Business Outlook Survey: Bioenergy Industry Is Optimistic

The results of the latest Biofuels Digest/BIO Quarterly Business Outlook Survey show that 85 percent of bioenergy industry executives say they are more optimistic than 12 months ago both about their organization’s prospects for growth and industry growth. Biofuels Digest drew comparisons to the previous two Business Outlook Surveys, conducted in September 2010 and December 2010.

Nearly 20 percent of respondents predicted that their organization’s revenue would increase 11 to 24 percent in the coming year, while an additional 17 percent predicted more modest growth in the 5 to 10 percent range. Likewise, more than 40 percent of respondents projected industry revenue growth in the 5 to 10 percent range.

The biggest drivers of growth for organizations, each identified by more than 40 percent of respondents, were rising demand for alternative fuels, new technology or intellectual property, and partnering in R&D, production and marketing.

The survey received responses from more than 700 executives in the bioenergy sector.

The Latest in Advanced Biofuels and Climate Change

“Four more BIO interviews remaining in the pipeline (woohooo!). This one is my interview with Dennis McGrew, Genomatica’s new executive vice president of business development and chief business officer.”

So begins the post by Doris de Guzman of ICIS Green Chemicals .

Guzman interviewed Dennis McGrew, Genomatica’s new executive vice president of business development and chief business officer.

“Genomatica,” Guzman writes, announced at the BIO industrial biotech conference that it was able to achieved pilot-scale validation of its bio-based 1,4 butanediol (BDO) at 3,000 liter-batches, a 100-fold increase from lab scale within two months. The scale-up was performed at MBI, a not-for-profit technology company affiliated with Michigan State University’s BioEconomy Network.

The next step is another 10x scale up between 20,000 and 50,000 liters within the next several months. Genomatica plans to have an integrated demonstration facility to come online in the second half of 2011, and commercial production either late 2013 or early 2014 for their bio-BDO.”

“We’ve taken BDO through piloting and demonstration phase on our own but for other products in the pipeline, we’re looking to partner more early. Partners will help drive the selection of which products from amongst the other 19 chemicals that we can work on — that will be a primary criteria from which one of those to move forward,” said McGrew,

“Another update,” writes Guzman, ” is Genomatica confirming that they have shelved the bio-methyl ethyl ketone (MEK) project for now. McGrew said they were able to show proof of concept for the chemical in the course of 4 months but current market opportunity is not as compelling compared to BDO.”

“Genomatica started research on bio-MEK in the second half of 2008, when corn ethanol producers were being squeezed. At the time, the company expected to produce MEK from plants being idled by ethanol producers. The downtrend in global economy and change in ethanol economics have made the bio-MEK project not as attractive, said McGrew.  “We want to focus on driving BDO as quickly as possible instead of focusing to develop two projects simultaneously,” he added.”

Earth2tech announced their top 15 algae fuel start-ups

“Two and a half years ago we put together this cheat sheet on 15 algae fuel startups you need to know, which turned into one of our most popular posts of all time. But boy have things changed since then. In early 2008 GreenFuel Technologies was still in business, Aurora Algae (then called Aurora Biofuels) was still focusing on fuel, Petro Algae hadn’t yet filed for an S-1, and it was unclear then that Craig Venter’s Synthetic Genomics was going to become a dark horse in the algae fuel world. Here’s our updated 2010 version of our original 15 algae fuel startups bringing pond scum to fuel tanks.”

And they are….

1.  Solazyme

2.  Aurora Algae

3.  Synthetic Genomics

4.  Petro Algae

5.  Sapphire Energy

6.  Bioalgene

7.  Phycal

8.  Live Fuels

9.  Solix Biofuels

10.  Aquaflow

11.  Bionavitas

12.  Seambiotic

13.  Bodega Algae

14.  Algennol

15.  General Atomics

According to Solve Climate News

Another biofuel company is about ready to go public.  This time it’s Gevo.

“Colorado-based Gevo makes isobutanol, a second-generation biofuel that it says has a number of advantages over ethanol and biodiesel, including higher efficiency and the ability to be transported through existing pipelines. But the company’s proprietary technology produces and separates isobutanol using a fermentation process that still needs food crops like corn, wheat, sugar cane or sugar beets as a feedstock”

“With the promise of cellulosic ethanol — biofuel from non-food sources — still a distant vision, Gevo is hoping investors will see the $150 million initial public offering it announced this month as a smart bet that provides a bridge to the future.”

Solve Climate News writes,

“It’s [Gevo] banking on a business model that involves retrofitting existing ethanol plants, which it says can cut the time and capital required to get a production facility running.

