One of the disadvantages of developing biofuels companies and products – as opposed to other high-growth industries such as computer hardware, is the requirement that fuels reach parity with gasoline and diesel from day one.
There’s no equivalent of launching computer hardware sold to early adopters at premium prices with high margins, generating cash flow and word of mouth for mass marketing efforts that will be undertaken when costs have been shaved and everyday low prices are possible.
What’s an early stage investor to do, besides suffer the timelines inherent in fuel development?
Over the past two years, early-stage bioenergy business plans have been developing a new sophistication, with an emphasis on renewable chemicals, plastics and other bio-based materials. These markets, with their high-priced products made from basic building blocks such as ethylene, ethanol, propanediol and butadiene, can serve as a proxy for the early-stage adopter who pays premium prices in the computer markets.
Although the monster markets in bioenergy remain fuel and power, early-stage investors, focused on driving early returns, have pointed their ventures towards the chemicals markets, where prices of $4.50-$10.00 per gallon are not unheard of, compared to target costs of $2 and $3 per gallon for biofuels.
Will chemicals receive the same support as fuels? A report from Reuters last August covered efforts by BIO among other organizations to persuade Congress to extend pollution permits to makers of biofuels, renewable chemicals and plastics. Under the legislation passed by the House, 2 percent of emissions allowances went to the oil industry, but none to biofuels or renewable chemicals.
“No offense to refiners, but they’re taking carbon that’s been buried in the ground for millions of years and releasing it into the atmosphere,” BIO’s Brent Erickson said. “And we’re taking carbon that’s in the atmosphere and recycling it through plants, and it ought to be treated differently.” The House bill gives away 85 percent of the emission allowances and auctions the remaining 15 percent. The Senate is expected to vote on the legislation as soon as October. The renewable fuels and chemicals industry has proposed receiving between 1 and 5 percent of emissions allowances.
Here is the latest from 14 of the leading companies developing renewable chemicals and plastics…
In January, the company is now operating its pilot plant, but it is expected that the rollout of Cobalt’s technology will be at an elevated pace. The company is expecting to complete a 1-2 Mgy demonstration scale plant by late 2011 or early in 2012, co-located or integrated with an existing pulp and paper mill (location to be finalized by summer 2010). Interestingly, according to Cobalt CEO Rick Wilson; “the combination of using existing front-end provided by the pulp and paper mill, and the advances we have made in our fermentation rate and in design, we can make money at demo scale.”
In January, Segetis announced today that it has closed its $17.2 million Series B round of financing. This new round was led by the Malaysian Life Sciences Capital Fund, co-managed by Burrill & Company, with participation from DSM Venturing and Series A leader Khosla Ventures. Segetis has an operating “semi-works” facility producing the bio-based monomers, derived from renewable feedstocks, that are being evaluated as sustainable replacements for plasticizers, solvents and polyols. Segetis will use the new funds to drive near-term commercialization of their levulinic ketal technology.
Segetis also announced that Atul Thakrar will become the new CEO of the company. Thakrar comes to Segetis from Soane Energy, a Boston-based specialty materials startup, where he was President and COO.
Segetis produces versatile, cost-effective chemical building blocks (monomers) as a base for renewable chemicals and plastics
In December, Raven Biofuels has established Raven Biofuels Ltd. as an affiliated company, which will license Raven’s technology and develop the first commercial scale wood waste-based biorefinery in Kamloops, British Columbia, in a JV with the Kamploops Indian Band. The Tk’emlúps Biorefinery will produce 11 Mgy of cellulosic ethanol plus green chemicals. The biorefinery design will be scalable to increase output once capacity is reached.
It is anticipated that the biorefinery will create up to 30 direct full-time jobs for the community of Kamloops and a number of other indirect jobs in the forestry and transportation sectors.
In December, Enerkem announced additional details of its $50 million DOE grant for the construction and operation of its waste-to-biofuels facility to be located in Pontotoc, Mississippi. Enerkem’s application is one of only four that have been selected in the larger demonstration scale project category of the Recovery Act – Demonstration of Integrated Biorefinery Operations Program. DOE announced the selected advanced biorefinery projects on December 4.
Enerkem Corporation will build and operate the 300 ton-per-day biorefinery in Mississippi, which will produce 10 million gallons of ethanol annually, as well as green chemicals, from sorted municipal solid waste and wood residues and will reduce the pressure to landfill. Since the announcement of its Mississippi project last March, the company has made substantial progress on the environmental permitting process and has further developed the project with its local partners, the Three Rivers Planning and Development District and the Three Rivers Solid Waste Management Authority.
The project is expected to create 130 jobs. The company also intends to double the size of its Mississippi biorefinery plant by adding a second module, bringing the total production capacity to 20 million gallons. Governor Haley Barbour, Senator Thad Cochran, Senator Roger Wicker and Congressman Travis Childers also offered supportive comments on the project, here.
In October, Cereplast announced that it is developing a technology to transform algae into bioplastics and intends to launch a new family of algae-based resins. According to the company, algae-based resins could replace 50% or more of the petroleum content used in traditional plastic resins.
Currently, Cereplast is using renewable material such as starches from corn, tapioca, wheat and potatoes and Ingeo PLA. “Our algae research has shown promising results and we believe that in the months to come we should be able to launch this new family of algae-based resins,” CEO Frederic Scheer said via a statement. Cereplast said that it has initiated contact with several companies that plan to use algae to minimize the CO2 and NOX gases from polluting smoke-stack environments.
