Are Manufacturers and Investors Looking for the Same Thing From Industrial Biotech?

The morning plenary session at BIO’s World Congress featured Jenny Cross from Mohawk Industries, makers of carpets, and Steven Mirshak of DuPont Tate & Lyle, suppliers of a biobased ingredient for Mohawk, discussing what consumers are looking for and how industrial biotech can meet their needs. Cross noted that their consumer research indicates that the typical consumer is looking for quality and durability, with price and “green” attributes coming second.

One point that Cross emphasized is that the carpet and flooring industry is a mature industry, with established (very old) capital infrastructure and well defined markets. To increase their revenue, the industry can’t raise prices — it must lower costs of production. So industrial biotech applications must fit into existing infrastructure without adding to capital costs.

Interestingly, in the lunch plenary with venture capital investors Michael Curry of Investeco Capital, Kef Kasdin of Battelle Ventures, Bill Lese of Braemar Energy Ventures, and Don Roberts of CIBC, all the speakers reiterated the search for capital-light opportunities. Following the recent economic downturn, venture capitalists are looking for companies with lower capital requirements and lower risks, which means they must have either lower up front costs or shorter timelines to return on the venture investment.

Roberts emphasized that recent IPOs — such as Gevo and Amyris — show good value by keeping capital costs low, ensuring steady low-cost raw material supplies, and planning to reach profitability quickly.

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Biofuels Digest, BIO Launch Spring 2011 Bioenergy Business Outlook Survey

Biofuels Digest and the Biotechnology Industry Organization (BIO) invite the industry to take part in the Spring 2011 Bioenergy Business Outlook Survey.

The survey examines growth expectations and opportunities from a company, national and organizational point of view. It also examines the role of research, government policy, finance, and research and market partners in creating opportunities or barriers to the growth of green jobs, energy security and reductions in greenhouse gas emissions.

The survey is open to organizations in all sectors of the industry – including producers, research and teaching organizations, associations, equipment suppliers, offtake partners and suppliers of services to the industry.

Respondents to the 21 question survey will receive a detailed summary of the survey’s findings and commentary on trends from the Biofuels Digest editorial team. Summarized results will be published in Biofuels Digest, but the customized, in-depth summary will be available only to respondents.

The Winter 2010 Bioenergy Business Outlook Survey conducted in December drew responses from companies representing an estimated 4,200 green jobs and more than $3 billion in annual sales. That survey showed that 80 percent of bioenergy executives were more optimistic both about their organization’s prospects for growth and industry growth, than 12 months prior. It also showed that confidence about industry growth prospects had jumped 11 percentage points in the final quarter of 2010.

Follow this link to go straight to the 2011 Spring Bioenergy Business Outlook Survey.

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.

BIO Pacific Rim Summit: Status of Cellulosic Ethanol Commercialization

Qteros, ZeaChem and Verenium presented updates on their efforts to bring three unique cellulosic ethanol processes to commercial status.

Qteros CTO Kevin Gray described how the company’s Q Microbe™ (Clostridium phytofermentans) enables a single step (consolidated bioprocessing) conversion and fermentation process for fuels. This approach can save as much as 40 percent in production costs. Qteros is currently scaling its technology up for a 100 liter laboratory bioreactor.

ZeaChem President and CEO Jim Imbler outlined the challenges facing the industry, which include the need for coherent government policy to help the industry make it through the “Valley of Death,” which he described as the stage between proving that a technology works and attracting enough investment to make it a reality. Raising capital for a first-of-its-kind project is particularly difficult, Imbler noted. Traditional project finance is not available; but companies could move forward with a combination of strategic investors and short-term government support.

Zeachem uses a Clostridium thermoaceticum found in the gut of termites to produce acetic acid, which is then converted to ethyl acetate and ethanol. They are constructing a demonstration-scale plant expected to be online in 2010.

Bill Baum of Verenium then described the status of the company’s joint venture with BP, Vercipia Biofuels, which is building a commercial scale cellulosic biofuel plant in Highlands County, Fla. and seeking a site for a second facility.

An audio recording of the webinar can be downloaded from BIO.org.

Pacific Rim Summit — Biobutanol: Overcoming the Barriers

The biobutanol panel at the 2009 Pacific Rim Summit on Industrial Biotechnology and Bioenergy had three dynamic speakers from the biobutanol industry: Pat Gruber, CEO of Gevo, Inc.; Jay Kouba, CEO of Tetravitae Bioscience and Rick Wilson, CEO of Cobalt Technologies. Besides the individual company presentations the conversation concentrated on technology, risk, barriers and financing on the path to commercialization.

Jay Kouba related to the audience that the business plan with the best technology is often not the one that makes it to commercialization; the path to commercialization is often paved by the plans with the lowest barriers to commercialization.

Pat Gruber of Gevo started the session off by giving background on his company, Gevo Inc., founded in 2005. Gevo’s biobutanol plans center around retrofitting corn ethanol plants to produce isobutanol. The main thing Gevo is concerned with is access to cheap feedstock, they will make their fuel out of whatever is most economically viable, currently sugarcane and grain, but eventually cellulosic feedstocks will be used. Gevo has a 1 million gallon demonstration plant in St. Joseph, Mo. Gevo also has business plans for renewable gasoline, jet fuel and isobutylene for use in such products as rubbers and plastics. These molecules will serve as building blocks for the chemical industry and they are beneficial, because the chemical industry already knows what to do with them. Gevo plans to have a commercial plant (20-50 million gallons per year) operating in 2011.