“The technology they have is promising,” as is their plan to build upon existing facilities, Tammy Klein, assistant vice president of Hart Energy Consulting, told SolveClimate News. But ultimately, she said, the company’s decision to file for an IPO probably has more to do with tight credit markets and a lack of access to capital during the economic downturn than the strength of the biofuels sector as a whole.

“Raising capital is an issue,” Klein said. “That’s why Gevo is doing this.”

“For Gevo—which tallied $660,000 in revenue and $19.9 million in losses in 2009—and its brethren” writes Solve Climate News, “success may be a matter of riding out an initially tough market, according to a 2009 report by market research and consulting firm Pike Research.

“In the near term, the biofuels market looks like a train wreck,” Pike’s managing director Clint Wheelock said in a statement when the report was released. “The economics of ethanol and biodiesel are not yet competitive with petro fuels, and governments have pulled back some of their support.

“However, in the 10 to 15 year timeframe, the outlook remains very positive. The long-term commitment of national governments to foster robust biofuels markets remains solid, and technological advances and economies of scale will dramatically improve the economics of biofuels versus petroleum.”

In Pennsylvania things aren’t looking up for biofuels.

According to Erin Voegele of Biodiesel Magazine,

“Legislation currently pending in Pennsylvania could negatively impact the state’s biodiesel industry. On Oct. 6, the Pennsylvania House of Representatives adopted an amendment, SB 901, which seeks to impose a new fuel tax on businesses that sell biodiesel fuel by amending the state’s Biofuel Development and In-State Production Incentive Act of 2008.”

According to John Kulik, executive vice president of the Pennsylvania Petroleum Marketers and Convenience Store Association, the amendment would levy a new fee, or tax, on companies that sell biodiesel within the state. Under the amendment, each convenience store, service station, truck stop or other retail location selling biodiesel would be required to pay a new $100 fee in addition to existing local, state and federal fees and taxes.

According to information released by PPMCSA, some of its members have also expressed concern over a $5,000 blender fee contained in the proposal. The association notes that the new fee could severely impact its members’ ability to import regular diesel and blend biodiesel from surrounding states, which could have a significant impact on fuel distribution patterns and the price of fuel.

The amended legislation establishes a total of four of these registration fees:

  • $5,000 for each biodiesel manufacturing facility within the state
  • $5,000 for each location within the state where biodiesel is blended
  • $100 for a person, other than a person that operates at a biodiesel production or blending facility, that sells, offers sale or otherwise transfers biodiesel or a biodiesel blend within the state, whether or not the that person operates a location within Pennsylvania where such activities are conducted
  • $100 for each location, in excess of one, within Pennsylvania where a registered person sells, offers for sale or otherwise transfers title of biodiesel or a biodiesel blend

Video of Plenary Sessions from BIO’s World Congress

BIO’s World Congress on Industrial Biotechnology held 6 plenary sessions, featuring Agriculture Secretary Tom Vilsack and DOE Asst. Secretary Cathy Zoi. Additionally, a World Economic Forum report on the Future of Industrial Biorefineries, detailing the potential economic contribution that industrial biotechnology can make, was presented by Novozymes CEO Steen Riisgaard. And a survey of the industrial biotech and advanced biofuel industry by McKinsey & Co. took the pulse of executives in the industry.

In the June 28 plenary session, DOE Asst. Sec. Zoi announces funding totaling $24 million for three algae biofuel research consortia.

During the June 29 plenary session, Ag. Sec. Vilsack indicated that the Obama administration supports biofuel development as a means of boosting rural employment and economic development.

Novozymes CEO Riisgaard followed Vilsack, saying that “converting biomass into fuels, energy, and chemicals has the potential to generate upwards of $230 billion to the global economy by 2020.”

Earlier that day, McKinsey & Co.’s Raoul Oberman presented the findings of a survey of the industry, including that more than half of respondents said there is currently insufficient capital to support growth of the industry.

More from the World Congress in Washington

Day two of BIO’s World Congress on Industrial Biotech brought more announcements from Genomatica and BIO itself, and day three promises exciting news from Ceres — The Energy Crop Company, according to sources.

Genomatica successfully scaled its first commercial product — 1,4 butanediol (BDO), a product with a $3 billion market used to make spandex, automotive plastics, running shoes, etc. — to pilot scale, running multiple successful batches of 3,000 liters. Genomatica uses computer aided analysis, modeling and simulation to design highly engineered microbes and has a vision that microbial productivity will increase the way chip memory did for computers.

