Issue Date: April 13, 2009
DURING THE PAST DECADE, major chemical companies have developed the means for converting renewable resources into large volumes of novel chemicals and plastics. Using nature’s bounty to make industrial products is not new, but the desire to supplant petroleum-based routes to bulk chemicals is.
This shift away from petroleum and toward renewable feedstocks is accelerating. The world market for biobased chemicals—excluding biofuels but including bioplastics and chemical building blocks—was $1.6 billion in 2008, according to market research firm Frost & Sullivan. As oil prices fluctuate and technology improves, increased production of these and other chemicals should boost the annual market to about $5 billion in 2015.
Concrete testaments to the big companies’ success are their 100 million-lb-per-year facilities making 1,3-propanediol (PDO), polyhydroxyalkanoate and polylactide polymers, and other industrial chemicals.
But not everyone wants to build, own, and operate world-scale plants. A crop of technology start-ups—firms such as Genomatica and Bioamber—believe it’s enough for now to focus on technology development. In the shadows of their bigger brethren, they’ve been in the lab designing newer biological and chemical processes that use renewable raw materials.
Although they are targeting multi-billion-dollar chemicals, most small firms do not plan on becoming large manufacturers. They typically house demonstration plants to fine-tune their processes, produce limited quantities for market testing, and show potential licensees the prospects for scaling up.
Small but savvy, these start-ups are being run by executives with experience in the traditional chemical industry. At a time of declining venture capital investment, they still have been able to raise capital and get government funding as part of the relatively attractive cleantech sector (see page 32).
Having a “capital-light strategy” to get to market quickly makes sense, says Douglas Cameron, managing director and chief scientific adviser for clean technology and renewables at the investment banking firm Piper Jaffray. A former academic scientist, Cameron also was chief scientific officer at the venture capital company Khosla Ventures and director of biotechnology at the agricultural firm Cargill, which runs the NatureWorks polylactide joint venture with Japan’s Teijin.
Some biobased chemicals are identical to traditional chemicals and will compete on a cost basis. Others are new molecules that address market needs and will compete more on performance than price. Although renewable origins may give products a slight marketing advantage, Cameron says, “it is not enough just to be green.”
“For a lot of these products, companies can compete with oil at $45 to $50 per barrel,” Cameron figures. The argument for biobased chemicals is even more compelling at what he calls a “sweet spot” of $70- to $100-per-bbl oil. “That’s a good price for stimulating this industry,” he adds.
SO FAR, though, prices for chemicals from alternative feedstocks generally have been higher than those for petroleum-based products, according to Leslie Burk, an analyst with the consulting firm BCC Research. Production costs will decline, she says, only as new technology becomes fully commercialized.
Saying it can compete with petrochemical routes, Genomatica is moving ahead with the plastic precursor 1,4-butanediol (BDO) and the solvent methyl ethyl ketone (MEK). The San Diego-based company uses computer modeling and microbe engineering to design biological pathways to convert sugars into the desired chemicals. Starting this way, Genomatica created an MEK-producing microbe from scratch in just a few months.
“We’re now optimizing those bugs to make more MEK, up to levels that we feel are sufficient to put them into production runs,” says President Christophe H. Schilling, who founded Genomatica in 1999 with University of California, San Diego, professor Bernhard Palsson. The company has recruited Mark J. Burk, formerly with enzyme developer Diversa and DuPont, as chief technology officer and Christopher E. Gann, a 26-year Dow Chemical veteran, as its chief executive officer.
MEK presents an opportunity to leverage small- to mid-sized ethanol facilities left idle in the current economy, Schilling says. Repurposing them is easy, he adds, because the MEK fermentation process is similar to that for bioethanol but yields a higher value product.
Genomatica engineers its microbes to be robust and tolerant of adverse conditions and to feed on glucose, sucrose, and other carbohydrates. “Designing in a level of feedstock flexibility will allow use of the lowest cost and most readily available feedstock within a particular market or geographical region,” Schilling says.
He expects the MEK-producing microbe will be ready for industrial use by the end of 2010. Likewise, within a year of first producing BDO, Genomatica has engineered more productive microbes. The company intends to build a demonstration plant this year to showcase an integrated BDO process to prospective licensees.
Similarly, by year’s end, France’s Metabolic Explorer expects to complete a pilot plant. The biobased chemical company says it will be able to determine the cost of each fermentation and purification step and extrapolate the total cost for industrial-scale manufacturing. The first of its five processes to enter this stage will be for PDO, followed by propylene glycol, glycolic acid, butanol, and L-methionine.
SCALING UP from bug to barrels can be time-consuming, as the companies trying to make succinic acid will attest. In 2004, the U.S. Department of Energy identified 12 top platform chemicals —succinic acid, glycerin, and levulinic acid among them—that could be produced from biomass and used as intermediates and end products.
Living cells make succinic acid as an intermediary in the energy-yielding Krebs cycle, but modifying a microbe to pump out large quantities has been challenging, says Patrick Piot, general manager of Bioamber, a joint venture between the biotech firm Diversified Natural Products and the French agrobusiness consortium ARD. Bioamber has exclusive rights to technology developed in 1995 by DOE and DNP’s predecessor Applied CarboChemicals.
Optimization and scale-up work has been under way since 2005, and the process is now competitive with petroleum-based succinic acid, Piot says. Bioamber is building a $27 million, 2,000-metric-ton-per-year demonstration plant in Pomacle, France, that should be operating by late 2009. By 2010 or 2011, the company anticipates reaching the stage at which it will license the technology to others interested in investing in large plants.
