Biorefining Magazine - October 2010

INSIDE: INBICON’S BIOMASS TECHNOLOGY CAMPUS OCTOBER 2010

The Language Of Licensing What tech providers providers, potential partners should consider before sealing the deal

Page 28

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PACIFIC WEST EVENT

January 10–12, 2011 Sheraton Seattle Hotel Seattle, Washington

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With an exclusive focus on biomass utilization in California, Oregon, Washington, Idaho and Nevada, the Pacific West Biomass Conference & Trade Show is a dynamic regional offshoot of Biomass Power & Thermal’s International Biomass Conference & Expo, the largest event of its kind in the world.

Visit www.biomassconference.com/pacificwest and: View interactive exhibitor map See conference sponsors and review sponsor benefits Register to attend Explore conference agenda And much more!

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CONTENTS |

OCTOBER ISSUE 2010 VOL. 01 ISSUE 02

20

MARKETS

Filling a Void

More reliance on natural gas as a petrochem feedstock opens doors for biobased chemicals

BY ERIN VOEGELE

24

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INDUSTRY

BUSINESS

Fitting the Right Retrofit

The Language of Licensing

Why repurposing first-gen plants makes sense BY BRYAN SIMS

Important perspectives on selling―and buying―rights

BY LUKE GEIVER

CONTENTS DEPARTMENTS 4 Editor’s Note

Business Matters

BY RON KOTRBA

6 Advanced Advocacy Lots of Smoke―But No Fire in Washington

BY MICHAEL McADAMS

7 Industry Events

CONTRIBUTION

9 Legal Perspectives

International Joint Ventures and Alliances

BY DEAN R. EDSTROM

10 Business Briefs

People, Partnerships & Deals

32 Growing Biomass Ideas in Denmark

How one company’s biorefinery complex can help shape an industry

BY THOMAS CORLE AND ROGER MOORE

12 Startup

Biorefining News & Trends

Upcoming Conferences & Trade Shows

8 Talking Point

Biorefineries: What are They?

BY LARRY SULLIVAN

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EDITOR’S NOTE

Think like they think, talk like they talk—that’s what John McCarthy Jr., president and CEO of Qteros, says tech companies in the

licensing business have to do if they hope to be successful. Associate editor Luke Geiver this month gives us “The Language of Licensing,” a feature article that discusses the intricacies involved in the serious business of licensing technology.

The emerging biorefining sector is full of small companies entirely dedicated to developing and validating technology pathways to produce advanced biofuels and biobased chemicals, but which seek to license out their intellectual property, or process techniques, rather than own and operate biorefineries themselves. The more I read over this article, the more similarities I found among this courting ceremony between licensing companies and potential partners, and mating rituals one might see on a Discovery Channel or Animal Planet program— or in a more familiar sense, experiences in human courtship.

To explain, here are a few key points Geiver covers in his article, items that got my mind connecting the licensing business and the eternal dance. To go back to McCarthy’s line, if there is no meeting of the minds (think like they think, talk like they talk), then “you will be speaking different languages and nothing will happen, regardless of what you are bringing to the table from a value perspective.”

If one party, for instance, wants permanance and the other wants no commitment, their goals will not be compatible and there is very little chance a mutually beneficial relationship will develop. Another similarity is the need for the market and the customer to understand each other—for anyone who’s been in a relationship, this needs no explanation. Greg Pal, a vice president with LS9, says what licensees “are really looking for is, first and foremost, very strong technology.” Like the alpha male in a pride of lions, the technology holder always has options, and need not go without partners. Biorefiners are risk adverse, so safety and security RON KOTRBA, EDITOR are essentials—sound familiar? The similarities go on.

RKOTRBA@BBIINTERNATIONAL.COM Enjoy this issue of Biorefining, and feel free to email or call to let us know what you think.

BUSINESS MATTERS

FOR MORE NEWS, INFORMATION AND PERSPECTIVE, VISIT BIOREFININGMAGAZINE.COM/THEBIOREFININGBLOG

CONTRIBUTING WRITERS THOMAS CORLE and ROGER MOORE together wrote “Growing Biomass Ideas in Denmark,” a contribution article about Inbicon’s biomass technology complex at Kalundborg port. Corle is cofounder of G-team, a marketing, communications and consulting company. Moore is a G-team consultant and Corle’s creative marketing partner. They have worked together for more than 20 years.

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LARRY SULLIVAN owns his own consulting company and wrote the Talking Point editorial column this month, which he titled, “Biorefineries: What are They?”

EDITORIAL EDITOR Ron Kotrba rkotrba@bbiinternational.com ASSOCIATE EDITORS Erin Voegele evoegele@bbiinternational.com Luke Geiver lgeiver@bbiinternational.com Bryan Sims bsims@bbiinternational.com COPY EDITOR Jan Tellmann jtellmann@bbiinternational.com

ART ART DIRECTOR Jaci Satterlund jsatterlund@bbiinternational.com GRAPHIC DESIGNER Sam Melquist smelquist@bbiinternational.com

PUBLISHING CHAIRMAN Mike Bryan mbryan@bbiinternational.com CEO Joe Bryan jbryan@bbiinternational.com VICE PRESIDENT Tom Bryan tbryan@bbiinternational.com

SALES VICE PRESIDENT, SALES & MARKETING Matthew Spoor mspoor@bbiinternational.com EXECUTIVE ACCOUNT MANAGER Howard Brockhouse hbrockhouse@bbiinternational.com SENIOR ACCOUNT MANAGER Jeremy Hanson jhanson@bbiinternational.com ACCOUNT MANAGERS Chip Shereck cshereck@bbiinternational.com Marty Steen msteen@bbiinternational.com Bob Brown bbrown@bbiinternational.com Gary Shields gshields@bbiinternational.com Andrea Anderson aanderson@bbiinternational.com CIRCULATION MANAGER Jessica Beaudry jbeaudry@bbiinternational.com SUBSCRIBER ACQUISITION MANAGER Jason Smith jsmith@bbiinternational.com ADVERTISING COORDINATOR Marla DeFoe mdefoe@bbiinternational.com

Customer Service Please call 1-866-746-8385 or email us at service@bbiinternational.com. Subscriptions to Biorefining are $24.95 per year in the U.S; $39.95 in Canada and Mexico; and $49.95 outside North America. Subscriptions can be completed online at www.biorefiningmagazine.com or subscribe over the phone at (701) 746-8385. Back Issues, Reprints and Permissions Select back issues are available for $3.95 each, plus shipping. Article reprints are also available for a fee. For more information, contact us at (701) 746-8385 or service@bbiinternational.com. Advertising Biorefining provides a specific topic delivered to a highly targeted audience. We are committed to editorial excellence and high-quality print production. To find out more about Biorefining advertising opportunities, please contact us at (701) 7468385 or service@bbiinternational.com. Letters to the Editor We welcome letters to the editor. Send to Biorefining Letters to the Editor, 308 2nd Ave. N., Suite 304, Grand Forks, ND 58203 or e-mail to rkotrba@ bbiinternational.com. Please include your name, address and phone number. Letters may be edited for clarity and/or space.

Please recycle this magazine and remove inserts or samples before recycling COPYRIGHT Š 2010 by BBI International

OCTOBER 2010 | Biorefining | 5

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ADVANCED ADVOCACY

Lots of Smoke― But No Fire in Washington The impending national election is stalling much-needed biofuels tax credit relief

BY MICHAEL McADAMS

M

y father, a fixture in Texas politics, would often tell me while growing up there is too much hurry up and wait in Washington for anything to get done, and even today Congress is proving him right. After months of intense debate and scrutiny on Capitol Hill, and with just two weeks before the scheduled adjournment of the House of Representatives as well as the Senate, the likelihood of passage of a number of biofuels tax credits is questionable.

Last month in this column I explained that for over a year now, the biofuels industry has been helping Congress identify real opportunities to help accelerate the timing when Americans could actually start seeing the benefits of advanced biofuels in their daily lives, through cars and trucks to buses, trains and planes. Many lawmakers recognized the first step would be providing added certainty to the industry through a level public policy playing field by strengthening and expanding federal tax incentives for next-generation biofuels.

Our industry is encouraging Congress to take steps such as extending the

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biodiesel, renewable diesel and alternative fuels mixture credits. While several pieces of legislation have passed the House, they have seen a different fate on the other side of Capitol Hill, as each measure stalled in the Senate.

The game-changing opportunities are real as the advanced biofuel industry offers to help solve the country’s current energy problems, and start putting Americans back to work. Our industry is not seeking a lifetime of public policy support, but short-term pragmatic incentives would provide potential investors the certainty they need to make long-term investments and lower costs through large-scale manufacturing facilities.

So why is it that, at a time when Congress is clamoring about the desperate need for legislation that sparks the creation of jobs and energy independence, all we’re seeing is more hurry up and wait? The answer is frustrating, but pretty simple.

We are getting closer to a national election and both parties are looking for rhetorical ammunition from a “do nothing” moniker to a “too much” label.

To make matters worse, a number of advanced biofuels companies this year

continued to produce under the hopes that the provisions would be made retroactive to the first of January. But as we get closer towards the tricks and treats of Halloween, the credits are still not passed and many are concerned that the inability to pass a retroactive provision will be more of a sour Halloween treat. But with the election looming and the expiration of the Bush tax credits for individuals on the line as a powerful political debating point, it remains unclear whether time or support will be sufficient to consider any of these crucial biofuels provisions prior to the election.

Remember now is the time all politicians of all flavors want your vote, so when the opportunity arrives, remind all of your representatives how important it is to extend the biofuels tax credits before the end of the year, as well as give the advanced biofuels companies the same options as the wind and solar industries to utilize and investment tax credit. I suspect we will be visiting this subject again in November.

Author: Michael McAdams President, Advanced Biofuels Association (202) 747-0518 mmcadams@bhfs.com

EVENTS CALENDAR |

International Algae Congress 2010 December 1-2, 2010

Congress Centre, The Planetarium Amsterdam, Netherlands This fourth event is expected to attract 200 people from more than 40 countries. Focus will be on development, technologies and political issues in the world’s growing algae industry. The event is organized by DLG Benelux, subsidiary of Germany-based DLG e.V. +31 (0)348 484002 www.algaecongress.com

Pacific West Biomass Conference & Trade Show January 10-12, 2011

Biomass Event Hotspot: Atlanta in November 11/2

If it’s not already been done, reserve a spot for this don’t-miss event: BBI International’s Southeast Biomass Conference & Trade Show, produced jointly by Biomass Power & Thermal and Biorefining magazines, Nov. 2-4 at the Hyatt Regency Atlanta. The conference, one of three distinct regional offshoots of BBI’s International Biomass Conference & Expo, will feature more than 60 speakers in four tracks: electricity generation; industrial heat and power; biomass project development and finance; and biorefining.

Within the biorefining track are four panels. Biodiesel from Waste and LowValue Feedstocks will feature researchers, a small-scale producer and a pretreatment company, all of whom will discuss taking advantage of local waste streams― used cooking oils, trap and sewer greases―that can be burdensome to communities, and turning them into quality biodiesel.

The race to commercial cellulosic biofuel production is heating up, and the combination of established process developers with new production advancements reveals that there’s more than one path to reach the cellulosic finish line. Another panel, Biofuels Advancements in Dixie: Pathways to Cellulosic Ethanol Production, will highlight several pathway approaches in the marathon of renewables, including detailed progress reports and feasibility issues facing many technology providers. Along with the industry overview, the panel will also discuss local, low-cost cellulosic ethanol production, new yeast strain developments with test results, and the future of pectin-rich residues use in advanced biofuel production.

