State of the Advanced Bioeconomy 2017

October 17, 2017 |

At 8:00am Pacific Time on Tuesday of this week, the Advanced Bioeconomy Leadership Conference on Next-Gen Technologies and Markets opens in San Francisco with a record audience size, with diversification as its theme and “Go!” as the takeaway message — with investment and technologies arriving in unheard of pace and volume in the sector, companies and their teams need to make hay while the sun shines.

Our look gets into technologies, markets and companies with our slide deck, Advance to Go! The State of the Advanced Bioeconomy 2017, here.

For those who follow a given technology type, or a company or set of them, or a specific region, or a molecule set of choice — the road can get bumpy and the outlook more gloomy. “Never fall in love with a feedstock”, LanzaTech CEO Jennifer Holmgren spends a considerable amount of time reminding us here in Digestville, and that pertains to any area of industrial activity.

Where’s Stutz? Maxwell? Packard? Duesenberg? Apex?? Albert? Carroll? DeSoto? Unheard of today, these were leading automotive brands of the past in the creative destruction of capitalism — but automotive propulsion technology kept advancing, and advances today. That we are hearing about Kia and Hyundai and Tesla today is the manifestation of a trend we will see forever in advanced nutrition, fuels and chemicals, too.

It’s not your Dad’s ethanol, dried distiller’s grains and some biodiesel in there — that’s for sure.

Measuring a sector by the fate or a single company, or molecule, or market — that’s looking at the micro instead of the macro. Though the industrial crematorium has new customers this year, and always more to come — the important factor is diversification.

In all, this year the Digest has tracked 102 different companies that have completed a new capital raise (42), or announced the timeline for advancement (or the arrival) of pilot-scale operations (30), demonstration-scale (10), or commercial-scale (20). That’s the busiest we’ve ever seen the sector, and we still have more than two months to go in 2017.

In some areas of activity — especially advanced nutrition, existing companies have more or less embraced new technology and new options. We see much enthusiasm in chemicals among established strategy players — though oil prices have taken a toll on deal-flow as chemicals are fully exposed to market prices in the absence of a Renewable Chemicals Standard to advance low-carbon chemicals. In fuels, we continue to see enthusiasm from national oilcos, particularly in Asia, but there remains entrenched opposition centered in the United States.

In perhaps the most remarkable signpost of shifting winds, shifting sands, shifting times —  Tesoro is now known as Andeavor to reflect its shift from petroleum exploration and production to refining and fuels marketing; meanwhile, DONG Energy renamed itself Ørsted to reflect its move away from oil and natural gas and towards renewable energy.

But overall the trends are highly positive, though good times never last — and amongst the estimated $5 billion in capital activity this year to date we have seen some clear trends.

At commercial-scale, the most significant build-outs tend to be in fuels, especially bolt-ons and drop-in fuels. At the demonstration-scale, we see the most enthusiasm for opportunities emerging in organic acids for chemical markets. At pilot and prototype scale- we’ve seen the most activity in Carbon Capture and Use. At the earliest company-forming stages the trend is clearly highlighting the shift to advanced nutrition.

On stage this week we’ll have more than 80 speakers, and something like around 200 different organizations networking like crazy on the conference floor at the Hotel Nikko. The industrial conversion to a low-carbon economy— in scope, size, or diversity — has never been seen before in the history of the global economy, and no one can do it alone, so partnership is the enduring key to success, and that is always the main business of ABLC to foster that.

But a cautionary note. An executive from Wells Fargo, in remarks that we’ll publish and explore later this week — described the overall global investment in climate-change related technologies as completely inadequate to the scale, intensity and immediacy of problems posed by our current industrial system based in fossil fuels. He noted that top players in the banking sector area measuring their loan portfolios — developed over several years — are in the low tens of billions, after arduous effort to get there. Yet McKinsey estimated that investment must top $1 trillion per year to counter the threat posed by climate change.

So, $5 billion is a remarkable number seen in the context of previous years — and is welcome capital for all the players who are using it.

But let us remember that there is $14T currently invested around the world in negative-yield bonds. That’s 2,800 times as much money as is coming into the sector, locked in to a strategy based on a guarantee of losing money.

The sector has far to go in convincing investors that their technologies offer positive returns — and to extant that capital determines the fate of companies, markets, partnerships, and technologies, the investment story is not being told well enough, not nearly well enough.

So, we raise a glass to all the companies moving ahead — but more is needed, much more, and soon, and it needs to be safe enough to unlock the capital along the sidelines before there will be any victory party for the winners in this marathon race.


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