Report By: Asta
Report By: Asta Partanen, Michael Carus nova-Institute, Hürth Germany Green premium prices… … and consumer perception of different biomass feedstocks T hree online surveys on green premiums for biobased products and one in-depth consumer study, published now for the first time Since 2013, nova-Institute (Hürth, Germany) has been investigating the pricing of bio-based products in various projects. Are there green premium prices for these products? How high are they? For how long do these premium prices for green products continue to be paid? How are they distributed along the value chain? Are there differences depending on the field of application? Three online surveys on green premium prices for biobased products were conducted in 2013, 2016 and 2017, respectively, and an in-depth consumer study was carried out from 2018 to 2019. These methods were complementary and their results match. Now, for the first time, the results have all been published in a single report, which is currently available as a free download (see infobox). The study is a result of the first-ever application of indepth market research on bio-based products which was carried out by nova-Institute, in collaboration with september Strategie & Forschung. This collaboration combined nova’s outstanding expertise in the field of bio-based products and materials with the knowledge and experience of september, who is one of Germany’s market leaders in deep psychological market research. Looking at the results of several years of market analysis and numerous contacts with bio-based producers, it may be concluded that green premiums are achievable for bio-based products in many applications. The vigorous efforts by the big market players to establish the biomass balance approach in the market are further evidence that a relevant number of customers are willing to pay a green premium price for a bio-based material and product. The 52 participants in the survey are themselves all active in either the production of or trade in bio-based products (or intermediates) or act as consultants in the field. The experience and in-depth market knowledge of these experts lend considerable weight to the credibility of these results. Almost 70 % of these experts report that, indeed, green premium prices for bio-based products exist (Fig. 2). Most of the participants (44 %) indicated that the price premium their customers were willing to pay for green products ranged between 10-20% ; another 21% put the price premium at a higher 20-40 %. About 4 % of the respondents mentioned a willingness among their customers to pay more than 50 %. 31% of the participants reported no green premium prices. Comparing the results of the surveys from 2013, 2016 and 2017, overall, the response patterns were found to have changed very little (Fig. 3). In all three surveys, a green premium in the 10-20 % range is most frequently reported, while the response ‘more than 50 %’ occurred the least. The most visible trend is an increase in the number of responses indicating a willingness to pay a green premium in the 20- 40 % range, while slightly fewer responses were noted over the years reporting a price premium either in the 10-20 % range, or in the “more than 50 %” category. In addition, the percentage of responses indicating “no green premium” rose, from 16 % in 2016 to 31 % in 2017. It is important to know to what extent new technologies – which may require large investments – can rely on green premium prices for their products on a long-term basis. The results of the survey show that 56 % of the respondents expect no time limit on the willingness to pay any green premium (Fig. 4). 33 % expect the green premium prices to remain for the next five years, 7 % for the next ten years. Unsurprisingly, the most important driver for the willingness to pay a green premium was the positive green image attached to the product or material (41% ) (Fig. 5). Yet other relevant drivers were also found in the survey, including the ‘touch’ of innovation (23 %), enhanced attention in the media due to using bio-based materials instead of standard materials (18% ) and expectations for higher prices (18 %). Figure 1 : Definition of green premium prices bio-based product petro-based product emotional performance + − emotional performance + strategic performance strategic performance Definition of green premium prices = additional performance € green premium price technical performance technical performance 24 bioplastics MAGAZINE [05/20] Vol. 15 Share of the green premium of bio-based products
Green premium price ranges for bio-based products from Figure three 3 : Green surveys premium (2013, price 2016 ranges and 2017) for bio-based products from three surveys (2013, 2016 and 2017) 80 70 60 50 40 30 20 10 0 more than 50 % 20-40 % 10-20 % green premium is limi- Additionally, single value-adding factors were named by the participants. Time limit The for highest the green ranked premium factor for the green premium price of the was bio-based a “Higher products bio-based share of the product” (24 %), which is especially valued in construction (31% ) (Fig. 6). “Lower 4% greenhouse gas emissions” 7% (17 %) and “Biodegradability” (17% ) were the next important single value-adding factors for green premium prices. no time limits “Biodegradability” was less important (11 %) in consumer goods, but important for packaging (15% ). The importance ted to the next 5 years of “Sustainability certification of the biomass feedstock” (10 33% 56% %) is ranked differently throughout the application groups; it no answer is more important in packaging and construction (12 % and 13 %) than for consumer goods (6 %). “2nd generation biomass” and the “GMO-free biomass” were the lowest ranked factors (8 % and 9 % respectively). An exception seems to be packaging, where GMO-free biomass (14% ) reaches the same level of importance as “Biodegradability” and Drivers “Lower for greenhouse premium