Cellulosic biofuels and perceptions of readiness, viability

Readers rate 27 different cellulosic biofuels technologies on perceptions of commercial readiness, viability, reasons for skepticism, and levels of confidence and awareness.

Recently, we asked Digest readers to rate 27 cellulosic biofuels technologies in terms of their perception of commercial readiness — a survey we conducted last fall and also in mid-2014. Our goal was to measure changing perceptions and explore reasons for why the view on given technologies might be improving or on the decline.

Readers continue to communicate that they are not hearing enough substantive information from developers to form a general perception of viability.  In some cases, this simply reflects that technologies are early on their development path, or are being developed in relatively fairway parts of the world. But those who are in the know provided an extensive details on their perceptions of viability (now or later), the reasons for confidence or skepticism, and how their perceptions have changed in the past 12 months.

Some caveats

Also note that there are a lot of great technologies focused on first-gen sugars or primarily on other non-cellulosic feedstocks that we didn’t focus on here — so you won’t see Amyris, Solazyme, LanzaTech or Gevo, to name a few.

Keep in mind — this is a measure of perception, not reality. A low rating does NOT indicate a technical weakness. It measures a perception of technical weakness, which if untrue could be overcome. Conversely, a high rating does not indicate technical prowess, it indicates a perception of strength which could be unwound in due diligence.

The respondents

In this question, we asked respondents to define their industry role — in many cases, it is a dual one (e.g. project developer and technology licensor), so the answers added up to more than 100%. The most popular category was “scientist, engineer, or in R&D” clodking in at 36.3%, with industry consultant, technology developer or project developer not far behind.

Overall perception

In the first question, we asked respondents to rate technologies by perceptions of general commercial readiness — it is ready now, ready one day but not now, or will never be commercially viable, with an option to rate a technology “don’t know enough” or “best in class”.

Here are the overall results on perception of viability:

Here are the results on perceptions of viability, sorted by “don’t know enough”:

After taking the “don’t knows” out and focusing on those who had formed a perception, we combined the “viable one day, viable now and ‘best in class’ into one overall rating, here.

At the top, generally companies that have completed construction on a first commercial — POET-DSM at the top, DuPont (constructing now), Abengoa, Beta Renewables, Granbio, Quad City and Iogen. Top of the heap among those who have not yet completed a first commercial were the afore-mentioned DuPont, Borregaard, Green Biologics, ICM and Inbicon. Overall, strong ratings for class as a whole, with two-thirds checking in at 75% or greater confidence levels.

We also sorted the results to combine perceptions of “viable now” and “best in class”. In this set, we also saw a focus on those who had completed a first commercial construction, though extended commissioning periods were clearly taking a toll on perceptions of several. POET-DSM, Abengoa and DuPont led the way in positive perception.

Reasons for skepticism

To the extent that respondents were skeptical, what’s the beef? The biggest concerns were on viable CAPEX/OPEX – just too expensive, or perhaps unable to compete right now where respondents felt that oil prices are likely to remain low for an extended period.

Here’s the results sorted for CAPEX/OPEX.

Feedstock costs were a lesser factor, but somewhat more so with aviation fuels players such as Solena and Red Rock where the demand is strong but has strict limits on prices customers will pay, while feedstock availability was of a lower level of concern, and “viable market for the products” was a very low concern. “Insufficient rates. titers or yields” – closely related to OPEX and CAPEX (though not entirely the same), was a bigger concern, with almost half the technologies checking in at 25% or higher as a reason for skepticism. Here’s that list, sorted.

Confidence levels

Something we have not asked respondents before — how has your perception changed in the past 12 months for a given technology? We sorted for “no change in perception” and there we see a high correlation with the respondents who rated the technology “don’t know enough” in terms of commercial readiness. Here’s that sortation.

Also, we deleted the “no change in perception” results from one sortation to take a closer look at technologies shifting towards higher confidence or skepticism.

The technology that has earned the most in terms of rising confidence is DuPont’s, which has moved from pre-commercial to construction in this period. And then we see a number of technologies that have completed construction of a first commercial or are moving quickly towards that: POET-DSM, Abengoa, Quad City, Green Biologics and Granbio among others.

Here’s the response, sorted for “confidence”.

At the bottom of the pile we tend to see the projects that have low profiles and high “don’t knows” – clearly in the absence of what respondents feel is sufficient information on progress towards commercial scale is tied to rising levels of skepticism. And, we see some cases towards the bottom where there have been substantive delays in expected commercialization timelines or completion of commissioning periods.

Projects that communicated expectations of operating at commercial-scale in 2013 and 2014 are feeling the heat from respondents to come extent in 2015.

The bottom line

Overall, confidence is quite high on the eventual viability of most of the technologies, There are several who simply have not been able to generate optimal levels of visibility  — hence, the correlations between high “don’t know” and “rising skepticism” in a number of cases.

But we note a shift in the “default position” of respondents. Whereas at one time a few years back, companies that first came out of stealth would be able to tap into a general “fund of goodwill” and “benefit of the doubt”, today companies appear to face more of a “if we don’t know much, we’ll think the worst” mentality.

That hits some smaller companies unfairly that have excellent technologies but find it hard to create levels of confidence among financiers. But we also see some companies in the “skepticism” penalty box generally tying back to elongated commercialization phases or long delays in getting financing together for a first commercial.