Domestic Fuel

The American Lung Association in Minnesota presented “The Clean, Green Minnesota Bean” over the weekend during the Minnesota State Fair. Randy Hilliard with the Agricultural Utilization Research Institute (AURI) gave a presentation to the fairgoers from the Sustainability Stage of the Eco Experience Building. The topic? Soybeans.

Hilliard discussed the market for plastics, fabrics, cleaners and other bio-based materials, all made from soybeans, which can be used in place of materials made from petroleum. Supporters of “The Clean, Green Minnesota Bean included the United Soybean Board, Minnesota Soybean Research and Promotion Council, Twin Cities Clean Cities Coalition and the American Lung Association in Minnesota.

Using crops such as soybeans and corn to create products rather than using petroleum is not new. Henry Ford, the founder of the Ford Motor Company, used soy plastics back in 1935 and every vehicle that rolled off the assembly line contained nearly 60 lbs, or one bushel of beans in the form of gearshift knobs, horn buttons, window frames, accelerator pedals, and more.

It may have taken multiple decades, but Detroit is once again looking to soy plastics. The AURI and Minnesota Soybean Growers Association recently held a conference in Mankota, Minnesota to discuss the potential of bio-based plastics to grow jobs in the state.

Gevo has inked a deal with Arabian American Development Co. to build a hydrocarbon processing demonstration plant at its South Hampton Resources, Inc. subsidiary located in Silsbee, Texas. Arabian will also provide toll-processing services that will result in the processing of up to 10,000 gallons of isobutanol per month into a variety of renewable hydrocarbon biomaterials including jet fuel, isooctane for gasoline, isooctene and paraxylene for polyethylene terephthalate (PET). Toll processing, or toll manufacturing is when a company (Arabian) with specialized equipment manufacturers a product on behalf of another company (Gevo).

According to Gevo, this strategy will allow them to supply early adopters with product in order for them to test the materials, make sample products and begin sales. The contract is for two years and the demonstration plant should be complete by the end of this year.

“This contract is the successful culmination of one of several toll-processing opportunities on which we have been working. Gevo is developing exciting new technology and we’re pleased to be part of this value chain,” said Nick Carter, President and CEO of South Hampton Resources. “We believe this is a sustainable partnership as Gevo expects to demonstrate the viability of renewable hydrocarbons in a variety of market applications. That would pave the way for a larger market development plant, which, in turn, expands opportunities and should drive additional demand for our toll-processing services.”

Carter added, “In addition, the new processing facility will continue to expand our capabilities into the renewable energy market. Our largest contributor to date in this field is our C5 product that is being utilized as the working fluid in closed loop geothermal generators with a top US geothermal company.”

The biofuels industry is making a come-back with several successful IPOs (initial public offering) over the past few months. Today, KiOR announced its initial public offering of 10,000,000 shares of Class A common stock at $15 per share. The company raised nearly $138 million of proceeds from the IPO which occurred on June 24.

Other successful IPO’s include the much-awaited IPO of Gevo back in February. The company raised an estimated $123.3 million after setting the share price at $15. In total, the company sold 8.223 million shares. There were concerns as to what level of interest the IPO would generate after Amyris went public last September with less than stellar results. In total, Amyris raised $84.8 million after setting in shares at $16. The company had originally hoped to go out with an offer between $18-$20 a share.

But despite set-backs for the biofuels industry, the real IPO winner so far this year has been Solazyme who raised nearly $227 million – nearly double the money raised by others in the biofuels sector. The per share price was $18, ironically 10 percent higher than company execs predicted several weeks prior to the official IPO.

So why did Solazyme rake in the big bucks while the others merely fared well? While I am by no means a financial guru, I believe part of their success lay in the fact that Solazyme is already making profits by selling bioproducts and biochemicals. Earlier this year, the company launched a cosmetic product that is being sold in Sephora stores nationwide. The other companies, while they have contracts and are producing fuels at smaller scales, are not making profits yet. Therefore, investing in these companies is a bigger gamble.

