ABLC 2018 Preview: deployment dawns, products proliferate, and techs land major venture deals as the bioeconomy advances into a big 2018

February 27, 2018 |

In Washington, ABLC 2018 opens amidst a flutter of government rollbacks of deployment support but the hope of regulatory relief, breakthroughs in financial structuring, a decisive shift in early-stage projects to nutrition & health, and an increasing number of deployments in advanced biofuels and a surge in exports and overseas expansion for corn ethanol.

On stage today are the feedstocks, intermediates and supply chain, and we’ll be making the presentation of the Holmberg Lifetime Achievement Award to VADM (Ret.) Dennis V. McGinn, the former CEO of ACORE and also Assistant Secretary of the Navy.

Tomorrow marks the opening of the Advanced Biofuels Summit, the Renewable Chemicals & Biomaterials Summit, the Aviation Biofuels Summit in partnership with CAAFI, and a series of roundtables on green chemistry and technology in partnership with the America Chemical Society.

And the major awards and presentations are tomorrow, including the live announce of the 50 Hottest Companies in the Advanced Bioeconomy, keynotes from Sen. Amy Klobuchar of Minnesota, a special address from DOE Dep., Asst Secretary for Energy Steve Chalk, we’ll present the Global Leadership Award to LanzaTech CEO Jennifer Holmgren, he major associations will be on stage for the Domestic Policy Forum and and leading CEOs and thought leaders also join us for the Industry Horizons Forum.

Let’s look at the key trends.

Exports and trade

As global sugarcane ethanol growth has stalled, it’s been high time for corn ethanol as the US ramps up exports and Brazil gets ready for its second corn ethanol production plant.

As we reported in February 2018, Summit Agricultural Group’s FS Bioenergy will build a second corn-based ethanol plant, investing $308 million to produce 680 million liters per year in the facility based in Sorriso, in northern Mato Grosso, Brazil. The company’s two plants together will process 3.1 million tons of corn annually from a total of 26 million tons of corn grown in the state.

FS Bioenergy to invest $308 million in second corn-based ethanol plant in Mato Grosso

And we reported in October 2017 that  China’s State Development & Investment Corporation began construction of its first ethanol plant in the Liaoning province with 300,000 tons of capacity and is planning on building another five ethanol plants in other provinces as well as buying additional facilities. SDIC is aiming to produce 4 million to 5 million tons of ethanol per year in the next three to five years.

China begins construction on ethanol plant and plans 5 more

But domestic production capacity increases are being swamped by a burgeoning export trade.

We reported last December that China has signed an offtake agreement for 2.5 million metric tons of cassava that will later be imported for ethanol production. Although much of the focus on the 2020 10% ethanol-blending mandate has been on corn-based ethanol, cassava-based ethanol production has been growing in China and the wider Asian region.

China to import 2.5 million tons of cassava for ethanol production

And, we also reported in December that  three ethanol-laden vessels are currently en route to China from the US and are expected to discharge before the end of the year, including one vessel that was on route to South Korea and changed its destination to China. With less ethanol headed to Brazil due to the 20% import tariff there, volumes are instead heading to Spain, Nigeria and India.

Three vessels seen taking US ethanol to China by year’s end

How far will it go in China? We reported in December that an analyst from Stewart-Peterson says that China will need to import an additional 1 billion bushels of corn in order to achieve its 2020 E10 blending mandate but even though the majority of that increased demand won’t come until 2019, already imports are increasing for both corn and ethanol.

Analyst believes China will ramp up corn and ethanol imports well before 2020

And India is now on the trade radar. As we reported in April 2016, Indian biofuel blending mandates and demand for ethanol from the industrial sector are finding a balance with domestic production going towards the 5% blend while cheaper Brazilian and US imports satisfy the chemical market. The government is now beginning to plan a transition to E10.

Meanwhile, the pushback is getting intense.

We reported last month that the European biodiesel market is concerned what will happen to prices this summer when imports from Argentina and Indonesia resume, pushing down prices significantly. Prices are expected to come down far enough that it will force some producers to shut down until the market rebalances.

And we reported last month that an investigation was announced in the Official Journal of the European Union on February 20 relating to imports of ethanol originating in the US. ePure requested in November that the investigation is re-opened, and as the current 9.5% duty on US-origin ethanol that has been in place since 2013 was set to expire on Friday, the duty has now been extended another 15 months. Platts reports that ePure is concerned the European ethanol market is at risk of further dumping after China, Brazil, and Peru put up barriers to stop US ethanol imports but the US continues to export significant volumes.

