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Metabolix: the Post-ADM Update

It’s been a very busy summer, but I had a chance to catch up with Rick Eno, the CEO of Metabolix, last week. Metabolix makes a bio-based plastic that it calls Mirel, though chemists call it a polyhydroxyalkanoate polymer (PHA). We last heard from Metabolix in January when its commercial-scale partnership with Archer Daniels Midland dissolved.

The breakup was a significant blow to the company in terms of growing its business and selling Mirel to customers. The partnership with ADM was based around an ADM-financed production plant capable of making 50,000 tons of Mirel per year. Unfortunately, sales ramped up slowly and ADM said the market was too risky.

Since the breakup, Metabolix has decided to launch the biodegradable Mirel bioplastic under its own nameplate, says Eno. It has transferred inventory from ADM, and brought over all the business operations. Still, the company needs a production partner.

“Since Mirel was exclusive to ADM for so long, [after the breakup] we did get inbound calls and we also reached out to potential partners to establish potential manufacturing,” Eno told C&EN. He says that rather than try to sell enough Mirel to keep a huge plant busy, he’s now looking for something closer to a 10,000 ton per year scale.

“We’ve narrowed down a large number of potential opportunities to four. Now we’re looking at engineering detail for integration of our manufacturing technology to the partners’ asset sets,” Eno reports. “We’re deeply evaluating a short list of manufacturing options.” Without ADM to center the business, Metabolix can look outside the U.S. – for example, to be closer to customers. In fact, the firm has opened a sales office in Cologne, Germany to be close to the European market.

As Alex Tullo wrote in his recent cover story on biodegradable plastics, an important market niche is in organic waste handling – specifically in municipalities where organic waste is separated and hauled to composting facilities. Eno suggests this is both a good niche for PHA, and also a great reason to be in Europe where people rigorously sort their trash.

Eno followed up on his January comments that the company would look to higher-value markets that really require biodegradability, rather than try to compete with cheap and plentiful petro-based plastics. He said the company is focusing on agriculture and horticultural markets – for things like biodegradable plastic mulch; the consumer market for compostable bags and similar products for organic waste diversion; a broader packaging market; and a marine and aquatic segment where it is important that plastics biodegrade fully in oceans and streams.

The breakup with ADM somewhat ironically boosted Metabolix’s cash position (for some rather complicated accounting reasons). That will be a big help, because the company is still developing its upcoming portfolio of bio-based C3 and C4 chemicals, using different PHA molecules than Mirel uses as an intermediate. Example target chemicals are gamma butyrolactone and acrylic acid. The C4 program is the farthest along and has reached 60,000 liter fermenters in scale-up. Eno says the chemicals program has netted “significant partner interest.”

Also helping to pay the bills is a government grant backing the company’s efforts to put the bio-based plastic platform into purpose-grown plants. In a recent advance, Metabolix and its research partners have reported a new way to increase polyhydroxybutyrate (PHB) production in sugar cane.

So there you have it – Metabolix is still moving along. The next time we will hear from them, Eno says, it will be because they have a new production partnership to announce. Stay tuned.

Spring Themes: Composting

[you can skip my musings and go straight to Alex's compostable plastics story!]

Today’s forecasted high temperature where I live in the Northeast is 78 degrees. That just doesn’t seem right. This time last year, we still had an impressive layer of snow which didn’t melt until sometime in April. [insert random thoughts of global warming, La Nina, and how yesterday was almost 20 degrees warmer than the forecast promised]

Over the weekend I took the opportunity to turn my compost pile. It’s got mostly kitchen scraps, a few bits of brown paper bag (worms love ‘em) and leaf litter. Home composting is both an art and a science – my pile had too much nitrogen and not enough carbon, so I added more dried leaves.

I also noticed a plastic spoon in the pile, normally a no-no. But this one was made of PLA, a plastic derived from corn that is supposed to be biodegradable. It still looked pretty new, though, mostly because my backyard pile cannot reach the high temperature and rabid microbial activity of an industrial scale composting operation.

If I lived in San Francisco (and today it feels like I do!) I would put the spoon and my kitchen scraps, and perhaps some lawn wastes into a compostable plastic bag and set it out to be picked up. This week’s issue of C&EN features an in-depth, fascinating story by Alex Tullo on how compostable plastic trash bags – plus disposable dinner ware – can enable cities to divert 50% or more of trash away from landfills.