Another reason why Solazyme’s strategy may be effective is that they are able to use their profits from their bioproducts and biochemicals to help fund it algal-biofuels research while companies like Gevo have no products yet. Therefore, Gevo needs to raise funds just to deploy its technology at commercial scale, which it is now doing. They have broken ground on the retrofit of an ethanol plant in Luverne, Minnesota.

With a solid showing on Nasdaq, at least for now, hopefully these second generation biofuels companies are paving the way for more IPOs and more private investment dollars – a much needed element if the industry is to move to commercialization.

Algae to Omega, an algae company focused on producing algae crops in vertical indoor farms, has chosen LumiGrow to provide its lighting solutions for its facility in Oakland Park, Florida. The LED efficient lights are being utilized to increase algae crop yield. The algae is used for high-value products including cosmetics, fish meal and nutritional supplements. During the day the algae farm receives natural sunlight, and now at night the algae will get constant light from the LED lights. Algae to Omega said that without these lights, they would need to double its space to produce the same amount of crops.

“As a company committed to green technologies, we were drawn to the LumiGrow solution’s demonstrated ability to cut energy use and costs by half versus traditional greenhouse lighting systems,” said Geronimos Dimitrelos, CEO of Algae to Omega. “But what really drove our selection is that the LumiGrow system’s adjustable color spectrum makes it the best choice for boosting algae growth. The algae grown under the 23 LumiGrow fixtures we have already installed is a vibrant healthy green.”

LumiGrow said that unlike other greenhouse lighting systems that emit broad swaths of color spectrum that plants cannot use, all the light emitted from their lighting system is used by the plants improving plant growth and health. In addition the system can be adjusted to meet the algae’s specific photosynthesis needs.

“Algae to Omega sets an example of how forward-thinking growers innovate to keep abreast of changing market conditions,” said Kevin Wells, CEO of LumiGrow. “We’re delighted that the LumiGrow solution is helping Algae to Omega realize their vision of a highly productive and cost-efficient vertical farm.”

A byproduct of the biodiesel production process is crude glycerin. The boon of the biodiesel industry has helped to create a glycerin glut and many biodiesel producers are having to dispose of the product rather than sell it. However, Diesello Verde S.A., based in Costa Rica, has developed technology that could provide biodiesel producers with a new revenue stream for the glycerin – eco-friendly, natural cosmetics products such as glycerin soap.

Diesello believes that using low value waste stream provides significant competitive advantages for biodiesel producers, especially with the multi-billion dollar green product industry. As margins on biodiesel production are typically tight, diversification of products can add additional revenue to the producer.

The company believes that by exploring new product development within a biodiesel company’s existing infrastructure, they can expect greatly improved profitability, lower production costs, and a larger and more diverse client base. As such, they will visit a plant, assess its current technology and products, and then create a strategy to expand the business into revenue generating cosmetics products, such as glycerin soaps.

In a study released by Genencor during the BIO World Congress in Toronto, when U.S. consumers were asked to name a product they considered green, 39 percent of them named ethanol first and 31 percent of Canadian respondents also named ethanol as a green product. This is just one of results discovered in the Genencor Household Sustainability Index that researched the market potential for “green” household products with environmental benefits.

In addition, the study found that four in 10 American consumers and about a third of Canadian consumers have already heard the term “biobased” to describe various products including fuels such as ethanol and biodiesel, as well as cleaning and personal care products and clothing.

“I think very clearly that they know what a green product is, but haven’t yet made the link on how we’re going to make those products green and how important biobased products are going to be,” said Tjerk de Ruiter, CEO of Genencor.

“It was very interesting to see that ethanol was at the top of the list. Now of course we were very pleased with that because ethanol is such an important product and such an important marketplace for us,” said de Ruiter. “But it also shows that the consumer really starts to buy in to the concept of the importance of home produced fuels and really the contribution that ethanol is delivering to the economy.”

