Beyond Borders: Global biotechnology report 2010

from infrastructure funds, but they are non-traditional in trying to
mitigate some of the technology risk to the extent possible. There
will be an attempt to set up a form of project financing, at least for
the first or second plant, basically to get the company on its feet, to
get it up and running. Then you demonstrate to the more traditional
financiers, the large-capital bank providers, that this is feasible on a
large scale as you roll out your plants with a more traditional capital
structure. But it’s something that people are starting to look at and
to really come up with creative structures because it does not really
fit in your classic project finance or your classic growth equity play.
Mace: Just a reflection on private or financial investors, people
who’d like to play in the sector but who don’t necessarily have inhouse
the industrial or the technological insights. I think that for
them, the technological landscape for second generation must look
fairly confusing right now. They’ve got a number of technologies
being proposed to them, some using biological routes, some using
various chemical routes. And I think it must be rather daunting
for those providers of funding to make up their minds right now in
terms of what really works and what doesn’t.
Forer: Going forward, what is the role of today’s leading oil and
gas corporations?
Mace: Clearly, the first role is to embrace our responsibility in
terms of facing up to and meeting the challenges. And the first
challenge for the energy world is energy security — where it is all
going to come from. I believe we’re talking about roughly doubling
the amount of primary energy used in 2050 versus today. Then,
of course, at the same time, it’s got to be low carbon; we have to
mitigate climate change. So the number one role is to be proactive
and really embrace our responsibility there.
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. So the role of oil and gas operators is to facilitate the
adoption of biofuels done well, as I certainly would not argue that
all biofuels are equal. And not only to facilitate their introduction
and their acceptance, but also to bring those technologies to market
because of our historically successful track record of delivering
large projects — of successfully delivering large capital investments.
We need to promote the technologies that we see as having the
ability to be winners in the long term. We need to help in selecting
them and in bringing them to market in a very material way since
we are not talking about biofuels being 1% or even 5% of transport
energy. Our vision is that biofuels have the potential to be between
10% and 20% of global transport fuel energy by 2030.
102 Beyond borders Global biotechnology report 2010
“The oil and gas folks are extremely
important because they have the capital
and the capability to build out these
new technologies. They have a lot of
the capability to improve production
processes. And they’re used to solving
problems.”
Roe: I think it’s interesting to look at and to watch the various points
of injection, if you will, or intervention into this space by the big oil
and gas companies. Invariably, without their involvement, this would
be a nearly impossible task.
That said, there is a real paradigm shift here. It is very difficult
for companies whose foundation is a mindset that the future
production of transportation energy revolves around oil reserves
to start thinking about a piece of land that in perpetuity produces
a feedstock material and doesn’t have a finite lifetime or life cycle.
This is a real shift, and I think some of the energy companies,
some of the oil and gas companies, see that differently, approach
it very differently and are more or less progressive on some sort of
a continuum.
But clearly, whether the paradigm shift occurs completely or
not, it must occur eventually. Because ultimately, success will be
very difficult to achieve as long as we have internal combustion
engines and liquid transportation fuels that are part of that
process, unless the current incumbent oil and gas companies are
very strong participants.
Haywood: I think you’re beginning to see the incumbents embrace
the future. But it’s important to remember that they’ve got their
businesses to run. Recently, when demand destruction hit, they
took a hit like everyone else did, particularly on the refining side.
Refining has been a brutal industry to be in for the last year. But
the oil and gas folks are extremely important because they have
the capital and the capability to build out these new technologies.
They have a lot of the capability to improve production processes.
And they’re used to solving problems. So I think they’re going
to be important from an investment perspective and also in the
development of these technologies as we go forward.