From eucalyptus to miscanthus, algae and switchgrass, the Southeast is primed to be tapped as a viable feedstock source aimed to support various bioenergy applications, including biobased chemicals and advanced biofuels production. Many issues surrounding biomass logistics, including feedstock management, collection, handling, densification, feedstock sustainability, cost and much more, will be covered in a panel titled Southern Energy Crops: Optimizing Regional Crops to Feed the Growing Biomass Derived Energy Industry.

The fourth panel, Biorefining: Technological Pathways to Renewable Hydrocarbons, will focus on new and existing technology platforms that are designed to convert biomass into renewable drop-in substitutes for fossil fuels. The four panel speakers are experts in the development and commercialization of these processes.

Attendees will learn about demonstration-scale thermochemical biorefineries that are currently converting biomass into renewable fuels and chemicals via a syngas platform, as well as fast pyrolysis platforms that produce bio-oil, which can be converted into renewable hydrocarbon fuels at existing petroleum refineries. Register today at http://se.biomassconference.com.

Sheraton Seattle Hotel Seattle, Washington This event is one of three distinct regional offshoots of Biorefining and Biomass Power & Thermal’s International Biomass Conference & Expo.

The program will feature more than 60 speakers within four biomass-specific tracks, one of which is biorefining.

(701) 746-8385 www.biomassconference.com/pacificwest

International Biomass Conference & Expo May 2-5, 2011

America’s Center St. Louis, Missouri The International Biomass Conference & Expo is the biomass industry’s largest, fastest-growing event. Plan to join more than 2,500 attendees, 120 speakers and 400-plus exhibitors for the premier international biomass event of the year.

(701) 746-8385 www.biomassconference.com

International Fuel Ethanol Workshop & Expo June 27-30, 2011

Indiana Convention Center Indianapolis, Indiana The FEW is the largest, longest-running ethanol conference in the world. Focused on commercial production of grain and cellulosic ethanol, operational efficiencies, plant management, energy use and near-term research and development, the FEW will attract 2,500 attendees.

(701) 746-8385 www.fuelethanolworkshop.com

OCTOBER 2010 | Biorefining | 7

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TALKING POINT

Biorefineries: What are They?

How high development costs for biorefineries can squeeze out farmers

BY LARRY SULLIVAN

T

he American landscape is littered with biorefineries: the cattle rancher that converts low-value hay to protein for steaks and burgers; the pharmaceutical company that makes sugar into exotic and remarkable prescription drugs to save lives; corn wet millers that take simple corn and make corn oil, ethanol, corn germ, enzymes, lysine and other great products for the food and feed industry. Wet millers are the forgotten heroes of American corn processors with their massive plants on the Mississippi, Missouri and other major river systems.

The federal government, and some enlightened state governments, have sought an increase in value for corn and soybean farmers. The proliferation and success of farmer-owned dry mill plants have helped secure better commodity prices. Many in this industry argue that once the corn ethanol plants install fractionation or other upgrades, they should be eligible to be called biorefineries, and I agree.

Early in my career, Conoco in Europe tasked me with finding more value in two of its refinery units in the U.K. and Germany, beyond the usual refinery fuels.

These are sometimes called “petrochemical intermediates” or “olefins and aromatics,” and this was driven by DuPont, then Conoco’s parent company. Most of the successful refinery and petrochemical complexes were intentionally designed to produce both fuels and chemicals, like

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Shell and ExxonMobil. The magic number is 7 percent, which refers to the percent of refinery volume that can be donated to high-value products relative to fuels, without a major upset in fuel production planning and optimizations.

The orthodox U.S. DOE and USDA thinking today concentrates on cellulose that is broken up into sugars for fermentation or thermal processes, or some combination. Ideally, the cellulose is gasified to syngas and then fuels are produced, as are the intermediates that are used in chemical markets, much like the “olefins and aromatics” that refiners make for their petrochemical merchant sales or captive uses. Projects involving gasification and syngas reformation to fuels are very capital rich, however, more so than most American farm groups can afford. Few companies, besides the petroleum giants, have the access to capital and technical skills to build large syngas-to-fuel projects.

Even mighty ExxonMobil backed out of its project in the Middle East when costs rose above $10 billion.

Generally, the barrier to entry for biorefinery projects is high. Success of farmer-owned corn ethanol plants was largely recognized in connection to the low costs—incredible $40 million, 40 MMgy ICM/Fagen plants. Today, a new 110 MMgy ethanol plant could cost less than $200 million, with used facilities going for less. A simple, small new petroleum refinery, such as Arizona Clean Fuels

proposed, is expected to cost more than $4 billion.

The wet mill industry is dominated by Big Agriculture, and the farmer co-op new generation groups have not been successful in building, owning and operating these giant biorefineries. There are farmerowned groups that propose to build, own and operate-smaller scale, quasi-wet mills that allow for oilseed production and corn starch chemical processing, adding higher value to product streams. Many insiders comment that wet mills are, in fact, true biorefineries but I don’t expect to ever see a full-scale wet mill in the U.S. ever again, because of corn product market saturation, difficult air and water permitting, and offshore sites that feature lower costs.

So then, what is a biorefinery? Is it a dry mill with all the bells and whistles to make fuel and feeds, as well as other chemical products? Have the USDA and DOE assured the public that the funding for biorefiners will be structured so that high barriers to entry will not prevent farmer co-ops from the success we have seen with the dry mill model? This new BBI International journal, Biorefining, will attempt to address these complex issues.

America needs advanced biorefineries.

Author: Larry Sullivan Owner, Consultant, Lawrence D. Sullivan and Co. Inc. ldsul@msn.com

LEGAL PERSPECTIVE |

International Joint Ventures and Strategic Alliances How local laws impact global partnerships BY DEAN R. EDSTROM

F

orming a joint venture or strategic alliance in the international marketplace adds an array of factors that complicate the issues normally encountered in such relationships.

These include different languages, cultures, laws, regulatory procedures, business practices, taxes and other considerations.

Structuring an international venture or alliance requires consideration of the impact of local law on the form of the enterprise. While a venture based entirely on a contractual relationship may be sufficient, particularly if the participants are subsidiaries formed to protect the interests of parent companies, the creation of a formal entity for the venture is often necessary or desirable. In each case, the contract or entity will be subject to local law.

The domestic and foreign tax regimes applicable to the venture could significantly impact earnings. Variables will include alternative taxing jurisdictions, taxes—such as the value-added tax—that may not be familiar to U.S. parties, tax rates, applicable tax treaties and different administration and enforcement regimes. In some countries or regions, tax enticements may be available, particularly where the venture promises significant investment or employment.

Protection of patent, trademark, copyright, trade secrets and knowhow, as well as future modifications or improvements, should be dealt with in the venture agreements and protected under local law.

The scope of protection afforded and the remedies available for infringement or

misappropriation must be considered.

The regulatory scheme encountered by a joint venture can be very different from what is familiar to the parties. And, the regulatory environment can change.

In some countries it may be necessary to apply for permission to establish a venture, and to execute undertakings regarding the repatriation of earnings, employment, future investments, ownership of technology and the like.

The EU countries and others have adopted employment and labor laws that are strongly in favor of employees. Termination of employees and distributors can be a difficult and expensive process. Obtaining visas for U.S. nationals employed abroad, and for non-U.S. citizens employed in the U.S., may be difficult.

Environmental laws and regulations at the locations of the venture’s operations must be reviewed in advance, both because permits may be required and the consequences of violation can be disastrous.

The U.S. and EU have significant antitrust or competition laws and regulations that may require attention. Notification requirements in the EU for the acquisition of businesses are an important example.

U.S. antitrust laws apply if there is a potential domestic impact of an agreement, or any anticompetitive conduct.

A variety of other U.S. regulations may apply. U.S. entities that own a 10 percent or greater interest in a foreign business, or that are owned 10 percent or more by a foreign investor, must report to the U.S. Department of Commerce. U.S. export/import regulations may restrict the

export of technology or require a license.

U.S. antiboycott regulations are a trap for the unwary when doing business in the Middle East. And, a joint venture does not necessarily shield a U.S. business from the consequences of corrupt practices abroad.

International operations may involve special market risks, ranging from different liability rules to currency fluctuations and political or social unrest. Prudent operating practices, such as insuring against insurable risks, hedging and repatriating earnings, should be considered.

A venture or alliance will need to change with the circumstances. Agreements should anticipate this and provide a method for change, termination and dispute resolution. Applicable law may make termination difficult and expensive.

Most significant could be the issue of the ownership of technology. Choice of law, forum and remedies must be addressed. A common solution is to provide for arbitration at a neutral site, before an internationally recognized tribunal, with law of a recognized neutral jurisdiction applicable.

International joint ventures and strategic alliances create opportunities to develop technology, enter new markets and finance operations. Knowledge of the issues, advance planning and capable professional advisors are keys to the success of any joint venture or strategic alliance.

Author: Dean R. Edstrom Attorney, Partner, Lindquist & Vennum PLLP (612) 371-3955 dedstrom@lindquist.com

OCTOBER 2010 | Biorefining | 9

BUSINESS BRIEFS People, Partnerships & Deals

Industrial microalgae biotech company Solazyme Inc. announced that the global agribusiness and food company Bunge Ltd. has joined its Series D round as a strategic investor. The investment represents a foundational step for the two companies to collaborate at critical portions of a new value chain, Solazyme states, enabled by its sugar-to-oil technology platform. Bunge is one of the largest sugarcane processing companies in Brazil.

“Solazyme’s technology sits right at the intersection of Bunge’s substantial access to sugarcane and its key position in the worldwide natural oils markets, says Jonathan Wolfson, CEO and cofounder of Solazyme. “This, along with their operational and logistical capabilities, makes Bunge an ideal strategic investor.” Braemer Energy Ventures and Morgan Stanley led Solazyme’s Series D round, with all major existing investors from previous rounds participating, including Lightspeed Venture Partners, The Roda Group, Harris and Harris Group, VantagePoint Venture Partners and Zygote Ventures. Existing strategic investors CTTV Investments LLC, the venture capital arm of Chevron Technology Ventures LLC, and San-Ei Gen, a major Japanese manufacturer and distributor of food ingredients, also participated.

Manufacturer of biobased, compostable plastics, Cereplast Inc., announced in September that it has partnered with Sezersan Ambalaj, a subsidiary of Asc Group in Turkey, to produce bio twist films made from Cereplast Compostables resins. The first-of-its-kind, patented product will serve as wrap packaging for a variety of food products distributed throughout Europe. The Sezersan bio twist film will be manufactured using Cereplast Compostables 7003 bio resin, designed 10 | Biorefining | OCTOBER 2010

to provide high strength, toughness and process ability for products. Under the terms of the multimillion dollar agreement, Cereplast will begin monthly shipments of 100 to 150 metric tons of bio resin in December. The new bio twist film has substantial form memory capability, or “dead-fold behavior,” and is heat sealable, the company states. The film is also thinner than other twistable products and may be made into opaque or semitransparent, film-like material. The bio twist film will be used as packaging for a variety of brands in the food industry in Europe. Cereplast states it produces bioplastic resins for use in tableware, cutlery, toys, healthcare and hygiene products, bottles and containers, bags, packaging, gift cards, printed displays, straws, pipes, conduits and other applications.

Stefan Kaiser has joined Vecoplan LLC in High Point, N.C., as head of business development. Formerly with partner company Vecoplan AG in Bad Marienberg, Germany, Knowledge Transfer Kaiser will act as a liStefan Kaiser, head of business development aison between the two for High Point, N.C.entities for the transfer based Vecoplan LLC, will be the company’s of both technological EU-U.S. liaison. and practical knowledge as it applies to best practices in the design, manufacture and implementation of turnkey biomass processing systems in North America and Europe. “In many areas the European biomass industry is ahead of us here in North America,” says Len Beusse, COO of Vecoplan LLC. Vecoplan engineers and manufactures complete alternative fuel systems, including preshredding, separation, screening, air classification, reshredding, storage, unloading, sampling, and delivery of fuel to its processing destination.

