Archive → June, 2011
Genomatica and BioAmber have been named as two winners of the Presidential Green Chemistry Challenge Awards. This is a good week for the renewable intermediate chemicals industry. (You can see the full list of awardees here.)
Start-ups have been moving on to the winners podium beginning in 2009 with Virent, a catalyst-focused bio-fuels firm. Green chemicals and fuels firm LS9 popped onto the list in 2010. But having two tech start-ups in 2011 suggests that these new companies are taking on a larger share of the attention paid to green chemistry by policy makers.
Historically, winners of the Challenge Award have been larger concerns like Proctor & Gamble, Eastman Chemical, Dow Chemical, and Cargill. In contrast to those diversified companies, renewables start-ups must see their green chemistry succeed in the market or they will go out of business.
Knowing this, C&EN tracks with interest statements from start-ups about plans for scaled-up facilities, strong corporate partnerships, and estimates of cost-competitiveness with petroleum-derived chemicals. It can’t be all about the technology. Likewise, the discussion about the award to Genomatica on the EPA’s website encompasses the technology itself, the many environmental benefits, and the possible low-cost manufacture of the company’s bio-BDO. I’ll peel off just the green bennies from the discussion in this quote from the award:
“Initial lifecycle analyses show that Genomatica’s Bio-BDO will require about 60 percent less energy than acetylene-based BDO. Also, the biobased BDO pathway consumes carbon dioxide (CO2), resulting in a reduction of 70 percent in CO2 emissions. Fermentation requires no organic solvent, and the water used is recycled. Furthermore, the Bio-BDO fermentation process operates near ambient pressure and temperature, thus providing a safer working environment.”
For BioAmber, a company in the midst of scale-up plans for bio-based succinic acid, the award focuses on how the firm’s product can enter the marketplace. “BioAmber’s economic advantage has given a number of chemical markets the confidence both to use succinic acid as a substitute for existing petrochemicals and to develop new applications for succinic acid. Succinic acid can replace some chemicals directly, including adipic acid for polyurethane applications and highly corrosive acetate salts for deicing applications. BioAmber has also made it economically feasible to (1) transform biobased succinic acid into renewable 1,4 butanediol and other four-carbon chemicals; (2) produce succinate esters for use as nontoxic solvents and substitutes for phthalate-based plasticizers in PVC (poly(vinyl chloride)) and other polymers; and (3) produce biodegradable, renewable performance plastics.”
Over at Earth2Tech, blogger Katie Fehrenbacher gives some reasons why the recent excitement powering Internet IPOs might be a boon for cleantech firms. As she points out, the venture capital game is about making money on an entire portfolio of investments, and if individual investors want to pay big for a piece of a coupon business, then VCs can cash out and cover their exposure to slow-to-grow renewables companies.
In examining the numbers, she looks at New Enterprise Associates, which is backing the Groupon IPO - likely to bring in lots of cash – and is also invested in e-car maker Fisker Automotive, fuel-cell maker Bloom Energy and thin-film solar firm Konarka, among others. A Groupon windfall might come close to the size of the diversified fund in its entirety. This could take the pressure off of those long R&D timelines, she suggests.
It’s no accident that so many Cleantech VCs are headquartered in San Francisco, and have portfolios in tech (of the computer and internet variety) as well as cleantech. It’s because most started up during the software and internet booms and then grew to take on green start-ups. But the latter type of investment is much more industrial, slow to develop, and capital intensive. That’s why some IPO watchers (and Fehrenbacher actually made this point last month) have suggested VCs may retreat from cleantech and flow back into the faster, cleaner world of silicon.
It is probably too early in the days of Internet boom part II to tell what, if any, impact we’ll see on the fundraising abilities of cleantech firms. But it’s good to remember that cleantech firms compete not just with each other, but with other industries for investment dollars.
One small rule of thumb to remember is that a successful IPO for a venture capital fund brings in ten times the amount invested. They are supposed to be high-risk, high-reward bets where one good launch makes up for many failures. That is the yardstick that VCs will use to measure the success of a cleantech company IPO.
We don’t have too many rules here in C&EN blogville, but we do try to maintain a chemistry connection. I was worried that would be at risk if I were to post about BrightSource Energy, a mega solar tech firm that has filed for a $250 million IPO.
To generate energy from the sun, BrightSource puts thousands of big mirrors in the desert that track the sun and focus light on a tower with a boiler full of water. The steam generated cranks a turbine to create electricity. It sounds like what a technology firm would think up if someone forgot to invite a chemist or chemical engineer to the concept meeting. [Note that in contrast, other solar thermal companies use nifty heat-transfer fluids like biphenyl and diphenyl oxide, as described by my colleague Alex Tullo.]
But there are at least two innovative uses of chemistry in the BrightSource system, one is basic CRC handbook stuff and one is rather mysterious. To extend the hours during which the water can be turned into steam, BrightSource is working to store some of the sun’s heat in a blend of molten nitrate salts (sodium nitrate and potassium nitrate). To save you the Googling, the melting point of sodium nitrate is 308 C and potassium nitrate is 334 C. For some reason this nice detail is in the firm’s S1 filing but I did not see it on the website.
The more mysterious chemistry is alluded to on the company’s website. As you can imagine, the boiler tower has to withstand some unusual conditions. But worry not, because, “The boiler is designed to withstand the rigors of the daily cycling required in a solar power plant over the course of its lifetime, and is treated with a proprietary solar-absorptive coating
Even after we’ve reduced, re-used, recycled, and composted everything we can, we are still faced with some odd items that are just trash. But on an elemental level, there is nothing that can’t be recycled if one is willing to put in a little extra effort and capital.
Canadian waste-to-fuels start-up Enerkem is willing, and this week it has been helped along with $59 million in venture funds from current investors including Waste Management and new investor Valero Energy. Enerkem has three plants in the works where, as the company is fond of saying, carbon can be recycled into fuels and chemicals.
Enerkem takes municipal solid waste (and other end-of-life wastes) and gasifies it at about 700 C. It then cleans up the resulting syngas and uses catalysts to convert the gas into products such as methanol. The products can be used to make ethanol, synthetic diesel, dimethyl ether, and even synthetic gasoline, says the firm.
It’s a bit more sophisticated than just burning trash for energy, but it similarly keeps materials out of landfills. The technology helped the company secure $130 million from USDA and DOE for a plant in Pontotoc, Miss. expected to break ground later this year. Meanwhile, Enerkem is building a plant in Edmonton, Alberta. The firm also has two plants in Quebec, including a demonstration facility.
According to a recent report from Pike Research (or at least a summary of the report that happened to appear as I was reading about Enerkem’s haul), both mainstream incineration for energy and new fangled gasification and biological technologies are on a growth trajectory. Why? Because the world produces a lot of trash, that’s why. Here’s some numbers on current operations from the summary:
“Today, more than 900 thermal [waste-to-energy] plants operate around the world and treat an estimated 0.2 billion tons of [municipal solid waste] with an output of approximately 130 terawatt hours (TWh) of electricity.”