Tetravitae will be focusing on the chemical industry for their butanol to take advantage of what they see as a weak point in the petrochemical web. They are focusing on finding a low capital route that they can get to market quickly and follow up with improvements, and they see many opportunities with biobutanol for chemicals. Tetravitae will be using a similar business plan to Gevo in retrofitting corn dry mill plants for production. Tetravitae has partnered with the University of Illinois to develop the organism they are using. Mr. Kouba said that their process is already cost competitive and they are planning on having a demonstration facility operating in 2010 and a commercial facility up and running in 2011.

Rick Wilson’s company, Cobalt Technologies, is focusing on commercializing their cellulosic butanol for fuels and chemicals business. The big question for them was, “What’s going to make the biggest difference and be the most cost effective cellulosic biofuel on the market?” The answer was biobutanol. According to Mr. Wilson, the advantage of this renewable fuel is that 15 billion gallons is mandated by the Renewable Fuel Standard, it has an estimated 70 to 90 percent reduction in lifecycle assessment in greenhouse gases versus petroleum, increases fuel efficiency, lowers tailpipe emissions and is compatible with existing fuel infrastructure. Cobalt Technologies is interested in a venture with high margins that requires low capital investments. Rick made the observation that the most important cost for them is the price of the feedstock. Cobalt currently has pilot plants constructed in Colorado and California with a 200,000 gallon per year facility planned for operation in 2011 and a 15 million gallon per year facility planned for 2013.

All of the speakers agreed that access to capital is a barrier to commercialization, and education for the public, the regulatory community and opinion leaders such as Members of Congress on the benefits and technological attributes of biobutanol is a priority. Lively discussion and debate followed during the question and answer portion of the session. Stay tuned as biobutanol moves forward into commercialization for fuels and chemicals.

It’s Not Easy Being Green When It Comes to Technology

Being environmentally friendly can be difficult, particularly if you’re not sure which products are which. Now all that may change and being green may become easier.
According to treehugger, a Discovery company, the USDA is proposing a “BioPreferred” label for biobased products.

Treehugger writes,

“Under the proposed plan, the label could be used on any product that is “wholly or significantly” made with renewable biological ingredients; in other words, anything made with “renewable plant, animal, marine or forestry materials.”

So just how many products are we talking?

“According to a USDA press release, there are currently about 15,000 products in 200 categories that would qualify for this label.”

But according to Treehugger this opens up a whole other can of worms, that is:

“Will imports qualify for the BioPreferred label? And what about imported raw materials used in manufacturing in the United States?

It seems there’s some discrepancy between “using American agricultural products” and the BioPreferred products. Colorado-based Sustainable Flooring has several bamboo flooring products listed in the online database, which would presumably end up carrying the BioPreferred label. But they are all made with Mao Tzu bamboo, which is grown in China.”

“I’m a little confused as to how this uses American agricultural products or how it is beneficial to rural America’s economies,” writes Treehugger’s blogger, Naturally Saavy.

Then there is our (BIO’s) post, “Roundtable: Biobased Products Are a Missed Opportunity for Climate Change Legislation.

This is a roundtable discussion that can be downloaded as a podcast, roundtable discussion with biotechnology companies that make renewable chemicals and oils for everyday products to talk about the environmental benefits associated with these products. Speakers include Matt Carr, policy director, BIO; Snehal Desai, Business Vice President, Segetis (Golden Valley, MN); Aaron Kelley, Senior Scientist, Genencor (Palo Alto, CA); Marc Verbruggen, CEO, NatureWorks, LLC (Minnetonka, MN); Ben Locke, Director of Government Programs, Metabolix, Inc (Cambridge, MA); Corrine Young, Director of Government Affairs, Myriant Technologies LLC (Quincy, MA). Jim Imbler, President & CEO, ZeaChem, Inc. (Lakewood, CO)

Next, in the world of synthetic biology, Pharmtech.com reports that Craig Venter’s team has announced a

“key advance in synthetic biology.”

What was the advance? Well,

“they successfully transformed one bacterium into a different strain by transferring the entire bacterial genome of the first strain into a second, related strain of bacteria. In order to accomplish this feat, the team performed what they called a genetic first: they transferred genes from a prokaryote to a eukaryote and back to a prokaryote. The genetic manipulations they performed represent an important advance in synthetic biology.”

That’s pretty nifty technology if you ask me.

Patricia Van Arnum, the blogger for Pharmtech.com finishes off her post by talking about synthetic biology’s market potential.

“The field of synthetic biology is still emerging, but market analysts are optimistic about its commercial potential. The global market for synthetic biology was $233.8 million in 2008, according to a June 2009 report by Business Communications Company (BCC), a Norwalk, Connecticut-based market research firm. This value is expected to increase to $2.4 billion in 2013, for a compound annual growth rate (CAGR) of 59.8%.
Chemicals and energy represent the largest market segment for synthetic biology, which was valued at $80.6 million in 2008, and is projected to reach $1.6 billion in 2013, for a CAGR of 81.6%, according to BCC. The biotechnology and pharmaceuticals segment is the second-largest market sector, valued at approximately $80.3 million in 2008. This segment is projected to increase at a CAGR of 49.2% to reach $594 million in 2013, according to BCC.”

What could be a better way to end a blog post, than with hope for the future. That’s it for now. See you next week.