Heard on the Floor at ABLC 2017 – Day 2

By Helena Tavares Kennedy

Special to The Digest

In Washington, ABLC 2017 continued the fascinating conversations, positive projections, and big announcements at the Mayflower Hotel on Day 2. Speakers built on yesterday’s talk of disruptive technologies and domestic policy uncertainty while adding talk of marathons and partnerships.

First, ABLC guests heard Governor Paul LePage from Maine invite all of us to his beautiful Northern state that has many existing and promising biomass projects and even backyard farms that grow tomatoes year round in that chilly Maine weather believe it or not.

His optimism continued with the first panel of the day including the “Fantastic 5” who all agreed on the need for policy stability, tax credits and tax reforms. Some positive numbers were thrown around – 4.2 million American jobs in biobased products, $393 million economic value added, and for every biobased product job 1.76 more jobs are created.

BIO’s Brent Erickson shared news from their recent study that says removing RFS would cause a $22.4 billion shortfall in investment. Now that RFS looks to be going back on track with Trump’s recent support statement, it could stabilize things. However, he noted we still need to work with Congress and state governments so they don’t put in place reforms that hurt our industry and so we have a level playing field in the tax arena. Anne Steckel from National Biodiesel Board agreed that tax reform is a priority especially given current policy uncertainty.

Mike McAdams, President of Advanced Biofuels Association, talked about how the point of obligation document would turn RFS upside down and has oil, biofuels, even rail industries all rallying against it. He also emphasized the need to be more vigilant and more civil regardless of your political side so we can work together on the common goal of advancing our industries.

Brooke Coleman, Executive Director of Advanced Biofuels Business Council, also was optimistic about where we are going and the new administration’s statements in support of RFS. He said it takes nerve to invest in this industry and it takes nerve to work in this industry, so in addition to tax reforms and credits, we need to “stay on the table” and not get thrown out when the new administration or Congress decides certain things need to be eliminated.

Many in the audience were on board and offered enthusiastic applause when BIO’s Brent Erickson said he’d like to see regulations that give fossil fuels tax credits and subsidies go away with Trump’s “for every new regulation you have to get rid of two” statement.

Kathleen Roberts, BRAG Executive Director and from Bergeson & Campbell shared an alarming rumor that the Trump administration specifically told some agencies that anything with the words “green” or “sustainability” in contracts would have special scrutiny, so your renewability may not give you brownie points with EPA/administration anymore. She agreed there is work to be done on tax incentives, tax reform and RFS, but reminded the audience to not forget about the work needed to be done with EPA and regulations as well.

As positive as most of the signs are from Trump, there is still lots of education to do with the new administration to get them up to speed on the industry and related policies to grow advanced biofuels, said Anne Steckel, Vice President of Policy for the National Biodiesel Board. She also noted that tax reform should be picking up soon with tax credits to continue to grow the current 2 billion gallons biodiesel domestic industry.

Several other speakers emphasized partnerships and compared marathons to current activities in biobased materials.

Marathon runner and President of Reverdia, Marcel Lubben, said our biobased products exercises are like Ironman triathlons – first developing winning technologies, then putingt it into robust manufacturing then building the market. He said Reverdia is in the last part of the triathlon, having biobased products already in the real world with positive green impacts like their 98% biobased paints – one is an antimicrobial paint and another is a depolluting paint that actually removes pollutants from the air.

“It’s a marathon not a sprint. The bad news is you have to sprint all the way through the marathon,” agreed Babette Pettersen, Chief Business Development Officer for Capricorn Ventures.

Pavel Molchanov, Vice President of Raymond James, made some oil predictions after reflecting on last year’s $30 oil low with a projection of $70 per barrel in 2017 and said prices won’t be going back to $30 or even $40 anytime soon. With oil demand growth at about 1.5% since last year, he said there is still lots of room for ethanol and advanced biofuels to grow and meet increasing oil demand worldwide.