EU re-opens investigation into alleged US ethanol dumping

Policy turbulence

Price is a factor in shifting supply towards exports, but policy is playing a role and we are seeing changes in Canada, India, China and potentially in the US that may up-end not only the trade in first generation fuels, but second-gen advanced biofuels as well.

We reported last month that Texas Senator John Cornyn is set to soon release details of his proposed legislation that he’s been working on for the past two years in an attempt to unify the oil and biofuels industries on a path forward for the Renewable Fuels Standard. The new policy centers around the creation of the D8 RIN that would be generated for every gallon of E10 and higher ethanol blends, on one hand potentially creating a premium market that would lead to increased investment in infrastructure for higher blends while helping to reduce demand for standard ethanol RINs, bringing down those prices and the alleged burden on oil companies.

Texas Senator to propose new type of RINs to weigh down current RIN prices

And we reported in December that the Minister of Environment and Climate Change, Catherine McKenna, moved Canada a step closer to using cleaner fuels, with the release of the regulatory framework outlining the proposed design of Canada’s Clean Fuel Standard. The framework will provide the basis for technical discussions and regulations that will require the use of cleaner fuels in vehicles, industries, and buildings. This is one of the ways in which Canada is taking bold action to ensure a sustainable planet for future generations, build a clean economy, and create more opportunities for middle-class Canadians.

Canada publishes framework for design of Clean Fuel Standard

Feedstock shifts

Research has continued to move towards oilseeds, rubber-producing feedstocks and forest products.

We reported last month that Bridgestone Americas and Versalis are forming a strategic partnership to develop and deploy a comprehensive technology package to commercialize guayule in the agricultural, sustainable-rubber and renewable-chemical sectors.The two companies will also make the new joint technology available to industrial partners willing to cooperate in maximizing the value of these innovative products.

Bridgestone and Versalis to jointly develop bio-based materials for tires from guayule

And we reported last month a research team led by the University of Georgia has discovered that manipulation of the same gene in poplar trees and switchgrass produced plants that grow better and are more efficiently converted to biofuels. In a paper published recently in Nature Biotechnology, the researchers report that reducing the activity of a specific gene called GAUT4 leads to lower levels of pectin, a component of plant cell walls responsible for their resistance to deconstruction.

University of Georgia researchers find gene can improve both poplar and switchgrass for biofuels

Meanwhile, there’s this map from USDA.

You’d be forgiven if you mistook Ahb Subi Banr-Sbar for a well-placed official in the Iranian government — but, in fact, it’s a 9-project network to facilitate the development of regionally-based industries producing advanced biofuels, industrial chemicals, and other biobased products.

Seven of them were established in a $156 million NIFA commitment to AFRI Regional Bioenergy System’s  Coordinated Agricultural Projects, plus two grants that NIFA awarded in recent months that have similar goals. Because it’s a mouthful, they generally call them CAPs, rather than Coordinated Agricultural Projects. They are about pushing yields, growing regions, logistics for harvest and distribution, and especially for emerging crops and varietals. Or, as we like to think of it, as No Crop Left Behind.

No Crop Left Behind: Inside the USDA’s bioeconomy feedstock strategy

Over in chemicals, advanced agriculture, and nutrition

So much of the action, especially with early-stage companies, has been in advanced nutrition and agriculture this year. Gobs of money raised and whether you are tasting the Impossible Burger or checking out Modern Meadow’s “leather without the cow”, it’s a different world that technology is bringing us now.

Consider these story lines, which are just from the last month in nutrition and agriculture. It’s a golden day for demonstration of new applications.

What about:

Growing your own paint. What about natural detergents found at the North Pole. Bioengineered muscle. Party beads from microalgae, or cow facial recognition tech. There’s a new biobased adhesive bra, graphene from toast, cellulosic glitter, and sustainable headphones.  Not to mention, bacteria that makes gold, stem cells for doggy arthritis, 3D printed ears and sustainable sunscreen.

Major brands on your mind? Whoa, what about the $250M biobased nylon project from Sebacic? Yes, Dunkin Donuts goes biobased, NASA aims at space farming, McDonalds fries may cure baldness, Hershey’s investments in agroforestry, Tyson invested in Memphis Meats, Bangchak’s making biobased cosmetics from ethanol, and Nestle acquires stake in Terrafertil.

Who’s raising? Mooala raised $5M, Miso Robotics found $10M, Canndescent nabbed  $10M, PrecisionHawk hauled in a whopping $75M. Not to mention that Ontario pledged $713M for agri-innovation and Canada earmarked $950M for super innovation clusters.

And as we mentioned, all of that, every bit of it, happened in just the past 30 days.

Projects to watch

There’s construction all over the world. Here are twelve to keep an eye on.