Systems are used in the preparation of biomass boiler fuel, for cofiring with coal and other fuels, for size reduction prior to gasification, for size reduction prior to pelletizing, and in the conversion process for cellulosic ethanol and other biofuels. Vecoplan has experience in processing wood, corn stover, switchgrass, miscanthus, any ag fuel crop, and all organic matter used as alternative fuel.

In September, privately held Zymetis Inc., a Maryland-based bioscience discovery company working on bacterial reformation of complex biomass, announced that enzyme maker Genencor, a division of Danisco A/S, has initiated an effort to explore novel methods for producing biobased chemicals directly from biomass feedstocks through use of a unique marine microorganism being developed

by Zymetis. Terms of the agreement were not disclosed. “Aligning with Genencor, a leader in Industrial Biotechnology, helps us accomplish three corporate goals at once,” says Scott Laughlin, Zymetis CEO. “First, it provides an opportunity to validate our technologies. Second, it offers a concrete commercialization path. And third, it provides the foundation for other key strategic alliances for us in the biochemicals industry.” Zymetis states it has engineered bacterium capable of converting whole plant material such as corn cobs, switchgrass, waste timber fibers and other biomass, into sugars that can then be used to make a range of commercially valuable products in the biofuel and biochemical industries. The company’s flagship technology is the Zymetis Integrated Process, whereby strains of the organism and its enzymes are used directly in the processing of biomass into sugars tailored for particular industrial processes.

BUSINESS BRIEFS |

Three major Canadian players in the green chemistry commercialization business have joined forces in a drive to make Ontario and Canada a world leader in sustainable chemistry innovations.

GreenCentre Canada of Kingston and Sarnia’s Bioindustrial Innovation Centre and Sustainable Chemistry Alliance have signed a collaboration memorandum of understanding that leverages their respective expertise, facilities and services in a common goal of moving green chemistry discoveries to market. GreenCentre Canada focuses on product and application development and intellectual property management, and BIC and SCA, which foster growth of renewable, biobased industries, focus on large-scale investment attraction, process development, and the design and commissioning of continuous pilot manufacturing and demonstration units. Recognizing their mutual strengths, the three entities will promote one another’s services and resources to their respective networks, in addition to providing commercialization services to selected technologies that each party believes will benefit from the other’s expertise or resources.

Verenium Corp. recently appointed Kevin Bracken to vice president of manufacturing. “Kevin brings more than 30 years of valuable manufacturing experience from global biotechnology companies,” says Janet Roemer, president and COO of Verenium’s enzymes business, to whom Bracken will directly report. “His extensive background in manufacturing leadership and breadth of expertise in process engineering, facilities and equipment design, project management, contract manufacturing, and commercial scale-up of novel products will greatly benefit Verenium

as we work to optimize and expand our manufacturing capabilities.” Previously, Bracken was vice president of manufacturing at Vical Inc., a developer of biopharmaceutical products. Before that, Bracken was vice president of process engineering and manufacturing at Universal Preservation Technologies Inc., and was director of engineering for Molecular Biosystems.

To support its growing resorbable polymers business, Purac is investing €15 million ($20.2 million) in a new U.S.-based manufacturing facility for its biomedical polymers. The company currently operates a biomedical polymers plant in Netherlands. Construction is expected to start and be completed in 2011. The Purac Biomaterials business comprises Lactidebased polymers such as polylactic acid and lactide/glycolide copolymers. The technology as developed for Purac’s biomedical polymers also formed the basis for Purac’s activities in L- and D-lactides for bioplastics such as PLA. In other company news, Purac and Arkema announced a recent collaboration in functional lactide-based block copolymers, which will enhance the thermomechanical and physical properties of many biobased polymers such as PLA, resulting in a wider range of applications opportunities. These copolymers are produced by combining Arkema’s organic catalysis ring-opening polymerization technology with Purac’s L- and D-lactide monomers.

Glycos Biotechnologies Inc. added Rob Toker to its management team as vice president of partnerships and market research. Toker will be responsible for the company’s overall partnership strategy and the related international market research required to deploy the company’s technology globally. He will also be focused on feedstock and commodity market analysis, negotiation and contracting.

BlueFire Renewables Inc. secured an off-take agreement with Tenaska BioFuels LLC for the purchase and sale of all ethanol produced at BlueFire’s planned cellulosic ethanol facility in Fulton, Miss.

Pricing of the 15-year contract follows a market-based formula structured to capture the premium allowed for cellulosic ethanol compared to corn ethanol, BlueFire states, giving the company a credit-worthy contract to support financing of the project. Despite the long-term nature of the contract, BlueFire is not precluded from the upside in the coming years as fuel prices rise. TBF, a marketing affiliate of Tenaska, provides procurement and marketing, supply chain management, physical delivery, and financial services to customers in the agriculture and energy markets, including the ethanol and biodiesel industries. The Fulton project, which will allow BlueFire to use green and wood wastes available in the region as ethanol feedstock, is designed to produce 19 MMgy. Another fully permitted, shovelready facility in Lancaster, Calif., will use post-sorted cellulosic wastes diverted from Southern California’s landfills to produce nearly 4 MMgy. SHARE YOUR INDUSTRY BRIEFS To be included in Business Briefs, send information (including photos and logos if available) to: Industry Briefs, Biorefining, 308 Second Ave. N., Suite 304, Grand Forks, ND 58203. You may also fax information to (701) 746-8385, or e-mail it to rkotrba@bbiinternational. com. Please include your name and telephone number in all correspondence.

OCTOBER 2010 | Biorefining | 11

Renewing Beauty from Within P&G Co. turns to biobased packaging on select product lines BY BRYAN SIMS Sugar is sweet and everything is nice for The Procter & Gamble Co. as the global consumer products manufacturer recently announced plans to use sugarcane-derived plastic on select packages for its Pantene Pro-V, Covergirl and Max Factor brands.

P&G will source its plastic from Brazilian petrochemical company Braskem SA, Sustaining Beauty which produces 200,000 tons-per-year of Jenny Rushmore, global sustainability biobased ethylene from sustainably-grown leader for Proctor & Brazilian sugarcane ethanol at its plant in Gamble, says using organic material in Triunfo, Brazil. Braskem began producconsumer product tion in late September and touts the facility packaging is important to the company. as an emerging premier global supplier of biobased polyethylene. Ethylene is the building block of high-density polyethylene (HDPE) plastic.

P&G intends to pilot launch its biopackaging over the next two years, with the first products hitting shelves in 2011. By launching the renewable packaging for some of its global beauty brands, P&G will leverage its established scale to deliver meaningful environmental improvements. According to P&G, the use of biobased polyethylene plastic in place of petroleum-derived material is a significant step towards its sustainability objective, says Jenny Rushmore, global sustainability leader for P&G’s beauty and grooming external relations division.

“P&G has a long history of commitment to sustainability, and our pilot of sugarcane-derived packaging is part of our journey to that commitment,” Rushmore tells Biorefining. She says the company expects launch of its new packaging to be well-received by its customers without trade-offs in performance or quality compared to its petrochemical counterparts.

“From our research with consumers around the world, 70 percent told us that they want more environmentally friendly products, but without having to sacrifice on performance or pay more,” Rushmore says. “Launching products such as this new sugarcane-derived packaging helps meet their needs, as the plastic looks, feels and behaves exactly like traditional plastic, but is made from a renewable resource.”

As to whether P&G intends to integrate nonfood-based alternatives into future packaging on select brands, Rushmore says the company is always on the lookout for such routes. “We have a team of packaging experts who are constantly looking at a variety of more sustainable alternatives to traditional petroleum,” she says.

12 | Biorefining | OCTOBER 2010

The Consumer’s Role Many customers seem willing to compromise on price, functionality of biobased food packaging―for now

BY ERIN VOEGELE

Although the U.S. economy remains largely depressed, market demand for biobased plastics is on the rise. This is driven by consumer pressure on the retail community and municipal regulations requiring food service packaging materials to be recyclable or compostable.

packaging made using NatureWorks LLC’s Ingeo biopolymer.

That biobased material, a polylactide (PLA), is compostable and can help businesses comply with new regulations, Simonson says. “The larger piece of this is that the general public’s awareness of environmental issues

PHOTO: DYNE-A-PAK INC.

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Biorefining News & Trends

In Demand Foam packaging materials manufactured by Dyne-a-pak are compostable.

“Most disposable food service products are not currently recyclable, which means that most companies are going down the compostable route,” says Wendell Simonson, marketing director at Eco-Products, a company that sells food service

just continues to explode,” he adds. “Even though we sell to businesses and retail customers, those businesses are doing everything they can do to make sure they are meeting the needs of their ever-evolving, environmentally aware clientele.”

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Biobased polymers are relatively new in the marketplace, especially compared to their petroleum-based counterparts. Evolving technology means consumers need to make some compromises in functionality and price.

Heat tolerance is one of the biggest issues with the packaging materials Eco-Products sells, Simonson says, noting that customers must also be willing to pay a premium. “People understand that if they want to participate in the movement to try to do something about environmental conservation, there is going to be a premium attached to it,” he says. “If people weren’t willing to pay that premium, then we wouldn’t have the growing business that we do.”

Simonson says once the technology matures—and the price and functionality issues decrease—his company expects demand for biobased products will grow geometrically. “Most of these products that we deal in have been traditionally commodity-driven lines, meaning that price is essentially still the number one factor in these buying decisions.”

Canada-based Dyne-a-pak Inc. also manufactures food packaging materials out of NatureWorks’ PLA. “Interest is growing exponentially,” says Mario Grenier, Dyne-a-pak’s general manager.

“We have a lot of demand right now on the West Coast because of the bans on polystyrene many cities have enacted.

On the East Coast, we see an interest from specialty stores and packers

that are packing specialty products like organic meat.” Although Grenier agrees that biobased plastics and foams are more expensive than petroleum-based products, he notes the price of PLA materials is on par with other product lines that can serve as a replacement for materials like polystyrene foam, such as laminated cardboard.

“We think that premium will disappear over time, as we get more volume and we get more efficiencies in production,” Grenier says. “I think if this product right now could be at the same price as polystyrene, we would probably outsell polystyrene. It’s a matter of bringing the cost in-line with oil-based polymer. At that point, I think there is no limitation on the polymer.”

Steve Davies, NatureWorks’ director of marketing and public affairs, also thinks that demand for PLA will continue to increase. Triple-digit growth for its products was achieved in 2005 and 2006, followed by flat-lined demand in 2008 and 2009, with demand growing again this year, he says, adding demand for NatureWorks’ products has been so strong the company doubled its production capacity last year to 140,000 metric tons a year. “We expect to have the full production sold out and in use within the next three years,” Davies says. “For that reason, we are looking at a second plant location now.”

Amyris Biotechnologies

Osage Bio Energy

BP

Rentech

Dynamic Fuels

Sapphire Energy

Elevance

SGC

Emerson Process Management

Solazyme Inc.

Gevo Inc.

Sun Drop

GeoSynFuels

Triton

Kern

Tyson Foods Inc.

Kior

Unica

Live Fuels

Honeywell's UOP

LS9 Inc.

Velocys Inc.

Neste Oil

Viesel

New Generation Biofuels

Virent Energy Systems Inc.

SOURCE: ADVANCED BIOFUELS ASSOCIATION

Leveling the Field Advanced Biofuels Association chairman discusses incentives In a recorded interview posted to E&E Publishing LLC’s website, Advanced Biofuels Association Chairman Lee Edwards says that the playing field is starting to level between advanced biofuels and traditional transportation fuels, noting the industry has been focused on producing energy dense, drop-in substitutes.

