In the Netherlands, Avantium has acquired the assets of Liquid Light Inc, developer of a process technology to make major chemicals from low-cost, globally-abundant carbon dioxide (CO2). The acquisition combines the technologies of both Liquid Light and Avantium to develop a world leading electro-catalysis platform and to commercialize new process technologies using CO2 as feedstock to produce sustainable chemicals and materials.
Liquid Light re-emerges from the dark
We last substantively heard from Liquid Light in July 2015 when the company and Coca Cola have signed a technology development agreement to accelerate the development of mono-ethylene glycol (MEG) from carbon dioxide. Liquid Light‘s technology enables more efficient use of plant material to make MEG, one of the major components used to make The Coca-Cola Company’s plant-based PET plastic bottle, representing up to 30% of Plant Bottles by weight.
For example, a bio-ethanol production facility could make bio-MEG from the CO2 byproduct that results from converting plant material into ethanol. The technology has the potential to reduce both the environmental footprint and the cost of producing MEG.
What was the technology, again?
So, here’s the Liquid Light process, simplified. Start with CO2, add an electrocatalytic process, add hydrogen — presto, oxalic acid. Add more hydrogen via hydrogenation, get MEG (or a variety of other products like glycolic acid, glyoxylic acid, acetic acid or even ethanol).
Where is Liquid Light in its process?
Good question. Last we heard, it had moved from bench scale batch reactors, in a 2000X scale-up to flow reactors making 5-6 KG of product per day. Next step was a 5-15X scale-up to a 50kg per day flow reactor. But there was never any definitive news on that step before Liquid Light fell into the dark.
It was all A-OK in 2014
In 2014, Liquid Light raised $15M and a lot of eyebrows as it advanced towards making $$ out of waste CO2. Their first target molecule? Consider monoethylene glycol (MEG), a $1200 per ton product with a $27B market, that is generally made from one of three ways in the Old Economy.
1. Out of ethane, costing $360 per ton.
2. From ethylene, costing $510 per ton.
3. From corn-based ethylene, costing $615 per ton.
So, here’s the CO2-based alternative in the Advanced Bioeconomy. You can make it for roughly $80 per ton CO2, if you have the technology (based on converting 1.58 tons of CO2 at $50 per ton, to a ton of MEG).
What’s not to like about that? And CO2 wasn’t hard to find. Consider a bolt-on plant using the Liquid Light process would have a capacity of 175 kilotons per year, with a capex of $280 million, and annual opex of $77 million, generating $200 million in annual revenue with a 15 year NPV of $200 million.
Our friend hydrogen, where’s that coming from?
“There are three ways to get it,” former LL CEO Teamey once told us, “one which we have unique to Liquid Light. The two most obvious are to use steam reforming or water electrolysis. The less obvious is to strip hydrogen from something else and make two products simultaneously.” Un, explain that again. “For example, our technology can be used to remove hydrogen from propane, thereby converting it to propylene, and then use the hydrogen for CO2 conversion.”
The Liquid Light went solidly dark
Why did the love of CO2 into MEG cool? Most of the target prices we mentioned above, those were in the heady days when oil sold for more than $25 a barrel. Oil has been in recovery, but chemical ventures have been struggling to find the benjamins until there’s clarity on something like $70-$80 oil. It’s beginning to look like springtime again, but let’s wait until we know more about the US economy under Trump, the EU economy without Britain and the China economy without a sky to see in the morning — before we get all excited, that is.
But Avantium had some special reasons to love this technology, and that made this especially appealing to them.
What did Avantium like? The 3 I Love Yous.
The Dutch are not as well known as lovers as, say, perhaps the Italians. But when it comes to the love of low-cost transformative IP, they can really start to remind you of Marvin Gaye crooning “Let’s Get it On”.
Here’s what’s to love about Liquid Light’s assets.
1. A really nice patent estate.
2. Reipes for making multiple chemical building blocks used in large existing markets, including oxalic acid, glycolic acid, ethylene glycol, propylene, isopropanol, methyl-methacrylate and acetic acid for the production of polymers, coatings and cosmetics.
3. Not conincidentally, both were working with Coca-Cola and Liquid Light’s technology was the missing piece for Avantium to produce, a 100% clear plastic renewable bottle. The 30% MEG content, that was the part Avnatium didn’t have.
Reaction from Avantium
Blow me down, they’re pleased and delighted. How delighted?
Tom van Aken, Chief Executive Officer of Avantium, said: “The acquisition of Liquid Light is an important step in our strategy to create and commercialize breakthrough technologies in renewable chemistry. It will extend our capabilities beyond catalytic conversion of biomass. This acquisition will enable the development of a powerful technology platform on the basis of carbon dioxide feedstock, meaning it turns waste into valuable products such as chemicals and plastics.” Press release
Gert-Jan Gruter, Chief Technology Officer of Avantium said: “Electro-catalysis is an emerging technology in the chemical industry that is based on electrical energy and catalytic reactions to drive chemical reactions. The technology enables the use of renewable energy for example from wind farms or solar panels for the chemical industry resulting in a significantly improved carbon footprint. The extensive patent portfolio of Liquid Light brings Avantium in the top of the world’s Intellectual Property position in electrochemistry.”
Well, they should be. And given that LL had gone dark, we bet they picked it up for a song. A song in this case entitled “financial details of the transaction were not disclosed”, which is a popular tune despite its cryptic lyric.
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