Tight finance market favours bio-based chems - group

31 March 2011 20:44  [Source: ICIS news]

NEW YORK(ICIS)--In the past two years, diminished access to venture capital has slowed the commercialisation of biofuel projects, but has been a boon to bio-based chemicals, a spokesman for the Biotechnology Industry Organization (BIO) said on Thursday.

“It's been very challenging for people to get financing, kind of a mixed bag,” said Brent Erickson, BIO’s executive vice president. “On the one hand, it's hard to get financing for these large projects, but the smaller chemical projects have done pretty well.”

Erickson attributed the shift, in part, to the difference in production scales. For biofuels to be profitable, they must be produced in high volumes at very large scale, and the initial investment required is particularly high.

“That makes the financing problems an order of magnitude more difficult to overcome,” he said.

Chemical products offer higher margins, and they can be produced commercially at smaller scales entailing less investment. Costs can be reduced still further by retrofitting existing facilities.

With financing tight, these lower-cost, higher-margin projects are easier to sell to investors than expensive biofuel projects.

Some of these renewable chemical products are basic building blocks. One of the most successful to date is 1,3-propanediol, manufactured by DuPont Tate & Lyle BioProducts in Loudon, Tennesseeaccording to Rina Singh, policy director at BIO.

Bio-succinic acid could be the next renewable building block to build a major market, Singh predicted. Six companies are developing processes.

One, France-based BioAmber, has progressed to pilot-scale production.

Another, US-based Myriant Technologies, recently received a $60m (43m) investment from Thailand-based PTT Chemical, which will be used to build a bio-succinic plant in Lake Providence, Louisiana. Myriant is also using this investment to develop high-value specialty chemicals, as well.  

Another company developing high value specialties is US-based Solazyme. The company’s primary thrust has been algae-based biofuel, but the Solazyme also has adapted its technology to the production of ingredients for personal care products through an R&D agreement with global consumer products company Unilever.

“There’s been a real burst of commercialisation activity,” Erickson said.

($1 = €0.71)


By: Clay Boswell
+1 713 525 2653

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