gas emissions”. for bio-based products along the value chain In further research within the framework of the project BIOFOREVER [1], a detailed evaluation was conducted in order to understand why a feedstock based on 2nd 18% generation biomass does not seem to play a large role in triggering a green premium. One possible reason could Positive green image be that the discussion about first 41% and second generation Touch of innovation biomass feedstock is one that has been conducted Enhanced mainly attention in the political 18% arena rather than in the market Price or expectations at the end customer level. Another explanation could be the lack of awareness and understanding among end consumers. The next issue of bioplastic MAGAZINE will include the results 23% of the in-depth consumer study and provide insights into the perceptions of end customers in different European countries. Dependence of green premium of bio-based products [1] European on single project value-adding BIOFOREVER factors (www.bioforever.org); or functionalities This project has received funding from the Bio-Based Industries Joint Un-dertaking under the European Union’s Horizon 2020 research and innovation programme under grant agreement No. 720710. Higher bio-based share of the product Lower greenhouse gas emission (favourable Life Cycle Assessment) Biodegradability Sustainability certification of the biomass feedstock GM-free biomass as feedstock Non-food biomass as feedstock (2nd generation) www.nova-institute.eu | www.bio-based.eu Info: Bio-based products: Green premium prices and Construction consumer perception of different biomass feedstocks ; nova paper #13 on Consumer goods renewable carbon 2020-09, https://tinyurl.com/nova-greenpremium Others Not depending on single factors All products Packaging 0 5 10 15 20 25 30 35 2013 2016 2017 green premium is limited to the next 10 years Report Green Share premium of the Figure green price 2 ranges premium : Share for of the of bio-based green products from Green premium three premium price surveys ranges of bio-based (2013, for 2016 bio-based products and 2017) products from three surveys (2013, 2016 and 2017) 80 Green premium price ranges for bio-based products from 4% three surveys (2013, 2016 and 2017) 80 70 70 60 60 50 50 40 40 30 30 20 20 10 10 0 0 31% 44% 21% more than 50% 20 - 40% 2013 10 - 20% 2016 2013 no green premium 2017 2016 2017 Green premium price ranges for bio-based products from Time limit for the green premium three Figure surveys (2013, 2016 and 2017) of the 4 : Time bio-based limit for Time limit for the green products the Green premium premium of the bio-based products 80 of the Time bio-based limit for products the green premium 70 of 4% the bio-based products 7% 60 4% 7% 4% 50 7% 40 30 20 10 0 80 70 60 50 40 30 20 44% 44% more than 50 % 20-40 % 10-20 % 10 more than 50 % 20-40 % 10-20 % 0 more than 50 % 20-40 % 10-20 % 33% 56% 33% 56% 33% 56% more than 50 % 20-40 % 10-20 % 2013 no time limits 2016 green no time premium limits is limited to the next 2017 5 years green premium is limited to the next 5 years green premium no is time limited to the next 10 years limits green premium is limited to the next 5 years green premium is limited answer no to the next 10 years green premium is limited to the next 10 no answer years Time limit for the green premium Drivers for green premium for bio-based products of the bio-based products Drivers for green along premium the value for chain bio-based products Figure 5 along : Drivers the for value green chain premium for bio-based Drivers for products green premium 4% along the value for bio-based chain products 7% along the value chain 18% 18% no time limits 18% 41% Touch of innovation 41% Enhanced attention 33% Touch of innovation 18% 56% 41% Price Enhanced expectations attention 18% no answer 18% 23% 23% Positive green image green premium is limited Positive to the green next image 5 years green premium is limited to the next Positive 10 years green image Touch of innovation Price expectations Enhanced attention Price expectations 23% Dependence Drivers for of green green premium for of bio-based products Dependence on single value-adding of green along premium the factors value of chain or bio-based functionalities products on single Dependence value-adding of green factors premium or functionalities of bio-based products Figure 6 : Dependence of green premium of bio-based products on on single single value-adding factors or or functionalities functionalities 18% Higher bio-based share of the product Higher bio-based Lower greenhouse share of gas the emission product (favourable Life Cycle Assessment) Lower greenhouse gas emission Higher bio-based (favourable Life Cycle Biodegradability Assessment) share of the product Lower greenhouse gas emission Positive green image 41% Sustainability (favourable Biodegradability certification Life Cycle Assessment) Touch of innovation of the biomass feedstock Sustainability certification Biodegradability Enhanced attention of the biomass GM-free feedstock biomass 18% as feedstock All products Price expectations GM-free Sustainability biomass certification Non-food as of feedstock biomass the biomass feedstock Construction All products as feedstock (2nd generation) Non-food biomass GM-free biomass as feedstock (2nd generation) as feedstock Others Consumer Construction goods All products Non-food biomass Packaging Consumer goods Construction Not as feedstock depending Others (2nd generation) 23% Packaging on single factors Consumer goods Not depending 0 on single factors Others 5 10 15 20 25 30 35 Packaging Not 0 depending5 10 15 20 25 30 35 on single factors 0 5 10 15 20 25 30 35 44% Dependence of green premium of bio-based products on single value-adding factors or functionalities no answer 2013 2016 2017 Higher bio-based share of the product Lower greenhouse gas emission (favourable Life Cycle Assessment) Biodegradability bioplastics MAGAZINE [05/20] Vol. 15 25
