The Bioeconomy’s Big Bang: The When, Where, Who, What and How of the sector’s expansion dissected in an interview with the Lee Enterprises Consulting team

Just before ABLC 2022 convened, I had an opportunity to visit with four leaders of the bioeconomy, now working together at Lee Enterprises Consulting, as to how the bioeconomy is evolving and how the industry is re-shaping and expanding to meet new needs. 

In today’s column and roundtable discussion, we explore the what, where and how of that expansion. I was joined by company founder and CEO Wayne Lee, COO Terry Mazanec (one of the nation’s premier bioeconomy technologists), Jason White, CCO and co-owner (and a former CMO of GE Capital);  and LEC Senior Adviser Denny McGinn, former Assistant Secretary of the Navy and Vice-Admiral (USN, Ret.)

Who focuses on what? Lee focuses on high level company oversight, and in the areas of renewable biofuels and materials. White focuses on expansion. McGinn looks at trends, and helps with the company’s overall strategy to determine where it should be heading. Mazanec oversees all projects and the ten project directors who help lead them.

First up, I asked about how strong the drumbeat for sustainability is, in the corporate boardrooms where Denny McGinn serves and travels.

MCGINN: I’m honored to be on several different boards, public and private. It’s amazing to see, for example, a board of trustees like Rocky Mountain Institute talking about the transition to a new energy economy, or when you’re talking at EPRI with US CEOs of major utilities, everybody is talking about sustainability. I think the driver is a tremendously growing awareness, on a personal and on a corporate level, of climate change and the effects of climate change and the fact that we must do something about it. That “something about it” lies inside the bioeconomy with that word “sustainability”. People feel a personal insecurity because of the frequent beatings we get from Mother Nature, whether it’s from droughts in the west, wildfires, floods in the middle part of the country, and the polar vortices pulled down in Texas recently. More and more people are being affected either directly or indirectly.

What is an individual, a family, a community, or a company to do? They look for more sustainable ways to work, be safer, have that the high quality of life and to do it in a way that is better for the potential bad outcomes related to climate change. I think about our security broadly. Our energy security, economic security and environmental security are inextricably linked. We need to consider all three of those when we decide we want to shift away from something or towards something. For energy and economic results from energy, just think of biofuels as an example. For economic security and environmental security, ask ‘can we do it in a sustainable regenerative agricultural way?’; that’s really key. 

I asked, where is the industry growth strongest as LEC is seeing it in their pipeline, now?

LEE: There are four areas I see impacting bioeconomy growth. First, more governments are enacting clean energy legislation than in years past. For example, we see more countries attacking plastic pollution and landfill problems now. Second, a lot more industries, are finally coming into the fold. For example, where aviation has been for a while, now we see the maritime industry starting to engage in a big way. Third, we are seeing investors and banks that are contemplating climate change effects, so it is not purely a monetary decision anymore. Fourth, in supporting the agricultural and forest industries, we see a lot of demand for feedstock studies, due diligence work, a steady influx of people looking for funding, and lifecycle analyses.

McGinn linked the technology and sustainability drivers and emphasized the bioeconomy’s ability to tailor solutions.

MCGINN: I agree with Wayne that it’s not just demand that is expanding along these lines. It is also the supply. When you think about what has happened in biotechnologies it is really awe inspiring for me to step back and see LEC’s multi disciplinary teams being able to produce goods and services through molecular engineering, genetic engineering, all kinds of technology leaps that are enabled by unbelievable use of information technology and sensing down to the molecular level. So, the supply of solutions to address those demands for sustainable economic outcomes and sustainable quality of life are growing. It’s not just the demand. it’s the choices. Terry and Jason can talk about the demand for customization and I would simply add that isn’t just okay now to say, we’ve got A, B and C, take your pick. It’s ”we’ll do it your way” because of our ability to work together on teams to tailor specifically customized solutions for the specific client’s needs. 

Is the growth from the top down, driven by governments at the policy level, or from the bottom up where consumers are demanding change and corporations are pivoting to serve new needs?