From the story:

In a landfill, food scraps generate methane, a much more potent greenhouse gas than CO2. They also form acids that leech out of landfills. “If you ask all these cities what the largest component of their waste going to the landfill is, it’s food,” he says. “And what is one of the worst things to go to the landfill? It’s food. The only thing worse is hazardous waste.” [quote from Jack Macy, commercial zero-waste coordinator for SF Environment, San Francisco’s environmental department.]

Now think about your household’s waste. To reach San Fran’s goal of diverting 100% of municipal trash from landfills, it would have to be either recycled or composted. Plastics can be recycled, but if they get into the composting supply (like a random fork, or the trash bag holding the food waste) then you’ve already broken your system.

Making Markets for Bio-based Fuels and Chemicals

Minnesota has long been the heart of ethanol fuel consumption. With plenty of corn and corn ethanol facilites – and a lot of drivers in E85 vehicles – the state was an early and enthusiastic supporter of bio-based fuel. But times have caught up with the northern-Midwesterners.

Now a new ethanol facility, owned by Gevo and being renovated to make isobutanol from corn, has run into an obstacle in state legislation that prevents the company from selling the alcohol to in-state fuel blenders. According to the Star Tribune, the state’s laws only specify that ethanol can be blended with gasoline (at 10% biofuel). Gevo’s Lucerne, Minn. isobutanol plant will have to ship out of state to access the fuel market.

Currently the site is being renovated to switch from making corn-based ethanol to isobutanol. Though the goal is to sell into the higher-margin chemicals market, fuels are usually a key destination to make the capacity/revenue equations work out.

There’s still time to get that settled, though. Gevo won’t be in commercial production until June, and the state can update the regulation to include other bio-based fuels. The Star Tribune points out that the President of the state’s ethanol trade group, Minnesota Bio-Fuels Association, is also CEO of Highwater Ethanol, which is also considering making isobutanol.
Highwater says it is in discussions with Butamax, a joint venture of BP and DuPont and competitor to Gevo. The two firms are been engaged in a major patent dispute. With Gevo poised to be the first in Minnesota to make isobutanol, I’m sure the firm would like to see the law changed sooner, rather than later.

Meanwhile, back in Washington, there are efforts to greatly expand the products that carry the USDA BioPreferred label. The program is a labeling/economic development/domestic bio-based materials promotion vehicle. President Obama gave it a boost last week when he signed a presidential memo requiring government agency purchasers to increase the amount of BioPreferred products they purchase. He also asked USDA to double the number of categories and products that are designated BioPreferred over the next 12 months. In the Senate, Debbie Stabenow (D-Mich.) has introduced the Grow It Here, Make It Here Bio-based Manufacturing Act which would further invigorate the effort.

I’ve been seeing a great deal of support Senator Stabenow’s bill in my in-box, from groups who expect to benefit from a higher profile for bio-based materials. DuPont, Novozymes, and the Biotechnology Industry Association trade group have publicized their support.

From a DuPont press release this morning: “The President’s action and the Grow It Here Make It Here bill demonstrate that the administration and policymakers understand the value of U.S. leadership on innovative biobased products in the United States,” said James C. Collins, president, DuPont Industrial Biosciences. “This action is a shot in the arm to America’s bioeconomy – helping support our overarching goals of boosting the U.S. agricultural sector and reducing our reliance on imported petroleum while offering a wealth of
environmental and health benefits.  This is U.S. innovation that can help create U.S. jobs for a growing global market for sustainable products.”

Tough Times for Thin Film Solar Makers

Two U.S. manufacturers of thin film solar cells based on cadmium telluride have been having a tough couple of weeks.

Tempe, Arizona-based First Solar put out a sobering fourth quarter earnings report. While sales were up a bit from last year’s quarter – to almost $2.8 billion, the firm reported a net loss of almost $40 million, compared to net income of $664 million for the fourth quarter of 2010. First Solar used the last quarter of the year to take a big goodwill impairment charge of $393 million – residue of acquisitions of OptiSolar and NextLight.

Without the goodwill charge and some restructuring charges, the quarter still brought in less profits than the previous year’s quarter. Going forward, the company cut its 2012 guidance on net sales to $3.5 billion-$3.8 billion from $3.7 billion-$4 billion. First Solar stayed firm on an earnings forecast of $3.75-$4.25 per share.

But other issues are haunting First Solar – the company’s filing with the SEC says that it is spending more than expected on warrantee replacements of solar panels deployed in hot climates. And it has a new head of investor relations after an internal investigation of company leaders who may have improperly disclosed that First Solar would not receive a DOE loan guarantee for a large utility solar installation due to not making a deadline for application. Its SEC filing said that the SEC was now investigating the issue (the loan news negatively affected First Solar’s stock price).