Accelerating technology and lower costs were key points for Jason Kelly, CEO Gingko BioWorks. He cited for example that human genome DNA sequencing can be done now for about $1,000 and even down to $100 instead of the $100 million cost back in 2000. Gingko BioWorks had some exciting news with a planned expansion later this year for an additional 3,000 square feet. Speaking of yesterday’s disruptive technologies talk, there was more of it today with Gingko BioWorks noting it was rated # 7 on CNBC’s Disruptor 40 list.

Amyris announced they just broke ground on a new plant in Brazil for cosmetic based products. In 2015, 30% of their business was from fuels and in 2016 it was only 1%, with most of their business now being mostly in nutriceuticals, fragrances and flavors. As we heard yesterday, fuels are not playing as prominent a role due to market demands and higher price points in health and nutrition and personal care. Amyris announced a new partnership with Sephora to roll out their personal care products and said partnerships are key and how they got to where they are and where they are going. By 2020, they anticipate reaching $600 million in revenue or more due to these partnerships and collaborations and customers.

To energize the mid-morning crowd, ABLC had 3 first-heard at ABLC hot announcements:

1.  1. ICM announced the planned build of Element, the first full scale deployment of fiber to cellulosic ethanol technology in a state of the art biorefinery to be located next to their Kansas headquarters.
2.  2. Sofinnova Partners announced the first closing of
3.  3. Licella announced that it is forming a global joint venture with Armstrong Chemicals to build the world’s first commercial-scale hydrothermal upgrading plants for End of Life Plastic to chemicals and will come on line in 2018.

ABLC presented the Global Leadership Award to Governor Terry Branstad from Iowa who thanked the audience by video.

Brian Foody from Iogen won the Holmberg Lifetime Achievement Award. Brian was thankful and shared optimism in the industry’s future since renewables have made huge strides in percentage of U.S. energy sources.

Attendees got a taste of what was most relevant to them by choosing one of 3 different tracks in the late morning and afternoon: Gas Conversion and Markets, Renewable Chemicals, and Sustainable Aviation/Advanced Biofuels. As we started the day together, we ended it together in one room to hear about financing and investing which crosses all bio feedstocks, technologies, and products.

John May from Stern Brothers said investors are always looking for ways to derisk agreements and projects and said “Project structure mitigates project risk.” He emphasized that project essentials include 65/35 debt to equity ratios as a starting point, not 90/10 or even 70/30. John also shared that many investors think RFS2 and RINs are too complicated to understand and they don’t have time to deal with it, so they often X it out when considering projects. He recommended that bio companies decrease risk with demo facilities or insurance instead of only looking at loan guarantees.

Speaking of insurance, John Cozens from New Energy Risk whose slides may never have been shown at a biofuels conference before, shared some insights from the insurer perspective. John said successful insurance candidates have several key things including demonstrated reliability, plans for failure modes and how to deal with what can fail, and relevant data. He also said “We don’t ensure technologies, we insure products and projects.” How do get your rating up and improve your standing with an insurer? John said “The more we know, the more comfortable we are and creditworthiness increases as you sell more.”

There was also call to action. “Now is the time to start listening to me if you haven’t been already,” warned Taite McDonald from Holland & Knight. She said we need to think differently about how we engage with Washington and encouraged everyone to get involved with their members and with Congress to help ensure programs that our industry relies on aren’t at risk. Some of those include the ERE, National Labs and loan programs which are all being re-evaluated by DOE, farm and energy bills that are already being discussed, and the change in mandatory funding, CHIF, which is now limiting the amount of funding that the USDA can spend annually.

To lighten the money and financing mood and end on a high note, the ABLC 50 Hottest Companies in the Advanced Bioeconomy winners, which are based on public voting, were announced, complete with a Superman song and video listing all 50 super heroes. The top 3 were:

#1 LanzaTech

#2 Amyris

#3 Renewable Energy Group

And to wash all our worries away, the day ended with a whisky tasting event from Celtic Renewables and selected Scottish distillers, providing a great way to celebrate and toast the Hot 50 companies and the progress and accomplishments heard on the ABLC floor today.