Bio-based chemicals developer Avantium (client registration required) recently announced that it acquired the IP portfolio and equipment, and recruited two to three full-time research employees, of Liquid Light (client registration required), a company that had previously focused on the electrochemical conversion of CO2 to monoethylene glycol (MEG) and other chemicals. Avantium’s primary technology converts glucose and fructose to furan-2,5-dicarboxylic acid (FDCA). Avantium then combines FDCA with MEG to produce polyethylene furanoate (PEF), a polyester with improved barrier and mechanical properties over polyethylene terephthalate (PET). Given the significance of this announcement, we reached out to Avantium’s CFO Frank Roerink to learn more about the acquisition and its implications on Avantium. Continue reading
Bio-based materials and chemicals (BBMC) often suffer from a bad reputation, universally thought to be of poorer quality or more expensive than their traditional petroleum-based counterparts. While initial BBMC products like starch-based plastics were inferior substitutes that didn’t perform as well as incumbents, in recent years developers have been putting out materials with competitive, and even, superior price-performance characteristics. Continue reading
Liquid Light recently signed a technology development agreement with The Coca-Cola Company to accelerate the progress of its CO2 to mono-ethylene glycol (MEG) conversion technology. This news follows Coca-Cola’s recent unveiling of its first PET plastic bottle made completely from plant materials.
With this announcement, Liquid Light joins Virent, Gevo, and Avantium on the Coca-Cola PlantBottle project. Gevo focuses on developing bio-PX as a precursor to bio-TPA, Avantium looks into FDCA for polyethylene furanoate (PEF), while Virent focuses on developing an alternative route to bio-PX for the (client registration required) production of bio-PET. Liquid Light aims to produce ethylene glycol from CO2, which would further augment Coca-Cola’s existing PlantBottle Packaging Program when the Liquid Light technology converts biogenic carbon sources.
But if Coca-Cola can already produce 100% bio-based PET, why did the company just sign this agreement with Liquid Light? Now that Coca-Cola has achieved its 100% bio-based PlantBottle, the company wants to implement the exclusive use of this bottle by 2020. However, it will not be able to do this on a global commercial scale while remaining cost competitive with (client registration required) petroleum derived alternatives. This is where Liquid light comes into play. The company claims its route to be a lower cost alternative to the ethanol to MEG route used to produce the bio-MEG in Coca-Cola’s PlantBottles today.
When we spoke with the company last year, we were told of a hypothetical model where a Liquid Light MEG facility would be an alternative to the Quest CCS Project, which plans to bury 1 million tons of CO2 per year underground. In this scenario, a Liquid Light facility would use the 1 million tons per year of CO2 to produce around 625,000 tons per year of ethylene glycol. Assuming a cost of carbon dioxide of $77/ton and a 10% discount rate, the company projected operational expenses of $402 million per year, which translates to approximately $640 per MT of MEG. Current selling prices for commercial volumes of MEG range from roughly $800 per MT to $1,000 per MT, thereby potentially leaving enough margin to compete on price parity with incumbents. If Liquid Light is able to achieve its cost claims, this gives Coca-Cola the ability to kill two birds with one stone: expanding its options for sourcing bio-MEG, while also obtaining it at a price on par, or even lower, than incumbents.
With its recent flurry of bio-PET announcements, Coca-Cola is becoming a leader in developing and implementing bio-based alternatives into its product portfolio; however, we are seeing other companies follow suit. For instance, (client registration required) LEGO’s recent sustainability announcement emphasizes the vast amounts of time and money companies are willing to invest in order to go green. Announcements like this emphasize the growing opportunities for companies looking to address sustainability concerns in existing value chains.