Meanwhile, Abound Solar, which makes  solar cells similar to First Solar, but is a smaller firm, recently said it would lay off 180 workers in Colorado. It plans to shift manufacturing to a more efficient production line, and says the workforce action is temporary. House Republicans have already been asking DOE why the company received a $400 million DOE loan guarantee for its manufacturing operations in Indiana.

First Solar and Abound Solar will go on, in spite of these hiccups. But they will continue to struggle to compete against traditional crystalline silicon solar cells because the latter have gone down in price by close to 40% in the last year. Thin film modules are well liked – First Solar is doing well with utility scale projects. But the firms have to move very quickly to increase efficiencies while decreasing production costs. To do so, they will have to stop work on older production lines – and they may have to do so abruptly or they will lose money on each module they sell.

Amyris: Earnings with a scent of patchouli

I learned an interesting new detail while listening to an earnings call.  On Monday evening, bio-based chemicals maker Amyris listed a handful of collaborations that would kick in some revenues in 2012. Amyris makes bio-based farnesene from sugar via fermentation. New to my ears is a project with fragrance and flavor maker Firmenich to make patchouli oil.

Amyris has had agreements with both Firmenich and Givaudan for flavor and fragrance products based on farnesene raw materials, but this is the first time I’ve heard about a particular end target. Two things come to mind to connect Amyris to patchouli, and neither have to do with insense burning or the counterculture (though these may be the first thing one thinks of related to patchouli).

Patchouli scent comes from a bush, for now. Credit: Wikipedia (cc)

First, farnesene is one of a large family of chemical compounds that make up the sesquiterpenes. Various forms of farnesene contribute to smelly compounds made by plants and insects, and the E isomer of beta farnesene is a constitutent of essential oils. Compounds like essential oils and other volatiles are part of the arms race between plant and insect. Patchouli scent is made from the essential oils of a member of the mint family; various species of the genus  Pogostemon 

are cultivated in Asia and Africa for the fragrance.

Second, though you might not notice it, many personal care products as well as soaps and detergents have scents that include patchouli. And it is widely used in perfumery. But patchouli and other essential oils pose tricky supply chain problems for consumer product makers – natural and man-made disasters can signficantly disrupt supplies. In 2010, for example, a volcanic eruption in Java destroyed patchouli crops in Java. This suggests that a renewable, steady supply of the stuff might make for a solid, high-value marketplace for Amyris’ farnesene.

Energy Conversion Devices: the other story

For many years of its history, Energy Conversion Devices had more cleantech and related business going on than this blog has categories for. The 51 year-old company filed for bankruptcy on Valentine’s Day, after having failed to generate sufficient revenues from its main business, United Solar Ovonics.

Tech writers are focusing on the Solar part of the tale, which is understandable because it neatly fits into a pattern of high-cost solar makers taking a tumble in the face of low-cost Chinese competitors. But what I found fascinating about the firm is the part referred to as Ovonics.

The word Ovonics was coined by ECD’s founder, Stanford R. Ovshinsky. He took the first two letters of his name and added the end of electronics to create a sort-of blanket term describing the way a bit of energy can convert amorphous and disordered materials into structured crystalline materials. It also covers the reverse process. The various energy and information applications that Ovshinksy put his inventive mind to include nickel-metal hydride batteries, LCD screens, read-write CDs, amorphous silicon thin-film solar material (and a nifty machine to make it), hydrogen fuel cells, and phase change electronic memory. It would be hard to imagine American life without many of these technologies – and some are still to come.

He is considered a Hero of Chemistry by the American Chemical Society. At 88 years old, he is still inventing at his new company Ovshinsky Innovations (he left ECD in 2007). The curious part of the tale is that Ovshinsky is self-taught – he didn’t go to college or graduate school. And his inventions began with research on energy and information that he pursued in the 1950s and 60s.

ECD started out as a laboratory – founded in 1960 – before it became a company. Even as a business, it ran more like a stand-alone research laboratory – think Bell Labs or Xerox labs without the rest of the corporation. The company brought in money by doing everything other than making and selling products - it had equity investors, research grants, and many collaborations along with a bit of licensing revenue.

It seemed to be always on the cusp of the big time, but it was ahead of its time. In some ways it was both ahead and behind at the same time. It had already licensed  the nickel-metal hydride rechargeable battery years before it powered the Toyota Prius. Now electric cars will have lithium-ion batteries. ECD made thin-film solar that would find a niche in building integrated photovoltaics, but that niche still is not large enough to save the solar business. Yet its cost structure still belongs to the solar industry of five years ago.

