Catch & Kill: the Velocys, Oxy, Cemvita, Carbon Engineering, BHP, Ginkgo chase to catch waste, kill emissions, armed with new organisms to liberate value

October 10, 2019 |

In Mississippi, Velocys’ Bayou Fuels project has signed with Oxy Low Carbon Ventures to capture carbon dioxide  from Velocys’ planned Bayou Fuels biomass-to-fuels project in Natchez, Mississippi, and securely store it underground in a geologic formation. OLCV, a wholly owned subsidiary of Occidental, will take, transport and store CO2 captured from the Bayou Fuels facility, when it is completed, enabling the production of transportation fuels that have a net negative carbon intensity, making it the first facility of its kind in the world.

What’s Velocys up to?

Integrating carbon capture and use into the Bayou Fuels biorefinery increases certain targeted revenue streams, such as those derived from the California Low Carbon Fuels Standard, and U.S. 45Q tax credits that incentivize the installation of carbon capture equipment on industrial facilities. This has a meaningful positive impact on returns. It also helps to de-risk the project and others that follow it. 

And exactly what is Oxy up to?

In August, we learned that Oxy Low Carbon Ventures also made an investment in Cemvita Factory which is engineering a portfolio of CO2 conversion microorganisms. Cemvita Factory’s bio-manufacturing platform mitigates emissions resulting from traditionally energy-intensive chemical and catalytic conversion processes by operating under ambient temperature and pressure. This same technology is able to turn polymer production into a low carbon activity by utilizing CO2 as a feedstock, a crucial step in building a circular carbon economy. Cemvita Factory is currently working with a number of clients in the energy industry to help them use CO2 as a resource to lower their carbon footprint.

As background, Cemvita Factory is a Houston-based biotechnology startup focused on creating economical solutions for a sustainable future. 

Ah, so that’s what Oxy is up to. Capturing emissions, and converting to use using Cemvita Factory’s bio-engineered pathways that use CO2 as feedstock.

And what is BHP doing in the middle of this story, exactly?

Yep, Australia’s largest mining concern, historically, BHP, has taken a strategic stake in Cemvita Factory.  BHP’s Chief Geoscientist, Laura Tyler, said BHP is interested in the potential for biomimetic technology to enhance remediation of mine-impacted soils and water. “Biomimetics have the potential to convert CO2 into useful downstream products such as chemicals and polymers, and it also holds promise for the remediation of mine sites,” said Ms Tyler.

Cemvita Factory’s technology is based on established methods of synthetic biology to improve the metabolic capacity of environmental-friendly photosynthetic microorganisms for CO2 utilization. These microorganisms may also be used for different purposes including the treatment of heavy metal or acidic contamination, utilizing and sequestering carbon dioxide in the process.

BHP hopes this technology will enable the discovery of new low cost, high volume treatment alternatives that provide an in-situ biosynthesis alternative solution, removing traditional treatment overheads, transportation cost, and more importantly, the perpetual management of legacy sites.

What is Carbon Engineering doing in the middle of this story, too?

OK, so there’s a daisy chain of connection here. Earlier this year, BHP made a $6m equity investment in Carbon Engineering, the Canadian-based company leading the development of Direct Air Capture, an innovative technology which has the potential to deliver large-scale negative emissions by removing carbon dioxide from the atmosphere. Which we profiled here.

How does a Cemvita, developing a portfolio of microorganisms, differ from, say, a Ginkgo BioWorks?

Yes, this week, we learned that Ginkgo BioWorks has raised a whopping $350 million to invest in spinouts from its technology. We’ll come back to that in a future Digest — but how do companies like Cemvita compare?

Gingko is the Walmart of synthetic biology, they’ll serve pharma, nutraceuticals, industrials, you name it, there’s something for everyone and they use a radically sped-up workflow to test out potentially zillions of different microorganisms, and using more bioinformatics on the front end than the boutiques will use. They have the bioreactor set-up to deliver amazing results through massive throughput.

By contrast, Cemvita Factory will have to think long and hard to build out its portfolio of microorganisms, there are perhaps 20-30 molecules that companies anywhere near oil & gas will want — the basic polymers and intermediates — and boutique like Cemvita is going to focus on those, and using a feedstock that oil & gas has in abundance, which is CO2. So it’s a much reduced set of paths of discovery. CO2 to 30 molecules, instead of multiple feedstocks to zillions of targets. So, despite the fact that they’ll have similar workflows in growing and engineering microbes, the focus for Cemvita is CO2 utilization, CO2 utilization, CO2 utilization. By the way, more about Cemvita factory, here.

Having mentioned Ginkgo BioWorks and its wondrous makings, it’s worth noting that the search for value from CO2 is a long one and Ginkgo is right in the middle of it. As it happens, for many people Ginkgo first appeared on the radar in the earliest days of ARPA-E when it landed a sizable grant through the ELECTROFUELS program to develop an advanced microbiological pathway to convert CO2 to fuels and chemicals. 

Electrofuels bypass photosynthesis altogether by utilizing microorganisms that don’t need sunlight. As was noted here in 2012, “electrolytic production of formate from CO2 can utilize electricity from a variety of renewable sources. The flexibility of electricity and the avoidance of the need for direct sunlight translate to greater flexibility in the location of such an electrofuel facility.”