MCGINN: it would be primarily a bottom up push, but not exclusively. People’s demands, and clients demands, for more sustainable products is a good example. That is directly related to the growing awareness about climate change, driven by the whole media and multimedia explosion — social media and traditional outlets.

When people really started to get their heads around the idea that “climate change is real”, the transition went from “yes it’s real but it’s gonna require sacrifice”; it’s going to require us giving something up. The challenges of climate [innovation] back then were a real downside. Now, as we evolve into a more sustainable bioeconomy, these days are opportunities to protect yourself from bad outcomes due to climate change, and to create tremendous new industries, jobs and economic vitality. Th economics are sustainable, and the effects are positive on the environment.

As corporations pivot fast to meet new needs, is a lack of bandwidth creating new demand for service providers with technical, policy and commercial capabilities?

WHITE: A major area of interest we are seeing is technical due diligence. We see it in biofuels and renewable diesel, and in requests for a major pension funds and private equity groups. They want our expertise in alternative proteins and cultivated meat. These are firms that are looking at more specialty applications than we’ve traditionally seen in the biotech space. We’ve seen these in using lipid nanoparticles, in RNA packaging to address insecticides and pesticides in a sustainable way. These things are exciting to me. These are the areas that are on the forefront, and we have the expertise – whether it’s an understanding of fermentation processes or from a more technical experience side of having evaluated investments in biofuels.

MCGINN: You mentioned due diligence. Because of this tremendous growth in the bioeconomy, more and more traditional financial institutions are getting in on the game. In many instances, they don’t have their own technical expertise. So, they can come to LEC’s “one stop shop” if you will, with our ability to put together multi disciplinary teams that can address finance, technology, policy, etc. and can put them together in a contextual way. There is tremendous growth in our ability to perform due diligence that is suited to work to the needs of US financial backers. 

SAF was a dominant discussion item at ABLC 2022. Is LEC hearing as much about it?

LEE: A good part of what we do is transportation fuels, and we continue to see that interest in traditional ethanol and biodiesel, but also in biogas, renewable diesel, biochar, sustainable aviation fuels, and the like. We see technologies like torrefaction, gasification and pyrolysis. We see a lot of requests regarding renewable hydrocarbons, SAF, renewable diesel, and there is a trend toward re-purposing existing plants, and developing more emerging biofuels such as biobutanol, and synthetic diesel.

MAZANEC: One big push I am seeing is in sustainable aviation fuel. There are several new technologies that are being developed there, everything from gas fermentation to pyrolysis, gasification, with Fischer Tropsch on the back end. So there’s lots of new technologies going on there. It’s being led to a great extent by the airlines. The airlines understand that they have a pretty big carbon footprint and there’s action from the bottom up saying “wait a second, are you doing things in a sustainable way” And the airlines are responding to that. They are trying to direct policy, and partnering with companies with new ways to make aviation fuels. 

Terry Mazanec pivoted to expand on the new feedstocks that industry would like to unlock, and pointed to some policy barriers.

MAZANEC: If you look at plastics, one question to ask is ‘when are we going to be able to recycle those into new plastics?’ This keeps the same amount of carbon in the ground as if you’d used biomass.

We ought to think about plastic as a resource, and already a highly upgraded resource. Typically, there’s very little contaminant in it unless, as with PVC, you get chlorine in there. So, you can convert that into new plastics or other things. From a policy perspective, it would be interesting to see if we could get some kind of a credit or mandate to encourage taking plastics where the carbon has already been extracted, and convert those into new, useful materials. That should get a credit. It may not be quite the same as for biomass, but something that shows people that plastic is of interest as well. One of the things driving this is all the plastics that have shown up in the ocean. That gets the headlines, but the back story is really that these things are being made in massive quantities. Something like 70- percent of all the plastics made in the last 30 years ended up in landfills and never got recycled. They are out there as potential raw materials.

Beyond fuels and chemicals, Jason White is beginning to see a diffusion of technology, especially some of those hitherto locked up in high-value biopharma applications.