Investment and growth in bio-based material and chemical capacity continues to increase globally. Aggregating 229 sites from 217 companies that are planned, operating, or have been shuttered between 2005 and 2017 paints an interesting picture, whether considered by feedstock, product category or the geography where scale-up is strongest. Categorizing the products – 133 chemicals and classes like succinic acid and polyols – into seven main product categories (e.g., intermediate chemicals, polymers, and specialty chemicals) and 22 subcategories shines the light on the highest potential areas for producers and potential adopters:
Bio-based intermediate chemicals (e.g, adipic acid and lactic acid) is the biggest singular growth driver in the coming years, growing from 2.0 million metric tons (MT) to 4.9 million MT in 2017, while growth in first-generation facilities stalls. Adding further volume to the overall bio-based space, today’s 1.1 million MT bio-derived polymer capacity will grow at an 18% CAGR through 2017 as companies like Avantium build new sites, and production of bio-oil and its derivatives is set to grow from 1.0 million MT today to 1.8 million MT in 2017. Finally, specialty chemicals (e.g., farnesene) are set to boom at a 46% CAGR on a relatively low existing base between now and 2017. In contrast, the nascent bio-based advanced material space, comprised of products like bee silk, continues to have a negligible capacity through 2017.
As the bio-based industry matured, the pendulum moved from fuels to chemicals and companies like Solazyme, Elevance, and Amyris pushed back plans for entering the fuel market and instead focused on available chemical markets. Now that these companies are reaching commercial production volumes and are looking to set up strong downstream offtake markets, strategies are shifting even further away from fuels. As companies look to generate revenue, expect to see continued movement into existing and high-value specialty markets. A key to this on-going growth will be a continuation of the partnering behaviors already exemplified by key players in the industry. Years of collaboration and partnership have resulted in the first wave of bio-producers reaching scale and putting products on the markets. Larger patterns and trends continue to evolve, and a variety of partnership models – some focusing on strong upstream relationships and other focusing on downstream offtake – are showing success. LanzaTech, Agilyx, and Renmatix are key companies with an upstream, feedstock focus, while Genomatica, Solazyme, Gevo, Elevance, and Segetis are working on downstream business development.
Assembling the partnerships for feedstock, process and product in the right geographies will define the long term winners in this space. The masses rushing towards natural gas feedstocks are only enhancing the opportunities for thought leaders and strategic thinkers in higher carbon bio-based materials and chemicals who can position to win now as well as long after the natural gas frenzy is over.
Source: Lux Research report “Cultivating Capacity for Bio-based Materials and Chemicals through 2017” — client registration required.
Last week, industry giants Coca-Cola, Ford Motor, Heinz, Nike, and Proctor & Gamble formed a partnership agreement designed to integrate 100% plant-based polyethylene terepthalate (PET) into their product lines at commercial scale. This news rides on the coattails of Coca-Cola’s announcement to partner with Virent, Gevo (Client registration required.), and Avantium (Client registration required.) to accelerate development of their current 30% plant-based monoethylene glycol (MEG) PlantBottle (Client registration required.). To date, purely bio-based PET technologies exist. In fact, there are many plant-based routes to terepthalic acid (TPA), which can then be converted to PET. These include both fermentation and catalytic processes that are currently too expensive at commercial scale.
Coca-Cola’s goal is to convert all petroleum-based PET products to plant-based PET, which represents 52% of the total packaging within the company. Heinz licensed the MEG PlantBottle technology from Coca-Cola, and hopes to achieve similar goals. Furthermore, Ford shifted from using petroleum-based PET to currently use 25% soy-based polyols for seat cushions, recycled resins for underbody systems, post-industrial recycled yarns for seat fabrics, and repurposed nylon to make cylinder head covers in its bio-based portfolio. Considered a drop-in solution, bio-based PET replicates the mechanical and chemical properties of petroleum-based PET. Therefore, the 100% plant-based PET can potentially be used for all of these end products.
This consortium acts as a catalyst to grow the bio-based PET industry to produce plastic bottles, clothing, shoes, automotive carpets, and other furnishings, and essentially any product made from traditional PET. These industry behemoths will inevitably commercialize the technology due to their current R&D partnerships, access to suppliers, collaborations with universities, and extensive monetary resources. Furthermore, this will enhance the strength of the bio-based materials and chemicals industry by promoting collaboration along the entire supply chain, especially as the rate of forged partnerships is expected to slow in 2012. (See the report “Solving the Bio-Based Chemicals Partnership Puzzle.” Client registration required.)