Edwards notes that it’s not easy for new ventures to secure capital in today’s market, making government assistance necessary. “I think there’s a role with the government to help us make this bridge to provide some stability through the policies that are implemented, and to access financing so that these first plants can be constructed and we can demonstrate the true potentials,” he says.

Edwards also adds that a realistic timeframe for this type of assistance is probably in the five to 15 year range, as the industry needs support to scale up production. While several plants are currently under construction, many still await financing. If those needs are met through loan guarantees or more affordable private financing mechanisms, Edwards says that a significant number of new plants will come online within five years.

—Erin Voegele

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Fighting for Renewables The U.S. Department of Defense uses a lot of fossil fuels— almost 2 percent of what yearly enters U.S. markets. By working to increase use of renewable fuels and energy, the nation’s armed forces are not only helping to increase energy security, but also provide a market opportunity and infrastructure development for new biobased and renewable fuels coming into the marketplace.

“Last fall, I put out five goals for the Navy, the most of ambitions of which, and one which I am absolutely confident that we can reach, is that within 10 years, the United States Navy will get half of all its energy needs—both afloat and ashore—from nonfossil fuel sources,” says Secretary of the Navy Ray Mabus during a recent speech at the Commonwealth Club in San Francisco.

Mabus says the Navy has always been a leader in energy. “In the 1850s, we went from sail to coal. In the early part of the 20th century, we went from coal to oil. In the ‘50s we embraced nuclear power. And every single time we did—every time—there was a group who said you’re trading one very certain means of transportation for one that is unproven. And, you are giving up this big infrastructure we’ve got. In fact, an official Navy panel in the late 1850s said that coal-fired ships would never replace sail because it was too dangerous and too uncertain.” The same objections arose when switching to oil then nuclear, Mabus says. “We have a chance, in the Navy, in the Marine Corps, to lead this country; to lead this country in new ways of producing energy.”

On the Navy’s established 2020 energy goals, Mabus notes that most ships that are going to be part of the fleet in 2020 are already in use. Rather than inventing totally new platforms, many of the targets must be met by changing fuels. “We’re funding research on new technologies,” he says. “We’re working with the Department of Energy and the Department of Agriculture to look at secondand third-generation biofuels, for example—biofuels from algae,

PHOTO: US NAVY

The U.S. Navy sets its sights on advanced biofuels BY ERIN VOEGELE

‘Green Hornet’ An F/A-18F Super Hornet strike fighter conducts a supersonic test flight. The aircraft is fueled with a 50/50 blend of biofuel and conventional fuel.

biofuels from waste, biofuels from any sort of cellular substance.

A lot of times, when technology changes, the U.S. military has led the way. You only have to look at things like GPS or flatscreen TVs. Those were military applications long before they were in the civilian world. I think you’ll see the same thing, in terms of energy, because right now there are two hurdles to alternative energy. One is cost of that energy and two is the infrastructure for it.”

One alternative fuel the Navy is currently working with is algal-derived shipboard fuel produced by Solazyme Inc., in partnership with Honeywell’s UOP. In September, Solazyme completed delivery to the Navy of more than 20,000 gallons of its 100 percent microbial-derived, nonalcohol advanced biofuel. The company also signed a new contract with the defense department for an R&D project to produce 150,000 additional gallons of the fuel in 2010 and 2011.

Sky’s the Limit Blue Marble Biomaterials eyes Montana as location for its commercial biorefinery Having already demonstrated its ability to effectively produce a suite of green chemicals from cellulosic and other nonfood-based biomass at its one-ton-perday pilot facility in Seattle, Blue Marble Biomaterials intends to build on that success by repurposing a 40,000-square-foot facility into a 100 metric-ton-per-month biobased chemical plant in Corvallis, Mt. Using its proprietary Acid, Gas and Ammonia Targeted Extraction process technology, BMB expects to manufacture a variety of green chemicals from cellulosic feedstocks including agricultural waste, spent brewery grain, micro algae, 14 | Biorefining | OCTOBER 2010

corn silage and more. The new facility will also be capable of converting lignin-rich feedstocks, such as woody biomass, into renewable chemistry, though it will initially focus on cellulose inputs, says CEO Kelly Ogilvie.

“Our ability to convert a wide range of feedstocks is one of the cornerstones behind our proprietary technology,” he says. “That’s key for us.”

The Corvallis plant, which is expected to produce commercial volumes early next year, will initially focus on producing high-value biobased chemicals such as ethyl butyrate for the food and flavor-

ing industries, and propyl butyrate for the cosmetics and fragrance industries, where market values stand at approximately $15 billion and $30 billion respectively, Ogilvie says. “With a combined market of $45 billion, those are very deep markets to begin playing, with no apparent competition that we can see at this point,” he notes. In addition to biobased chemicals, the company is able to coproduce various biogases such as hydrogen sulfide and biomethane.

Ogilvie says future plans are to identify a site for a 1,000 metric-ton-per-month facility. —Bryan Sims

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Feather of a Different Bird Keratin-derived resins could gain traction as potential biobased alternative BY BRYAN SIMS Poultry feathers aren’t the first thing that comes to mind when thinking of feedstock for renewable thermoplastics, but executives with Mt. Crawford, Va.-based Eastern Bioplastics firmly believe keratin from chicken feathers is a biobased alternative that will make a noticeable dent in the plastics market.

According to founder and principal Sonny Meyerhoeffer, Eastern Bioplastics begins its process by receiving chicken feathers supplied by a third-party renderer.

From there, the company extracts keratin from the feathers using fully automated twin-press extrusion equipment developed and built in-house. Feather quills and fibers contain keratin, a material that can be processed much like standard petroleumderived thermoplastics. Finally, the feathers are cleaned, chopped and extruded into strands that are then further dissected into granules.

Depending on the product, Meyerhoeffer says the extrusion equipment is capable of churning out about 2,000 pounds of keratin granulate an hour, when produced for biocomposite applications. “If you’re

doing 100 percent fully biodegradable keratin material, it’s a little less volume due to more energy use,” he says.

The company has tested around 200 formulations, with most of its efforts focused on development of extrusion grades for injection molding applications.

Thermoplastic processors all over the world, such as molders of single-use packaging and cutlery, have expressed interest in blending Eastern Bioplastics’ keratin, Meyerhoeffer says.

“We got some film people looking at our product, as well as some blow molding people,” he says. “We’re refining our process here so the resin that they get can do those certain things. It has to hit a few more checks and balances along the way, but we’re working towards that and we’re working with some partners to get that developed. We’re really building a lot of partnerships right now.”

The company intends to run a battery of tests to determine structural and performance properties, though Meyerhoeffer points out a few preliminary benefits.

Unlike many bioplastics, keratin is not

sensitive to heat with a melting point above 200 degrees Fahrenheit. Additionally, when keratin is blended with thermoplastics made from polyeurathane and polypropylene, the feather fibers are completely encased, with no transfer of water or microbes into the material to degrade the keratin due to its lower density.

“We’re still getting tests back to determine quality,” Meyerhoeffer confirms. Though not universally recognized as a leading candidate for alternatives to conventional thermoplastics, Meyerhoeffer says the company is poised to expand its operations to commercial-scale, and has strategic partners willing to integrate its product. Also, Meyerhoeffer foresees Eastern Bioplastics’ keratin as able to compete with standard petroleum-derived thermoplastics on the market, although maybe not quite yet.

“We should be a little more stable in pricing because of our input, feathers have a very low fluctuation of value due to the rendering side,” he says.

World of Potential

Global Market for Succinic Acid

Report: Biobased succinic acid production on the rise Increased use and production of biobased succinic acid as a viable alternative to conventional, expensive petrochemicals is anticipated to fuel global market growth in the next five years, according to a report released by Global Industry Analysts Inc., titled “Succinic Acid: A Global Market Report.”

The global market for succinic acid is estimated at 42,700 tons by the end of 2010, with future projections pegged at 144,700 tons by 2015, the report states. Having been largely an underexploited market, and despite its potential as a platform molecule, succinic acid has yet to reach its full use potential due to its higher cost. The average market value for succinic acid ranges between $7,000 and $7,500 per ton, with prices significantly influenced by volatile oil prices.

Opportunities exist for biobased succinic acid to thrive as a viable replacement for butane-based maleic anhydride, which is widely used in production of other chemicals such as succinic anhydride, 1, 4 butanediol, fumaric acid, diethylmaleate, glyoxylic acid and other

150

plastics. Biobased 120 succinic acid’s 90 use in polyols and polyurethane 60 production, which relies 30 on the use of adipic acid as a 0 2006 2010 2015 precursor, is also Year likely to boost Shipments (in thousand tons) prospects in the Amber Waves Global volumes of succinic acid are expected to increase exponentially in the next five years. succinic acid SOURCE: GLOBAL INDUSTRY ANALYSTS INC. marketplace.

The report also notes the need for developing lower cost fermentation processes and locking in reasonable raw material costs to expand market share for biobased succinic acid. —Bryan Sims OCTOBER 2010 | Biorefining | 15

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Rethinking Ag Residue Corn’s versatility and man’s innovation have led to production of feed, food, chemicals and fuel such as ethanol. Now, the collection of corn is drawing interest from several companies more interested in the cobs than the corn itself.

One such company is Michigan-based Recovery I Inc., which collects corn cobs exclusively intended for oil reclamation applications. The company’s method—coined Golden Retriever—uses dried corncobs that can be deployed either by air, sea or hand to absorb oil and other caustic contaminants found in oil spills. Once the cobs are collected, oil can be extracted from them using a centrifuge with a decanting process. The extracted oil can be used as lubricants or heating oil, and the corncobs can be reused, says President Adria Brown.

“One corncob can absorb five times its weight,” she says, adding that the company has already stockpiled 34,000 tons, much of it sourced from the Midwest before harvest time.

Brown says the company is working with Feeders Grain and Supply of Corning, Iowa, to collect the cobs, and is in discussions with Waukee, Iowa-based biomass harvesting company Ceres Agricultural Consultants LLC for potentially similar

corncob collection deals.

Meanwhile, Cedar Rapids, Iowa-based MCG BioComposites LLC signed an agreement with MGP Ingredients Inc. to provide compounding and laboratory services.

MGP will produce biocomposites at its Onaga, Kan., compounding faCorn Strength MCG BioComposites manufactures garden markers via injection cility using corncobs as a molding. The markers are made by recycled high-density polyeurethane with a 20 primary biomass filler. It percent corn cob flour mix. will be the first commercial production of the material, which MCG customer could be using 40,000 pounds per month of the material. The company is also developed in a feasibility study with North Dakota State University, according to MCG in discussions with John Deere.

MGP Ingredients, which has produced founder and CEO Sam McCord. its own biopolymer product derived from “We’re very selective with the type of wheat prior to its arrangement with MCG application,” he says, adding that MGP Ingredients’ compounding facility is capable BioComposites, won’t be a competitor to MCG’s corncob-based material, accordof extruding an average of 2,000 pounds ing to McCord. Best Cob LLC will supply per hour. “We intend to target mostly injecMCG BioComposites with the corncobs. tion and rotational molding very hard.”

