Biochemical firms look to capitalize biodiesel industry

By Bryan Sims | April 15, 2009
Web story posted May 6, 2009

Today, biochemical production is a small but growing sector of a larger biofuel market. Industrial chemicals, while offering a smaller market than that for fuel, could also offer steadier prices to a target market.

This notion could hold substantial credence, particularly at a time when biodiesel producers are experiencing a decreased demand for their product. Couple this with a concurrent decrease in price for biodiesel compared to diesel prices and stagnant crude oil prices, biodiesel companies continue to operate well below installed capacity.

To that end, several biochemical companies are looking to make significant inroads in the staggering industry to help it find its financial footing.

One of those companies is Elevance Renewable Sciences Inc. Officially launched in March 2008, the Bolingbrook, Ill.-based company was created through collaboration between Materia Inc. and Cargill Ventures, after receiving a $1.8 million matching grant from the U.S. DOE in 2004. Elevance is majority-owned by TPG Inc., a closely-held fund based in Fort Worth, Texas.

Elevance uses soybean and palm oils to make specialty chemicals, including waxes, skin moisturizers, antimicrobials and lubricant additives, without the high heat and pressure used to make conventional petroleum-based chemicals. The company's technology also produces jet fuel and diesel.

According to Chief Executive Officer K'Lynne Johnson, Elevance is in conversation with potential investors about raising an additional $40 to $50 million this year to acquire distressed biodiesel facilities and outfit them using the company's novel biochemical process technology into producing biochemicals and biodiesel. She said the plan is to convert vegetable oil into 80 MMgy to 100 MMgy of chemicals and fuels, which may be custom built or created by acquiring and retrofitting existing biodiesel plants.

Johnson said Elevance is currently in talks with a U.S.-based biodiesel company to acquire and begin installation of its technology sometime next year with full operation anticipated to begin in 2012. More details regarding this endeavor will be release later this year, she said. The company is also developing a similar business opportunity in Asia.

"With minor additional modification, adding Elevance technology enables a biodiesel facility to optimize and widen its ability to trade higher value markets that biodiesel often provides," Johnson said. "We believe it's a very distinctive technology platform that truly enables biorefinery versatility and profitability."

The key to Elevance's success is behind its novel process technology, which uses what it calls an olefin-metathesis catalyst technology that reacts with the double bonds of unsaturated sites in oils with natural oils, enabling the company to create a variety of different molecules-whether shortening, lengthening or branching those molecule fragments-out of those natural oils. The technology was developed by Materia founder Robert H. Grubbs, which won him the Nobel Prize in chemistry in 2005.

"The emergence of green chemicals is very new and just beginning its growth cycle," Johnson said, adding that the technology can operate at very low temperatures and low pressures, which lower its carbon footprint substantially.

"We expect it to become an additional robust and vibrant component of a renewable and alternative materials platform," she said. "However, the vibrancy and robustness of green chemicals is still dependent on those products delivering comparable performance at competitive pricing and that is the challenge that many of the emerging technologies are looking to scale and overcome right now."
 
 
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