Composites
Environmental problem
Transport represents almost a quarter of global CO2 emissions, and around one half of emissions are attributed to the movement of the vehicle itself, not the cargo or passengers. An empty airbus A320 weights 37 tons and the maximum take off weight is 80 tons, which means that passengers, fuel and cargo represent only just over half the total weight transported. In cars, this ratio is even more striking, with an average 1300 kg vehicle carrying a total maximum of 500 kg of passengers and cargo. The shift to electric vehicles, which can be 10-20% heavier than their ICE counterparts, is set to further deepen this issue of “dead weight”.
In this context, lightweighting in transport is a highly effective emission reduction strategy – not only does each kilogram of vehicle weight reduced have a direct impact on fuel consumption, but it also carries potential indirect benefits such as enabling smaller sized engines (or batteries) and/or higher cargo capacity per vehicle, which in turn reduces the total number of trips needed to move a set amount of goods.
“Almost one half of emissions in transport are attributed to the movement of the vehicle itself and not the cargo or passengers.”
Environmental Solutions
Lightweight materials are increasingly used to replace heavier steel, particularly in transport: the average aluminium content in cars in Europe increased over 35% between 2016 and 2022, a key driver of Ambienta’s investment in our portfolio company Phoenix. Composite materials however hold the highest weight reduction potential in structural applications.
“Composite materials” refer to all materials where a fibre is used to reinforce a base material (the “matrix”).
“Composite materials hold the highest weight reduction potential in structural applications.”
The most common fibers are glass fibers, which are found in c. 95% of composite materials volumes, followed by carbon fibers which are used in lower volumes but have a much higher value. Matrices are most commonly polymeric resins, with ceramic and metallic matrices found in niche applications such as space, and medical. Composites are also referred to as “engineered” materials: specific properties can be obtained by varying the fibre/matrix materials and ratios or changing the shape and orientation of the fibres. The advantage of composite materials is that they can achieve mechanical performance comparable and even superior to metals with lower specific weights, making them a compelling lightweighting solution.
Composite material parts can therefore have similar or higher performance than steel/aluminium at a fraction of the weight, reducing the amount of material needed and decreasing transportation energy consumption. Compared to steel, composite materials are also more durable in certain applications: they do not suffer from corrosion and are not prone to damage from fatigue, a phenomenon by which metals are damaged from repeat stress cycles. As a result of these characteristics, composite materials are not only increasingly used to reduce weight of transport vehicles, but also in a variety of other applications:
- Wind turbine blades are the perfect application for composite materials. Ever growing turbine diameters size and the need to support repeat stress and weather cycles for decades require lightweight, high strength materials to make transport and installation feasible.
- In high pressure tanks (H2, ammonia, bio-LNG…) composite materials enable the minimization of the container to gas weight ratio and offer the highest durability.
- In construction, products such as glass fiber rebars offer a more durable and lighter alternative to steel.
Although the benefits outweigh the negative impacts in most applications, the production and disposal of composite materials carry their own environmental challenges, which need to be overcome for composites to for become a truly sustainable material option:
- Energy/carbon intensity: Fiber production requires high temperatures redering them energy and carbon intensive, in particular carbon fibers.
- Fossil raw materials: Resins are typically fossil based andbcontain a variety of chemical additives. Carbon fibers arebmostly derived from oil.
- Recycling: Composites are by definition the combination ofbdifferent materials, and therefore difficult to recycle. Today, they are even less recycled than plastics, but a growingnsupply of end-of-life materials will require solutions.
Investment opportunities
The global value of composite material parts is valued at over 100bn $/year, consuming around 13 million tons of material (matrix and fibres). The penetration of composite materials has been growing across industries, from the marine sector, where glass fibres are increasingly used to produce hulls of leisure boats, to pipes and tanks, where carbon fibre composite tanks enable higher pressures at lower weights. However, different dynamics apply to each end market, and the discussion of investment opportunities for composite materials needs to be tailored for each application. In light of the ever increasing relevance of environmental trends, we focus on three end markets.
Aerospace
The use of composite, predominantlybcarbon fibre based materials in aerospace, has accelerated driven by the focus on fuel efficiency and therefore weight reduction. The latest wide body aircraft models by both Airbus and Boeing released in the 2010s contain c. 50% by weight of carbon fibre composite materials, compared to less than 10% for models launched in the 1980s and 1990s.
Aerospace grade carbon fibres are markedly different from industrial grade carbon fibres used in wind turbines and automotives. Globally, only 3-4 producers are currently able to manufacture these. Furthermore, the process of having composite material components certified is lengthy and expensive, creating a significant barrier to entry to becoming an aerospace grade composites supplier. The market of composites material for aerospace therefore scores as the most attractive.
Wind
Wind turbine blades are a significant growth driver for composite materials, with both glass and carbon fiber composites widely use in the construction of blades.
Wind turbine manufacturers continue to design increasingly larger blades to maximize power output and minimize costs: the average length of a turbine blade for onshore wind has grown c. 50% to 60 meters between 2012 and 2020. The latest offshore turbine models that can generate 16-18 MW of power, have 130-140 meter long blades. To provide the necessary stiffness without disproportionately increasing the weight of the blade, carbon fibre is increasingly being used, particularly in the most critical parts like the spar cap. The weight of a single 80m blade can be reduced from 35 tons to 26 tons using carbon fibre.
With the expected growth of wind capacity installations and the continued shift towards carbon fibres, we estimate that global carbon fibre demand for wind turbine will triple by 2030.
This market is being challenged by the aggressive expansion of Chinese suppliers driven by the growth of Chinese turbine manufacturers. Of the 118 GW of wind capacity additions in 2023, 77 GW (65%) were added in mainland China, and Chinese wind turbine OEMs captured almost 70% of the global market. China is supporting the growth of its wind turbine industry with significant carbon fibre capacity additions, which are estimated to have grown 5-6 times between 2019 and 2022 and are expected to replace all imports by 2025. Given the expected overcapacity in this market, despite the clear demand growth, the attractiveness of composites for wind is low.
“We estimate global carbon fibre demand for wind turbines to triple by 2030.”
Automotive
The use of composites in automotives has been far more limited than that in aerospace, mostly due to cost. Glass fiber composites are widely used for bumpers, hoods and doors casings as they provide better mechanical properties than regular plastics at competitive costs. Carbon fiber composites on the other hand were never adopted in large volume models due to the cost of the materials themselves and the limited high volume automated manufacturing options.
The only volume production car which made significant use of composites in structural components has been BMW’s electric i3 model, which was discontinued in 2022.
In high performance and luxury vehicles, the penetration of carbon fibers has continued to rise, and we see attractive investments opportunities among suppliers for this segment. However, in this context the environmental benefit is limited as the objective of lightweighting is performance improvement rather than reduction of fuel consumption.
Conclusions
Composite materials use is gaining share across sectors driven by lightweighting and durability. Wind power generation has become one of the largest end markets, particularly for carbon fibers. However, not all markets are equally attractive: we see the most attractive investment opportunities in markets with high barriers to entry (aerospace) and in steps of the value chain where customisation is most relevant (intermediates and parts production).
Environmental challenges for composites present opportunities for technological innovation, particularly for equipment manufacturers and chemical players specialised in bio-based materials aimed at reducing production energy intensity, limiting reliance on fossil inputs and improving recyclability.
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