The MCG/MGP deal also covers lab serMcCord says the company is in negovices and the companies intend to develop tiations with its first customer, a window other biobased products derived from other and door supplier, that will conduct trial forms of agricultural residues, such as sunruns using the material in early October. If flower hulls. the trial run is successful, McCord says, the

Biorefining U University-led programs answer a growing demand for biobased education BY LUKE GEIVER Student A (as in, anybody from anywhere) is interested in all things bio, everything from biobased chemicals to biorefining. Student A is not alone. A growing number of high school, undergraduate and graduate level individuals are pursuing an education in bioenergy and biomaterials just like Student A, and the evidence is in the classroom. Look at the Colorado Center for Biorefining and Biofuels (C2B2), a cooperative research and education center devoted to biomass conversion into fuels and other products. “During the past three 16 | Biorefining | OCTOBER 2010

years of the C2B2-Research Experience for Undergraduates program, the number of undergraduate student applicants has more than quadrupled from 60 to more than 260,” said C2B2 center coordinator Frannie Ray-Earle. “Student interest in renewable biofuel and biorefining technologies is growing exponentially.”

Companies are looking to build a new energy economy by producing biofuel products with energy efficient technologies and sustainable practices, said Ray-Earle, and to do so, she pointed out, “They will

need our students as their future employees in order to stay on the cutting edge.”

For the C2B2 program, the “they” interested in the students is virtually a who’s who in energy and transportation. Along with funding from the state and other universities, the program is already sponsored by Chevron Corp., Conoco Phillips, General Motors and Shell Global Solutions. Gevo and ZeaChem, two leading biorefinery developers, have also sponsored the program.

Throughout the nation no other bioenergy program can boast more sponsor

PHOTO: MCG BIOCOMPOSITES LLC

Corncob applications take unique routes to sustainability BY BRYAN SIMS

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names than the C2B2 program, but this doesn’t mean there aren’t other university programs providing a quality bioenergy education.

If Student A is looking for a graduate program there are multiple options. The University of Georgia has a biorefining and carbon cycling program as part of the its bioenergy initiative. The program is devoted to research, development and demonstration of biomass conversion technologies through the idea of the integrated biorefinery. At the Bioconversion Research and Education Center, one of the facilities utilized by UGA’s program, Student A could work with many of the components seen in a biorefinery and now, after receiving a $700,000 grant from the National Science Foundation, Student A could also apply to UGA’s newly created professional science master’s program in biomanufacturing. The scope of the program will allow participants to focus on one of three areas of biomanufacturing: biofuel/biochemical, industrial/environmental or pharmaceutical. As for work opportunities after the program, Timothy Davies, co-director of UGA’s program, said a PSM program participant “could potentially go straight to work at DuPont Danisco’s new biofuel facility,” or “at a veterinary pharmaceutical company like Merial.”

Educate and Grow Many universities have embraced biofuel and biorefining curricula, helping to build the next-generation of bioprofessionals.

If UGA isn’t the right fit, Student A can also give Maryland a try. The Maryland Technology Enterprise Institute’s Bioprocess Scale-Up Facility announced it will double its staff and create a pilot plant for biofuels. In doing so, the facility will be able to take on more projects and provide more training.

And if Student A needs to get away from home and take that trip abroad, there are still suitable programs available, especially at the doctoral level. The University of Nottingham, in London, recently cre-

ated a research project that is in need of a candidate to assist in macroaglae research.

Titled, “A Biorefining approach to macroalgae; sources of specialty chemicals and feedstock for bioethanol fermentation,” the project will provide a large-range of “bio” experience.

If education is the key and the growing number of biorefining programs for people like Student A is an indication, then the future looks bright for the biorefining industry.

Lactoil to the Rescue A biobased, biodegradable material for effective groundwater cleanup For 18 of the top 20 groundwater contaminants found at hazardous waste sites, there’s a new biodegradable, renewable product to clean up the mess. The product was developed through a partnership between JRW Bioremediation and Archer Daniels Midland Co., and its origins are familiar: corn and soybeans. Using soy oil, ethyl lactate from corn and a group of emulsifiers, the Lactoil micro emulsion is designed to stimulate bacteria in the environment that degrades most pollutants naturally. Because the emulsions are smaller and more stable in comparison to other products, JRW Bioremediation President Donovan Smith says the Lactoil can move through the ground more easily while treating a greater area with fewer injection points. “We’re really accelerating an already natural process,” Smith says.

Once the Lactoil does it job, the pollutants are broken down into carbon dioxide, water and chloride ions. Commonly used to treat degreasing solvents, dry-cleaning solvents, chemicals found in solid rocket fuel and munitions, and Hexavalent Chromium—the groundwater contaminant featured in the movie Erin Brockovich—the renewable product, which recently received a U.S. Patent, is ready to save the day. With U.S. EPA estimates of more than 217,000 contaminated sites needing remediation, chalk up another future use for biobased products. —Luke Geiver

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The Power of Powder

Under certain conditions almost anything is possible― just ask Compact Contractors of America LLC. The Utah-based company has developed a process that, at the right temperatures, dries an algal feedstock resulting in a powdered algae-based fuel. Using a commercially available spray dryer, CCA’s process draws the oils to the surface of the cells creating a powdered fuel featuring sugars, plant material, cellulose and proteins that all fire at once. “It does not caramelize and it does not gel, which makes it a good jet fuel,” according to Robert Fulton, CCA’s chief technologist and founder. Apparently the U.S. Air Force thinks so too.

The U.S. Air Force Research Laboratory has purchased samples of the powder and will test CCA’s product for future use as a solid propellant in rocket or aviation use.

Fulton says because of the powdered state of the fuel, it remains less affected by lower temperatures. And the Air Force isn’t the only interested party. CCA has also teamed up with a Pennsylvania State University research team that specializes in powdered fuel delivery systems. ―Luke Geiver

18 | Biorefining | OCTOBER 2010

PHOTO: VELOCYS INC.

A dried-algae process has the U.S. Air Force thinking rocket fuel

Small Channels, Big Improvements Velocys Inc.’s demonstration of its microchannel FT reactor in Gussing, Austria, outpaces conventional reactors with larger reactor channels.

900 Reasons to Watch An Austrian city is the new home for an FT biofuels project BY LUKE GEIVER The Velocys Inc. microchannel reactor features 900 microchannels—and none of these channels have anything to do with cooking, sports or news. The people of Gussing, Austria, a town known for its pioneering spirit on renewable energy production, are still watching, though. Through a joint venture combining the Velocys reactor technology, a specialized catalyst made by the Oxford Catalyst Group, and the management skills of Portuguese-based SGC Energia, Gussing now has a Fischer Tropsch demonstration facility capable of producing FT biofuel after the partnership began running the plant. Once the biomass gasification plant began operations in 2001, Gussing has remained energy self-sufficient. Jeff McDaniel, business development director for Velocys, says the company’s decision to locate the facility there was a combination of the city’s past and the “enthusiasm of the local technology community.”

If performance achievements created by the reactor/catalyst collaboration are an indication, the southern Austrian town’s populace should be happy. Already, the plant is producing 0.75 kg of FT liquids per liter of catalyst per hour, which correlates to conversion efficiencies in the range of 70 percent per pass, as opposed to typical conversion rates of 50

percent or less per pass, according to Oxford Catalysts. The 70 percent efficiency rate stems from the reactor’s channel diameters, which are in the millimeter range versus conventional reactor’s using channel sizes in centimeters.

Because of the smaller channels, the reactor is able to dispel heat more quickly, which then allows for the use of more active catalysts. And for active catalysts, the Oxford Catalyst Group has just the thing: the Organic Matrix Combustion OMX catalyst.

Characterized by crystallites that have a terraced surface to enhance activity, the OMX catalyst also uses a metal salt and organic compound mixture to stabilize the catalyst when it’s in the reactor. A single reactor block measuring 60x60x60 cm implementing the OMX can produce more than 30 barrels of liquid fuel a day using wood chips from the surrounding area. According to Derek Atkinson, business development director at Oxford Catalysts, the OMX will hold up over time. “We believe that the unit in Gussing works well and is demonstrating the fact that our designs are robust,” he says.

In 2008, Velocys ran a two-gallon per day microchannel demonstration unit for more than 4,000 hours, the results of which showed more than 1,500 kg/m3/h, compared to 100

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kg/m3/h for fixed bed reactors and 200 kg/m3/h for slurry bed reactors. The positives of the process seen through the Gussing facility and past tests don’t just stop at production efficiencies, however. McDaniel says the FT system presents a possible user the ability to “number up.” Instead of major structural changes typically needed for expansion, a Velocys reactor, he says, allows a facility to simply add another module (reactor) when scaling up. And, in Gussing, performance is expected to improve even more after the steam superheating section of the plant is debottlenecked.

Atkinson says the only real obstacle presented by the reactor/ catalyst system is making more. “Given the number of reactors that would be required to expand into other facilities, the biggest barrier to expanding this technology to other facilities is the need to put in place the manufacturing capability to build the reactors,” he says. For facilities looking to implement a proven process, the partners are working to secure manufacturers for the reactors.

Most importantly, Atkinson notes, “For this technology the catalyst and the reactors will be considered as a single package.”

Changing its Stance The USDA remains active in advanced biofuels In March, the USDA issued a request for eligible advanced biofuel producers, offering funding under the Advanced Biofuel Payment Program. The initial request said “eligible advanced biofuels must have been produced in a biofuel facility located in a rural area and whose owners met U.S. citizenship requirements.” Then USDA issued a new statement, saying, “The Agency has decided that…nonrural and foreign-owned biofuel producers of advanced biofuels will be eligible for the Program to the same extent as rural, domestically owned producers of advanced biofuels.” One of the

nation’s largest biodiesel plants, Claypool LD Biodiesel in Indiana, owned by Louis Dreyfus Agricultural Industries LLC based outside the U.S., filed suit in the District Court of Columbia against the USDA, claiming it unconstitutionally denied the Indiana facility funding due to the plant’s foreign ownership.

The amendment to the foreign ownership qualification was not the only item issued by the USDA the announcement.

“In order to provide needed assistance to the advanced biofuels industry as soon as possible, the Agency will provide an

advance FY 2009 supplemental payment to those producers who submitted eligible requests under the March 12, 2010, notice,” the USDA states. The advance will equal roughly 25 percent of the funding the applicant would have received prior to this announcement. Also, under the Rural Energy for America Program, the USDA announced availability of funding to pay for feasibility studies on renewable energy production. The energy to be produced includes heat, electricity or fuel. For each study, the USDA will issue up to $50,000.

—Luke Geiver

Bioplastic Goes Nuts Japanese company produces bioplastic from nut shells and cellulose Jasper says NEC is working Strength to form partnerships with existing plastic manufacturers in Polylactic acid +Packing component several regions of the world.

100 Interest in utilizing the bioplastic is already grow75 ing in the industrial sector.

Cellulose resin bonded with cardanol 50 “Following NEC’s announcement of its new cellulose and Conventional cellulose resin* 25 cardanol bioplastic, companies from a wide range of 0 0 5 10 fields have expressed interest Elongation （％） in the material, and we will announce new information as *Adding conventional petroleum-based plasticizer it becomes available,” Jasper Durability Strength is a critical quality bioplastics must says. The company plans to possess to achieve marketplace success. continue improving its existing biobased SOURCE: NEC CORP. technologies, while also developing new developing bioplastics independently, and materials. He adds, “NEC’s bioplastic allows these manufacturers to concentrate technologies enable manufacturers to on producing new and innovative prodovercome the technological barriers of ucts.” —Erin Voegele Flexural strength (Mpa

Japan-based NEC Corp. has developed a biobased plastic manufactured by bonding cellulose with cardanol, an oil-like material derived from the shells of cashew nuts. After enhancing its reactivity, NEC chemically bonds the cardanol with cellulose, which results in a durable thermoplastic that is strong, heat and water resistant, and noncrystalline. According to NEC, these characteristics are a result of bonded cardanol’s unique molecular structure that consists of flexible and rigid parts.