Blue Marble Algae, Bionavitas
In October, Blue Marble Energy and Bionavitas announced a partnership in which Blue Marble Energy will produce high-margin biochemicals from microalgae supplied by Bionavitas. Bionavitas, based in Redmond, Washington, has developed Light Immersion Technology that enables the rapid, cost-effective production of algae for environmental remediation, manufacturing health and nutraceutical products, and producing biofuels.
Blue Marble Energy, based in Seattle, has developed a proprietary technology to produce a wide array of high-margin, carbon neutral specialty biochemicals from organic biomass. These biochemicals include esters, a group of chemicals used in food, fragrance, plastics, resins and adhesives.
Blue Marble Energy is a Seattle-based company utilizing unique bacterial consortia to produce specialty biochemicals and renewable natural gas. Bionavitas harnesses the power of algae for biofuel production, health and nutraceutical products and environmental remediation.
In November, Braskem announced that it has signed an agreement to supply sugarcane ethanol-based polyethylene to Argentine plastic packager Petropack. Braskem noted that, after signing agreements with Japanese and European partners, this was the first partnership it had signed in Argentina, or any Latin country outside of Brazil. Overall, Braskem has signed offtake contracts for the majority of its ethanol resins, which it will produce at a 200,000 tonne capacity polyethylene plant under construction. Total project investment is $292 million.
In August, Novomer announced that it has completed a Series B funding round of $14 million, led by OVP Venture Partners. The company makes low-cost plastics, polymers and other chemicals from renewable feedstocks including CO2 and carbon monoxide.
The company has raised $21 million to date, to exploit the potential of catalysts developed by Geoff Coates at Cornell University. Investors also participating in the round included Physic Venture Partners, Flagship Ventures and DSM Venturing. The company’s first product, a polypropylene carbonate sacrificial binder, was released last year.
Dow Chemical, Algenol
In June, Dow Chemical announced that it will partner with Algenol Fuels to build and operate a 24-acre Texas-based algae biorefinery demonstration farm that will produce ethanol at a target cost of $1 per gallon.
The facility will be constructed at the Dow facility in Freeport, and will make ethanol that can be used as a base for the production of a variety of green chemicals. Dow is expected to concentrate on the development of bioplastics. The test plant is expected to employ 300 people.
Georgia Institute of Technology, the National Renewable Energy Laboratory and the Membrane Technology & Research are partners in the project, which is targeting production of up to 140 gallons of algae fuel per day, or 51,000 gallons per year at a yield of 2,120 gallons per acre.
The companies are jointly seeking a $25 million DOE loan guarantee.
Last February, Biofields CEO Alejandro González Cimadevilla said that the company is targeting 2 billion gallons of ethanol from algae by 2020 using the Algenol process. The company said that it considered 15 other locations in Mauretania, Algeria, Spain, and the US, before settling on Sonora because of its 328 days of annual sunshine and 3.75 million annual tons of CO2 emitted by local power plant CFE.
The company said that it has purchased 22,000 hectares of unproductive land, and Gonzalez said that he will produce 250 Mgy by 2013, building off the recycling company, Grupo Gondi, founded by his father Luis Gonzalez Diez. Gonzalez has recruited Mateo Lopez, a former Mobil Oil senior construction executive in Mexico.
The company secured an exclusive license for the Algenol technology until 2013 when the company reaches its 250 Mgy target. According to CNN Expansion, the company has invested $30 million to date in the project, which is reporting yields of 6900 gallons per acre at its Sonora site. The company is said to be hiring 1500 temporary and 350 permanent workers and commenced construction in December.
In February, OPX Biotechnologies of Boulder received a Governor’s Excellence in Renewable Energy Awards from state Gov. Bill Ritter this week, for its biotechnology to convert renewable raw materials into biochemicals and biofuels. OPX uses proprietary genetic engineering technology to produce several biochemicals and biofuels using renewable biomass as well as carbon dioxide and hydrogen feedstock.
The company plans to initially commercialize bioacrylic, used in a range of industrial and consumer products, including paints, adhesives, diapers and detergents – followed by biofuels. The company plans to open its demonstration plant in 2011 and a full-scale commercial plant in 2013.
In February, ZeaChem, a developer of biorefineries for the conversion of renewable biomass into fuels and chemicals, today announced it has produced bio-based acetic acid surpassing the company’s demonstration plant targets for recovery and purity, and the results have been replicated using two different commercial vendors. Acetic acid is salable to various manufacturing industries for the production of film, bottles and fibers among other products. Global demand for acetic acid is 14.3 billion pounds per year.
Current U.S. production capacity is nearly 6 billion pounds per year with sales of approximately $1 billion. Acetic acid is also ZeaChem’s intermediate building block for the production of cellulosic ethanol and bio-based chemicals. ZeaChem intends to scale to a commercial biorefinery upon successful operations at its 250,000 gallon-per-year facility, which is proposed to be built in Boardman,
In February, SynGest announced the company has retained Stern Brothers and Company to raise up to $74 million in debt to support the company’s first biomass-to-ammonia plant, to be located near Menlo. The plant will have a capacity of 50 Mgy, from 130,000 tons of corn cobs. “Anhydrous ammonia is the liquid fuel/battery/fertilizer of the future,” commented SynGest CEO Jack Oswald. Total project cost is expected to be $105 million, and Stern’s goal is to raise the 70 percent debt portion through the issue of municipal bonds. SynGest said it is in discussions regarding potential future projects in Ohio, Oregon, Michigan and Minnesota, according to the company. SynGest hopes to complete funding by mid-2010 and commence construction before year-end.
Editor, Biofuels Digest