Listen to my interview with Tjerk de Ruiter here: Genencor Household Sustainability Index

I asked de Ruiter how biobased enzymes, such as their product, differed from what we’ve seen in the past. “When you work with a biobased organism, you can continuously improve. If we look at the enzyme systems we have today, they are a lot more efficient allowing you to extract a lot more alcohol, or ethanol, out of the product itself, and quite often at lower temperatures and in the process reducing energy use,” said de Ruiter.

Other products consumers found to be green were detergents, cosmetics and some clothing. The survey will be used to create a baseline to determine if “biobased” products become better understood, accepted and adopted by consumers. Click here to learn more.

Click here to see photos from the 2011 BIO World Congress.

A new report from the Milken Institute, “Turning Plants Into Products: Delivering on the Potential of Industrial Biotechnology,” examines the challenges facing the industrial biotechnology sector and identifies market and policy based responses. In particular, the report found that biotech could play a significant role in the reduction of fossil fuel use, but struggles due to petroleum’s price advantage. The report is a accumulation of the Institute’s Financial Innovations Lab’s results derived from discussions with experts and stakeholders on how the US could facilitate a better flow of private capital into companies focused on the production of bio-based products.

“There is much appeal for policymakers to invest in expanding the biotech-derived chemical industry. In the long term, it has environmental advantages and offers an alternative to foreign oil,” said Joel Kurtzman, executive director of the Milken Institute Center for a Sustainable Energy Future. “In the short term, it offers the immediate benefit of rural employment opportunity.”

Industrial biotechnology uses living materials such as plants, algae, marine life, fungi and micro-organisms and biosolids to produce a wide range of products from chemicals to plastics to cosmetics. But unlike the petrochemicals industry, the industrial biotech industry is not well established and doesn’t have the advantages of economies of scale and established operating efficiencies. So to encourage further development the industry will need an organized cooperation of local, state and federal governments along with support from the investment community, trade organizations and academia.

Turning Plants in Products suggests several courses of action to mitigate current challenges and increase the chances of success: establish concrete, long-term government policies; create prize forums; utilize established resources; and create innovative securitization.

Kurtzman added, “The industry needs to find the momentum to get companies past the funding gaps and on to commercial-scale production. This will require continued investment in R&D, supported by the government and public-private partnerships, to make the investment less risky and to increase the efficacy of the technology. We believe the results will be greatly worth the effort.”

The Financial Innovations Lab that led to the development of the Institute report was funded in part by the Office of Energy Policy and New Uses at the U.S. Department of Agriculture.

Butanol is not just for fuel. Today, TetraVitae Bioscience announced that it has successfully demonstrated its process to produce renewable n-butanol in a corn dry-mill pilot plant. The company says this is a major milestone for them in creating economically competitive renewable n-butanol for the coatings, plastics, personal care, and packaging industries.

“With this achievement, TetraVitae has shown that producing renewable n-butanol in a commercial scale corn dry-mill will be a reality very soon,” said Jay Kouba, CEO of TetraVitae. “Corn dry-mills offer the most direct, capital efficient, and low-cost route to large-scale production of renewable chemicals in North America. The industry has built a successful business based on fuel ethanol. TetraVitae is offering dry-mill operators a way to make higher value products using their existing capital base.”

For the demonstration phase, TetraVitae worked with The National Corn-to-Ethanol Research Center (NCERC) to retrofit NCERC’s fully integrated corn dry-mill pilot plant to operate using their technology. The technology performed and successfully produced n-butanol as well as acetone and distillers grains at a competitive cost.

Working with the University of Texas in Austin’s Separations Research Program, the pilot phase of the program also demonstrated product purification. TetraVitae took raw chemical products produced at NCERC and produced purified n-butanol and acetone in a continuous distillation that met all standard chemical industry specifications for solvents.

“n-Butanol and acetone are high value chemicals with many applications in the coatings, plastics, personal care, and packaging industries,” said Kouba. “TetraVitae is creating partnerships with companies across these value chains that will result in economically competitive renewable products that consumers use every day.”