7 Decision Points in the Race for Scale in advanced biofuels

November 8, 2011 |

ABM 2011 opens for business in San Francisco.

On the dais – 30 industry CEOs, policy and trade association leaders.

On the docket, 7 issues that will define the Race for Scale.

In California, Advanced Biofuels Markets 2011 opens its three-day run this morning, with an update from the USDA, DOE and the US Navy, followed by presentations from Mike McAdams Brooke Coleman and Mary Rosenthal, heads of the Advanced Biofuels Association, Advanced Ethanol Council and the Algal Biomass Organization, respectively.

The conference opens in the wake of major steps towards commercialization announced in the past 24 hours by LS9, USDA with Sapphire Energy, and LanzaTech.

Today, policy and trade association leadership, 13 CEOs and the 50 Hottest Companies in Bioenergy.

15 companies are on the dais in the late morning and afternoon, including the CEOs of Solazyme, LS9, Virent, Gevo, Codexis, Enerkem, LanzaTech, Qteros, Cobalt Biotechnologies, Aemetis and Primus Green Energy, and Beta Renewables.

This evening, the 50 Hottest Companies in Bioenergy for 2011-12 will be announced by Biofuels Digest, which is co-producing ABM with Greenpower Conferences.

In the Race for Scale, the industry has excelled in driving down operating costs. Capital costs have proven more perplexing, and sticker shock has been a hold-back. Feedstock availability at affordable cost and appropriate scale has also bedeviled the scale-up effort.

What are the seven issues defining the Race for Scale that the industry will tackle this morning?

1. RFS – Hold or Fold?

In the policy outlook, the future of the US Renewable Fuel Standard is likely to dominate. Coming under unprecedented attack from oil-patch and conservative lawmakers, the industry has largely adopted a unified, “don’t mess with the RFS” stance. But some of the more advanced technologies, whose rise was not contemplated in the framing of RFS2, have been lobbying for revisions to RFS2 to make it more fuel- and feedstock-agnostic. In particular, the algal biomass industry. A lively morning session is expected to tackle the issues head-on.

2. The $510 million Title 3 advanced biofuels program.

Expected in the morning presentation from the Navy’s policy director Chris Tindal, the latest on challenges faced by the US Navy in raising its $170 million contribution to a USDA/DOE. USN $510 million investment fund for advanced biofuels. Recently, Republican lawmakers on the House Armed Services committee voted not to allow the Navy to transfer funds from other programs to the funding of the commitment.

3. Collaboration and co-opetition.

When and how closed, vertically integrated systems work – when to partner and how, in matching “best of class” front-ends (e.g. pre-treatment, gasifiers, hydrolyzation) with “best of class” back-ends (e.g. advanced fermentation, catalytic conversion). ZeaChem CCO Bob Walsh, Genenco Busines Development chief Aaron Kelly, LanzaTech CEO Jennifer Holmgren will address the role of partnerships. In major addresses, Codexis CEO Alan Shaw and Beta Renewables CEO Guido Ghisolifi are expected to tackle the structure of bringing together front-end systems for producing low-cost sugars, with high-performance fermentation systems that convert sugars into fuels and chemicals – and how rival companies can and should collaborate in this way.

4. Diversification and the integrated biorefinery.

When and how to diversify the feedstock supply. When to go for the vast but low-margin market in fuels, when to go for the small-volume, high-margin markets in base and speciality chemicals, food, feed and personal care. Enerkem CEO Vincent Chromet will address the opportunities in diversified feedstocks. LS9 CEO Ed Dineen will examine the key role of product portfolio diversity.

5. Drop-in vs. novel molecules.

In both chemicals and fuels, the ongoing debate over whether it is better to make a drop-in replacement for existing molecules, or to make the most cost-effective, high-performance molecule possible and incur the infrastructure and or time challenges in moving from one platform to another. Making the case for drop-in will be Solazyme’s Wolfson, LS9’s Dineen, Edwards’ Virent, and Primus’ Samia.

On the novel molecule side, Enerkem’s Chornet, Qteros’s McCarthy, Genencor’s Kelley and Aemetis’ McAfee. Codexis CEO Alan Shaw and Gevo CEO Pat Gruber are expected to emphasize drop-in molecules for the chemicals markets, with its exacting and narrow standards on performance – while having more tolerance for novel molecules on the fuel side. Solazyme CEO Jonathan Wolfson is expected to challenge attendees not only to replace, but to improve drop-in molecules in cost, performance or both.

6. Bolt-on, vs new facilities.

The latest trend in reducing capital cost has been the built-in strategy, where companies add their core technology units to existing plants – drawing on benefits such as process heat and steam, CO2, water supply, power supply, land, roads, and permits. In many cases the integration is even tighter, sharing process elements such as distillers or pre-treatment.

7. How many scale-up steps – and other risk vs reward decisions on the path to commercial scale?

Pilot to commercial, or demonstrate the technology? It’s expensive and time-consuming to construct demonstrations of key technologies at scale. Is it better to head quickly for commercial-scale, as Amyris did this year and then face technical issues (that caused it to revise its 2011 productions estimates but not 2012 and beyond). Cobalt Biotechnologies CEO Rick Wilson is expected to make a strong case for the demonstration at scale, prior to going to full commercial, as a necessary risk mitigator. Meanwhile, Qteros CEO John McCarthy will explore the economic value of biofuels within the context of the RFS; and capital finance considerations for achieving commercial scale.

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