Beyond Borders: Global biotechnology report 2010

Roe: I am in agreement that sustaining and enduring government
policy is a critical accelerator here, and certainly we’ve seen
evidence of that in Brazil, without question. We can question
whether or not we’ve seen that in the United States yet. In fact,
I would posit that we have not. Thirty-five or so years after the
declaration that we have to become energy independent, we
still don’t have an enduring energy policy in this country. Every
administration, Democrat or Republican, has failed to follow
through on its promises.
So I agree with Ollie in that regard. I would say further that
from the standpoint of a true accelerator, independent of the
molecule, independent of the fuel type, whether it’s ethanol or
the so-called drop-in type fuels, I think a terrific accelerator would
be investment tax credits (ITCs). We’ve seen this in other areas
of the cleantech space, the clean energy space. We’ve seen ITCs
successfully employed in wind and solar. But we have yet to see
the same mechanism employed in biofuels, and I think it would
be not only an acceptable, but almost necessary early incentive.
Then, I would also agree with Ollie, that these incentives ultimately
have to go away again.
Forer: What are some of the solutions to scaling up biofuels?
Mace: Again, it’s this notion of partnerships — recognizing
complementary skills and recognizing what specific partners are
good at. People who are good at developing technologies and who
are at the forefront of bioscience, for example, but may not have
the track record or the bench strength to really do the scaling up of
their process, meeting halfway with the people who are less high-
tech but have more of a track record of delivering big projects at
scale consistently, who have the know-how and the processes.
Roe: I would agree with that, and I would also say that there
probably is some room here for true finance innovation. I don’t
know if it can be actualized or if we’ll ever see this in the foreseeable
future, but something as novel or as new as a green bank scenario
that’s been proposed, for example. One of the most difficult things
to do today if you’re ready to go, if you’re ready to get a project of
size up and running or up and constructed, is just the acquisition of
even conventional project debt, where lenders today are perhaps
rightfully gun-shy about taking chances on big projects with first-ofa-kind
technologies.
It would be a huge undertaking. It’s unclear whether the climate
today would be conducive to such a concept. But it would be a
manifestation of what we talked about earlier in terms of the need
for enduring government policy and a stake in the ground that says
if it takes us 20 to 30 years to get there, we have to start now and
we have to have structures in place, including innovative financing
structures, that will allow this to happen.
Haywood: We’ve linked synthetic biology with industrial biology.
When I say that, the magic is really in the synthetic part, what we do
inside the host organism. But the other piece is equally important;
the industrial biology actually allows you to scale up, and that’s
really fermentation. Fermentation is not a new science. It’s been
around since the Phoenicians used it to make alcohols. Thus, the
technology is actually older than oil and gas refining and it’s very
sophisticated. The Brazilians have used it effectively to make
ethanol. And also in the US, we’re now making a lot of ethanol using
fermentation, and I think that’s one of the better technologies to
be able to tap into to produce at the scale that we’re talking about.
We didn’t invent it; we’re just using it. And it’s very effective. It has
a history of being reliable and productive, and it goes on at pretty
much ambient temperatures and pressures, so it doesn’t require a
lot of exotic equipment. This keeps the capital costs relatively low.
I think the other issue is on the feedstock side. That’s really
unlocking the technology that allows you to convert biomass to
sugars. There are a lot of technologies that use sugars, as LS9
does, to create biofuels. Once you produce sugars from biomass,
you now move the geographies out of just the cane areas to
almost everywhere you can grow cellulosic materials. You can use
switchgrass, wood chips, corn stover and waste products to create
sugars. I think when that happens, it will be a huge breakthrough in
terms of the scaling capabilities of a lot of these technologies.
Bandak: I’m starting to see non-traditional pools of capital being
attracted to this space. They may come from traditional parties,
such as sovereign wealth and private equity funds, or potentially
“Biofuels are clearly a big part of the
response and, as a matter of fact, they are
among the very few credible solutions in
the area of transport … Our vision is that
biofuels have the potential to be between
10% and 20% of global transport fuel
energy by 2030.”
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