Products Made With Captured Greenhouse Gas Are Reaching Commercial Scale

Straws, bottles and packaging made with captured greenhouse-gas are starting to reach commercial scale, offering a way for businesses making and using everyday products to reduce emissions contributing to global warming.

Locking up greenhouse gas in ingredients that go into products can be costly compared with petroleum-based options and presents hurdles to building out enough infrastructure to capture emissions. Even so, big companies are increasingly willing to pay a so-called green premium for products that help reduce their carbon footprints by seeking alternatives to plastic and other materials made with petroleum.

Origin Materials Inc. and Newlight Technologies Inc. are trying to meet that demand by bringing factories online that use captured emissions to manufacture materials used to make products including clothes, tires and plastic bottles. The two companies have signed deals with Target Corp., Ford Motor Co. and other companies hoping to reduce emissions in supply chains and from the use of their goods.

“If we could use carbon emissions as a resource to create useful products, then potentially we could create a consumer-driven pathway to reducing carbon in the air,” said Newlight Chief Executive Mark Herrema. Sourcing and transporting raw inputs and captured CO2 are crucial to a product’s so-called carbon-negative credentials, meaning more CO2 is stored than created.

Mr. Herrema said he expects Newlight’s costs to fall as production scales up, adding the Huntington Beach, Calif.-based company’s foodware products are already priced competitively with other sustainable options. He said there are many sources for emissions, but more infrastructure to capture them is needed.

Newlight in 2020 opened its first commercial-scale factory in Huntington Beach. It manufactures foodware, such as cutlery, bowls and straws, for Shake Shack Inc., Walt Disney Co. and Hyatt Hotels Corp. among others. Newlight said the factory has produced more than 50 million foodware units.

The company took about a decade to develop a process using microbes that suck up methane or carbon dioxide to grow a biological material called polyhydroxybutyrate, which is used to make biodegradable resins that can replace plastic. The private company sources captured emissions from dairy farms, ethanol plants and landfills, and is expanding into coal mines and exploring direct-air capture.

“Nature’s favorite food source is greenhouse gas,” Mr. Herrema said. “Do what nature does, turn it into useful goods.”

The startups are taking aim at chemicals that are an essential part of many consumer goods. The sector is the third-largest industrial source of greenhouse gas emissions globally and is on pace to produce more unless new technologies go into widespread use, according to the International Energy Agency.

Making chemicals that capture emissions faces two barriers, according to chemical industry analysts: reducing costs sufficiently to compete with petroleum-based chemical manufacturing and sourcing enough captured emissions or raw materials.

“The market for captured-carbon-based fuels and products is still relatively limited due to technology and cost constraints,” said Mitch Toomey, vice president of sustainability and responsible care at the American Chemistry Council trade association.

Mr. Herrema said Newlight is also in talks with Nike Inc. and Sumitomo Chemical Co. Ltd. to use its materials in apparel and automotive machinery. Previously, Newlight had agreements with IKEA and Dell Technologies to provide packaging, but Mr. Herrema said his company decided over the past few years to focus on serving foodware, fashion and automotive companies until it grows.

Newlight’s next factory is slated to come online in 2025 in Ohio, which will tap methane from a coal mine through an agreement with CNX Resources Corp. The CNX deal will supply between 1 million to 36 million metric tons of carbon-dioxide equivalent, with the likely amount somewhere in the middle, said Ravi Srivastava, president of new technologies at CNX. He said the mine is one of only five with a capture system in place, among more than 2,000 coal mines across the U.S. The companies declined to share financial terms of the deal and what portion of the mine’s emissions it will cover.

Competitor Origin Materials has a different approach to acquiring captured emissions and plans for its first commercial-scale factory to come online next year.

The West Sacramento, Calif.-based company already has $9 billion in orders from companies including Primaloft to make bedding and apparel and Ford for automotive parts, and expects to be profitable by 2025 after its second commercial-scale plant opens.

Through a chemical process, Origin Materials converts organic materials, which lock up carbon dioxide from when they were growing, for use in polyethylene terephthalate, or PET, plastic commonly found in packaging and other synthetic products. The company’s offerings will be cost competitive with petroleum-derived versions because the ingredients it uses are abundant and cheap, co-CEO John Bissell said.

“There are a lot of these materials globally,” Mr. Bissell said. “If we’re at the point that we are using all of those things, we’ve won the game if we are starting to run out of feedstock.”

Could a recession be the best time to launch a tech startup?

A recent study suggests that is the case. The authors found that tech startups that began operations during the 2007-09 recession—and received their first patent in that time—tended to last longer than tech startups founded a few years before or after. And those recession-era companies also tended to be more innovative than the rest.

“The effect of macroeconomic trends is not always intuitive,” says Daniel Bias , an assistant professor of finance at Vanderbilt University’s Owen Graduate School of Management, who co-wrote the paper with Alexander Ljungqvist, Stefan Persson Family Chair in Entrepreneurial Finance at the Stockholm School of Economics.

Drawing on data from the U.S. Patent and Trademark Office, the authors examined a sample of 6,946 tech startups that launched and received their first patent approval between 2002 and 2012.

One group—about 5,734 companies—launched and got their patent outside of the 2007-09 recession. Of those, about 70% made it to their seventh year. But the startups that launched and got their first patent during the recession—about 1,212 companies—were 12% more likely to be in business in their seventh year.

These recession-era firms were also more likely to file a novel and influential patent after their first one. (That is, a patent the researchers determined was dissimilar to patents in the same niche that came before it, but similar to ones that came after it.)

So, why did these recession-era firms outperform their peers? Labor markets played a big role.

A widespread lack of available jobs meant that the startups were able to land more productive and innovative employees, especially in their research and development groups, and then hold on to them. More important, the tight labor markets also meant that the founding inventors—the people named on the very first patent—were more likely to stick around rather than try for opportunities elsewhere.

For startups started during the 2007-09 recession, founding inventors were 25 percentage points less likely to leave their company within the first three years. On average, about 43% of founding inventors in the entire sample left their startup within the first three years.

“Our study really highlights the importance of labor retention for young innovative startups. Retaining founding inventors cannot only help them survive, but also thrive,” Bias says.

Products Made With Captured Greenhouse Gas Are Reaching Commercial Scale

Startups are taking aim at chemicals, one of the largest industrial sources of global emissions

A study suggests that when jobs are hard to come by, the best workers are more available—and stay longer