Ovshinsky was also ahead of his time when he focused his work on renewable energy to break the world’s dependence on petroleum.

I don’t know ECD intimately but as an outsider, it seems that the company likely lost its driving force when it lost Ovshinsky five years ago. The management wanted to concentrate on making the company profitable – so it focused on solar energy, which was experiencing a boom. That was a bet that did not pay off.

A Microhybrid is Not a Tiny Car

This week’s issue has C&EN’s update on what’s going on with the Obama-touted advanced battery industry. In short, the U.S. can make many, many big batteries for various flavors of electric vehicles. More batteries, in fact, that the U.S. has electric vehicles.

One flavor of vehicle that may be a new one to many is a microhybrid. These are not tiny cars, nor are they like the all-electric Nissan Leaf or plug-in hybrid Chevy Volt. Rather, a microhybrid system is part of a less radical design intended to help gas-powered cars use less gas. They use some version of what are called start-stop batteries. Andy Chu, vice president of marketing & communications at battery firm A123 Systems explains:

“With start stop batteries, also called micro hybrid batteries, the primary function of the system is that it turns the engine off when you stop. And it turns the engine back on automatically. Just by turning off the engine at a stoplight you can save a few percent on fuel economy. Some of the batteries just crank the engine. But when you ask it to do other things – like launch assist – or move the vehicle from a stopping point – that is the hybrid function. This is great because the battery can respond instantaneously.

You need something beyond typical lead acid, like for regenerative braking. The A123 solution has higher charge capability, then you don’t waste braking energy as heat. Also, it extends the life span – you use the battery much harder – with A123 you don’t need to replace the battery as often as with a lead acid. Weight is another advantage that helps with fuel economy savings. Compared to a lead acid version, we expect 50% better fuel economy gain. If you gain 10% with lead acid, you’d gain 15% with our battery. It is very difficult to save weight in vehicles. A lead battery is very heavy – so its easy to take weight out there.

Automakers, especially in Europe, are really moving to microhybrids. They require very little design change; the battery and alternator are a little bigger, lighter, and provide better fuel economy. They are easy to integrate. So microhybrids are part of our message – though electric vehicles are the sexy topic, advanced batteries can be used across a wide variety of vehicles.”

Lux Research analyst Kevin See says the hybrid-you’ve-never-heard-of will be responsible for the bulk of future growth of energy storage technologies for vehicles, along with batteries for electric bikes. “Although battery prices for all-electric and hybrid passenger cars are dropping, they’re not dropping far enough or quickly enough to fuel the sort of broad adoption that advocates expect,” says See. “Instead, the substantial growth we see for vehicle-related storage technologies will be powered mostly by e-bikes – which are shifting from lead acid to Li-ion battery technology – and microhybrids, which offer a more incremental, low-risk way for automakers to improve fuel efficiencies.”

A Lux Research report states that microhybrids “ are set to surpass these other passenger vehicle types in terms of both total storage and dollars in 2016, growing from 5.1 GWh and $495 million, to 41 GWh and $3.1 billion –  CAGRs of 52% and 44%, respectively.”

A New Year for Biofuels

Fuel blenders are finding that the New Year is bringing a few changes to their business. Before Congress adjourned for the holidays, it opted not to renew the subsidies for putting corn ethanol into gasoline. Though the subsidy had become a fact of life – and added up to $6 billion last year – the fall of the corn regime was not unexpected.

This morning, NPR tried to answer the question of whether anybody would notice the difference, and according to their expert, energy economist Bruce Babcock at Iowa State University, most likely no one will. You can review the segment on the NPR website.

I don’t yet have a number for 2011 production of corn ethanol, but 2010 was a record year, according to the Renewable Fuels Association. U.S. refineries produced 13.23 billion gallons of the stuff. So bear that number in mind for my next item…

Totally aside from and unrelated to the generous corn ethanol subsidy that no longer exists, the EPA still requires the blending in of biofuels in its Renewable Fuels Standard, now in its second edition (RFS2). For 2012, EPA says blenders must include 8.65 million gallons of cellulosic biofuel* in their fuel mix. That will be equivalent to .06% of all renewable fuel produced in 2012. RFS2 says blenders will need to use 9.23% of renewable fuels in their blends in 2012 – most of that will still be corn ethanol.

