Aviation Industry an Enormous Growth Challenge for Biofuels

To meet the demand for sustainable aviation biofuels with algae, the industry would have to build a new plant every month for the next 20 to 30 years, Biojet Corp. Chairman Chuck Fishel noted during Tuesday’s General Plenary Session at BIO’s World Congress.

Michael Lakeman of Boeing put forward a more cautious goal of meeting 1 percent of jet fuel demand with biofuels by 2015. That would still require 60 million gallons, though, and from Boeing’s perspective, they must be truly sustainable.

Fishel still worries whether the airline industry is an attractive market for algae and advanced biofuels. Biotech companies can make more money by pursuing low-volume, high-value chemicals than high-volume, low-value jet fuels. So would airlines be able to compete for these sustainable solutions?

Navy Director of Operational Energy Chris Tindal, however, is far more certain about the Defense Department’s needs for sustainable biofuels, particularly from algae. The Navy has set a goal of using 50 percent renewable energy by 2020 and launching the Great Green Fleet by 2016. Currently, the military uses about 2 percent of all energy used in the United States, with most of that represented by transportation fuels. So, it is a niche market, but one that still requires cost competitiveness as well as a sustainable level of greenhouse gas emissions.

Navy Asst. Sec. Chris Tindal Speaking at the 2011 BIO World Congress

Tindal also made clear that what the Navy wants is to be able to pull into ports around the world to refuel with biofuels. Relying on a single large producer of fuel and a long worldwide supply line would recreate one of the problems with the military’s reliance on oil.

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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.

BIO World Congress Begins with Newsmakers

BIO’s 2011 World Congress got off to a strong start in Toronto, with news announcements from G2 BioChem and others throughout the morning.
The big news from BIO was the presentation of the George Washington Carver Award to Royal DSM CEO/Chairman Feike Sijbesma. Sijbesma discussed the evolution of DSM from a coal mining company to a chemical company and now to a global life sciences and materials company. For Sijbesma, this transformation mirrors the current Green Industrial Revolution.
Feike Sijbesma’s acceptance speech is available as written.

Download audio of speech: Royal DSM Chairman/CEO Feike Sijbesma Accepts the 2011 BIO George Washington Carver Award
As evidence of the Green Industrial Revolution, DSM announced plans to build a bio-succinic acid plant in partnership with Roquette. The plant would open in Italy in 2012 if all goes according to plan. BP announced investment in Verdezyne, a California company building a platform to produce adipic acid, which is a building block for nylon.
Genencor published the results of a new survey of consumer acceptance of biobased household products. In a survey of U.S. and Canadian consumers, from 30 to 40 percent of respondents indicated they have heard the term “biobased products.” More than two-thirds indicated they’d be willing to purchase them for their environmental sustainability, if they were comparable to non-biobased products on cost and effectiveness.

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.

Final Notes from BIO’s World Congress

On June 29 at BIO’s World Congress, Steen Riisgaard, CEO of Novozymes, and Stephen Tanda, Board Member of Royal DSM N.V., released a report from the World Economic Forum on The Future of Industrial Biorefineries. The report says that a biorefinery value chain could create revenue for agricultural inputs ($15 billion US), for biomass production ($89 billion), for biomass trading ($30 billion), for biorefining inputs ($10 billion), for biorefining fuels ($80 billion), for bioplastics ($6 billion) and for biomass power and heat ($65 billion) by 2020.

You can download and listen to the press conference Release of report on The Future of Industrial Biorefineries.

The highlight of the final day of the World Congress was a debate between Princeton Visiting Scholar Tim Searchinger and MSU Professor Bruce Dale, moderated by Univ. of Minnesota’s John Sheehan. Sheehan sought to explore both the strongest and weakest parts of the arguments for and against including an indirect land use penalty in the carbon lifecycle of biofuels and bioenergy. For him, the central question in the debate is whether or not the world is running out of land to use — for all purposes, not just agriculture — meaning that any new use, such as biofuels, inevitably causes a shift of use somewhere else.

For Searchinger, the central point is that the traditional lifecycle of biofuels and biomass energy accounts a credit for using carbon stored in crops and trees. Bioenergy, he argues, should only get credit for new sources of carbon that it creates or for using carbon that would have decayed and entered the atmosphere anyway, but never for carbon that is already stored.

Dale took an optimistic view that a switch to bioenergy — and away from petroleum — would spur the creation of additional carbon stores. This could be accomplished through increased productivity and yield on the same amount of land, for instance, and through regrowing of crops and biomass sources so that the credit given to bioenergy is repaid quickly.

World Congress on Industrial Biotech Begins in Washington

On the opening day of BIO’s World Congress on Industrial Biotechnology and Bioprocessing in Washington, DC, new announcements came from the Department of Energy, ZeaChem, Elevance and DSM.

The DOE’s Assistant Secretary Cathy Zoi, head of the office of Energy Efficiency and Renewable Energy, announced funding of $24 million for three research groups addressing key hurdles in commercializaiton of algae. The money will be split among the Sustainable Algal Biofuels Consortium, the Consortium for Algal Biofuels Commercialization, and Cellana, LLC Consortium.

The DOE also released the National Algal Biofuels Technology Roadmap.

Elevance announced a joint venture with Wilmar International to build a commercial-scale manufacturing facility in Surabaya, Indonesia with an initial capacity of approximately 400 million pounds of its renewable waxes and oils. The facility will be located within Wilmar’s new integrated manufacturing complex now under construction and is expected to come online in 2011.

DSM announced formation of a joint venture with Roquette Freres — to be called Reverdia V.o.f. and to be headquartered in the Netherlands. The venture will combine Roquette’s sugars with DSM’s fermentation technology to produce succinic acid, which is a building block chemical for nylon and other plastics. This follows another French succinic acid plant, Bio Amber.

ZeaChem announced achievement of milestones in scaling up their biorefinery process.

A session at the World Congress focused on commercialization of algae biofuels, with DOW, UOP Honeywell, Raytheon, and HR BioPetroleum presenting updates on the partnerships they’ve formed. The discussion turned to jet fuels and chemicals as way to ensure any algal process is sustainable — it can ensure economic viability and reuse of all byproducts.

Pacific Rim Summit: Renewable Chemicals

Two companies commercializing different techniques to produce chemicals from renewable resources gave presentations this morning at BIO’s Pacific Rim Summit.

Christophe Schilling, CEO of Genomatica in San Diego, outlined the company’s strategy for making butanediol (BDO) directly from sugars. BDO is a polymer used in things such as spandex, betadine, and car parts including tires. Genomatica says its process uses 30 percent less energy, reduces CO2 and GHG emissions, and produces a 40-60 percent saving in capital expenditures. Plus, there is a $3 billion existing market.

Sam McConnell of Myriant described his company’s strategy for making succinic acid, which is a chemical intermediate that can be converted into many other products. Myriant is partnering with the University of Florida and Buckeye Technologies on a plant in Perry, Fla., which they project to be completed in 2010. The output of the plant is already 80 percent sold, according to McConnell.

A recording of the session is available from bio.org.