The Charge of the Capital Light Brigade

December 20, 2010 |

"Half a league, half a league, Half a league onward, All in the valley of Death rode the six hundred".

“Half a league, half a league, half a league onward…all in the Valley of Death rode the six hundred.”
Lord Tennyson, “The Charge of the Light Brigade”

If the summer of 2009 was the Summer of Algae, then what we are passing through now is the Winter of Finance-Me-Not, and the men are being separated from the boys.

In this bleak season, the pioneers of advanced bioenergy have seen their commercialization plans collapse in the wake of the global financial crisis. Where once bioenergy VCs and project financiers practiced the Art of the Deal, now they practice the vital arts of making do.

But a new generation of companies has come along with new ideas about how to develop scale in a world of empty wallets. You might have heard of them as Amyris, Solazyme, LS9, Gevo, Joule Unlimited, Cobalt, and there are others. But they are really the Capital Light Brigade.

Though half a league, half a league, half a league onward into the Valley of Death famously rode four regiments of British cavalry at the Battle of Balaclava in 1854, these companies have proceeded, more accurately, half a gallon onward, in a series of partnerships with Big Oil, Big Chemicals, and occasional the boys from Brazil.Thinking small, contracting out or bolting on, finding friends amongst the deep-pocketed.

What has distinguished them has not been the essence of their core technologies, though they are brilliant. Nor is it the shrewdness of their leadership, though shrewd they generally have been. Nor is it buckets of sheltering dollars provided by their early-stage investors, though most have been adequately armed with the buckaroos.

You see, the desert floor in the Valley of Death is littered with the grave markers of the brilliant, the shrewd, and the deep-pocketed.

No, what they have in common is this: they have focused down to the essence of what they are and what they do, leaving all other aspects to be achieved through partnerships and alliances and other actions in the market. Therein have they reduced themselves to the proving of one thing, the building of one thing, the managing of one thing, and the promotion of one thing.

“The secret of life is one thing,” said Jack Palance in City Slickers, to which Billy Crystal replied, “what’s that?” Palance said, “that’s what you have to find out.”

It can safely be observed that there is one uniting factor amongst all those companies that are making serious strides out of the Valley of Death and toward the cool oasis at Tractionville. Their commonality? The knowledge that light makes right, when money is tight. Here are ten from the Brigade’s ranks.

Amyris – Hot 50 #1

The latest: This month, Raymond James analyst Pavel Molchanov affirmed Amyris’ “outperform” rating and raised the share target to $27.00. Since October 8, Molchanov noted that “Amyris is now the only Gen2 biofuel story to sport a market cap above $1 billion, and in fact it has the second-largest market cap of any U.S.-traded biofuel company, behind only Brazilian-based Cosan (CZZ).  We take this opportunity to recap Amyris’ farnesene commercialization roadmap, which has two distinct “tracks.”

What makes them light: Bringing forward their chemical strategy to achieve commercial-scale volumes faster; finding Brazilian partners.

Solazyme – Hot 50 #2

The latest: From, Solazyme: They Might Be Giants:What exactly is Solazyme? To look at the company’s prospects, let’s first consider what it is.  They themselves get uncomfortable when described as an algae company – seeing algae as a fermentation platform and themselves no more an algae company than Anheuser-Busch is a yeast company simply because they use yeast to ferment their beer…What Solazyme sometimes feels like is a maker of designer oils, but with the industrial ambitions of a Calvin Klein or an Yves St. Laurent…It is easier to understand Solazyme in this way, because when you invest in a firm of designers, you are investing in the ambitions and the capabilities of the designers themselves.

What makes them light: Using contract fermentation for early-stage operations; heavy reliance on partners to develop finished products with their renewable oils allows Solazyme to focus on its core technology.

POET – Hot 50 #3

The latest: From the Bioenergy project of the Future: As POET CEO Jeff Broin said, “with the integrated biorefinery of the future, ethanol is the base.” Yep, that’s corn ethanol. Before you resign your Biofuels Digest subscription, consider this: existing first-generation fermentation biofuels require no re-invention of feedstock systems, no exotic first-of-kind processing technology, no fuel certification or from-scratch market development. They are financeable.