EPA is tracking 6 cellulosic biofuel projects that are supposed to produce in 2012, and that is how it came up with the number. This is what EPA published at the end of December:

KL Energy Corp. is the only facility in the United States currently generating cellulosic biofuel RINs. American Process Inc., Fiberight, and ZeaChem all anticipate completing construction on their production facilities in late 2011 or early 2012 and plan to begin producing biofuel soon after their facilities are complete. INEOS Bio and KiOR are targeting April 2012 and mid 2012 for the start-up of their respective cellulosic biofuel production facilities. The variation in these expected start-up times, along with the facility production capacities, company production plans, and a variety of other factors have all been taken into account in projecting the available volume of cellulosic biofuel from each these facilities.

There are a couple of other projects in the works that are likely to be RFS2 candidates, but not this year. Poet has received a conditional USDA loan guarantee and is building a co-located plant (with corn ethanol) in Emmetsburg, Iowa – scheduled for completion in 2013. DuPont now has full ownership of what used to be DuPont Danisco’s cellulosic project. No word yet on when that plant will be constructed, but it will be in Nevada, Iowa.

*Edited 1/4/12 to state cellulosic biofuel rather than cellulosic ethanol. EPA anticipates that the largest cellulosic fuel producer will be KiOR, which will be making biodiesel and gasoline from cellulose at its plant in Columbus, MS. KiOR is the only project of the six planning to make anything other than ethanol.

 

 

Advanced Biofuels: pipedream or solid investment?

I read with much amusement this week two dueling editorials about advanced biofuels; one from the Wall Street Journal and the other - a reaction piece – from Biofuels Digest. One was pr0 and one against, I’ll let you strain your brain figuring out which was which.

Editorial boards have plenty of information to pick from to illustrate a variety of contentions – from advanced biofuels are a “march of folly” paid for with “an invisible tax paid at the gas pump” to biofuel as wise investment not just for government, but for companies like Shell and BP. Evidence for the former view: Range Fuels, which absorbed both grants and loans before succombing to the perils of scale-up engineering last week. Evidence for the latter would include Mascoma‘s joint venture with Valero Energy to build a 20 million gal per year cellulosic ethanol plant in Michigan. Valero will foot a good portion of the estimated $232 million bill to construct the facility.

The crux of the problem, as Cleantech Chemistry and many others have observed (including the National Academies) is that the type of advanced biofuels (i.e. fuel not made from food-like feedstocks such as corn sugar) called cellulosic ethanol has not achieved scale to date. (There are other, more lifecycle concerns, as well). Biofuel Digest editors point out that the larger proportion of advanced biofuels scaling up now are of a different sort- like biodiesel for example. In short, they point out there are multiple roads to get to the same place.

The Wall Street Journal, to its credit, does not politicize its arguments – it rightly notes that Range Fuel’s support came from programs created by the Bush administration. Meanwhile, Biofuels Digest points out that the CapEx on the Mascoma plant pencils out to $11 per gal of ethanol for the first phase. The plant may produce up to 80 million gal per year, however, and all the usual promises of cheaper production through scale are supposed to apply.

US Cleantech firms in white-knuckle mode

There has been one positive piece of news this week for the cleantech sector – Solazyme is part of a $12 million grant to supply the U.S. Navy with 450,000 gal of biofuel. Solazyme’s algal oil will be used along with used cooking grease to power a fuel plant run by Dynamic Fuels, a joint venture between Tyson Foods and Syntroleum. They’ll be making both renewable jet fuel and marine fuel. Press releases about the deal emphasize that it is the single largest biofuel purchase in government history.

Thank goodness cleantech has the government as a customer. Private industry customers haven’t panned out so well lately for battery firms like A123 Systems and Ener1, as reported this week in the Wall Street Journal. Major investments in battery manufacturing – supported in large part from Recovery Act funds – have been met with disappointing demand from electric-car makers. A123 Systems has scaled back its scale-up plans because its big customer, Fisker Automotive, has slowed its own plants due to technical problems. Meanwhile Ener1′s customer Think Global has filed for bankruptcy protection.

When C&EN wrote about the battery scale-up, a major concern at the time was that there would be more battery capacity than cars to put them in, and that seems to be the case for now.

Back to biotech, according to a Reuters report from Pike Research analyst Mackinnon Lawrence, the biofuels industry is very concerned that budget cutting in Congress will pull the rug out from programs that are helping companies bootstrap their way to cost parity with petroleum. Part of the problem is that industry’s promises to have commercial-scale production on line by this year  have not panned out. Cellulosic ethanol is the biggest disappointment, and so now attention is likely to switch to drop-in biofuels like renewable gasoline and renewable diesel. Or, even better, jet fuel.