The material is composed of more than 70 percent renewable content and is fit for use in electronic equipment. According to NEC Spokesman Joseph Jasper, the company is currently producing its biobased plastic at lab-scale. “We are planning to have commercial production begin by the end of 2013,” he says. Rather than constructing its own production facilities,

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MARKETS

20 | Biorefining | OCTOBER 2010

MARKETS |

Filling a Void Major changes in the petrochemical sector mean big market opportunities for biobased chemicals BY ERIN VOEGELE

While most are well aware that volatility, price spikes and overall price increases have characterized the U.S. transportation fuel market over the past decade, the effect these factors have had on the domestic petrochemical industry may be less clear. According to the U.S. Energy Informa-

tion Administration, the average domestic price of crude oil remained below $30 per barrel throughout the 1990s and into the early 2000s.

Prices began to increase in the 2004 timeframe, before spiking at $133 per barrel in July 2008, a

more than 400 percent increase from the price of oil less than a decade earlier. While crude oil prices now hover in the $70 per barrel range, this is still a significant increase when compared to prices that occurred five years ago. Higher crude oil prices do more than increase the price of gasoline and diesel though—they also reflect higher input costs for the petrochemical sector that produces materials such as plastics, polymers, rubbers and fibers.

As the price of crude oil has risen, petrochemical refiners have been more attracted to alternative feedstock, specifically natural gas.

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MARKETS

US Basic Petrochemical Prices Butadiene Cents Per Pound

Ethylene

2009

2008

2007

2006

2005

2004

2003

2002

2001

2000

1999

1998

1997

1996

1995

1994

1993

1992

1991

1990

Propylene

Platform Prices The increased use of natural gas liquids as a petrochemical feedstock could drive up the price of propylene and butylene, creating market space for biobased chemicals.

SOURCE: CHEMICAL MARKETS ASSOCIATES INC.

Technology advances, driven in part by higher crude oil prices, have resulted in a boon of recoverable natural gas reserves, while prices have remained relatively low.

According to the EIA, the industrial price for natural gas is currently in the $5 per thousand-cubic-foot range.

Due to these two market dynamics in the fossil fuel sector, those in the petrochemical industry that are feedstock flexible have largely begun to Olefins Whiz move to natural gas Steve Zinger, global business director for liquids as feedstock. the olefins market at Although both crude Chemical Markets Associates Inc., says oil and natural gas three petrochemical can be used to make building blocks make up 70 percent of the carbon 2 (C2), carbon chemicals people 3 (C3), and carbon 4 encounter daily.

(C4) chemical building blocks, the use of natural gas liquids as a petrochemical feedstock results in more C2 production, and less C3 and C4 production. These limitations seem to be driving up prices for C3 and C4 molecules, which could open up market potential for biobased molecules that can fill this void.

22 | Biorefining | OCTOBER 2010

Petrochemicals 101 According to Steve Zinger, global business director of the olefins market with Chemical Markets Associations Inc., these newly recoverable natural gas reserves have only recently begun to enter the market place. “This gas has started to come into the market over the past two years,” he says.

“It’s really going to change the energy markets—at least where gas and oil compete— it’s going to change those dynamics.”

However, natural gas itself isn’t used as a feedstock for the petrochemical industry, except for ammonia and methanol production in a few cases. Rather, natural gas liquids that are recovered as part of the extraction process can be processed by petrochemical manufacturers. “The specific chemicals [that compose natural gas liquids] are ethane, propane and butane,” Zinger says. “Pretty much the only use for ethane is to go into the petrochemical industry. They take the ethane and heat it up to very high temperatures, and they crack it. When you do that it makes some basic chemical building blocks, like ethylene, propylene and butylene. Those three petrochemical building blocks probably go into 70 percent of the different chemicals you use every day, whether it’s a polypropylene cup that you get at a baseball game, or the

PET (polyethylene terephthalate) bottles you drink out of, or the trash bags you use.

All the building blocks for polymers and petrochemicals really start at that level.”

As more ethane feedstock has become available, some petrochemical producers in the U.S. have begun to move away from the use of naphtha feedstock, which is derived from oil. “When you use naphtha as a feedstock for petrochemicals, you make a lot of byproducts; you make a lot of ethylene, but you also make a lot of propylene and butylene,” Zinger says. “When you use ethane as a feedstock, you make mostly ethylene and very little propylene and butylene. So the punch-line here is that, as the industry shifts more and more toward ethane feedstock because of its new availability, it is making less and less of the propylene and butylene molecules. Those molecules are becoming more expensive as a result, and the ethylene is actually becoming cheaper.

That has kind of changed some of the dynamics in the petrochemical industry.”

Ethylene is a C2 chemical, while propylene is a C3 and butylene is a C4. According to Zinger, companies that are making biobased C3 and C4 molecules, like Gevo Inc., may be able to capitalize on this market opportunity. According to information published by Gevo in its Aug. 12 S-1 filing with the U.S. Securities and Exchange Commission, isobutanol can be converted into a wide variety of hydrocarbons, including rubber, lubricants, polyesters and polystyrene. The company states that there is approximately 67 billion gallons per year of market opportunity for these products in the petrochemical industry.

“In the case of Gevo, they are making isobutanol, and it is a C4 platform that could tie into that C4 market,” he says. “It would fit nicely into that C4 market, I think they have a good product that has good properties. It’s just new, so it will take a little time to get accepted in the industry.”

Obstacles One obstacle facing biochemical producers is that their products are new and have historically been more expensive to produce. “The issues with using biobased inputs have primarily been that it’s a more

MARKETS |

U.S. Dry Natural Gas Proved Reserves (billion cubic feet) 250,000

200,000

150,000

100,000

50,000

0

2000 2001 2002 2003 2004 2005 2006 2007 2008

Booming Reserves, Low Prices Technology advances, such as "fracking," have substantially increased the amount of recoverable natural gas reserves in the U.S., helping, in part, to keep prices low.

SOURCE: U.S. ENERGY INFORMATION ADMINSTRATION

expensive route to making them, versus the petroleum-based routes,” Zinger says, noting that low crude oil prices in the 1990s didn’t lead to a great deal of interest in developing alternatives. “As we moved into this decade, higher petroleum-based costs have made people look for alternatives,” he continues, adding that there has also been a significant push for renewable and recyclable products by retailers and brand owners.

Even with this push, however, biobased chemicals make up less than a few percentage points of the petrochemical market.

“It’s fairly new, and there are several different routes to making them, but none of them have really taken a lot of market share from petroleum-based products,” Zinger continues. Jim Cooper, vice president of petrochemicals at the National Petrochemical and Refiners Association, confirms that biobased inputs currently make up an extremely small portion of the overall chemical market.

According to Cooper, biobased chemi-

cal producers need to improve their efficiencies a great deal to be able to compete with current processes that petrochem manufacturers employ. “So far, all we’ve seen are things like succinic acid and more complex molecules that are naturally derived from plants anyway,” he says. “Even those are just being put out at the pilot scale.

We haven’t seen a butanol process that can even come close to competing right now in the marketplace, or have any real commercial viability yet. I’m not saying that won’t happen in the future, but we haven’t seen anything that is going to be coming online to replace the current processes anytime soon.”

While the use of some biobased inputs is being explored, their commercial use will be ruled by physics, Cooper says. “It is performance based,” he continues. “Whatever the molecule is, it has to have certain attributes to be able to really compete in the marketplace—in addition, of course, to price.”

Working with Established Industry While Cooper notes that it could take decades for biobased chemicals to reach a significant level of market penetration, he also says he thinks that there is a strong future for biobased materials in the longterm. We can’t look at the marketplace under the impression that, as the petrochemical industry collapses, a biobased chemical sector will rise up to replace it, Cooper says.

There is currently an abundance of raw materials for both petrochemicals and biochemicals, and there is enough room in the marketplace for all of them because each product line has its own attributes.

“Our members are putting a pretty good amount of resources into developing these kinds of [biobased] processes, so we’re pretty confident that there is a future for them,” he says. “I’m talking some of the world’s biggest corporations that have pretty advanced resources to look in a lot of different areas, as far as viability of feedstocks and processes, and they are pretty confident that there is going to be a role for green chemicals in the future.”

To develop interest within the traditional petrochemical sector, Zinger says it’s important to get the right people involved.

“From a business standpoint, I think it’s key to get partners in place to test and commit to using materials to demonstrate that biobased chemicals will work in the refining and petrochemical industry,” he continues.

“That’s always a challenge. These industries tend to fall back to the traditional products that are out there until a new one can be proven better, and the only way to really do that, I think, is to develop alliances or partnerships and long-term commitments with customers to try these things out. As they become accepted, then they can grow in the industry.”

Author: Erin Voegele Associate Editor, Biorefining (701) 850-2551 evoegele@bbiinternational.com

OCTOBER 2010 | Biorefining | 23

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INDUSTRY

Breaking Ground In 2007, Chippewa Valley Ethanol in Benson, Minn., began retrofitting its plant to incorporate a biomass gasifier.

PHOTO: SUSANNE RETKA SCHILL, BBI INTERNATIONAL

24 | Biorefining | OCTOBER 2010

INDUSTRY |

Fitting the Right

Retrofit To build new or to repurpose, that is the question for biorefinery project developers

BY BRYAN SIMS

And the timing may be just right, since From a business standpoint, it’s a retrofi tting first-gen biofuels plants may be the match made in heaven: an idled, fiquickest route to advanced biofuel commercialnancially distressed industrial manization to meet increasing RFS2 requirements. ufacturing facility devoid of working capital with a depleted workforce To this end, reputable design and engineering and depreciating assets teams up firms have established partnerships with emergwith an emerging advanced biofuel ing advanced biofuel companies to help reinvigand green chemical technology firm orate the respective sectors they intend to serve, eager to use the host facility to de- each bringing their own unique strengths. ploy its new platforms while leverUpgrading Ethanol’s Value aging existing infrastructure.

Integrating next-generation processes capable of producing advanced biofuels and biobased chemicals into a first-generation facility could well be the path of least resistance, and expense, to building out this emerging sector. Reduced capital and energy costs, additional revenues from multiple high-value outputs, job creation, and job retention, are just a few of the benefits of repurposing existing industrial assets.

After identifying an area and facility where operations have been suboptimized since the initial start-up, the next step will be determining the degree of retrofitting the host facility would require. A simple tune-up to an existing corn ethanol plant to reduce water intake, for example, is much different than retrofitting the entire facility to produce isobutanol with ethanol, says Doug Rivers, research and development director for ICM Inc. Headquartered in Colwich, Kan.,

OCTOBER 2010 | Biorefining | 25

INDUSTRY

ICM is a leading ethanol plant design/build firm whose process technology is employed at more than 102 first-generation biorefineries across North America.

“Right now, most In Demand of the interest that we R&D director for ICM Inc., Doug Rivers, says see in our plants is in first-gen plants have retrofitting those with been inquiring about retrofit strategies. additional capabilities to take advantage of existing production systems, such as being able to capture corn oil out of the system,” Rivers tells Biorefining.

He says existing corn ethanol plants, ICM-designed or not, looking to optimize production options by including lignocellulosic feedstock, have sought out ICM’s retrofitting services. This could serve as a hedge against being tied to the price of one commodity input and output. ICM is currently adapting its existing dry fractionation grain ethanol pilot plant at LifeLine Foods LLC in St. Joseph, Mo., to use corn fiber, switchgrass and sorghum. ICM says the goal is to demonstrate feasibility of co-locating projects scalable to meet existing ethanol plant production. Construction began in August, and the demonstration phase is scheduled to begin in January with full production expected toward the end of 2011.

Retrofitting an existing corn ethanol plant to produce biobutanol from nonfoodbased sources is another way to achieve this.