WHITE: I’m in Boston, surrounded by a more traditional kind of biotech and biopharma. One of the signals I’m looking for is whether the technology – like the mRNA developed by Moderna for vaccines and techniques we’ve seen using lipid nanoparticles— is whether those are beginning to diffuse and move into other spaces. For example, cultivated meat, dairy, alternative proteins, or using technology for sustainable pesticides. I’m not coming at this as a technologist. I look at the big PE firms where we are well connected, where are they investing, where they are placing their bets. Where will the technology and economics meet? We are starting to see examples of it, like bio-fabrication from synbio-altered yeast. 

MAZANEC: I always think that the lead of new technologies typically comes from a high end, high value product. if you take something that’s not too expensive and can make it into something that’s really valuable, that is going to stand on its own. It doesn’t need any government pushing; doesn’t need people being worried about the environment to encourage it. It has intrinsic value of its own, and I think that will lead. The growth of the biorefinery will be led by some of these specialized applications, whether they are biological or chemical. Think of Avantium’s PEF molecule for clear plastic bottles with better properties than PET. There’s a new product that could be valuable and widespread. 

WHITE: At a high level, we have a strong history of fermentation with ethanol and now we are beginning to see the technology develop even further. Many of our clients are in these areas are cutting edge. This is the beginning of the commercialization process- using these technologies in more precise fermentations, beginning to explore end consumer products – that’s where I see the signals in the economy. We have had some of the largest PE shops in the country, and big investment banks coming to us. Their due diligence is absolutely critical. I think we’re going to see what we saw in solar and wind – a lot of malinvestment, bad investment. I think that’s part of why the large shops are coming to us. We have the team, with the experience. They don’t just draw the map, they’ve been to the territory. And, each one of these markets is different.

Terry Mazanec noted that, in part, the pivot to fermentation is driven by the fact that these new feedstocks have simply not been “hammered quite as hard for as long as petroleum has been.” Waste is making haste, in part because people are uncovering new value.

MAZANEC: As a technologist who grew up converting ethylene and methane and things like that, now we look at different feedstocks that have different things in them. They have different contaminants. They have a lot of oxygen, for example. It’s kind of exciting in a way in that there are new challenges. These feedstocks haven’t been hammered quite as hard for quite as long as petroleum has been, and there’s more opportunity for people to do new things, and develop new processes. Look at LanzaTech and what they’re doing, that’s something that, twenty years ago, people weren’t thinking about. While it’s one of the more spectacular ones, it isn’t the only one. There are others.

LEE: I see a strong push to turn waste into something useful. This includes paper mill waste, waste landfill materials, railroad ties, used tires, and the like.  Hydrogen is hot right now, as is green ammonia. We are asked how to integrate renewable hydrogen or to use the waste carbon dioxide in processes. Batteries are attracting attention.

MAZANEC: I also look at the other end of things — fine chemicals or specialized materials that can be made from fermentations. Fermentation is traditionally for ethanol but there are people making proteins, and all sorts of highly specialized, highly functionalized materials that could go into medications and all sorts of other things. So there’s a lot of opportunity there. In thermochemistry, I don’t see many new tools that have come come out in the last twenty years. Using high temperature and catalyst has been studied for many years and people have perfected those. However, on the bio side, with genetic manipulation and some of the things that this can do, it’s a whole new ballgame. They have new tools new skills that they can use and so they can tailor those in a way that you can’t really do as easily with conventional chemistry, I’m a catalyst guy, so you know I don’t want to knock it, but there’s more flexibility in being able to do new things, whether it’s fermentation or some other process. We have people looking at algae — if you can process cheaply enough it can be extremely valuable.

Denny McGinn pointed to the influx not only of new technology development companies and strategic investors, but the arrival of financial firms to drive the pace.

MCGINN: Certainly, companies are seeing more strength in synergistic partnerships rather than trying to do it by themselves.  One example: A few months ago I moderated a fireside chat between the CEOs of EPRI (Electric Power Research Institute) and RMI (Rocky Mountain Institute). There was tremendous overlap in thoughts and initiatives, but being achieved in different ways with different coalitions. When you look at the membership of the board of directors in ACORE (American Council on Renewable Energy), you’ll find more folks from financial institutions than from technology. The traditional renewable energy companies are still there, and certainly should be. But the financial aspects are so evident that it has become such a robust board of directors at ACORE.

