9 Years Upon The Anvil: the baptism of renewable chemicals and the purification of its strategy

“We are always in the forge, or on the anvil; by trials God is shaping us for higher things” – Henry Ward Beecher

By now, Tom Boussie of Rennovia has been 20 years in the forge of the chemicals business, and 9 of those years being pounded on the anvil of renewable chemicals development.

“People want to live sustainably,” Boussie told The Digest the other day,  “But I have done due diligence with, like, 100 companies, really deep due diligence with real players, and the only thing they care about at the end of the day is the cost.”

“I suppose I am a total cynic now, focused only on cost and economic drivers, but 20 years made me into a cynic. I used to be very wide-eyed and altruistic. But it’s been beaten out of me, and beaten out of all of us I think. I meet these young 32 year olds with their great new ideas. And I think, “Go! go! go! Please, the rest of us, we need the fresh blood!”

From Boussie, you’ll hear no Sunday sermons on greenhouse gas emissions, no candlelight-vigil kumbaya for keeping oil in the ground, no psalm-singing of the inevitable victory of biomass over petroleum, or thundering jeremiads about sustainability. Any incurable optimism has been cured.

They’ve been beat, but they’re not beaten. A blacksmith is pounding out the impurities when he hammers a piece of steel upon his anvil, and this generation has felt the BOOM! of the hammer on their heads.

BOOM! Gone is the belief that governments will help de-risk technologies through to scale to achieve their carbon goals. BOOM! Gone is the belief that corporations will write the $400 million checks for first-of-kind commercial plants. BOOM! Gone is the hope that investors will take the long view on oil prices. BOOM!  The pounding has continued until BOOM! all there is left is the essence. And BOOM! the essence of the chemical industry is cost.

“The Coke and Pepsi plant bottle is an exception.” Boussie said. “For everyone else, if you don’t have the cost, they walk away. They’ll walk away, guaranteed, and no project will get greenlighted, there’ll be no equity investment. There’ll be none of that, if you don’t have the cost. Period.

“So, I have to accept the reality on the ground, rather than railing against the subsidies that prop up the oil industry. It’s some other person’s job to knock those down, because I am not going to be able to base a business model around it, and I can’t afford to spend energy on it.”

This is the generation that’s had the romance knocked out of it. These days, they don’t fall in love with a feedstock, or a molecule, as Jennifer Holmgren always warned the industry never to do. They’re cynical, they’re tart, but not sour, not bitter. They’re oranges, not cranberries.

They might remind you of the matriarch who lived at 19 Cranberry Street, in the Fruit Streets district of Brooklyn Heights, in the movie Moonstruck. That’s Rose Castorini, played expertly by Olympia Dukakis, who speaks to her daughter Loretta (played by Cher in her Oscar-winning performance) about love.

Rose Castorini: Do you love him, Loretta?
Loretta Castorini: No.
Rose Castorini: Good. When you love ’em, they drive you crazy. ‘Cause they know they can.

See? Like every hardened chemical industry pro, taught by years in the commodity markets never to be beguiled by emotion, never to be swayed by externalities, always to pursue cost, and lower cost, and lowest cost.

First, catch your rabbit

Isabella Beeton never did actually write a recipe for rabbit stew that began, “first, catch your rabbit”, but we like to think she did, because it’s such a clever reversal and we laugh out loud. And it’s true. Every rabbit stew, every company, every industry needs a rabbit. That first step, first product. Ford’s Model A. Musk’s Model S. The Apple II. With petroleum, it was kerosene for lamp oil.

In renewable chemicals, Boussie calls it “the pragmatic molecule” — the one that brings a company to cash positive, and de-risks the technology when it is scaled.

And because of that, there’s no more important moment in the history of any company than the selection of its first.

No pain, no gain

“The industry has adapted, and Rennovia has adapted,” said Boussie. “Our pivot came later than it should have. We were focused on large volume commodity scale drop-in replacements, and in the end there was little or no guarantee we would be able to execute in a commodity scale plant. There are no $400 million checks out there. Crude oil is $45 a barrel, and no one can compete.”

Feel their pain? Innovation is grounded in it. Sometimes the supplier feels it, sometimes the customer. When you have a backache, you are the one suffering, but your chiropractor is feeling happy to have the business.

“There just not enough pain in our industry,” says Boussie, “especially at crude’s current prices. Most of my friends are in pharma and there is always pain, there. There is always disease, and there are always patients and their need is now, and there are always drugs going off patent.”

Specialty chemicals, ahoy

To survive, Boussie’s view is as clear as day. “For Rennovia, we need to focus on specialty chemicals.” Which brings us to 1,6 hexanediol.

Which you might think of as Rennovia’s wascally wabbit.

“Instead of $1500-$2000 a ton,” said Boussie, “this is a semi-specialty chemical, and while the global market isn’t much by world standards, at 150 kilotons per year, it sells for $3500 per ton. And we can make money with that molecule in a smaller-scale plant. Say, 20 KPA for about $60 million, or we could go smaller and do $40 million for 10 KPA.” There’s tons of room in there, compared to the thin margins for the bigger chemicals, and that means everything in raising the debt, where they question your advantage.

