Two of the pioneers of the biobased economy – former Codexis CEO Alan Shaw and NatureWorks — strike a landmark deal based on methane – most affordably sourced from natural gas.

Renegades? Revolutionaries? Practical business in commodity-driven industries? The Digest takes you inside the deal — and the technology.

In Canada, Calysta Energy and NatureWorks electrified the BIO World Congress on Industrial Biotechnology yesterday in announcing an exclusive, multi-year collaboration to research and develop a practical, world-scale production process for fermenting methane — a potent greenhouse gas — into lactic acid, the building block for NatureWorks’ signature Ingeo product line, as well as lactide intermediates and polymers made from renewable materials.

Electrifying — because Calysta makes the claim that it has developed a “hardware/software” system in which proven metabolic pathways — like NatureWorks’s pathway for making polylactic acid – can be imported into its methanotroph which can make the same product, via the same pathway, only accessing methane as its carbon source.

In short, a transformative, biobased iPad — awaiting more metabolic apps.

Also electrifying — because no company has been more closely identified as a leader in the biobased economy than NatureWorks, a subsidiary of Cargill and PTT that began life with a clear focus on making PLA, or polylactic acid, from renewable sugars as an alternative to polyesters made from traditional fossil fuels.

As NatureWorks says in its self-descriptor: “NatureWorks is the first company to offer a family of commercially available…lactides and biopolymers derived from 100 percent annually renewable resources with performance and economics that compete with oil-based intermediates, plastics, and fibers.”

So, methane from, ahem, natural gas? What gives?

In today’s Digest, we explore the Calysta technology, it is “bio” at all?, the deal as seen by the partners, feedstock diversification, the 5-year goal, what Alan Shaw learned from the Shell-Codexis relationship, and the bottom line — by following the page links below.

1. Methane.
2. Low-cost sugars.
3. Chemicals.
4. Opportunities in the C4 platform – anything from isobutanol to BDO and butadiene.
5. Financing challenges, especially for first commercial plants

Our 6 favorite quotes?

1. “The trends you see at BIO this year? Methane, low-cost sugars, and chemicals.”

2. “We don’t yet see a significant amount of renewable content inside the recycle stream itself, but we are monitoring that and expect to see over time that products like the Plant Bottle will begin to change that. But when we refer to, for example, 30% renewable content, that means right now that we are sourcing that all from virgin renewable fibers.”

“We saw significant consumer pull for PET (plastic bottles) compared to glass – 2 liter glass bottles with product had an incredible amount of weight. “Renewable” is a term that can be leveraged with consumers, we proven that now with our work to date. But many of the benefits (of renewables) are largely transparent to the customer – you are not, for example, going to see a change in weight or shelf life.” – Mike Schultheis, The Coca-Cola Company

4. “You can sum us up in three takeaways. At commercial-scale. Solid economics = profit for our partners. Performance Guarantees.” – Michele Rubino, Beta Renewables

5. “A key element in this business is to recognize interdependence. If you improve yeast technology and performance you also can reduce enzyme costs.” – Oliver May, DSM

6. “Two trends are unmistakable. Reducing the environmental footprint and economic growth through resource maximization.” – Andrew Casey, CEO, BIOTECanada

7. “If we look at things in a silo…food…fuel…feed, instead of food and feed and fuel, [as a society] we are never going to get anywhere.” – Joanna Dupont-Inglis, Director of Industrial Biotechnology, EuropaBio

“After a 5-6 month hiatus to combat contamination-related production issues,” wrote Piper Jaffray’s Mike Ritzenthaler, ” the phased re-start of Luverne has surpassed its most difficult and important hurdle in our view – reliability of production. While we had fully anticipated this restart, we continue to view today’s announcement, along with significant wins in court with respect to their IP position, as unequivocal positives for the stock, and opens the door for a meaningful volume ramp over the next 12 months.

“We are evaluating the implications to our model. We are in the process of evaluating the restart timing and potential volume ramp on our model. We do believe that Gevo will sell the in-spec production through their existing offtake agreements and use modest volumes to continue market seeding. We believe that a single train is capable of a run-rate of 3-5 million gallons per year, with the full rate of 18 million gallons coming with all four fermenters running.”

At Cowen and Company, Rob Stone and James MEdvedeff wrote: “Still a Long Way to Go. We believe only a few runs have been completed, and operating metrics and production cost are likely far from optimal at this point. Additional financing should be needed within a year. Yield, productivity, cycle time, and purity levels were not disclosed, but we believe that one fermentation train produced enough isobutanol to test one GIFT separation system at full scale (which was not the case last summer). Plans appear to remain on track to bring up all four fermentation trains and all three GIFT systems by the end of the year, which would enable demonstration of 1MM gallons per month capability. If successful, a ramp to full nameplate (1.4-1.5MM GPM) could be realized by H2:14. However, we believe consistent, repetitive, volume production, at commercial metrics and cost, in all operating conditions, may be a difficult task. Unforeseen pitfalls could materialize as the complexity of multiple trains feeding three GIFT systems is added. Also, if purity is not high enough, additional distillation equipment may be needed.”

Gasrec is Europe’s largest supplier of Bio-LNG; a blend of liquefied natural gas (LNG) and liquid biomethane (LBM). LBM is a natural, green source of renewable energy produced from organic matter such as household food waste. Gasrec works with a number of market-leading companies including B&Q, Sainsbury’s and Tesco. When substituted for diesel, Bio-LNG can today cut fuel costs and CO2 by around 20 per cent. It also delivers improvements in air quality emissions with huge reductions in NOx and particulate matter. Gasrec is currently developing the UK’s first network of open-access Bio-LNG refuelling stations, which is set for completion in 2015.