In 2012 it was reported that Ginkgo validated that their genetically modified microbes can utilize a feedstock of formate produced from CO2 by DNV. DNV’s ECFORM process, it was mentioned at the time, met many of the metrics required for successful commercialization of the electrolytic production of formic acid and formate salt from CO2.  More on all this news from that CO2-to-value chase, here.

And then, not much more was heard of DNV or Ginkgo’s work, presumably saddled with the same woe that was visited on a host of promising technologies when the price of oil collapsed in the mid-2010s.

What’s different these days? First of all, the technology is more advanced. Secondly, the conversation about emissions is more strident and less connected to “do something if you can make more money at it than doing nothing” and more connected to “do something if you value freedom to operate”. 

The Bayou Fuels backstory

The Bayou Fuels project will take waste woody biomass and convert it into transportation fuels, such as diesel for heavy trucks and sustainable aviation fuel, using Velocys’ proprietary Fischer Tropsch process. The integrated technical solution designed by Velocys is ideally suited to carbon capture, utilization, and storage; the CO2 is captured before it enters the atmosphere. OLCV is uniquely positioned to transport and store the CO2 by leveraging Occidental’s industry leadership in CO2 storage and utilization. This combination of CCUS-ready technology and Occidental’s expertise in storing CO2 enables the Velocys facility to produce net negative carbon intensity fuels.

The Bottom Line

It’s a daisy chain all right, and its a long way from BHP’s carbon dioxide surplus to Ginkgo’s ambitions in advanced foods through spinouts like Motif.

A couple of notes, here.

Josko Bobanovic of Sofinnova Partners and nobody’s fool, observed in the Ginkgo news, signs of:

1) market maturity – company and space are doing so well commercially that they need new sources of ideas (think pharma innovation model) 

2) startups starting to compete with their own investors using investors’ money

3) lack of focus and management distraction – why do something you don’t know how to do when there are professionals out there and create potential conflicts for yourself in the future 

4.) biology has become digital and Ginkgo will be AWS, Softbank  and Google of biology all at the same time.

We also might mention a couple of observations.

1. To justify the $4 billion valuation that Ginkgo reportedly has, they’re going to have to move beyond the service model and deeper into the value chain, spin-outs are the way to go, even if it means competing with its own investors and customers.

2. CO2 utilization is a big, big deal for oil & gas companies. Whatever they might be saying about climate science in some forums, they are speaking volumes with this Catch & Kill strategy with carbon emissions. Boutique firms like Cemvita are springing up that are a) Houston-based, b) speak oil & gas, c) focus on CO2 and d) focus on products that oil & gas companies would like to have almost as much as they’d like to be rid of CO2.

3. Ditto for mining companies.

4. Velocys and Carbon Engineering are two excellent examples of where to find CO2, concentrated and pure, to work with. CE is grabbing from the skyfill, Velocys is grabbing from the landfill.

5. Value comes especially from creating closed loops for clients. Make MY feedstock into MY target. That’s very different than in the past, when the emphasis was in using SOMEONE ELSE’s feedstock to make MY molecule. Or, using MY feedstock to make SOMEONE ELSE’s molecule. As in advanced biofuels, where you see pushback on the molecule side and “where’s my big check” from feedstock owners, from time to time.

6. In this way, we’re recreating some interesting economic models from the glory days of corn ethanol. When the capital and the feedstock came from the same source — the corn farmer. Making the economic argument for investment not only about venture return but raw material value-add. This model is even more advanced. I’ll give you something you need anyway from something you have anyway, only better economics that what you usually use to make what you need.

Reaction from the stakeholders

Henrik Wareborn, CEO at Velocys said: “We have designed this facility to maximize environmental sustainability and offer attractive opportunities for partnerships with major energy companies. We don’t just want to process waste materials and produce cleaner burning fuels – we want the process that produces the clean fuels to be as sustainable as possible as well. That is why we will be capturing the CO2 as a by-product from the gasification process at our Mississippi facility. This will make the facility a net negative emitter of carbon dioxide, which is highly desirable from both an environmental and an investment point of view. This carbon negative solution could be replicated at other Velocys sites, so we hope our proposed UK facility in Immingham will be able to benefit from this technology, subject to UK Government support for CCUS deployment and the availability of transportation and storage infrastructure in the Humber region.”

Richard Jackson, President, OLCV, said: “Carbon capture, utilization, and sequestration is essential to reducing the carbon intensity of the transport sector and achieving global climate goals. This project illustrates how CCUS can enable production of zero-carbon and negative-carbon fuels. Occidental is uniquely positioned to develop and operate CO2 sequestration facilities based on our 40 years of experience injecting CO2 for enhanced oil recovery. We are excited to build on this experience to support Velocys in a strategic partnership to produce negative-carbon intensity fuels.”

“One of OLCV’s strategic priorities is to develop and commercialize CO2 utilization technologies that complement Occidental’s core businesses and product lines, with the goal of helping Occidental find value in new markets and attain its aspiration of becoming carbon neutral,” OLCV President Richard Jackson said. “Cemvita Factory’s CO2 utilization platform has the potential to harness the power of nature and create new, sustainable pathways for the bio-manufacturing of our products.”

“With the investment received from Oxy Low Carbon Ventures, we plan to demonstrate that our technology can economically scale from test tube to the field,” said Moji Karimi, co-founder and CEO of Cemvita Factory. “We have an ambitious goal to take one gigaton of CO2 out of the carbon cycle in the next decade and are very excited about being a part of Occidental’s journey to become a carbon-neutral company,” said Tara Karimi, co-founder and Chief Scientist.

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