The Sacramento Inno Awards recognize some of the year's most talented and successful players in the tech and startup community. This year, the Business Journal recognized companies, products, and leaders in the in the innovation space. Origin Materials is this year's Longevity Award winner.
The founders of Origin Materials Inc. knew what they were proposing back in 2008 was not going to be easy. They wanted to change fundamentally the way plastic is made globally and in doing so make it zero-carbon.
Origin developed a replacement for petroleum in manufactured products like plastics and resins sourced with renewable wood scraps.
Origin’s founders proved they can do it on the laboratory bench. They proved they can do it on a larger scale in a lab in West Sacramento, and this year they proved they can do it on a commercial scale at a $130 million refining plant in Sarnia, Canada.
The Canadian plant is the first manufacturing facility in the world making plastic-precursor chemicals at scale that don’t use any petrochemicals and yet are a drop-in replacement for them.
Now Origin is preparing to scale up even further with a $1.6 billion plant in Louisiana.
On the demand side, the company has companies clamoring for its products.
On the production side, this kind of design work is challenging. It entails massive investment of capital, complex engineering and precise design.
“Large scale capital projects are hard,” said John Bissell, co-CEO of the company.
It will take 150,000 to 200,000 hours of engineering just to design the Louisiana plant, he said. To contemplate that figure, consider that a person working full time for a year logs 2,080 hours a year, with no vacation.
It’s a heavy lift for a small startup to build billion-dollar manufacturing plants.
To get traction years ago, Origin got backing by users of plastic materials who were looking to decarbonize. Those investors included household names like The Mitsubishi Group, Nestle SA, Danone SA and PepsiCo Inc. (Nasdaq: PEP), all of which are potential customers for Origin’s zero-carbon PET for industrial goods and packaging.
In recent years, Origin has struck potential licensing deals with two global-scale chemical manufacturers in Thailand and one in Korea. It also has big-name customers lining up to use its zero-carbon products, including Paris-based international luxury brand company LVMH Moët Hennessy Louis Vuitton, New York-based cosmetics powerhouse Revlon Inc. and Pepsi.
For years, Origin was focused primarily on making zero-carbon PET plastic out of renewable plant materials, rather than petroleum. PET is the plastic most used in everything from bottles and packaging to textiles and tires.
Origin has a culture of sharing what it is doing, and even for going into detail about its plans, Bissell said. Sometimes the company gets praised for that openness from people interested in renewable sources of what are now petroleum-sourced products.
Openness has been Origin’s culture even before it became a publicly traded company in 2021.
Nowadays, however, with public markets and stock analysts following the company, the culture of openness can cause a sting. Sometimes financial analysts pick the company apart based on a quick read of what the company is doing.
Origin is content with long explanations of what it is doing and why it is doing it that way, Bissell said. The company has little use and even less patience for sound bites, he said. “We don’t care about sound bites.”
Bissell said that if you go to the web pages or the financial reports of many giant chemical companies, they have pretty pictures and only very vague descriptions of what they do, and they don’t go into any detail.
Origin is open to discussing that it is seeking to replace petroleum in plastic, and through its processes to do that, it also makes precursor chemicals to all kinds of resins and even fuels.
Origin shares fell sharply in August after the company announced that it also intends to begin selling other low-carbon chemical products and also low-carbon transportation fuel sourced from its next manufacturing plant in Louisiana.
Analysts in August said renewable fuel was a less profitable and a more competitive market than plastic replacement, which hurt the stock price, along with a longer timeline for construction of the company's second plant.
Origin also announced in August it would build its next plant in two phases rather than all at once. The company said the change in plans was a response to higher construction and capital costs as well as changes in product demand. The first phase is estimated to open in 2026 with full completion of the Louisiana plant estimated for 2028. That is compared to the previous estimates for the full second plant opening in 2025.
Bissell said what most analysts don’t realize is that Origin creates a lot of in-demand chemical products and renewable fuel precursor chemicals in the process of making its intermediate chemicals to replace petroleum in plastic. The company is reacting to the market demand and seeking to get to profitability sooner.
The first plant, in Sarnia, Ontario, was completed on Jan. 27. The company has been commissioning the plant since June, and it ramped up to commercial production in October.
“Some investors love what we are doing,” Bissell said. “Some are investing in us because we are doing the next big thing, and that’s fine. No judgement.”