What makes them light: Positive, powerful grower relations make for good feedstock partners as well as political and investment support; also, a cellulosic ethanol bolt-on strategy saves tim and money.

LS9 – Hot 50 #4

The latest: In an interview with Biofuels Digest, newly appointed CEO Ed Dineen said, “don’t view this [change of command] as a change of direction, but a broadening of the vision and strategy. We’ll continue to push with diesel and jet fuel, but we will be broadening the spectrum. We’re very pleased with the P&G relationship, and I would say it would be fair to expect additional alliances of that kind.

What makes them light: Bringing chemicals forward; acquisition of low-cost fermentation facility out of banruptcy.

Gevo – Hot 50 #5

The latest: In November, Gevo announced that it received notification that its isobutanol had successfully cleared registration with the U.S. EPA as a fuel additive. The company said that its isobutanol is the first isobutanol to be listed in the EPA’s Fuel Registration Directory and is now approved for blending with gasoline. Gevo’s isobutanol can be used directly as a specialty chemical, as a gasoline and jet fuel blendstock, and through conversion into plastics, fibers, rubber and other polymers. Gevo will soon begin the retrofit of its first 22 million gallons per year (MPGY) ethanol facility in Luverne, MN to produce 18 MGPY of isobutanol.

What makes them light: Bolt-on strategy for deploying biobutanol.

Cobalt Technologies – Hot 50 #14

The latest: In November, Cobalt Technologies announced a partnership with the U.S. Navy to develop technology for the conversion of biobutanol into full performance jet and diesel fuels. Under the agreement, n-biobutanol produced by Cobalt will be converted to bio-jet and biodiesel fuels using technology developed at the U.S. Naval Air Warfare Center Weapons Division (NAWCWD) in China Lake, CA.  More specifically, the combined team will optimize dehydration chemistry for the conversion of bio-n-butanol to 1-butene, followed by oligomerization of the biobutene into jet fuel, based on a process developed at NAWCWD.

What makes them light: A focus on renewable chemicals first, and bolt-on strategy for deploying biobutanol.

Enerkem – Hot 50 #16

The latest: In October, Enerkem announced that it has successfully concluded the U.S. federal environmental assessment requirements for its Mississippi waste-to-ethanol plant, which clears the way for the company to move forward with the project. Following the assessment, DOE issued a “Finding of No Significant Impact” (FONSI), which gives Enerkem the green light to proceed with the project without the need for additional federal environmental assessment. Construction work for Enerkem’s Mississippi plant is expected to begin in 2011.

What makes them light: Effective feedstock partnership with Edmonton brings long-term, stable feedstock supply.

Joule – Hot 50 #22

The latest: Bill Sims, CEO, Joule Unlimited told attendees at Advanced Biofuels Markets, “We are already at 10,000 gallons per acre for ethanol, and we expect to reach a cost of $30 per barrel of oil equivalent for diesel, and 58 for barrel of oil equivalent of ethanol. Next fall we expect to start the commercialization scale effort, and we have a pretty good chance if succeeding.”

What makes them light: Engineering design allows them to pilot on extremely low-cost basis – as little as a single screen unit.

ZeaChem – Hot 50 #27

The latest: This month, ZeaChem obtained a guaranteed maximum price, under the Engineering, Procurement and Construction agreements with engineering firm Burns & McDonnell, for construction of its demonstration cellulosic ethyl acetate and ethanol plant in Boardman.

The company also announced that it has secured full construction funding for the core facility. The $25 million grant from the U.S. DOE will be used to fund the independent front and back-end cellulosic process components, enabling ZeaChem to produce fuel grade ethanol as well as intermediate chemicals from non-food related biomass.

What makes them light: Demonstrating core technology in a “semi-works” enviroment; enhanced in interest in chems; creative financing moves to gain traction sooner.

Butamax – Hot 50 #38

The latest: In November, Butamax Advanced Biofuels announced several milestones in its plan to commercialize biobutanol for the transportation fuel market. Tim Potter, CEO of Butamax, outlined the commercialization strategy at the second and final day of the Advanced Biofuels Markets conference in San Francisco, California.

What makes them light: Bolt-on strategy for deploying biobutanol.

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