As ABLC’s storied 2 for 1 offer comes to a close this week, we look at the top themes that Delegates will be coming to Washington to explore, debate, negotiate, argue, pray for, fear, delight in and generally obsess over.
Yep, the Advanced Bioeconomy Leadership Conference — which convenes in Washington, DC on February 28th — is best-known as a dealmaking environment where customer development, finance and investment, policy-wrangling, and technology previewing are in the foreground. But it’s also home to real dialogue by real leaders on the real issues.
What are the top trends? Here are the 11 we see dominating the debate on the stage and on the floor.
Jet fuel deployment – how much, how soon, by whom? California, look up, not down!
Jet fuels are reaching scale with the key deployment of Fulcrum BioEnergy now under construction and expected to open in the next 18 months. Yet airlines continue to put pressure on producers to drive down fuel costs to meet market prices, and for public policy officials to get anywhere near as serious about addressing carbon credits in the sky as they have been in hading out subsidies for electric vehicles. At this writing, California has invested $448 million in electric vehicle subsidies according to this source, yet hasn’t managed even to include aviation fuels under the California Low Carbon Fuel Standard.
What do we do about biodiesel?
While renewable diesel volumes (especially aimed at California) are zooming, America’s favorite advamced biofuels is in the dumps, not getting anywhere near the love it should on emissions, jobs, energy security from the political powers that be – leaving it short of its tax credits, and shorted in the mandate. Yet, it remains the one true beloved advanced biofuels available at scale, punching well above its weight when it comes to creating positive vibes for renewable liquid fuels. Is the biodiesel story over – is a renaissance just around the corner. At ABLC, we’ll be diving into the issues and gazing into the collective crysatl ball.
High-value protein and nutrition development
In the past year, there’s been a notable shift in Silicon Valley investing towards advanced nutrition — companies like Impossible Foods, Beyond Meat, Ripple Foods, Hampton Creek, Clara Foods, Perfect Day, Calysta, Modern Meadow and KnipBio have emerged. Impossible Foods has moved aggressively into consumer deployment and is picking up gobs of attention from media and celebrities along the way. Passing fad, vegan niche apps, or megatrend. 2018 is the year we’ll find out if promise and promises convert smoothly into sustained market entries and traction.
Cellulosic ethanol – “too little, too late” or “the best is yet to come”?
By the time ABLC convenes, there will be something like 30 cellulosic ethanol deployments in the United States and nearly 40 around the world, with roughly a dozen technologies at or heading for commercial scale. On the one hand, a wondrous achievement, yet roughly four years behind the expected deployment schedule and the average volumes per project are so much lower than expected (generally being corn fiber residues rather than corn stover, cobs or other ag residues) that policy, public and investor attention has shifted over to electrics. We’ll hear from leading cellulosic developers and deployers on the near-term horizons, with some major technologies getting ready to debut at scale. Will it be enough?
Digital Biology – novel molecules or enhancement?
As the Artisanal Era of “SynBio” gives way to the Industrial Age of “Digital Biology”, will the targets be novel molecules and metabolic pathways, or improving the ones we know and have. We have significant players on the novel side — companies like Ginkgo BioWorks and Arzeda — and yet big plays like Zymergen are gaining momentum via the “optimization route”. Silicon Valley has signaled via some monumental venture rounds that they are ready to extravagantly support both approaches as they build out their factories and foundries. So, it is likely to come down to customer demand — will the big companies be looking for big new molecules or to make the ones they have even more zippy and cost-effective to produce. We’ll be delving into this issue both on and off the stage.
Low Carbon market volumes
They’ve been fighting all over the world about mandates and volumes this year — not only the total number, but the character of them. The US has backed corn-based ethanol to the hilt and more or less thrown anything looking like an advanced biofuel under the bus. California has been cynically using fuels to carry the low carbon base load and then handed the revenue to electrics. Europe has backed advanced biofuels and thrown first-gen fuels under the bus, after mostly starving advanced technology deployment for a decade. Only Asia has been keeping policy and technology deployment structures is any sort of order, yet they’ve under-invested in R&D and will have to import technologies to realize their feedstock opportunities. Brazil had it all going, then disappeared down a rabbit hole of commodity price woes and political scandal. Who will emerge as the regional leaders in technology development and project deployment?