Ceres has developed a new plant trait that improves salt-tolerance for energy grasses, including sorghum, miscanthus and switchgrass. Researchers tested the effects of very high salt concentrations and seawater from the Pacific Ocean, which contains mixtures of salts in high-concentration, on improved energy grass varieties growing in greenhouses. “Soils containing salt and other growth-limiting substances restrict crop production in many locations in the world. This genetic breakthrough provides new opportunities to overcome the effects of salt,” said Flavell. In food crops, Ceres has confirmed the trait in rice to date and is preparing additional testing in others.

During the lunch plenary session on Tuesday, Raoul Oberman of McKinsey & Co. released the results of a survey of BIO member companies on the future of the industry. Notably, the results included responses to the question, “By the year 2025, what will be the dominant fossil fuel alternative?” The majority (60 percent) of industry respondents said “Bio-substitutes for gasoline,” while 19 percent cited biodiesel and 16 percent said electric vehicles. McKinsey’s analysis showed that on a land use efficiency analysis, electric vehicles powered by biomass achieved 37 miles per acre while biofuels achieved 30.

More than half (55 percent) of respondents said there is currently insufficient capital to support growth of the industry. Three quarters of respondents (76 percent) supported “Governments create long-term regulatory frameworks and offer incentives” as a solution, and two thirds also supported “Science offers clear evidence of biofuel efficiency and carbon impact” as a driver of investment.

You can view the presentation of the findings by Oberman at McKinsey Industry Survey on Biofuel Outlook 2010.

BIO also presented the 2010 George Washington Carver Award to MIT Professor Greg Stephanopoulos, a pioneer in metabolic engineering and commercialization of industrial biotech processes.

Woolsey, Khosla get it

At the World Congress on Industrial Biotechnology and Bioprocessing plenary breakfast this morning, “Investing in Energy Security and Industrial Biotechnology – A Venture Capitalist’s Perspective” Jim Woolsey, Venture Partner at Vantage Point and Vinod Khosla, Founder of Khosla Ventures highlighted impressive prospects for industrial biotechnologies such as biofuels, products and renewable specialty chemicals. Mr. Woolsey said it best, renewable electricity technologies such as nuclear and wind, do nothing to reduce our dependence on oil. And it sounds like it wouldn’t even “green” our electricity production. If we electrified the majority of our passenger auto fleet, those plug-ins, hybrids or battery-powered autos could likely run on the electricity capacity we already have. Meaning, no wind or solar facilities would be built. Instead, existing, likely coal-fired power plants, would simply increase their output to meet the demand. Mr. Khosla focused on the economic viability of the different biofuels technologies and renewable specialty chemicals. He presented a view of the broad spectrum by breaking the opportunities down to feedstock options, processing technologies, and end products and categorized the economic viability for each combination. 

Importantly this morning’s speakers highlighted the availability for industrial biotechnologies to assist in significantly reducing petroleum use in the near term and the opportunity for innovation, particularly in the small, entrepreneurial realm of industrial biotechnology. The future looks bright for these companies with a broad spectrum of opportunities on the horizon.

Algae-Based Biofuels

Last week the Triplepundit wrote a post called, Breaking the Cost Barrier on Algae-based Biofuels.  The piece noted that the technology was promising and then provided a summary of where things are today

And just where are things?  Today biofuel companies are currently seeking to scale the commercial production of algae and are pursuing several engineering approaches to the design of an economical system for growing algae. The industry is also investigating use of closed systems and open pond systems. In closed systems, engineers can precisely regulate algae growth conditions. Closed systems include both photobioreactors for photosynthetic algae strains and traditional bioreactors (enclosed tanks such as those used in other microbial growth) for those, such as cyanobacteria, that do not require sunlight. Open pond systems have been used in many settings, but can be sensitive to various environmental factors, such as contamination by other algae strains, or variations in nutrients, heat and light. Pond systems covered by thin plastic films and combination closed/open systems are being developed to control these factors.

The Defense Advanced Research Projects Agency is working with teams led by Science Applications International Corp. (SAIC) and General Atomics to produce cost-effective military jet fuel (JP-8) from algae. Testing is expected to begin in 2011. The Navy’s Defense Energy Support Center has also purchased and begun testing algae-derived diesel distillates from Solazyme. And Continental Airlines and Japan Airlines have successfully tested Jet A from Sapphire Energy and UOP Renewables in commercial jets, including Boeing 737 and 747 planes.