The world’s succinic acid market is less than 50,000 tons per year, but according to Piot, that’s because of its cost, not its usefulness. “We believe if we can lower the cost, we will be able to open new markets,” he says. Succinate salts and esters can be used in polymers, deicers, and plasticizers. The acid can be chemically converted to derivatives such as BDO, 1,4-diaminobutane, and N-methyl-2-pyrrolidinone.
Big company competition is on the horizon. Last month, DSM and French starch giant Roquette announced plans to complete a succinic acid demonstration plant in France by the end of the year. They intend to refine their process before scaling up to commercial production by 2012.
Any environmental benefit of using renewable feedstocks would be forfeited if the process itself consumed large amounts of energy or produced hazardous wastes. Yet most fermentation processes occur under mild conditions with relatively benign reactants. Succinic acid production, Piot points out, has an excellent carbon footprint since it actually consumes carbon dioxide.
As in other fermentation processes, Bioamber’s bug can consume glucose from a variety of plant sources, sucrose, or glycerin, which is a by-product of biodiesel production. Most producers are starting out with readily accessible corn or sugar feedstocks, Cameron points out.
These producers eventually want to transition to low-cost sugars from cellulosic raw materials that don’t compete with the food supply. But this raw material pipeline isn’t yet established. “There are enough technical hurdles that they are already working on that they don’t also want to be working on the feedstock hurdles,” he says.
SEGETIS, a Minneapolis-based start-up, is using glycerin and levulinic acid, neither of which is integral to the food chain, to make its first product, a levulinic ketal. Produced primarily in China in small quantities, levulinic acid can be made from biomass by a thermochemical process, CEO James Stoppert says. He joined the firm in late 2008 from Cargill, where he led its industrial bioproducts business unit.
Segetis is taking a different tack from firms such as Genomatica and Bioamber by using a chemical process to combine the biobased feedstocks. “It’s a very benign process that uses an off-the-shelf catalyst, and all the waste products can either be sold or recycled,” Stoppert says.
“We are making a new monomer that has never existed before, and there will be other alcohols that we will react with levulinic acid to make other monomers,” he explains. Segetis says its first product can replace phthalate plasticizers and polyols and be used as a solvent or in polymers.
In February, the company started up a pilot plant with capacity of 250,000 lb per year, and Stoppert is already thinking about a large-scale facility by 2012. “If this couldn’t be a $500 million to $1 billion business, I wouldn’t be here,” he says about the potential for growth. Segetis is the fifth business that he has been involved with in the renewables industry, and he says he prefers the chemistry approach.
“With fermentation, you spend years on it before you know if you have a product in terms of yields and the economics necessary to compete,” he says. “And you don’t know any of that until you actually get the process up and running. In terms of speed to market and risk mitigation, there is no comparison.”
Genomatica’s Schilling points to the benefits of fermentation processes that go directly from sugar to end-product in only one step. Chemical syntheses, in contrast, are generally multistep. Whatever technology is used, he believes it’s wise to avoid taking on the technical risk of developing a new process simultaneously with the risk of trying to introduce an entirely new molecule to customers.
As companies mature, and rapid advances continue in metabolic engineering and in applying chemocatalysis to biobased feedstocks, Cameron predicts they will move from their technological devotions to a more “technology agnostic” middle ground. “I personally favor whatever tool makes the most sense,” he says.
Another start-up following a chemistry route is Elevance Renewable Sciences, launched in 2008. Its roots are in a DOE-backed collaboration between Cargill and catalyst developer Materia, which has rights to metathesis technology developed by Nobel Laureate Robert H. Grubbs. Investment funds TPG Growth and TPG Biotechnology Partners helped raise $40 million to establish the company and support the scale-up of its technology.
Targeting specialty chemicals and revenue of $1 billion per year within a decade, Elevance uses olefin metathesis to convert vegetable oil molecules—by rearranging, shortening, lengthening, or branching them—into waxes, functional oils, lubricants, and antimicrobials. It already sells NatureWax commercial-grade waxes and is signing on development partners, such as Dow Corning in the personal care market.
“In most segments, we are offering new and different molecules but are targeting a particular functional performance that the segment has been wanting or replacing molecules that are under supply or other pressures,” says CEO K’Lynne Johnson, a former BP and Amoco executive.
“The technology is flexible and scalable and we can effectively use contract manufacturing while we commercialize products,” she adds. “Metathesis is a low-pressure and low-temperature process that doesn’t create a lot of toxic by-products or waste products.” Although it currently uses industrialized oils such as soybean and palm, Elevance is investigating alternative raw materials such as mustard oil, jatropha oil, and algae.
FOR EMERGING businesses, there are no guarantees. These start-ups still must improve their technology, test their processes, create new supply chains, and develop markets. External pricing and supply factors also will come into play.
Although biobased chemicals have been the focus of many studies, few analyses actually estimate production quantities, according to Utrecht University researchers. Supported in part by the European Commission, and with input from industrial partners, the researchers created scenarios based on bad, good, and neutral conditions in Europe (Environ. Sci. Technol. 2008, 42, 2261).
They factored in oil prices and feedstock costs, and they looked at energy savings, land use, and greenhouse gas emissions. Under favorable conditions, energy use and gas emissions would drop compared with petroleum-based processes. But even in the best case, high market potentials for biobased chemicals are likely only if technological developments continue, feedstock costs decline, and fossil fuel prices increase.
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