Free trade vs national development
We’ve seen a steady hum of debate between free trade in low-carbon vs nationalistic policy aimed at food and energy security explode this year as the US has shifted decisively towards trade deal evaluation based on more narrow and nationalistic advantage. The EU has never let go of food-sector protectionism on the grounds of food security, while emerging nations that generate their exports primarily from commodities rather than manufacturing or services are apoplectic about the narrowing of trade windows into the US and European markets, or the tariff penalties applied thereto.
Liquids vs electrics
Everywhere you look in the US and Europe, you see billions being ploughed into electrification of the fleet, and an intensive focus of developing longer range vehicles, faster charging, more re-charging infrastructure. And Tesla was supposed to be deploying 10,000 low-cost Model 3 cars into the market by Q3 in what was advertised as a decisive vote by consumers and manufacturers that all-electric would kill the internal combustion engine within 10-20 years. Voices at Ford, Toyota, Audi and Nissan have been ignored for continuing to raise the problems of recharging cycles, grid instability and the promise of fuel cell and hydrogen vehicles. Meanwhile, the Tesla bears racked up almost $900 million in profits this quarter betting against the accepted wisdom and that Tesla would come up monumentally short of promised volumes. And auto writers have been quietly noted that the $35,000 base model price is going to look more like a $58,000 luxury car purchase when the needed add-ins are included. We’ll be looking at the hard data throughout ABLC – including the attractive middle ground of hybrid electrics.
Chemical deployment – functional advantage vs sustainable attributes – Driven by markets or technology?
A related debate is about the underlying technology itself. Meanwhile, many technologies have pivoted away from fuels — heading for renewable chemicals, nutraceuticals, advanced foods and biomaterials. In most cases, they are chasing higher-value markets as well as concern from strategic investors over sustainability, and commodity price volatility.
In some cases, technologies have uncovered novel applications with performance benefits. But are strategic investors and customers more interested in making today’s molecules more sustainable, or chasing novel molecules with functional advantage?
It’s not just a theoretical question, take the Coca-Cola initiative on clear plastic bottle technology for example, They made an investment in Virent and Gevo chasing a more sustainable form of PET plastic. And they invested in Avantium which is developing PEF as a novel alternative to PET that has not only sustainable properties but some striking functional advantages especially in smaller bottle sizes. Avantium’s successful IPO and partnership with BASF points to the strong momentum for that approach.
But the question remains, can technologies develop fast enough if driven by markets to get to market before the commodity price window closes? If driven by technology, can they attract enough early-stage investment support to get through the Valley of Death?
Oil and commodity prices
When the pivot is to chemicals, the low oil price environment hasn’t helped, in a market with a Renewable Fuel Standard but no Renewable Chemical Standard. Opportunities on the chemical side have tended to focus on performance benefits from novel chemicals, and organic acids that contain oxygen (found in biomass, but not petroleum). But we’ve seen more and more pivoting to super-high products, forget a pivot from $2 fuels to $4 chemicals, we’re seeing companies turn to $12 proteins and $300 fragrances. Where venture capital is available, they’re completely steering away from high-volume, low-price markets such as fuels.
So, where are oil prices headed? Are we looking at a sustained 10-15 year slump, a fundamental shift in demand that will downshift prices forever, or a temporary spat between cartel partners that gives us a 3-5 year price pause, as we saw in the 80s and 90s?
Fostering investor confidence, and the financing problem
In many cases, financing is the challenge — the financial benefit conferred through the RFS is not enough the galvanize investors. Loan guarantees, credits, and incentives are used to fill the gap, but they come with their own challenges. A couple of major shifts are the rise of technology risk insurance and the opening of the tax-free municipal bond market and interest from institutional bond buyers. We’re seeing epic amounts of money coming into Digital Biology where biology is morphing into Software-as-a-Service, and protein and nutrition ventures have been picking up venture support for much shorter timelines to scale than fuels or big-volume chemicals. At ABLC, we’ll also look at the reviving of mandates to create a separate market within which low-carbon fuels can compete — an expanding California LCFS, a Canadian LCFS; stronger mandates in India and China.
The Sustainable Agriculture Imperative
And in the end, it all comes down to the raw materials. Nothing is made from nothing. Whether it is waste material piling up in a landfill, new energy crops or existing crops that can be used to make fuels as a secondary application — it’s all about producing sustainable, affordable, reliable available feedstock. That’s why we’re beginning ABLC this year actually in the building at USDA, focusing on the building of supply chains for the biobased revolution. We’re starting where the supply chain starts — with the farmer and the lab.
Not only looking at making more biomass, but making it more sustainably through yield intensification, reduced inputs, smart fields and farmers with all the decision-support data they could possibly need, right at their fingertips.