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Transforming Hype Into Reality in the Next Generation of Alternative Fuels
Mark Bünger, Research Director November 8, 2013
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Introduction: About Lux Research
Helps clients respond to global megatrends and capitalize on the resulting new business opportunities from emerging technologies in the physical and life sciences
Provides technology scouting and market intelligence to support better business decisions
Has over 150 clients on six continents – blue-chip corporations, investors, government agencies, universities, and SMBs
Sources intelligence from direct interaction and onsite visits with CEOs and top executives at cutting-edge technology firms
Has global reach, with over 75 employees in Boston, New York, San Francisco, Amsterdam, Singapore, Shanghai, Seoul, and Tokyo
Combines deep technical expertise with business analysis; 60% of research team holds advanced degrees in science or engineering
Solar Components
Formulation and
Delivery
Smart Grid and Grid Storage
Electric Vehicles
Alternative Fuels
Bio-based Materials & Chemicals
Agro Innovation Water
China BioPharma
Advanced Materials
Printed Electronics
Bio-electronics
Energy Electronics
Sustainable Building
Materials
Efficient Building Systems
China Innovation
Lux Practice Areas
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Abstract
The alternative fuels sector continues to steadily progress, revealing some lucrative home-runs as well as ill-fated disappointments on a global basis. Shale gas disrupted the North American energy landscape, and its ripples were felt worldwide. But with the fuels market on the order of trillions of dollars, opportunities for an array of technological solutions exist. The leading innovators are targeting cheaper feedstock - whether waste, ag residue, or sludge - and aiming for higher performing fuels. Leaders, like Beta Renewables, have secured hundreds of millions in project financing to build their first commercial plants, while laggards struggle between a rock and a hard place: government support is unpredictable in the post-Range Fuels world, and private investment dollars are drying up after the post-IPO pullbacks of companies like Amyris and Gevo. Lux Research regularly analyzes hundreds of companies developing processes ranging from fermentatation, pyrolysis, and cellulose pretreatment and this presentation will connect the leading technologies to macro market trends government growth globally in next generation fuels.
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Biomass and shale feedstocks share key similarities
1. Thinly dispersed over vast areas
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Biomass and shale feedstocks share key similarities
1. Thinly dispersed over vast areas
2. Expensive to ship, cheaper to burn
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Biomass and shale feedstocks share key similarities
1. Thinly dispersed over vast areas
2. Expensive to ship, cheaper to burn
3. Complex, capital-intensive conversion
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Key similarity #4: HYPE
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Energy independence is not just around the corner
“Although vehicle uses currently account for only a small part of total U.S. natural gas consumption, the projected percentage growth in natural gas demand by vehicles is the largest percentage growth in the projection.”
“With incentives and low natural gas prices leading to increased demand for natural gas as a fuel for HDVs”
“Particularly after 2025, consumption in vehicles increases from about 40 billion cubic feet in 2011 to just over 1 trillion cubic feet in 2040.”
Source: US EIA Annual Energy Outlook 2013 April 15 2013
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Before user-generated awareness comes media-generated awareness – “hype”
Jackie Fenn “The Microsoft System Software Hype Cycle Strikes Again “ July, 1995
20%-30% = Early early majority
<5% = Early adopters
Cover of The Economist
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De-hyping Energy independence: What’s the reality?
Bioethanol, algae, and shale gas…
Feedstocks seem abundant and cheap
But require expensive infrastructure and vehicle conversion for use as transport fuel
And can just as easily be converted into higher-value chemicals and co-products
Many bio-based developers initially pursued energy, but changed direction to pursue materials
The same shift is likely in shale – in fact it’s already happening
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Chemical plants are leaping to cheap, abundant natural gas…
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…and the chemicals industry is moving to protect its strategic interest in gas
That ethane is sometimes included in LNG exports “is one of the reasons we worry”
Andrew Liveris CEO, Dow Chemical
Similarity #5: Both shale gas and biomass are increasingly indispensible to the chemical industry
Shale gas provides…
Bio-based feedstocks provide…
87%
9%
2% 2%
Methane Ethane
Propane CO2
Source: Lux Research
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Biomass vs. shale gas: chain length? Oxygen?