ICM formed a strategic partnership with biotechnology company Gevo Inc. to advance commercial development of Gevo’s Integrated Fermentation Technology, which enables retrofitted ethanol plants to produce isobutanol and hydrocarbons. Since September 2009, Gevo has demonstrated the viability of its technology at a 1 MMgy demo facility also in St. Joseph built and designed by ICM. In August, Gevo acquired a 22 MMgy corn ethanol plant owned and operated by Agri-Energy LLC near Luverne, Minn.

While an industry-wide retrofit strategy for corn ethanol plants to integrate advanced biofuels technologies may not be feasible anytime soon, Rivers says it certain26 | Biorefining | OCTOBER 2010

PHOTO: COBALT TECHNOLOGIES

|

Fill Up Bruce Kaufman, manager of operations with Cobalt Technologies, fuels up a Chevrolet Cobalt with biobutanol. The company recently partnered with Fluor and reduced capital costs of Cobalt's demo plant by 25 percent.

ly has replication potential for long-term success. “We would expect to see similar kinds of things happen with new products, whether it is isobutanol or other fermentation products that come out of a sugar stream from a dry mill corn plant or cellulose plant,” he says.

Recapturing Biodiesel’s Value Carlsbad, N.M.-based Cetane Energy LLC sees opportunities for biodiesel producers to trade in transesterfication for its small-scale hydroprocessing technology. “Depending on what infrastructure and equipment is already there that we can utilize, we could, at the very least for a 10 MMgy plant, add 10 MMgy of renewable diesel capacity to it,” he says. The company has five refineries planned for retrofit; mostly idled petroleum or chemical refineries along the Gulf Coast. According to Aves, each would be engineered to produce between 500 and 2,000 barrels (21,000 to 84,000 gallons) of renewable diesel daily.

The company finds its process technology to be particularly compatible with idled petroleum refineries due to existing hydrogen supplies, but Cetane Energy expects its technology to be integrated with idled or operating biodiesel plants where hydrogen access is available. Currently, the company has partnerships in place with Idaho-based

biodiesel producer Pleasant Valley Biofuels and has license agreements with Minnesota-based Rational Energies and Rio Grande Valley Biofuels out of New Mexico.

Cetane Energy’s fuel received EPA certification in April 2009, and the company is currently looking at first-generation feedstocks for its second-generation process.

Its demonstration plant in Carlsbad, N.M., which can produce 200 barrels a day of renewable diesel, is considered by the company to be the first stand-alone hydroprocessed renewable diesel facility in the U.S. The benefit of integrating hydroprocessed renewable diesel technology is that it features a low-capital profile and flexibility to use virtually any feedstock a conventional biodiesel producer Cost Cutter Cobalt CEO Rick would use, from virWilson shaved millions gin soy or palm oils, to off the cost of his company’s demo plant used cooking oils and by contracting Fluor brown grease. Cetane Corp. to reengineer the facility.

Energy is also looking at using pyrolysis oil, where it can remove the oxygen and refine it via hydroprocessing. “We feel that’s going to be the next big thing,” Aves says.

A critical consideration before integrat-

INDUSTRY |

ing hydroprocessing capacity into an existing biodiesel refinery, Aves says, is to make sure the host site has an available supply of hydrogen nearby, which can make or break a retrofit project in an existing biodiesel facility. In 2009, Cetane Energy planned to install its hydroprocessing equipment to retrofit a 1.2 MMgy biodiesel plant in Sedwich, Kan., operated by Healy Biodiesel Inc., but the lack of available hydrogen killed the project.

“Hydrogen isn’t like natural gas,” Aves says. “You just don’t buy a property and hope there’s a pipeline nearby. Making sure there’s hydrogen at a host site is critical before putting a project like this together.”

Reinventing the Mill Advanced biofuel companies are also tailoring their specific technology platforms to fit into idled or underutilized pulp and mills. One such company is Cobalt Technologies. After signing a partnership agreement with global engineering and project manager Fluor Corp. in August, the Mountain View, Calif.-based firm seeks to take its

advanced biofuel dream from its small-scale testing facility to large-scale commercialization.

Cobalt tells Biorefining it expects to roll out its proprietary technology at an elevated pace. The company anticipates completing construction of a 1 MMgy to 2 MMgy demo plant by late 2011 or early 2012, integrated with an existing pulp and paper mill. Cobalt and Fluor partnered during a reengineering exercise of Cobalt’s technology, performed

by Fluor, which reduced Cobalt’s energy costs by 40 percent and capital costs by 25 percent, says CEO Rick Wilson.

“We had a design for our 1 MMgy demonstration plant, our original cost was $30 million,” he says. “Then we had Flour come in and reengineer it, and we got the cost down to $16 million. That gives you some sense what a big engineering firm like Fluor can do.”

Wilson adds that Cobalt’s ability to use a combination of existing feedstocks found at pulp and paper mills, and the advances it has made in its fermentation rates and design, will make for profitable business ven-

tures. “We don’t need to build big facilities to make money,” he says. “Our demo plants will be profitable commercial entities.” Cobalt’s proprietary technology uses microbes to ferment normal biobutanol (n-butanol), which Wilson believes will give the company advantages to supplying biobased chemicals to the market. “Our normal biobutanol carries a chemical market with it—about $5 to $6 per gallon,” he adds.

As for pulp and paper mills becoming viable retrofit targets, Wilson says the alignment of interests makes sense. “Pulp and paper mills are shutting down left and right,” Wilson says. “They’re looking to do something to make them viable again.

You’re going to see an evolution of them, and using our technology is a great way to do that.”

Author: Bryan Sims Associate Editor, Biorefining (701) 738-4974 bsims@bbiinternational.com

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BUSINESS

Giving Instructions Complex technology set-up requires thorough explanation and a good set of instructions, and tech providers need to know how to do both.

PHOTO: QTEROS

28 | Biorefining | OCTOBER 2010

BUSINESS |

The

Language of Licensing

The end is just the beginning for tech providers who’ve proven their novel innovations BY LUKE GEIVER Royalties, milestones and process design packages, up-front and back-end payments and equity stakes: for anyone who’s committed long hours to testing and retesting, tuning or tweaking their advanced biorefining process and feels ready to bring it to the masses, there’s only one thing to know—the language of licensing. Describing a novel technology, all

that hard work, down to the last tiny detail, to a prospective licensee doesn’t match up with the tone or terminology required in the licensing business. To successfully negotiate the realm of technology licensing, the applicant must explain to the lender everything from the basics to the need-to-knows, and all of their intricacies.

They must walk the walk and talk the talk of the lender.

The Advanced Biofuels Association currently lists a large number of technology providers working to streamline their highly innovative production processes, and if not already, in the coming months and years many of them will make headlines for their accomplishments.

Velocys has developed a microchannel FT reactor, LS9 continues to perfect a designer microbe capable of producing biofuel and biomaterials, Virent Energy Systems has created a patented BioForming process to produce renewable fuels and other chemicals, and Qteros has assembled a platform to make cellulosic ethanol using the Q-microbe. These, among many others, are promising companies, but regardless the status of a technology provider or developer, there is one basic concept to remember, according to Qteros’ President and CEO, John McCarthy Jr. “If you are in the licensing business and your customers are large, global or industrial companies, you have to think like they think, talk like they talk,” he says. “Otherwise, you will be speaking different languages and nothing will happen, regardless what you think you are bringing to the table from a value perspective.”

McCarthy, with years of experience in growing and building technology companies (e.g. Verenium Corp.’s rise), is not alone on his thoughts of “licensing talk.” Paul Spindler, general manager of technology for a joint venture between energy giant Chevron Corp. and forest OCTOBER 2010 | Biorefining | 29

|

BUSINESS

products producer Weyerhauser, Catchlight Energy LLC, points out the same basic concept that, when ignored, creates a roadblock between the licensor and the licensee. First, Spindler says, a potential licensor needs to understand the market and the customer for its technology. “Many companies with technology fail because they don’t understand their customer,” he says. For those larger companies like the BPs and Chevrons of the world, understanding the company and recognizing what they want to “talk” about is key, as McCarthy points out, but recognizing the proper mode of dialogue is one thing—nailing down exactly what to discuss is another.

Of all the variables a potential company or biorefinery may want to hear about, the first is quality. “What the licensees are really looking for is, first and foremost, very strong technology,” says Greg Pal, LS9’s vice president of corporate development.

The need for a credible and qualified product from the technology applies to both fuel and biobased chemicals. Without it, the result is pretty clear. “You can’t sell the product,” he says.

After quality in both technology and product, think economics. For Pal, it’s a matter of looking at the technology and defining what type of economics a particular technology can enable for the user. As McCarthy explains, for some technology providers, highlighting what the technology will or won’t do is equally important.

The Qteros platform works to produce advanced biofuel, but McCarthy notes that his company will get paid “essentially on what we are saving.” Because of the cost-saving factor, illustrating how a process can cut expenses or operate at a lower cost can be a major advantage.

Although it does loom large, money generated or saved isn’t the only variable licensees want to talk about. Biorefiners are manufacturers, and because of that, biorefiners are risk adverse due to the high capital cost, safety and environmental concerns associated with operating a plant, says a source who wished to remain unnamed.

“They (the biorefiners) are obviously looking for technologies that offer an attrac30 | Biorefining | OCTOBER 2010

PHOTO: QTEROS

Something to Talk About

Speaking of Saving Of all the things a technology provider can do, most potential licensees are looking for a process that saves money, says John McCarthy Jr., president and CEO of Qteros.

tive return and competitive advantage,” the source says. “But they want to deal with credible companies that have demonstrated, or have a plan to demonstrate, their technology at a semi-commercial scale.” Along with credibility, add the team’s experience and expertise to the list of talking points.

Pal says, apart from experience on the biological side, a provider also needs to explain its expertise at forecasting future challenges because, as the source says, “Many technology companies grossly underestimate the capital costs required to build their technology.”

And, if that isn’t enough, a technology provider had better be able to positively talk about it all: quality of the intellectual property, favorable economics, experience in both science and engineering, and expertise in foreseeing future challenges. “I think what has been learned over the past five or

six years from those early stage companies is that you just aren’t going to get any value if you only have, or are only focusing on, one element of the equation,” McCarthy says.

The Provider’s Perspective Knowing what to say means a lot, but when the time comes, knowing what to ask for in exchange for a microchannel reactor, a designer microbe or any other advanced technology, is equally essential. And the same questions must always be answered: to what level do you want to be vertically integrated and in what situations or environments does it make sense? This is not unique to the biorefining industry either, and the answer resides in a combination of factors ranging from manpower, know-how and time. For Qteros, McCarthy is pushing the company in a certain direction because

PHOTO: QTEROS

BUSINESS |

World's Best Bug Providers might have a great microorganism (above), a hardware package or even a new software program, but if that is all there is, a licensor has more work to do before a licensee will sign on.

of what he learned during his time at Verenium, working to build a joint venture demonstration plant with BP in Jennings, La., and a commercial plant in Florida.

That direction, which may not apply to every company, is all about avoiding the heavy lifting, or in some sense using manpower and know-how to save time. With Verenium and BP, 100 percent of the focus was to get both plants up and running, he says. The Qteros plan will avoid the construction aspect. “As a licensing model, with the right partners on board, we can simultaneously be working on many projects because we aren’t doing the heavy lifting building and engineering the facility.” But to work on multiple projects means working with outside partners, an aspect of successful technology licensing that Pal and his team from LS9 are also not afraid of.

“Within the value chain of fully commercializing technologies there are four key components: feedstock, traditional or cellulosic; technology, how you convert those feedstocks; production, how do you operate the technology; and finally, sales and distribution,” Pal explains. The LS9 approach reveals a strategy that relies on informed choice based on market availability. According to Pal, the company will focus its efforts on technology and production, and will look to partner on feedstock and sales/ distribution. Within the feedstock sector a number of companies exist that are far bet-

ter in terms of growing feedstock for biofuel production, he says, and in the sales/ distribution, the same applies. In both areas, LS9 is looking to partner to avoid wasting time on what they feel they can get fair market value for.