Small technology startups are driving a wave of new bio-based chemicals and materials technologies, and their growth is catalyzing the biggest change the global chemicals industry has seen in decades. In a recent report (client registration required), Lux Research applied its Lux Innovation Grid to rate 106 startups competing in seven technology areas, ranging from renewable feedstocks like algae, GM crops, and waste gases, to downstream processing in pyrolysis, gasification, and synthetic biology.
This week’s graphic displays the likely winners and losers who are fielding thermochemical processes, which promise the bounty of bioprocessing without the need for engineered microbugs. Unlike bioprocessing, thermochemical technologies create compounds via more scalable catalytic and conventional chemical methods. The Dominant quadrant’s five innovators make the field one of the strongest in the bio-based chemicals and materials space.
Among the top innovators is Elevance, which uses metathesis to convert plant oils into glycerin, esters, and biofuels. Its high Technical score derives from its simple chemical process and capital-light manufacturing, which combine to yield a disruptive process. But Elevance also has ongoing collaborations with Cargill, Materia, Dow Corning, Tetramer Technologies, Stepan, Wilmar International, and others, all of which fueled the company’s $100 million IPO filing.
Also in the Dominant quadrant is Virent, which develops fuels and chemicals from soluble sugars. It rates highly on Business Execution because of its management team’s industrial and scientific backgrounds and investments from Cargill, Honda, and Shell. Moreover, the company has a partnership with HCL Cleantech, which supplies cellulosic sugars. Its technology signifies a unique and effective way to convert sugars to alkanes that may then be catalytically converted to a slew of materials (client registration required).
Both Red Lion Bio-energy and Siluria occupy the High Potential quadrant, but that’s about all the two companies have in common. Red Lion, whose process combines aspects of pyrolysis and gasification to convert biomass to syngas, faces business challenges because its gasification technologies are capital-intensive. Meanwhile, Siluria Technologies has a unique catalyst support technology designed to efficiently convert natural gas (fossil or biogas) to ethylene. While its approach is notable and potentially very valuable, the company is only in its fourth year and has not made much commercial progress yet. It has raised about $17 million in venture funding to date, but it lacks chemical industry connections through management experience or partnerships.
Source: Lux Research report “Assessing Innovator Evolution in Renewable Materials and Chemicals.”
Venture capitalists (VCs) invested $3.1 billion in bio-based chemicals and materials developers since 2004. As many of those start-ups reach megaton scales and launch IPOs, Lux Research analysts sought to find which technologies venture investors favored. This week’s graphic comes from their just published report (client registration required), in which analysts tracked 177 venture transactions involving 79 companies operating in five technology categories – biocomposites, bioprocessing, thermochemical processes, crop modification, and algae. In short, they found:
Bioprocessing developers brewed up $1.89 billion in 96 deals. Bioprocessing developers – especially synthetic biology companies – landed more than half the total venture capital invested since 2004. Encompassing technologies like fermentation, phage display, natural breeding and synthetic biology, all bioprocessing platforms employ some sort of organism as a “factory” for creating products as diverse as sweeteners and catalyst supports. Intrinsically flexible, these platforms enable the likes of Amyris, Codexis, LS9, and Solazyme to produce multiple products from multiple feedstocks, thus ensuring a relatively low-cost route to high-value compounds and providing a hedge against feedstock and product price volatility.
Thermochemical technologies raked in $577.0 million in 31 deals. Thermochemical processing encompasses technologies like gasification (Enerkem), catalysis (Avantium, Inventure), and acid hydrolysis (HCL Cleantech, BlueFire) that sometimes convert biomass to an intermediate like sugars or syngas, and sometimes go all the way to an end product. (e.g. Virent’s paraxylene is used in Pepsi’s famed 100% bio-based PET bottle
Crop modification companies harvested $371.7 million in 28 deals. IPOs are less common fates for crop modification companies which, as you may have guessed, modify crops to be more amenable and economical for use in bio-based materials and chemicals. Instead, companies in this category, like Athenix and FuturaGene, usually end up being acquired by the likes of Syngenta, Monsanto, DowAgro, or Bayer CropScience.