carbons examples and applications
C20+ paraffin, tar, bitumen
C15-C20 lubricants
C12-C15 kerosene
C10-C24 diesel
C7-C11 gasoline
C5-C7 napthas (solvents)
C4 n-butane, isobutanol
C3 propane, propanol, propene
C2 ethane, ethanol, ethylene
C1 methane, methanol
lignin
1,4 butanediol
butane
methane O2 no O2
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Detail of the Bio-based Materials and Chemicals Value Chain
fermentation
C5/C6 sugars
acid hydrolysis lignin cellulose
enzymatic hydrolysis
gasification
pyrolysis
syngas
pyrolysis oil
MSW
starch
catalysis
starch crops (corn, cane…)
oil crops (soy, jatropha…)
trees and grasses
algae
mechanical extraction
oils
Industrial chemicals acetone butanol ethanol 3-hydroxypropinoic acid succinic acid lactic acid levulinic acid sorbitol furfural xylytol …
fuels
lignin
amylase
CO2
Source: Lux Research Pruning the Cost of Bio-Based Materials and Chemicals, June, 2012
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Why cellulosic? Oil Prices and Sugar Crop Prices are All Rising
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0
100
200
300
400
500
600
700
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Mill
ion
gallo
ns p
er y
ear
Cellulosic Ethanol
Unlikely Possible Probable Likely Existing
Alternative Fuel capacity growth -- Fast growth in non-food feedstocks
Source: Lux Research Alternative Fuels Tracker, March 2013
We determined tiers based on: •Financing •Technology •Key Relationships •Feedstock
This shift to new feedstock left many victims, and a new wave is scaling up in 2013/2014
• Failed Efforts: • Next Wave of Producers: » 13 MGY, 2013 » 8 MGY, 2013
» 25 MGY, 2013 » 28 MGY, 2014
» 10 MGY, 2013
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Capacity and company status: Feedstock Focus Feedstock Companies with primary feedstock focus Companies with secondary
feedstock focus Corn stover Dyadic International, EdeniQ, Cellulose Sciences International,
Inventure Chemical, Infinite Enzymes1, TMO Renewables, MBI, Zhejiang University – Prof Liming Xia, Novozymes
REAC
Sugarcane bagasse Dyadic International, Cellulose Sciences International, Inventure Chemical, TMO Renewables, MBI, Zhejiang University – Prof Liming Xia, Leaf Energy, Novozymes
REAC, ENEnergy, Renmatix
Empty fruit bunch Inbicon, Inventure Chemical TMO Renewables, Leaf Energy Wheat straw TMO Renewables, MBI, Novozymes REAC Switchgrass Dyadic International, Cellulose Sciences International, TMO
Renewables, MBI REAC
Hardwood Lignol Innovation, Cellulose Sciences International, Inventure Chemical, Sweetwater Energy, AST, Renmatix
ENenergy, TMO Renewables
Softwood REAC, Lignol Innovation, Cellulose Sciences International, Inventure Chemical, Sweetwater Energy, AST, Novozymes, Weyland
ENenergy, Renmatix, TMO Renewables
MSW BlueFire Renewables, Novozymes, Enerkem REAC, Renmatix Unclear/ feedstock agnostic
Proteus, Carbolosic, Weyland Bioethanol, Metgen
General “Agricultural Waste”
ENenergy, Beta Renewables, Inbicon, BlueFire Renewables, Zhejiang University – Prof Liming Xia, Virdia
EdeniQ, TMO Renewables
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Capacity and company status: Companies in the Cellulosic Sugar Supply Chain
Technology Description Technology Developers Enzyme suppliers Novozymes, Genencor, Dyadic, Codexis, EdeniQ, DSM, BP, Proteus,
Biomethodes, Infinite Enzymes, Zhejiang University, MetGen
Dilute acid pretreatment
Abengoa, POET/DSM, Borregaard, Sweetwater Energy, Praj, SEKAB, St1 Biofuels, Pure Energy, Tavda, NEDO, Genahol, Iogen, SunOpta, ENEnergy, Old Town Fuel & Fiber, Jilin Tianshun Biochemical Development Co.
