Renewables firms focus on cost squeeze

Last month’s gathering of the Biotechnology Innovation Organization’s World Congress on Industrial Biotechnology, held in San Diego, featured six tracks of diverse talks and panel discussions. But the hallways were nearly empty.

The high-traffic area, it turned out, was downstairs in a warren of little cubicles that BIO helpfully set aside for one-on-one partnering meetings. Executives from biobased chemical companies spent most of their time in conversation there, emerging occasionally to discuss how they plan to compete against products made from low-priced oil and natural gas.

No one, it seems, wants to go it alone in the biobased chemical industry. At the meeting, company leaders were looking not just for financial support or purchase agreements but for ideas and expertise to hammer down costs. At times, it felt like the industry was going back, if not to the drawing board, then certainly back to basics.

“At BIO, we’re looking to put our story out there and get more strategic partners,” said David Sudolsky, founder of Anellotech. The company makes aromatics from woody biomass using pyrolysis and catalysis. It is currently working with the beverage maker Suntory to develop p-xylene for 100% biobased polyethylene terephthalate bottles.

In San Diego, Sudolsky sought to diversify his business by finding companies that can use biobased benzene. He also hoped to meet with fuel firms that would like to increase their biobased inputs.

With wood as its feedstock, Anellotech has some curb appeal, but biobased chemical firms that rely on comparatively pricey sugar can look like clunkers. For example, Gevo started life boasting about its technology for converting corn sugar to isobutyl alcohol. At this year’s conference, use of sugar had to be defended.

Robert Walsh, senior vice president of genomics specialist Intrexon, presented his firm’s plan to make isobutyl alcohol not from sugar but from natural gas using methanotrophic bacteria. The company operates a pilot plant in South San Franscisco. “We have cost advantages in both capital expense and feedstock” compared with petroleum-based producers, Walsh said.

The world of goods that can profitably be made from sugar has shrunk as basic chemicals have gotten cheaper, acknowledged Thomas Boussie, cofounder of biobased chemical maker Rennovia. “We can’t compete in fuels made from sugar or in supercommodities,” he said. “We focus on more functionalized chemicals that contain more oxygen and selectively remove oxygen with catalysts.”

Start-up Lygos searched for a product family that would have a cost advantage using sugar as a feedstock—and that does not require massive manufacturing plants. Chief Technology Officer Jeffrey Dietrich said the firm is looking at chemicals priced at more than $3.00 per kg and sold to the tune of $75 million to $250 million per year. Malonic acid and its esters hit that sweet spot, he said.

Boussie remains confident in the long-term prospects for Rennovia’s plan to make sugar-based adipic acid because he says it is cost-competitive at commercial scale. But the company has adjusted its near-term plans: It will build a small plant to make the intermediates glucaric acid and 1,6-hexanediol to generate early, recurring revenues. And it has expanded its partnership with Johnson Matthey to codevelop the catalysts.

Indeed, low-cost, high-yield conversion of feedstocks to chemicals is highly dependent on catalysts, whether they are chemical or biological. Biobased manufacturers are “looking to squeeze every cent out of their production process,” said Cameron Hibbert, vice president of Genomatica. That’s good news for companies such as Genomatica that focus on the efficiency of conversions. Hibbert’s firm develops microbial pathways to make biobased intermediates for licensees including Novamont and BASF.

Similarly, Arzeda, a synthetic biology start-up, is working with Mitsubishi Rayon and Invista to establish biobased routes to polymers and fibers including nylon. According to Arzeda Chief Executive Officer Alexandre Zanghellini, the firm’s strength is in computational enzyme design and in getting enzyme pathways that function well into microbes.

“We use computers to design new genes that are not now made in nature,” Zanghellini explained. To that end, he announced a deal in which the synthetic DNA firm Gen9 will supply DNA crafted to Arzeda’s specifications. Zanghellini says his approach to clients is to ask, “What are the properties you want? We can build that molecule.”

Zanghellini says that, in the future, biobased firms will create novel molecules with properties that beat fossil-fuel-based competitors. For example, a monomer can be designed that greatly raises the glass transition temperature of a polymer.

Companies with biobased intermediates in the here and now are also making performance a selling point. Reverdia, for example, is now supplying its succinic acid to Mäder, a coatings firm, for a new alkyd-resin-based paint. The paint, which also contains Roquette’s bio-isosorbide, is scratch-resistant and comes in an antimicrobial formulation.

It’s hard work to find applications for biobased chemicals that leverage their strengths, said Marcel Lubben, Reverdia’s president. “But we know that once a brand changes to biobased, it is not going back.”