Algae developers saw $190.5 million in 13 deals. Notably, that figure only encompasses start-ups developing algae strains, cultivation systems, and processing equipment for creating industrial chemicals. Representative developers include Bio Architecture Lab, a macroalgae developer, and Israel’s Rosetta Green, which had raised $1.5 million in venture funds, but more recently brought in almost $6 million in an IPO on the Tel Aviv TASE. Excluded from this category are companies primarily developing fuels (which we cover in our Alternative Fuels Intelligence service), and companies like Solazyme and Green Pacific Biologicals that use algae for fermentation (and, thus, are categorized in bioprocessing, above).
Biocomposites developers brought in $108.9 million in a mere nine transactions. This category includes bioplastic blends, some starch plastics, and bio-based foams, from the likes of Cereplast, EcoSynthetix, Ecovative Design, and Entropy Resins. Because of the relatively simple nature of these technologies, VCs often don’t see them as investment opportunities – forcing companies like SoyWorks and Biop Biopolymer to find other sources of funding.
Source: Lux Research report “Seeding Investment in the Next Crop of Bio-Based Materials and Chemicals.”
In the third quarter of 2011, Lux Research analysts profiled 286 companies in 11 different emerging technology sectors. Here are the 10 they thought were the most compelling. Some are already enjoying great commercial success, and should continue to do so. Others are promising upstarts that could yet fail but have the potential to achieve great things. Let us know your thoughts and watch this space for the next quarter’s results.
1. Semprius – Positive – Solar systems
If the company can maintain high yields in automated mass manufacturing, it will have the market’s most attractive high-concentration PV module.
2. Qingdao Institute of Bio-energy and Bioprocess Technology, Chinese Academy of Sciences – Positive – China Innovation, Alternative Fuels
With multinationals such as Boeing and Shell undertaking joint research partnerships, Qingdao has emerged as a leading Chinese institute in alternative fuel technologies.
3. Ice Energy – Positive – Green Buildings
As a complete solution provider of ice-based thermal storage systems for peak-demand load shifting, Ice Energy has secured valuable channels to market via partnerships with Trane and Carrier.
4. Oxis Energy – Wait and See – Electric Vehicles
Although still too early in development to declare success, next-generation energy storage solutions are potentially disruptive in the transportation market, and UK-based Oxis Energy could be one of the first to reach market with its lithium-sulfur battery.
5. Aerogen Therapeutics – Strong Positive – Targeted Delivery
Aerogen is targeting both health and consumer applications, as well as the medical device market, with a versatile electronic micropump technology that aerosolizes liquid drug formulations.
6. Modumetal – Strong positive – Advanced Materials
This leading developer of electroplated metal coatings has shown great savvy in procuring high-profile customers and partners across the aerospace/defense, automotive, and oil and gas industries, despite long development lead times.
7. Sensus – Strong Positive – Smart Grid
A dominating player in the North American advanced metering infrastructure market that spans the entire value chain.
8. Breivoll Inspection Technologies – Wait-and-see – Water
Technology adoption in the $20 billion water infrastructure repair market is notoriously slow, but is inspiring innovations from the likes of Breivoll, which has developed a nondestructive metal water pipe profiling to locate and fix water system weak points before they cause blowouts.
9. E-Ink – Strong Positive – Printed Electronics
Having captured most of the market for e-reader displays with its electrophoretic film technology, E-Ink is looking to other applications as the leisure e-reader market saturates.
10. Avantium – Positive – Bio-based Materials and Components
With its novel furanic platform, Avantium is pushing towards the polyester markets and fanning the flames of the drop-in versus novel chemical debate.