I asked, where is the demand the hottest?

MAZANEC: One thing I see is anaerobic digestion – making renewable natural gas, primarily because there’s a big incentive. It can be made from things like food waste, cow manure and pig manure. Another one we get a lot of a requests for is due diligence studies in waste upgrading schemes. We get these mostly from the US, Canada and Europe, but also from the Middle East, surprisingly enough. We currently have a project using CO2 from direct air capture. CO2 is everywhere. It is easy to get, but sometimes expensive to separate.

Some of these companies, and the national labs, have more leeway to do blue sky research and work on longer timelines. The other things we get lots of requests for are techno-economic analysis. Companies, universities, government labs sometimes, working on a new process. They want to know what it’s going to take to make it work and where are the pinch points are in this process?

I asked, what are the feedstocks and geographies that are the most robust right now?

WHITE: One of the interesting things we’ve seen is coming out of India. In the last six months we’ve seen a big boom in the level of interest in creating ethanol and other biofuels, using what in the past were considered potential food sources. In India, that’s a real concern and we get it.

LEE: It’s happening. Jason mentioned India, much of the feedstock that they’re considering is not going to be from any edible feedstock. They ‘re not running into any “food versus fuel” arguments. China’s a big leader in the Far East. We have 10 project directors and we recently elevated one in Bangkok, Thailand, just to take care of the Far East. We also recently added an expert fluent in Chinese. South and Central America and the Caribbean are growing areas also. 

MAZANEC: To clarify, as Wayne said, in India, they probably would never use soybean oil to make biodiesel. They don’t have a surplus there. It comes down to many different feedstocks, whatever is in surplus. In the Far East. they have palm oil — in some places they have cut down too many trees, there’s a lot of restrictions in place. In Northern Europe they have tremendous forests. Different landscapes have different feedstock availabilities and restrictions., In New Zealand, they must be more self-sufficient and are looking at forest and ag waste. And look at biogas — who was focused on that 20 years ago?

LEE: We now have clients in New Zealand, Thailand, South America, the EU, North America, South Africa, and Morocco – all getting on the bandwagon, asking ‘what can we do differently?’ They want to know things like whether they can modernize a refinery to make it a “biorefinery”. So, at LEC, we have a vast array of expertise constantly being developed and deployed. The reason we are growing so fast is that we keep finding new things clients need us to do.

WHITE: It’s important to see where countries are in their development. As we start expanding our understanding of where the specific markets of the world are currently, we see some that are way ahead and some that are way behind. But, it’s really exciting to see all the progress that is occurring. 

Finally, a word about the rapid evolution at LEC itself — a bellwether for the changes that will be coming to other firms as they navigate the expansion opportunities.

LEE: As you know I founded LEC in 1995. Over the past 27 years, it has grown from a very small, boutique consulting group, to a large organization of more than 150 experts in all facets of the bioeconomy.  While, in the past, I really never had a desire to bring on partners, I knew changes had to come to carry us into the next 20 years.  I’ve known Jason for many years. He has been a friend that I have seen grow businesses for large companies like GE Capital. Last summer, the stars seemed to align. Jason retired at an early age from a Swiss start up at about the same time I was coming to the realization that I had to act on LEC’s explosive growth.  On January 1, 2022, I formally formed Lee Enterprises Consulting Partners LLC and Jason began as a full partner to me. I’ve had a wonderful, eye-opening experience as to how the structure of this organization is vital for the growth we’re seeing. We’re going to double what we were doing this time last year.

WHITE: My thought was what if I could become involved in a group that could address a lot of the health and human concerns – not just climate change, but other things like feeding people, shortening supply chains, and more local manufacturing. I think that in the foreseeable future, we might be able to have the freshest sushi ever, made in a bioreactor unit in Nebraska. Are we going to have enough bio reactor manufacturers? We’re helping clients to anticipate and meet those fast-evolving needs.