Alkali pretreatment DuPont Danisco, Cellulose Sciences International, MBI Steam pretreatment Beta Renewables, Clariant, Andritz, Inbicon, Henan Tianguan Fuel
Ethanol, NBE Sweden, PureVision Organosolv Lignol Innovations, American Science and Technology, Leaf Energy, CIMV,
Chempolis Catalytic pretreatment Midori, Carbolosic, Fiberight Hydrothermolysis Renmatix, REAC, Inventure Chemical Concentrated acid Virdia, BlueFire Renewables, Arkenol, Weyland BioEthanol, Masada
Resource Group Other American Process (ethanol and SO2), Proterro (sugar production from
cyanobacteria)
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Converting Cellulosic Biomass: Gasification, Acid Hydrolysis, and Enzymatic Hydrolysis
Enzymatic Hydrolysis Acid Hydrolysis Gasification Methods of decomposing biomass
Enzymes from cellulose-eating fungi: • Endoglucanases • Exoglucanases • β-glucosidases
Exposure to acids via: • Dilute acid (H2SO4) • Concentrated acid
/Arkenol process (H2SO4)
• Bergius process (HCl)
Very high-temperature (>800 °C) gas in processes including: • Fixed bed • Fluidized bed • Entrained flow • Plasma
Sensitivity to feedstock composition
High Medium Low
Output C5 and C6 sugars C5 and C6 sugars, lignin CO, CO2, H2 Key players DSM, DuPont
(Genencor), Abengoa/Dyadic, BP (Verenium), Mascoma Codexis, SinoBios, Protéus
BlueFire Renewables, HCL CleanTech
Enerkem, Sierra Energy, Anellotech
Source: Lux Research Pruning the Cost of Bio-Based Materials and Chemicals, June, 2012
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Overview of Enzymatic Hydrolysis
Feedstock field to biomass
Conversion biomass to intermediate
Production intermediate to product
feedstock handling
crop (e.g. corn, stover)
enzyme production
enzymatic hydrolysis/
saccharification
liquid separation (e.g. distillation)
pretreatment
fermentation
solid separation (e.g. centrifuge)
biomass
hydrolysate
broth
cellulase enzymes
product (e.g. ethanol)
coproducts (e.g. DDGs)
C5/C6 sugars
Source: Lux Research Pruning the Cost of Bio-Based Materials and Chemicals, June, 2012
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What’s taking so long? Gaps in the Lignocellulosic Sugar Value Chain
Feedstock • Feedstock harvesting,
aggregation, storage • Long-term feedstock
supply
Sugar • Economical conversion
of biomass to sugar monomers
• Lignin upgrading • Risk-tolerant financing
to build new processes
Product • Simultaneous C5/C6
fermentation • Oligomeric conversions
to fuel or chemical
Application • Ethanol blend wall (US) • Too little available
supply in industrial quantities
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Forecasted growth in capacity for bio-based chemicals globally
-
2,000,000
4,000,000
6,000,000
8,000,000
10,000,000
12,000,000
14,000,000
16,000,000
18,000,000
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Met
ric To
ns p
er y
ear (
capa
city
)
Capacity forecast in bio-based materials and chemicals
Polymer
Acid
Intermediate
Other
First gen
Source: Lux Research, December 2012
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Gen 2 start-ups reach for – and realize – commercial scale production
Company Scale Status 42,500 mt/a of farnesene in Brazil Not sold out, and still optimizing
strain metrics
3,000 mt/a succinic acid, today, in France; 20,000 mt/a by Q4 2013 in Sarnia, Canada
Says “on track” for Q4 2013 production in Sarnia, Canada
180,000 mt/a of specialty chemicals and biodiesel in Surabaya, Indonesia; 80 MGY biodiesel plant being retrofitted in Mississippi
Malaysia plant came online in July 2013
Produced equivalent of 23,600 mt/a of BDO in 5 week run More plants to be built with numerous partners globally
50,000 mt/a of isobutanol at first plant; retrofit of conventional ethanol plants may enable build-out
Restarted isobutanol production
2,000 mt/a capacity of polymers of itaconic acid; easily and inexpensively expandable
Currently producing at less than maximum capacity
