Novozymes acquires 10% of Beta Renewables for $115M; companies to jointly market, demonstrate and guarantee cellulosic biofuel solutions.

October 29, 2012 |

Novozymes becomes preferred enzyme supplier for Beta Renewables’ current and future cellulosic biofuel projects; embedded in Proesa production technology.

In Denmark and Italy, Novozymes, the world’s largest producer of industrial enzymes, and Beta Renewables, a global leader in cellulosic biofuels and part of Gruppo Mossi & Ghisolfi, announced an agreement to jointly market, demonstrate and guarantee cellulosic biofuel solutions.

As part of the agreement, Novozymes will acquire a 10% share in Beta Renewables, paying approximately $115 million cash for the equity, marketing fees, other intellectual property rights and milestone payments.

The announcement came as the global biofuels industry began its annual three-day Advanced Biofuels Markets meeting in San Francisco, which focuses on high-level, strategic partnerships and deal-making. Beta Renewables chairman and CEO, Guido Ghisolfi, will address ABM with a keynote this morning, and the new partners will hold a joint briefing for industry and media this afternoon.

Beta Renewables will embed Novozymes’ enzymes in its PROESA technology and guarantee biofuel production costs upon start-up of customers’ cellulosic facilities. The deal is unique in offering a combined solution that reduces the risk in customers’ projects while providing competitive commercial terms.

Three integrated networks for cellulosic biofuels enzymes, production technology

The partnership marks the formation of the third major global match-up, via joint venture or equity shares, of cellulosic biofuels technology and an enzyme supplier.

Last year, DuPont acquired Danisco and its Genencor enzymes unit, bringing together Dupont Cellulosic Ethanol (originally Dupont Danisco) and Genencor into an integrated solution marketed by DuPont Industrial Biosciences. DuPont expects to break ground on its first commercial plant before year end in Nevada, Iowa.

In January of this year, POET and DSM formed the POET-DSM joint venture, with DSM committing $125 million towards the partnership, which brought together POET’s production technology and biomass aggregation systems, and DSM’s cellulosic enzyme and yeast fermentation technologies. POET-DSM expects to complete its first commercial facility.

The Independents

Other key cellulosic biofuels production technologies – including those developed by Inbicon, American Process, Fiberight, Abengoa, COFCO – remain independent in terms of enzyme suppliers. Mascoma is pursuing a consolidated bioprocessing solution through development of its own internal enzyme and production technologies, and TMO Renewables is pursuing development of its own microorganisms and processing technology.

Reaction from Novozymes and Beta Renewables

“This type of complete offering will significantly de-risk cellulosic biofuel projects financially as well as technologically for our customers,” says Beta Renewables’ Chairman and CEO, Guido Ghisolfi. “It will make cellulosic biofuel projects bankable and accelerate large-scale commercialization of the industry.

“It reduces uncertainty,” added Ghisolfi, “and that has been a factor in holding back development of the industry.”

“Large-scale commercialization of cellulosic biofuels is taking off, and this is a fantastic opportunity for Novozymes,” says Peder Holk Nielsen, Executive Vice President at Novozymes. “Beta Renewables is an extremely committed industry front-runner. They are building advanced biofuel facilities all over the world and, by being their preferred enzyme supplier, Novozymes will gain access to significant new business opportunities. We expect Beta Renewables to be able to contract 15-25 new facilities within the next three to five years. The sales potential for Novozymes from these plants could be up to $175 million.”

World’s largest advanced biofuel plant

In the last five years, Beta Renewables has invested over $200 million (€140 million) in development of the cost-competitive PROESA process. PROESA is the same technology that will be used at the world’s largest cellulosic ethanol plant in Crescentino, Italy, where operations are expected to start by the end of 2012. The plant will initially produce 13 million gallons (50 million liters) of ethanol per year from wheat straw, energy crops and other locally available feedstocks. It has a design capacity of 20 million gallons (76 million liters) per year. Ghisolfi confirmed that the boilers at Crescentino are online and an aerobic digester system that produces onsite biogas. The project is now starting up its biomass loading system. Ghisolphi conformed that the entire project will  be producing ethanol by Christmas.

“Just one year after it was established, Beta Renewables has become a global leader in the production of non-food biofuels and biochemicals,” says Guido Ghisolfi. “This agreement has double value: It demonstrates the full integration of the PROESA process with the enzyme technology and allows Beta Renewables to guarantee a full lignocellulosic cost.”

Addressing feedstock risk

While the project brings together enzymes and processing technology – feedstock remains outside of the equation, for now. “PROESA’s technology is capable of working with multiple feedstocks,” noted Ghisolfi, “and that reduces feedstock risk – and, as well, addresses the basic problem of trying to sourec 250,000 tons on any single feedstock. In our case, you can use straw in the summer, corn stover in the fall, woods chips or arundo in the winter, for example. That not only reduces the dependency on one feedstock, it allows customers to save on the storage and handling of biomass for an entire year. Plus, with feedstocks such as corn stover that are not kept completely dry, it avoids the problem of losing sugars due to natural fermentation that could occur over long periods of storage.”

Enzyme generation

While Novozymes is building enzyme capacity around the world, the global nature of the partnership raises the question of producing enzymes on site with each project, versus a centralized production facility. “It’s economics,” said Ghisolfi, “and at the present time it makes sense to produce in a centralized manner. Our North Carolina project, for example, will be supplied from Novozyme’s plant in Nebraska. Perhaps enough capacity will be built eventually in some clusters that additional enzyme facilities would be cost-justified – again, the economics will dictate that.”

Expansion from Italy to US, Brazil

Beta Renewables has also secured a deal to build at least one manufacturing plant in Brazil with GraalBio, and, recently, Gruppo Mossi & Ghisolfi received a $99 million loan guarantee from the U.S. Department of Agriculture to construct Project Alpha, a cellulosic biofuel plant in North Carolina.

Novozymes is the world’s leading supplier of enzymes to the biofuel industry. The Denmark-based biotech company’s Cellic enzymes enable cost-efficient conversion of biomass to ethanol and have been chosen by COFCO, Fiberight, and other biofuels technology providers, in addition to the Novozymes partnership.

The Digest’s Take

Fans of the San Francisco Giants have been shaking the streets in celebration of the Giant’s victory last night in the 2012 World Series. The halls at Advanced Biofuels Markets are expected to shake with no less intensity, as news of the partnership spreads. For fans of Beta and Novozymes — a stunning step for the pair towards rapid commercialization of their technologies.

Even for their rivals at POET-DSM and DuPont — reconfirmation that an integrated enzyme-processing technology solution is now the standard model towards enzyme-based cellulosic biofuels.

And a shot in the arm for a cellulosic biofuels industry rocked last week by news that BP Biofuels was canceling two cellulosic biofuels projects aimed at the US market.

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