Cargill/Calysta. 1st commercial, Tennessee. It’s methane-to-fish protein. You have an abundant and cheap feedstock producing a product that’s expensive and getting tough to find, joined by advanced biotechnology.

DMC / Inscripta. Early-stage digital biology, CO. If you heard about CRISPR gene editing technology, keep an eye on Inscripta, which may well revolutionizing the writing of DNA the way that Illumina revolutionized the reading of DNA a generation ago. A big cap raise may well be on the way.

Enerkem. 1st commercial, Alberta. Enerkem is moving fast on expansion, so watch this first commercial as a nexus for process development and yield improvement that will ensure that those accelerated plans are joined to accelerated returns.

Fulcrum BioEnergy. 1st commercial – Nevada. Like Enerkem, here’s advanced fuels and waste feedstock — in this case, renewable diesel and jet fuel. Watch this one to confirm that airlines like United and Cathay Pacific are onto the right thing by investing back into the supply chain to obtain low-carbon fuels.

Ginkgo BioWorks. Commercial-scale BioWorks2 labs, MA. If you think that optimizing the speed and performance of metabolic pathways and micro-organisms is the next big wave — and the key driver for Digital Biology — then look no further than this well-funded Ginkgo expansion to it BioWorks2 facility.

LanzaTech. 1st commercial – China. Another waste feedstock — abundant steel mill off-gases — to fuels. But it’s China and steel and that makes LanzaTech one to watch. Not to mention that the entire future of syngas fermentation may be riding on this one.

POET-DSM. 1st commercial, Iowa. Cellulosic ethanol has been slow in arriving. The biggest current hope to accelerate the speed of deployment is this project in Iowa — already in the ground, but it’s been operating sluggishly, But POET-DSM has reported some extravagant improvements in uptime and pretreatment results, and that could be major.

Prairie Catalytic. Greenyug/ADM 1st commercial, Nebraska. It’s ethyl acetate, so its one of the signature renewable chemical projects. Interesting here has been the speed to market, the presence of ADM as the strategic partner, a drop-in chemical replacement and the co-location strategy employed in choosing Columbus, Nebraska for this first commercial.

REG Geismar. Renewable hydrocarbon 1st commercial, Louisiana. Like Enerkem and POET-DSM, this one has been around a while, now under REG ownership and the plant has increased from a fraction of nameplate to routinely exceeding nameplate capacity. Can REG sustain the momentum for renewable hydrocarbons — will there be a second commercial soon? Much depends on the process improvements that are being deployed here.

Sylvatex. Early-stage, California.  Then, there’s the arbitrage opportunity We reported last month on one of the purest, high-yield financial plays we have ever seen in the energy business is possibly emerging. Catalyst for industry attention is the news that Sylvatex and Valicor inked a Joint Development Agreement to develop and commercialize Sylvatex’s MicroX technology. What you need to know for know, from a technical POV, is that Sylvatex technology takes one gallon of free fatty acids (made, in this case, by hydrolyzing distiller’s  corn oil) and one gallon of conventional corn ethanol, creating thereby two gallons of a diesel fuel blendstock. Obvious to everyone is the potential for expanding an ethanol producer’s market with something less mercurial than the export trade, and that’s the US diesel market. But more interesting to us is the arbitrage play. In this case, $21 million in value-add, per year, for a $3 million investment for the technology bolt-on, at a reference-case 100 million gallon plant. (The opex is fuzzy, but keep in mind that the most important cost, the ethanol and DCO, is already included.)

Vive le ROI: has Sylvatex uncovered a gold mine in renewable fuels?

Synvina. Avantium/BASF 1st commercial- Netherlands. We point to this one because its BASF, it’s Avantium’s first commercial and comes on the heels of its successful IPO, and because there’s a novel molecule, FDCA, that is the target here and could revolutionize the clear plastic bottle. This is no drop-in replacement such as biobased PET would provide. This molecule has better barrier properties and could allow bottlers to phase out the metal cans that are still used for ultra-small bottles.

Veramaris. 1st commercial, Nebraska. And there’s algae, which brings us to health an nutrition, but there’s big news, big as in “volume and capacity”.

As we reported last month, DSM and Evonik have given a name to their joint venture to produce omega-3 fatty acids EPA and DHA from natural marine algae for animal nutrition. It’s Veramaris, and the 50:50 joint venture — headquartered at the DSM Biotech Campus in Delft, Netherlands — has commenced construction of a $200 million production facility at the Evonik site in Blair, Nebraska.

Big Algae chases Omega-3 dominance: DSM, Evonik underway on $200M algae project in Nebraska

That’s not the only big algae complex. Look at this biggie from Qualitas Health, the first phase of an expansion project — already, it’s fully occupied the original Sapphire Energy complex, as you see here.

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