Has produced ethanol at 100,000 GPY scale and continues to do so at Shougang Steel
Working towards 13 MGPY scale-up
First commercial plant, 13,000 metric tons/year, currently producing product; working towards 2 additional plants
Working towards operating at full capacity
ADM/Clinton demonstrated at ~500,000 L; to be on-line by early 2014 to 50,000 mt/a scale; Solazyme Bunge 100,000 mt/a production by 4Q13; Peoria and Roquette plants add additional capacity
Steadily increasing scale
Adipic acid and DDDA at 10,000 mt/a to 15,000 mt/a expected in 2014, in steps
Sites being reviewed
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Lux Innovation Grid – Bioprocessing
Akermin
AllylixAmyris
Aquaporin
BioAmber
Biomax
BioTork
Bird Eng
Butalco
Butamax
Carbozyme
Cathay
Celexion
CO2 SolnsCobalt
Codexis
Dyadic
Evolva
Genomatica
Gevo
Ginkgo
Global Bioenergies
GlycaNova
GlycoMar
GlycosBioGreen Biologics
Isobionics
Jiangsu Lianhai Bio Tech
LanzaTech
LS9
Metabolic Explorer
Myriant
OPX
Saffron Eagle
SolazymeSolvert
Synthetic Genomics
SyntheZyme
Verdezyne
1
3
5
1 3 5
Tech
nica
l Val
ue
Business Execution
High-potential
Long-shot
Dominant
Undistinguished
5.0
4.0 - 4.9
3.0 - 3.9
2.0 - 2.9
1.0 - 1.9
Strong Caution
Caution
Wait and See
Positive
Strong Positive
Lux TakeMaturity
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Gevo: Bio-isobutanol Lux Take : Positive
Engineered yeast produce isobutanol and purification system continuously removes isobutanol from fermentation vessel
Uses corn and sugarcane as feedstock
Restarted isobutanol production at the 18 MPY commercial facility • Two of three trains operating • Goal is to switch to mash and bring the final train
online by the end of the year
Integration with cellulosic processes won't happen by 2015 as previously hoped • Most of the challenges lie in the supply chains
that Gevo’s partners are constructing • Trouble securing cellulosic feedstock supplies will
not be a problem unique to Gevo
1 - Butanol market • Solvents, coatings
2 - Platform chemical •Butyl rubber, PET, butene
3 - Fuel blendstock •Has EPA registration
4 - Jet Fuel •Works with Mustang Eng.
Target Markets (in order):
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Myriant: Bio-succinic acid Lux Take : Positive
Modified, feedstock-agnostic E. coli produces succinic acid, with a current focus on starch based feedstocks
Producing product at the 15,000 short tons/year scale in Lake Providence, Louisiana • Currently operating at partial capacity and
working towards full capacity
Looking to build a 140 million lb/yr facility in North America
Recently signed a JV with PTT Chemical called Auria Biochemicals
Working on development of bio-acrylic acid • Myriant said scale up is linked to partnership
opportunities • Anticipating six to nine months of joint research
and development, then building a pilot plant
Selected partnerships:
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Butadiene is another chemical getting a lot of bio-based interest
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De-hyping Energy independence: What’s the reality?
Bioethanol, algae, and shale gas…
Feedstocks seem abundant and cheap
But require expensive infrastructure and vehicle conversion for use as transport fuel
And can just as easily be converted into higher-value chemicals and co-products
Many bio-based developers initially pursued energy, but changed direction to pursue materials
The same shift is likely in shale – in fact it’s already happening
31
Conclusions
Neither shale gas nor biomass producers are focused on alternative fuels • Chemicals are the goal for both • This has profound environmental and/or economic consequences!
Cellulosic and MSW feedstocks are abundant, but • Collection is expensive • The market for ethanol is limited
Bioprocessing from cellulosic sugars and syngas to drop-in fuels should be a top technical and economic priority
