward integration strategy to build its value chain because it has a solid capital base and good infrastructure. PepsiCo’s “green” PET bottle is entirely made of biomaterials and has the same molecular composition. Over the coming years, a shift in emphasis from petroleum to biobased resources is anticipated to present numerous growth opportunities.

Regional Analysis

The global biodegradable plastic market is bifurcated into four regions: North America, Europe, Asia-Pacific, and LAMEA.

Europe Dominates the Global Market.

Europe is the highest shareholder in the global biodegradable plastic market and is expected to grow at a CAGR of 12.7% during the forecast period.  The UK, Germany, France, Italy, Spain, and the rest of Europe are all included in the analysis of Europe's biodegradable plastic market. Europe switches from conventional plastic to bioplastics to become a proper waste management region. An important factor driving the expansion of the biodegradable plastic market in Europe is the promotion of sustainable and biodegradable policies by European associations to the government and the environment. An increase in demand for bioplastic products among European consumers stimulates the growth of biobased products in this region. Given their environmental advantages, European consumers prefer bioplastic products to conventional plastic ones. As a result, Europe commands a sizeable revenue share in the global biodegradable market. The extensive use of biobased plastics is encouraged by European legal frameworks and strategies, which also offer growth prospects for the biodegradable market in that region. Another important factor driving European market expansion is benevolent government policies for bioplastics producers.

North America is expected to grow at the fastest CAGR of 13.7% during the forecast period. The U.S. and Canada are included in the analysis of the biodegradable plastic market in North America. Due to the addition of new manufacturing facilities, the North American market is expanding significantly. Manufacturers of synthetic plastics are influenced to favor the production of bio-based plastic materials by supportive government regulations and policies for the production and consumption of sustainable products, as well as the rise in consumer environmental awareness. Due to growing environmental concerns about the non-degradability of synthetic plastic packaging materials, consumers prefer degradable and bio-based plastic packaging. Furthermore, the development of the North American biodegradable plastic market is anticipated to be fueled by educated consumers with significant purchasing power, high levels of environmental awareness, and a legal and regulatory environment. Because of their expanding use in the packaging sector, the PLA and starch blend segments are predicted to grow steadily in North America.

Segmental Analysis

The market is segmented by type and application.

Based on type, the global market is bifurcated into PLA (POLYLACTIC ACID), PBAT (POLYBUTYLENE ADIPATE TEREPHTHALATE), PBS (POLYBUTYLENE SUCCINATE), PHA (POLYHYDROXYALKANOATES), Starch Blends, Others.

The Starch Blend segment is the highest contributor to the market and is expected to grow at a CAGR of 13.6% during the forecast period. Starch blend plastic is reported for a significant market share in the biodegradable plastic segment and is also one of the significant consumption segments in the global biodegradable plastic market. The most adaptable biodegradable substance is thought to be a starch blend because it can be combined with various materials to obtain the desired properties. Due to its agricultural demand and flexible packaging demand, the starch blend is predicted to grow steadily. Additionally, starch-based plastic can be altered to have any desired characteristics. Blends of starches are frequently used to reduce the environmental impact of conventional resins because they can replace synthetic polymers with natural ones. Plastic made from starch is biobased and biodegradable and has low toxicity.

Based on application, the global market is bifurcated into packaging, agriculture, consumer durable, textile, and others.

The packaging segment is the highest contributor to the market and is expected to grow at a CAGR of 13.2% during the forecast period. Biodegradable plastic has a wide range of uses in the packaging industry. Numerous products are produced using it, including bottles, loose-fill, cups, pots, bowls, flexible films, etc. Because it is flexible and environmentally friendly, biodegradable plastic is becoming more and more popular. Many applications for flexible and rigid packaging use biobased biodegradable plastics, such as PLA and starch blends, which are very cost-effective. Consumers are switching from synthetic to biobased products in response to rising environmental awareness. Compared to plastics made from fossil fuels, biodegradable materials are less toxic. The demand for biodegradable plastic in the packaging industry is also anticipated to increase due to strict government regulations on single-use plastic and supportive government policies regarding biobased plastic.

Recent Developments

• November 2022, A Master Collaboration Agreement (MCA) between NatureWorks, an advanced materials company and the world's top producer of polylactic acid (PLA), and CJ Biomaterials, Inc., a division of South Korean company CJ CheilJedang, calls for the two companies to work together on the development of sustainable materials solutions based on NatureWorks' IngeoTM biopolymer and PHACTTM Biodegradable Polymers from CJ Biomaterials.

• March 2022, Genomatica, a leader in sustainable materials, and Asahi Kasei, a global manufacturer with a Japanese base, recently announced a strategic alliance to commercialize nylon made from Genomatica's bio-based HMDA (hexamethylenediamine) building block.