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.

Advertisements

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.

Pacific Rim Summit Focuses on Drop In Fuels for Military

BIO’s Pacific Rim Summit came to a close on Tuesday, but not before giving attendees a preview of what the industry expects to be two of the hottest trends for 2011, as recorded in a recent BIO/Biofuels Digest poll.

Department of Defense interest in biofuels is expected to increase, due to the national security implications of reliance on oil. As Chris Tindal, director of Operational Energy for the U.S. Navy, explained to attendees of the Summit, “While the Department of the Navy is a significant consumer of fuel, neither DoN nor DoD can affect the price of oil. Therefore, both are at the mercy of the market – both the stability of supplies and fluctuations in price.”

Tindal noted that the DoD used 119 million barrels of petroleum in FY08. The Blue Navy used 29.4 million barrels (not including Marine Corps). And the airline industry and the Department of Defense collectively consume 1.5 million barrels of jet fuel per day. The Navy has set a goal of replacing 50 percent of petroleum in the commercial fleet by 2015.

Tindal also noted that the Defense Energy Support Center and the Air Transport Association of America signed an Alternative Fuels Pact on March 19, 2010. The pact sets shared goals of spurring the development and deployment of commercially viable and environmentally friendly alternative aviation fuels.

Commercialization of Bioproducts
Paul Bryan, Biomass Program manager at the Department of Energy, gave some detail behind the second expected trend for 2011, that attention will be given to bioproducts and renewable chemicals in addition to biofuels. Bryan emphasized that we need to “develop technologies and supply chains to replace the whole barrel and all products made from crude today.” Because so many products are made from each barrel of petroleum, and biofuels displace a portion of each barrel, oil refineries have no incentive to make a shift.

If we reduce total petroleum usage as a percentage of one market, we need to think about how that impacts other markets. The most obvious issue is that we have to replace diesel and jet in proportion to gasoline, since their combined volume is approximately three-quarters that of gasoline, and their markets are projected to grow significantly faster than that for gasoline. But other products are important, too. The largest chunk of the ‘other products’ in the barrel is the petrochemical industry, virtually all of which is based on crude oil and natural gas.

BIO’s Pacific Rim Summit Kicks Off with Discussion of Synthetic Biology

BIO’s Brent Erickson, host of the Pacific Rim Summit on Industrial Biotechnology, welcomed attendees to the opening plenary session with some observations about trends developing for the coming year. “I have been involved in industrial biotechnology for over a decade now and the changes I have witnessed over the past five years are sweeping, extraordinary and encouraging,” Erickson said. The trends that he identified in his remarks include:

  • Industrial biotech is spreading globally, and some of the most robust commercial developments are occurring in Asia;
  • Despite the global economic challenges all companies face, significant investments are still being made in industrial biotechnologies and processes;
  • As commercialization of large-scale biofuels facilities has slowed, due to financing constraints, commercialization of renewable chemical platforms has surged ahead;
  • Worldwide demand for oil will create even more demand for industrial biotech products over time, as oil prices continue to climb;
  • We are beginning to see new combinations of biocatalysis and conventional catalysis that will lead to exciting new renewable chemical processes;
  • Synthetic biology is a new engine for innovation and will increase the rate of innovation in the laboratory and reduce the time to commercialize new products.

Synthetic Biology BIOFAB Project

The Summit also hosted a session on a new BIOFAB project during the first full day. Dr. Drew Endy of Stanford led a discussion of the rapid pace of discovery in biotechnology and the challenge that presents for business models and safety and security networks, possibly requiring changes to current practices. Synthetic biology envisions reducing the the time and money spent on developing new biotechnology applications by allowing developers to work with DNA through a common programming language, analogous to computer programming, according to Endy. But that is an extraordinarily difficult thing to do.
The BIOFAB, according to Endy, is “a public-benefit facility producing the parts, tools & standards powering the future of biotechnology.” The first project of BIOFAB intends to question a central dogma of biology, that “one can construct, but not design, genomes.” Initial results are being generated, showing that a gene “expression operating unit” can be modeled with a high degree of predictability.

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.