Gates Backs Renmatix; Total takes 1 million ton/year cellulosic sugar license

September 15, 2016 |

In Pennsylvania, Bill Gates is leading the latest investment round into the pioneering cellulosic sugars producer Renmatix as energy giant Total joins in with second investment and a 1 million ton per year license.

Gates is the chairman of the Breakthrough Energy Coalition— along with Zuckerberg, Branson, Bezos, Steyer, Khosla, Doerr, and 20 others who said at the COP 21 meetings last year in Paris that:

“Current governmental funding levels for clean energy are simply insufficient to meet the challenges before us. We must also add the skills and resources of leading investors with experience in driving innovation from the lab to the marketplace. The private sector knows how to build companies, evaluate the potential for success, and take the risks that lead to taking innovative ideas and bringing them to the world.

The Coalition added that:

“In the current business environment, the risk-reward balance for early-stage investing in potentially transformative energy systems is unlikely to meet the market tests of traditional angel or VC investors. This collective failure can be addressed, in part, by a dramatically scaled-up public research pipeline, linked to a different kind of private investor with a long term commitment to new technologies who is willing to put truly patient flexible risk capital to work. These investors will certainly be motivated partly by the possibility of making big returns over the long-term, but also by the criticality of an energy transition.”

The investor group pledged to be:

“Doing our part and filling this capital need by coming together in a new coalition.”

They said they would:

“Invest early, Invest broadly in Electricity generation and storage; Transportation; Industrial use; Agriculture; and Energy system efficiency; invest boldly, invest wisely, and invest together.”

The Renmatix transaction can be fairly seen as a first tangible investment into the low-carbon transport sector by members of this group, since the Paris announcements. For those who have followed the Renmatix story for a long-time, John Doerr and KCPB were among the foundational investors in this company and Amyris — which in turn has a foundational investment partner in Total. The Gates Foundation got Amyris’ foundational technology rolling, as another case in point.

If you see a loose but not entirely disconnected Gates-Total-Amyris-Khosla-Branson-LanzaTech-Doerr-Renmatix investment and deployment nexus in all of this, you’d be right.

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The Total Gambit

Meanwhile, Total’s commitment ranks up there as one of the boldest steps every taken by an integrated energy giant to translate low-carbon aspiration into action.  The Total order represents enough cellulosic sugars to make biobased diapers for 24 million babies for three years; fly 100 planes continuously for 9 days, drive 1 million cars 2,000 miles each on ethanol; make 120 billion compostable plastic cups; or make paint for 14 million new homes.

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Any of those use cases could be fulfilled by technologies — primarily Amyris but there are others in the Total Universe — under development today. Most of which need low-cost cellulosic sugars to become economically viable in the long term.

Hence Renmatix.

According to Gates, “To effectively address climate change, we need to develop an energy infrastructure that doesn’t emit greenhouse gas and is cost competitive. A critical component in this effort must be to decarbonize the industrial sector. Another is the possibility of cost competitive biofuels. Renmatix provides an innovative process that is an exciting pathway to pursue.”

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The background of the relationships

It’s been 15 months since the Total investment in Renmatix was first publicly disclosed. The Gates relationship goes back even farther, but Renmatix CEO Mike Hamilton confirmed to The Digest that the pace of discussions accelerated after COP 21, coinciding with Renmatix’ accelerated development path. It became clear coming out of Paris that he wis looking seriously at how to bring more innovation to energy, and that he wanted to pay attention to later cycle companies, not just the early-stage ones.”

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Hamilton also confirmed that the company has been working not only with Amyris — and Total, Amyris and Renmatix picked up DOE support not long ago — but with other undisclosed partner who have had development activities with Total. He added that “woody biomass in the US is a great starting point for the technology, because there are a lot of pulp & paper companies with idled or underutilized plants and resources,” but noted that there are other biomass feedstocks and geographies which make sense for Renmatix’ Plantrose technology and its licensing partners.

In other words, don’t count out  Asia or the EU as a location for Total to deploy the Plantrose tech.

What the investment does for Renmatix

This investment in commercializing Plantrose will help drive towards the first wave of Renmatix licensees building Plantrose-enabled biorefineries in diverse global markets like Canada, India, Malaysia, the U.S. and elsewhere. In parallel, that activity will facilitate further market development in downstream bioproduct applications.

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But there will be further capital announcements in this tranche and further in Renmatix’ narrative. Although we can reasonably expect an announce on a first commercial project for the company’s technology in 2017.

Total’s take

“At Total, our ambition is to become the responsible energy major. We want to make low-carbon businesses a profitable growth driver accounting for 20% of our portfolio in 20 years’ time. Meeting these goals is what has led to setting-up and expanding our collaboration with Renmatix,” said Patrick Pouyanné, Chairman and CEO of Total.

Fundamental drivers: governments or strategics with sustainability goals?

We’ve seen companies like Wal-Mart step forward with ambitious climate policies that will impact the supply chain for materials and create space for the biobased revolution.  And we’ve seen the potential for government action in areas like a ban on conventional microbeads in cosmetics and the like which might create space for compostable, biobased alternatives. So we asked Renmatix CEO Mike Hamilton, will governments or companies push the deployment forward.

“I think it will be a combination. But no question there’s a no question there’s a demand. Most people would like to use cosmetics and other materials that have a renewable option, but the same functional properties and similar costs. And there are applications not only in fermentable sugars but in applications for lignin that make it truly a biorefinery producing multiple high-value products. But it all comes down to moving down the cost curve.”

Fundamental drivers: what does the chemical sector want?

We asked Hamilton, whose career before Renmatix was entirely in the chemicals sector, about the near-term opportunities in chems, given low oil prices and a lack of carbon policies that support conversion to renewable chemicals.

“The chemical companies can be pretty schizophrenic about feedstocks. When oil prices are down and product margins are good, the search for alternatives gets less intense. But it’s a cycle, and we’ve seen it for years. First, the downstream products get competitive pressures, and there are price cuts, and then feedstocks go up, and they get squeezed.

“What you see from BASF, however, that commitment to innovation, it’s huge. They want to shift, they don’t want to get whipped around by the commodity cycle and they want to have alternatives and they are working on a long-term plan. And we don’t want to get whipped around either by shifts in prices or sentiment. So the rush is on for us to be competitive on cost, and competitive now.”

Renmatix backgrounders

The Digest’s Multi-Slide Guide to Renmatix

The Digest’s 5-Minute Guide to Renmatix

Renmatix acquires Mascoma demonstration plant in New York

Gates, Zuckerberg, Branson, Bezos, Steyer, Khosla, Doerr, 20 others form Breakthrough Energy Coalition 

 

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