Green Chemistry Startups Cannot Succeed Without Support from Regional Boosters

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The chemical industry faces two major challenges to operate climate-neutral by 2050. One is an energy transition to the use of green electricity, and the other is a transition in raw materials towards biobased and recycled inputs. Fossil oil, gas, coal, and related fuels and feedstocks will be phased out. Revolutionary new technologies are necessary for this transformation, and these usually come from startups, often established as spin-offs from universities or research institutes like TNO.

Plenty of Startups

Consider companies like Syclus, which produces plastic from bio-ethanol derived from agricultural residues. Or SusPhos, which makes fertilizers and flame retardants from phosphate extracted from sewage. The Frisian company Paques Biomaterials creates biodegradable plastic from wastewater using bacteria. Torwash employs patented TNO technology to convert sludge, wet grass, and mixed plastics into biofuels, biogas, fertilizers, and materials for new plastics. A startup like Relement uses biobased alternatives, such as waste from sugar beets, to produce aromatic compounds for paints. The Groningen-based Foamplant successfully creates 100% biodegradable and recyclable foam from various plant-based residues. All of these startups require support and funding to thrive and can ultimately grow into companies like Vertoro, which uses biomass from sawdust, wood, and paper waste to produce bio-crude oil, or a publicly traded company like Avantium, which transforms various plant materials into chemicals and bioplastics and operates multiple sites in the Netherlands.

ROMs Supporting Chemical Clusters

The Netherlands has five industrial areas that house large chemical companies, known as chemical clusters. Our country also has nine regional development agencies (ROMs) that act as catalysts for the regional economy, creating thousands of new jobs and billions in investments annually. They invest in startups and innovation, seek out other investors, assist companies with scaling and internationalization, and help build supply chains involving suppliers, customers, and knowledge institutes. They now also provide support for the chemical clusters in their regions. For example, InnovationQuarter, the regional development agency for South Holland, and the Brabant-based BOM support the Rotterdam-Moerdijk chemical cluster, NOM does so for Delfzijl and Emmen in Northern Netherlands, LIOF for Chemelot in Limburg province, and Impuls Zeeland for the Schelde Delta region. To ensure collaboration not just regionally but also at a national level, the ROMs have joined the platform Green Chemistry New Economy.

Pooling Regional Strengths

“Chemistry is an important sector for the Netherlands. The industry is large and has long been dominated by major players who have not invested much in Europe for some time,” says Errit Bekkering, business developer for NOM. “However, between 2030 and 2050, all of them need to change. This means established companies are taking action, but there is also a significant influx of new players with external technologies. Projects in this sector often involve longer timelines and larger sums of money. Against this backdrop, the ROMs have recognized it is impractical to address these matters sub-regionally. This awareness has led to collaboration with the platform Green Chemistry New Economy, focusing on clear development goals. From the perspective of sustainability, we have pooled our strengths.”

Building Supply Chains

The primary roles of the ROMs to assist companies with innovation and investments are particularly crucial in the chemical sector, extending beyond their own regions. “In green chemistry, we can collaborate at a supra-regional and even national level,” says Tys van Elk, director of LIOF. “Within the five chemical clusters, we should not all be doing the same thing but should instead focus on building supply chains based on the specific strengths of the various clusters. Some clusters excel at generating green hydrogen as a raw material, while others are well-equipped to utilize that. Certain clusters are experts in specific innovations, while others excel at establishing demo plants. Thus, not everyone needs to reinvent the wheel.”

Her colleague Angelique Erkenbosch, business developer for circular economy at InnovationQuarter, views this as a national interest. “We help innovative SMEs accelerate to market readiness. We prepare them for investors, provide financing, and help them find a place to establish themselves. We engage with every aspect of their business case to expedite their success,” she explains.

Green Chemistry Accelerator

A tangible example of the results of this collaboration is the Green Chemistry Accelerator. Within this program, experts assist startups with a tailored plan to achieve their main goals in 100 days. “You could try to help everyone individually, but it’s more effective to bring them together nationally and create one program. This way, they can learn from each other, enhancing the overall quality. It makes sense to tailor the approach to specific sectors rather than regions,” Bekkering notes. In November, five selected startups began their journey in this new program.

Financial Engine

Startups present a high-risk profile for investors. Building pilot plants and facilities to scale up is costly, complex, and time-consuming. “That’s why we, as ROMs and other parties, are working to bring together all potential financiers into a coalition to see if we can build what are called financing trains,” Van Elk explains. By this, he means that in every phase of a startup's development, investors will be ready, and companies will know what steps they need to take to secure that funding. In the early stages, the ROMs can invest between a quarter and half a million euros, going up to a maximum of five million later on. After that, parties like the State Investment Fund Invest-NL, investment, and pension funds, or large companies seeking to use the technology take over that role.

If necessary, the ROMs explore available government subsidies or European funds to fill in funding ‘gaps’. Erkenbosch adds, “We want to ensure that the Netherlands possesses a robust financial engine to finance green chemistry and make continuous progress.”

Success Stories

This approach has already yielded success stories, such as the company Vertoro, which creates biobased alternatives to fossil fuels from the world’s most abundant waste: sawdust, or lignin. The bio-oil, named Goldilocks, is well-suited as a replacement for fuel oil in maritime shipping. The startup originated as an innovative spin-off at Chemelot and is now collaborating with Danish shipping company Maersk to prepare a pilot plant for maritime fuels with a capacity of 10 kilotons in the Port of Rotterdam. Van Elk states, “Initially, a Limburg development agency was not pleased because they felt the company was moving away. However, we spoke with IQ and concluded that it is better for the company to advance to the next phase in maritime fuel production in Rotterdam. Therefore, instead of competing between regions, we should connect them to propose the best options for the business. That’s what we’ve done with Vertoro and aim to do with all other initiatives in green chemistry.”

Read here about the stories of several game changers.

They Can't Do It Without Us

The Zuid-Holland ROM IQ has facilitated the entire process in Rotterdam, from collaborating with the port authority to find a location for the pilot plant to tapping into European funds. “Initially, I wondered if the company could thrive without us. Now, I realize: no. In this business, it is extremely challenging. You need a partner to support and guide you; otherwise, such innovations won't get off the ground,” asserts Erkenbosch. “The ROMs play a crucial role in this.” Bekkering adds, “The overarching interest is to ensure that this factory is built in the Netherlands and not in Antwerp.”

From Startup to Publicly Traded Company

Avantium, which produces plastic from natural raw materials, has progressed significantly in its development. The company is publicly traded, employs 200 staff, has its headquarters in Amsterdam, and operates three R&D laboratories and pilot plants in Geleen and Delfzijl. This year, the regional NOM brought together 20 million euros from northern investors in a consortium to construct a new bioplastic facility valued at over 150 million euros in Delfzijl. Avantium also started as a startup at Chemelot. “What we observe is that companies are not looking to just one but several clusters to decide where it’s best to locate. For us ROMs, the ultimate goal isn’t to win business for one region but to keep it in the Netherlands and find the best region for it,” van Elk explains.

This article previously appeared on Change Inc, authored by André Oerlemans.