If a provider is going to partner on a project or in using the technology, it’s no surprise there are key elements to consider as well. For Pal, experience is big, but it’s not everything. “When you go to build a firstof-a-kind facility, having a partner who has some experience with this stuff is helpful, as opposed to someone who is brand new to biotechnology or biorefining,” he says.

Along with experience on the engineering side, he also says, in general, “You want to look for people that can help speed up how fast the technology is going to get market.”

McCarthy also mentioned the need for speed when getting a technology to market, but noted the role of a process design package (PDP) as well. Because companies looking to license are thinking in terms of large-scale production, a provider not only needs to give a biological platform with all the requisites and data, he says, but also an engineering package that outlines how the technology can be built or plugged into their own designs. To say the Qteros PDP includes simply intellectual property would be a major misnomer. Its package includes everything from the process description and design, piping and instrumentation dia-

grams, preliminary process operating manuals, the full utilities requirements all the way to the recipe for the organism. “We and our Engineering Procurement and Construction partner would bring this to a BP, Shell or Chevron,” McCarthy says.

Aside from knowing how far to go in the commercialization process, there is still one major question—how to get paid? The answer is virtually endless. A company can opt to receive an upfront payment calculated by finding the savings from a given process combined with milestone (significant achievement) payments; a backend payment based on process performance; royalties based on a function of free cash flow or revenues, and, in some cases, an equity stake in the company or biorefinery using the technology.

For each option, there are different factors to consider. If a company wants to implement a technology but wants to see it in action first, then a provider would be warranted to charge a double fee on the backend payment plan. If the company is young, a startup new to an industry, McCarthy says to avoid royalty payments based on free cash flow, but if the company has been involved for a long time, then he would feel more comfortable with the free cash flow revenues because that company “would know how to operate.”

The perspective from Pal is much like that of Qteros in the way he views his company’s approach to financing. For LS9, Pal says, “We view technology licensing fee plans as somewhat of a continuum as opposed to a one-size-fits-all scenario.” Like Pal’s view, the Qteros perspective seems similar, and in the realm of technology licensing, it sounds pretty good. McCarthy says, “If there is X of tens, if not hundreds, of millions of dollars that a technology platform can bring to a production facility over a 20-year period of time, then there are various ways for us to get economic value.”

Author: Luke Geiver Associate Editor, Biorefining (701) 738-4944 lgeiver@bbiinternational.com

OCTOBER 2010 | Biorefining | 31

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R&D

Growing Biomass Ideas in Denmark Inbicon looks beyond its new 100-metricton-per-day biomass refinery to envision a flourishing biomass knowledge center

BY THOMAS CORLE AND ROGER MOORE

The Inbicon Biomass Technology Campus doesn’t look like a campus. Instead of ivy-covered

walls, a gray steel skin and Danish-modern design disguise the growth of scientific knowledge going on inside. The industrial hub surrounding the biomass refinery reinforces the perception of heavy-duty manufacturing and processing, not the generation and exchange of paradigmchanging technical ideas.

But Niels Henriksen, CEO of Inbicon, sees things differently, taking a more expansive view of the Inbicon Biomass Refinery humming away at Kalundborg port. To him, it’s not just a demonstration

of how wheat straw is converted into cellulosic ethanol and other renewable energies. He describes it as “the first flower” of a burgeoning technology campus whose goal is three-fold: continue the refinement of Inbicon’s biomass conversion technology; accelerate the commercialization of that technology by helping develop renewable energy projects around the world; and, most important to Henriksen, his third aim, “To provide a yeasty atmosphere for learning,” he says. “We never want to stop learning about the performance characteristics of various biomasses and how to extract maximum value from them, with increasing efficiency.”

The claims and statements made in this article belong exclusively to the author(s) and do not necessarily reflect the views of Biorefining or its advertisers. All questions pertaining to this article should be directed to the author(s).

32 | Biorefining | OCTOBER 2010

Though the physical heart of the tech campus is the 100-metric-ton-per-day plant at the western end of Zealand island, campus facilities also encompass two pilot plants and a full-scale research laboratory located just across the water at Fredericia, on the east side of the Jutland peninsula.

Beyond Denmark, the flow of knowledge circulates worldwide among scientists and engineers, collaborators and customers, developers, inventors and investors from Japan in the East to America’s Pacific coast in the West. “Last year we signed our first technology licensing agreement with Mitsui for projects in Southeast Asia to turn palm fruit waste into ethanol,” Henriksen

PHOTO: INBICON

R&D |

Expanding Knowledge Inbicon’s Biomass Technology Campus in Denmark’s Kalundborg port, with the refinery in the foreground, seeks to provide companies with a venue for proving out biorefining conversion technologies for industry development.

explains. “And today we’re planning new commercial-scale business models for Europe and North America.”

Danish universities contributed important research early on. Benny Mai, Inbicon’s vice president in charge of the Kalundborg refinery, cites a recent example of how Inbicon collaborates with university scientists. For three weeks during late summer, Inbicon invited Jane Lindedam of Copenhagen University to work at Kalundborg. Her doctorate focus, which had been the cellulose content of different straws, found some types produced a 30 percent higher yield of ethanol. In her post-doc work on recycling enzymes, she required a deeper understanding of the Inbicon process.

“She immediately swung into action to help with a technical problem in our molasses process,” Mai says. “With good teamwork between our process engineers and Jane, both parties came to new insights and the problem was solved. So we’re very happy to have her come back periodically and do more research during her three-year post-doc period.”

Is Bigger Better?

The Inbicon Biomass Refinery in Kalundborg has an annual processing capacity of 30,000 metric tons of biomass, which it converts into three clean-energy streams: 1.5 million gallons of cellulosic ethanol, which Statoil blends with petrol for Danish motorists; 8,250 metric tons of clean lignin pellets, used as a solid biofuel in combined heat and power units; and 11,100 metric tons of C5 molasses, suitable for conversion into renewable energy or green chemistry products.

“Size matters,” says Christian Morgen, Inbicon’s senior marketing manager. “It accelerates learning. In 2003, our first pilot plant could handle 2.4 metric tons of biomass a day. In 2005, we built a bigger one, which could process 24 tons a day. Now, with Kalundborg, our design capacity is four tons an hour. The higher operating rates let us test larger quantities of biomass faster, and measure results based on nearcommercial conditions—not possible before. So our analyses have great reliability, including estimates of capital and operating costs when we scale up.”

Benny Mai points out advantages to

having a range of options for tech campus research. With the technology demonstration being focused at Kalundborg, the 2.4 MT/d and 24 MT/d pilot plants are freed for other tasks. The smaller is used primarily for biomass testing, while the larger is ideal for equipment testing before scaling up to commercial size. Both can be available to potential licensees, facilitating more frequent material transfer at larger quantities. More varieties from different crops around the world can cycle through. In the past seven years, in addition to straw, Inbicon has proven its process on a variety of soft biomasses, including corn stover, corn cobs, sugar bagasse, miscanthus grass, sorghum, and residues from palm oil production.

“We can provide a detailed description of the biomass analysis, product description, general mass and energy balance, and the general economics of the proposed project,” Mai says. The biomass description, for example, breaks out the fractions: water by percentage, and cellulose, hemicellulose, lignin, ash, and other solids by percentage of dry matter.

Getting high-quality data back can cut planning time for many different types of renewable projects. In the U.S., for instance, it’s helpful to know if switchgrass, arundo, and miscanthus have enough energy in the crop to make a biomass refinery feasible. Developers in New York, who are using biomass refinery projects to rebuild the state’s agriculture, can determine whether grasses grown in now-uncultivated shale soil are feasible.

Beyond biomass testing, Inbicon is working at Kalundborg with different enzyme suppliers who want to test their latest advances in near-commercial operation and compare results to those already obtained in a lab environment. Two leading developers, Novozymes and Genencor, are in Denmark; Novozymes is actually next door in the Kalundborg industrial park.

For targeted explorations into higher-value bioproducts, specialists in C5 conversion can obtain plenty of clean material from the Inbicon Biomass Refinery.

Ethanol plant operators can extend their knowledge base on biomass utilization to help decide the best next steps for their OCTOBER 2010 | Biorefining | 33

|

R&D

a commercial basis, virtually everything is recycled, and productivity is increased without consuming more energy, water or raw materials.

PHOTO: INBICON

Clean Energy Parks of 2020

Sharing Resources Seven businesses neighboring the Inbicon biomass campus interlinked to form a group called Industrial Symbiosis, allowing one manufacturing facility’s waste to become another’s energy.

individual businesses. EPC contractors can preview the technology and thoroughly understand it before building the 1,200 MT/d Inbicon Biomass Refineries designed for North America and Europe, each producing 20 MMgy of cellulosic ethanol. A refinery staff can be trained in advance. Some developers are using the campus to gain better knowledge of inputs and outputs for cross-platform systems.

Government agencies are welcome to use Kalundborg to get better data for policy decisions.

Waste or Energy?

Visitors soon become aware that the walls of the biomass refinery aren’t the boundaries of the technology campus.

The refinery is integrated with the adjacent coal-fired Asnæs Power Station, Denmark’s largest. It’s another opportunity to see the technology in action and learn from the results. Waste steam from the power station cooks the biomass, boosting the power station’s efficiency. Lignin from the refinery—so clean it’s used without ad34 | Biorefining | OCTOBER 2010

ditional and expensive purification—goes to augment coal-firing in Denmark’s power plants, producing green electricity.

“This kind of symbiotic energy exchange helps our customers build sustainable, carbon-neutral businesses,” Henriksen says. At commercial scale in the U.S., “power plants can nearly double their efficiency.”

Beyond these two major facilities are seven neighboring businesses interlinked to form a group called Industrial Symbiosis.

Over the past 30 years, as new businesses arrived, they developed a cooperative web for economic advantage and environmental benefit. It wasn’t planned. It came about gradually from managers living in the same small town of 20,000, many belonging to the Rotary Club. Somebody’s waste, they discovered through dialogue, could be somebody else’s energy—or somebody else’s raw material. They found 27 ways of working together: three water recycling projects, six exchanges of energy and nine recycling of waste products. By utilizing each other’s residue and byproducts on

Is symbiotic thinking a springboard to clean energy parks of the future? Will a widening variety of new technologies produce renewable energy more efficiently by using interconnected methods of production? Instead of one manufacturer on one site, Henriksen says look for more colocations, more clustering, more sharing of resources and utilization of one another’s wastes in increasingly productive and costcutting ways. It meshes with his vision of what the Inbicon Biomass Technology Campus will be exploring over the next 30 years.

Gasification technology is already being developed on the Inbicon campus, and the pilot of its Renescience Municipal Waste Refinery is operating in Copenhagen.

Henriksen is already planning the next stages of a sustainable and digitally connected tech campus. In some cases, satellite branches will crop up around the world in the form of pilot plants, each located at the site where the biomass testing needs to be done, usually in cases where the biomass is perishable and cannot be safely shipped.

“There isn’t one solution to clean energy,” he says. “We like the path we’ve taken, but we’re opening as much dialogue as possible because we never want to stop learning. We invite leaders from the energy, investment, process engineering, and environmental communities, as well as government representatives, to participate in the conversation. From innovative thinkers we haven’t yet met, we believe many options will surface we haven’t yet imagined—ideas that will transform how clean energy is produced in the future.”

Authors: Thomas Corle and Roger Moore Consultants, G-team tcorle@biopowered.biz rmoore@biopowered.biz

May 2 – 5, 2011 America’s Center St. Louis, Missouri

2011 201 Exhibit Space & Sponsorships SSponso Sp p so so

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