No Matter the Question, the Answer is Four: four-carbon molecules and the big opportunity for biotech

Solo, duet, trio, or chamber orchestra? Bah! The hottest music in all of the bioeconomy are the quartets.

That is, the four-carbon molecules that have the best combination of market size and favorable economic conditions.

An announcement by LanzaTech and SK Innovations on butadiene confirms the trend.

In the final movement of Beethoven’s String Quartet No. 16 in F Major, the composer scribbled at the top of the manuscript “Muss es sein?” (Must it be?), answering in the faster allegro section “Es Muss Sein!” (It must be!). In the world of four-carbon molecules, i.e. the quartets, there is lately an equal feeling of inevitability in their rise.

In the world of chemists, they are known as the C4s, and they are a target these days for just about anyone who can figure out a way to make them. Over on the petrochemical side, along has come the rise of low-cost liquid natural gas, which is being fed into  crackers to make ethylene, the King of Intermediate Chemicals.

But using natural gas, a refiner produces fewer C4 molecules than through the more traditional reliance on naphtha — which is to say that, as natural gas stays cheap and makes all kinds of ethylene, the world ends up short on C4s.

So, along come the renewables. Many of whom were planning to make fuel — and still are — but those c4 chemicals look tempting and tasty right there, low hanging fruit on the Tree of the Knowledge of Good & Evil Economic Models.

If you say it fast enough, it can sound like the chug of a steam locomotive, taking producers far away from their troubles, and onto the Promised Land: “butadiene, butadiene, butadiene, butadiene, butadiene.”

So, it is a surprise but not a shock to relate that LanzaTech and Korean petrochemical giant SK innovation announced an agreement to develop a new process technology for the production of 1,3 butadiene.

Why is that molecule important?

Think rubber. An estimated $20 billion market, butadiene is a building block for tires, belts, hoses, seals, carpet backing and medical latex; molded plastics used in consumer appliances such as vacuum cleaners, kitchen appliances and electronic gadgets; nylon 6,6 used in textiles and engineering resins used in automotive engine components; and as a chemical intermediate for adhesives and speciality chemicals.

Why this pair of companies?

Bottom line, the pair are going to go through gas fermentation all the way through to butadiene. SK brings their considerable resources and R&D capability, LanzaTech brings its magical modified gas-fermenting organism, the work they are doing with Invista and PNNL relating to BDO to butadiene conversion.

Why biotech muss sein?

Already, we see biotechnology competing effectively on price on the four-carbon platform with petrochemicals. Genomatica’s success in this regard has propelled it three consecutive years to the top of the rankings in the 30 Hottest Companies in Biobased Chemicals — and you can be sure that the extravagent number of forays that large chemical companies like BASF, Solvay, SK and others have more than a little to do with the hunt for effective C4 biotechnologies.

Like everyone, they foresee continued improvement on the traditional chemical side in developing new catalysts and processes for eking more opportunity and profit out of a barrel of oil. But it is analog work.

By contrast, biotechnology is digital — as the industry builds micro-organisms that have more and more skill in converting wastes, residues and low-cost biomass into target molecules. Often, bypassing many of them steps, via an organic cycle, that petrochemical scientists have to develop to manage all the steps from the barrel to the bottle.

But there is biotech, and there is biotech. Which is to say, the empire is divided into feisty and competing duchies such as e.coli, yeast, algae and more.

As LanzaTech CEO Jennifer Holmgren notes. “it has been a long slog to get the tools and capabilities we needed to be able to get to parity with yeast and ecoli but we are really starting to see results.”

The problem of feedstocks

What could derail all these technologies is the Tragedy of the Commodity. No matter how cheap and unloved a feedstock, as soon as technologies arrive that can utilize it, the feedstock’s price rises until the cheapest industrial uses — usually the fuels — become uneconomic.

We have seen it with grease and soybeans for biodiesel, corn and cane for ethanol.

Holmgren sees it, “It isn’t about reducing price it is about dampening the oscillations, and reducing the price volatility. That type of certainty is what the world of chemicals needs.  The problem with all the current and most new feedstocks for fuels and chemicals is that they are all commodities. We need to use waste streams which are not traded and won’t be because you can’t move them.”

Can’t move them. There’s a good point — seeking feedstocks which are not sufficiently densified to travel, and finding ways in biotechnology to make target products in those stranded locations with undensified biomass. Hence carbon monoxide, hence LanzaTech’s microorganism, hence the attention and the excitement from many observers who have concluded, in elevating the company to its exalted position in the Hot 30 and Hot 50, “Must it be? It must be!”

Which molecule goeth to which mountain?

Or, as Francis Bacon wrote in chapter 12 of his essays:

“Mahomet made the people believe that he would call a hill to him, and from the top of it offer up his prayers, for the observers of his law. The people assembled; Mahomet called the hill to come to him, again and again; and when the hill stood still, he was never a whit abashed, but said, If the hill will not come to Mahomet, Mahomet will go to the hill.”

How big a market?

Pike Research has made a stab at it, and conjured up the figure that the biobased chemicals market will be $20 billion by 2020 — and we see the figure on a lot of industry slide presentations. 20×20. It sounds as symmetrical as a string quartet.

At $2000 per ton for chemicals like butadiene — that means 10 million tons of product, more or less. Another way to think of that is 2,000 10-million pound chemicals plants, or 200 100-million pound plants. Sounds like an awful lot of construction to us that would have to start no later than 2018 – roughly 60 percent of all the global advanced biofuels & chemicals production volume in all the projects built and announced through 2018, as we see in our Biofuels Digest’s SuperData. Possible, not probable.

But never mind — it’s going to grow, pulled by end users. As Holmgren cautions, “This is exactly like the aviation industry – pull but need a technology breakthrough to make the ambitions real.  There will only be nominal volumes purchased if you cant get to market based prices.”

The location

The development work will be carried out at SK innovation’s state of the art research centre in Dae Jon, Korea. The research campus hosts more than 1,500 scientists and engineers and has been in operation since 1995. The centre focuses on research and development of new technologies in energy, petrochemical, and materials industries. It works on a wide range of research areas such as eco-­‐friendly, premium petroleum products, asphalts, lubricants, polymers, green energy and advanced batteries.

Reaction from the partners

“Investment in science, technology and innovation has made Korea one of the world’s most dynamic industrial economies with Korean companies increasingly renowned for the quality of their research and development work,” said Jennifer Holmgren, CEO of LanzaTech. “We are excited to work with SK innovation, which is a pioneer in new energy technologies. The partnership provides LanzaTech with an opportunity to expand and grow our green chemicals portfolio, taking another important step toward our vision of creating a diversified range of fuels and chemicals using waste gas as a resource.”

“As customer demand for green chemicals grows, we continue to seek innovative solutions to develop cost-­‐competitive process technologies to serve important global markets,” said Dr. Byongsung Kwak, Chief Technology Officer, Global Technology, SK innovation. “We believe this collaboration provides a great opportunity to combine our expertise in R&D with the unique industrial waste gas fermentation technology LanzaTech has developed in order to increase the supply of biobased butadiene globally.”