Ways and Means Should Include Job Creation of Advanced Biofuels and Bioproducts in Green Jobs Leg

On Wednesday, April 14 the House Ways and Means Committee will hold a hearing on Energy Tax Incentives Driving the Green Job Economy. The focus of the hearing is to examine the effectiveness of current energy tax policy and identify additional steps that the Committee can take to ensure continued job growth in this area while at the same time advancing national energy policy focus on a discussion of current and proposed energy tax incentives. Witnesses for this hearing have not been announced and we do not know how much of the hearing will focus on transportation fuels however, energy tax incentives for biofuels and biobased products should be a significant area of focus for this round of green jobs legislation. These technologies are ready to deploy and create near term job opportunities.

Industrial biotechnology is the key enabling technology for producing biofuels and biobased products like bioplastics and renewable chemicals to aid in reducing our dependence on foreign sources of oil, thereby reducing greenhouse gas emissions. They also have the ability to crate jobs, jobs that are currently moving overseas due to their reliance on petroleum as a feedstock or more favorable economic or political environments.

The United States has invested considerable amounts of taxpayer dollars to try to revive our economy. Too often, though, the resulting jobs are being created overseas, as other countries invest in green technology deployment. As a result, the opportunity to improve our economic competitiveness is lost. The United States is a leader in the research and development of green technologies, but to maintain that lead we must invest in the companies that are putting that green technology to work in our economy. These industries have shed hundreds of thousands of domestic jobs over the past two decades, as petroleum producing countries have attracted more capital investment. For example, U.S. chemical and plastics companies have increased capital investment outside the United States by 32 percent over the past decade, while increasing investment within U.S. borders by only 2 percent.

The Renewable Fuel Standard (RFS) enacted as part of the Energy Independence and Security Act of 2007 sets the minimum level of renewable fuel that must be produced and blended into the US transportation fuel supply at 36 billion gallons by 2022. 21 billion gallons of that requirement must be cellulosic or advanced biofuels. Direct job creation from the advanced and cellulosic biofuels volumes in the RFS could reach 29,000 by 2010, rising to 190,000 by 2022. Total job creation could reach 123,000 in 2010 and 807,000 by 2022. Jobs will be across many sectors of the economy. Some projected job creation sectors are: labor/freight, mixing and blending machine operators, shopping/receiving/traffic clerks, truck drivers, chemical equipment/technicians, chemical plant/system operators/electrical, sales etc.

The Ways and Means Committee can aid in accelerating this job creation by incentivizing biorefinery construction here in the United States. In 2008 Congress enacted a cellulosic biofuels production tax credit and enhanced depreciation for advanced biofuels facilities as part of the 2008 Farm Bill, both of which are scheduled to expire on December 31, 2012. Due to an overall downturn in the worldwide economy, this tax credit has not yet been utilized by cellulosic biofuels producers. This credit needs to be extended now in order to signal to investors that a plant being constructed this year, will have certainty in the availability of that tax credit once the plant begins to produce the advanced biofuel. A tax credit that expires before or shortly after production begins, does not create economic security for a yet to be built advanced biofuel biorefinery looking for funding. Furthermore, capital costs for construction of next generation biorefineries, which utilize renewable biomass to produce next generation biofuels and biobased products, are a substantial barrier to commercialization. Congress should provide an investment tax credit to help accelerate construction of next generation biorefineries and speed deployment of next generation fuels, chemicals and products.

Historically, the U.S. chemicals and plastics industry was the envy of the world. At its peak in the 1950s, the industry was responsible for over 5 million domestic jobs and a $20 billion positive trade balance for the United States. Jobs associated with the industry were typically among the highest paid in U.S. manufacturing. However, the petro-chemicals and plastics industries are now hemorrhaging jobs overseas. Conversely, biobased products and chemicals production, like domestically produced biofuels, will stay in the U.S., in close proximity to their biomass feedstocks. Total US employment in the chemicals industry declined by over 20% in the last two decades and is projected to decrease further. The US is a world leader in industrial biotechnology with a wide range of companies pioneering new, renewable pathways to traditional petroleum-based chemicals and plastics.

The potential job creation from bio-products is immense. Consider that the nascent biobased products industry employed over 5,700 Americans at 159 facilities in 2007 and every new job in the chemical industry creates 5.5 additional jobs elsewhere in the economy. Currently the biobased products portion represents only about 4 percent of all sales for the industry. Congress should create targeted production tax credits that can help them to expand their share of the market and grow additional domestic jobs. With an industry with the potential to grow by over 50% per year, bio-products can form the basis for a strong employment growth engine for the US.

Clearly commercializing the advanced biofuels and biobased products industries is an integral solution to creating high caliber domestic green jobs in the United States that will catapult this country to be a leader in successful high tech, sustainable technologies. BIO will be urging the Ways and Means Committee through written comments to recognize that innovations such as these are some of the most promising sources of green jobs and economic growth for the future.