“We can’t be a just a hexanediol company, we wouldn’t be successful. But we can start there, because HDO is itself a path to other things.”

Putting in functionality, and taking it out

“Chemicals are useful because they have functionality,” Boussie told The Digest. “Usually, we are starting with hydrocarbons that have none, so we have to install it, with selective oxidation. But if you look at biobased, there’s functionality all over the place, so it’s the inverse game, you have to remove it, selectively.

“How you do that? That’s the key. You can dehydrate, you can ferment, where the source of the electrons you need is in the sugar. Our approach is to use hydrogen as the source of electrons, and as a source of reduction. It is far, far cheaper than sugar, and better suited for chemical catalysis.”

An Analogue to Benzene

“What we are attempting to reproduce,” Boussie contends, “is an analog to how petrochemicals are produced — the petrochemical product tree. From a small set of platform chemicals, in a series of steps and high yield reactions, chemistry brings us an array of products.”

If you think of it, Nature is highly conservative in molecules. Diversity comes from many combinations, not from many platforms. Six platform molecules and you have the chemicals industry. 5 mother sauces and you have French cuisine. Four base acids in DNA. And so on and so on.

“So, biobased would be doing something very important if with our own chemistry and feedstocks we bring forward a biobased analogue to this,” Boussie contends “Even one molecule, one tiny slice of it, added to the list of platform molecules, that would be big, with all those downstream imolecules to make.”

The drive to HMF

“The obvious one is HMF,” Boussie said. “We make HDO from HMF, and there’s functionality in the right places. There’s the chemistry now to make FDCA as an alternative intermediate for clear plastics. But we look at it as a source to make many other things. HMF is closer to that benzene analogue. BASF, DuPont and others are beginning to recognize this. From HMF, you can get those A to B transformations using chemical catalysis, just like petroleum.”

The Keys to the Kingdom

In the end, though, it comes down to cost, Boussie says.

“You can make HMF, but unless you are the people who can make the cheapest HMF, no one will back you, and you will never really have that big chance. You will never get the keys to the kingdom unless you are the lowest cost producer. So that’s what we work on.”

So, the head is down, but not bowed. It’s focus, not despair. Focused on cost, and patenting broadly the downstream chemistry. Raising interest for that HDO plant. And chopping out some more cost. And then some more.

A Higher Purpose in the Higher Value?

Just six doors from the Castorini’s fictional Moonstruck home in Brooklyn Heights is the real home of Henry Ward Beecher, the 19th century preacher once called “the most famous man in America”. His radical stands on abolition, and his meditations on the relations of Man to God were hugely influential in his time, and he worked out of Plymouth Church, just a few yards from where Moonstruck was filmed.

That’s the spectrum of renewable chemicals, Moonstruck to Beecher, when you think about it. From the romance-shredded, cost-and-that’s-it, anvil-beaten professionals at the one end of the street to “someone’s cutting carbon, My Lord, kumbaya” at the other.

Beecher went the other way from Rose Castorini. He pointed to:

“The constant working of God through natural law, to which nevertheless he is supreme… all national as well as individual prosperity depends upon…a thorough reliance upon the wisdom and the love of God.”

Nothing appeared in the constellation of Beecher’s worldview except as part of God’s love for Man and to assure the eventual triumph of good over wickedness. It sustained him in his long struggle against slavery.

It was said of Henry Ward Beecher by Abraham Lincoln, when Lincoln invited him to give a sermon at Fort Sumter, in 1865, on the occasion of a flag-raising and a thanksgiving for the ending of the Civil War:

“We had better send Beecher down to deliver the address on the occasion of raising the flag because if it had not been for Beecher there would have been no flag to raise.”

So, when there’s a flag-raising and a thanksgiving for the end of petroleum’s dominance as a feedstock, be that decades or eons away, we’ll save a chair for Tom Boussie and for all the cats at Rennovia; and, really, everyone at every biobased chemical company who persevered and jived and pivoted, who slipped the noose and survived the anvil, in these days of low, low oil prices.

But I suspect that Tom would trade a solid order for a 1,6 HDO plant, for all the chairs, at all the flag-raisings, for all the eternity of time.

It’s been 9 Years Upon the Anvil, and they’ve been pounded hard, these developers, and been driven to the Castorini end of the street. 9 years ago, you found most of them pretty close to the Beecher end.

You’ll make up your own mind about which end of the Fruit Streets you’ll inhabit — at the east end along Orange Street with Beecher, or at the west end along Cranberry Street with Castorini. At the one end they are singing “We’ll Come Rejoicing, Bringing in the Sheaves” and at the other end you hear “They’re Singing Songs of Love, but Not for Me”.

How high do lift your eyes, to see the beautiful landscape before you, yet not be blinded by the sun?

Is this is a low-cost pathway to 1,6 hexanediol, or a stairway to HMF, or a model for the construction of a low-carbon chemical industry, or something even bigger than that?

We wait to see. God moves in a mysterious way, his wonders to perform.