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Rennovia’s Demise, the Triple Rule, and the Pursuit of Sustainable Nylon in a World of Low Oil Prices

Submitted by on March 9, 2018 – 9:59 amNo Comment

by Jim Lane (Biofuels Digest)  In California, Rennovia has ceased operations, after the company failed to raise sufficient financing from investors and/or strategic partners to advance its pilot-scale technology to first commercial production.  The bulk of the IP assets have been sold and the company’s physical assets are currently in liquidation.

The company had developed what is widely considered to be transformative catalyst and process technology — and it’s demise illustrates some trends in bio-based chemistry that are worth focusing on.

The results did not go unnoticed for long at all. In early 2014, ADM committed to a $25 million equity investment in Rennovia. The partners said that the first products would be the nylon intermediates adipic acid and hexamethylenediamine (HMD). ADM’s investment would support research and development programs and continuing operations.

You want green nylon? You may need renewably produced adipic acid. Who was in the nylon hunt back in 2014?, A bunch of companies like Ashai Kasei, BASF, DSM, Dupont, Honeywell, Huntsman, Koch, Lanxess, and Rhodia. And smaller companies such as Rennovia, Genomatica, BioAmber and Verdezyne.

Adipic wasn’t the only way. There’s butadiene, generally thought of as a path to polybutadiene rubber (PBR) and styrene butadiene rubber (SBR), two types of synthetic rubbers used globally to replace natural rubber. But also a key intermediate chemical used by INVISTA for the production of adiponitrile (ADN), which in turn is a critical intermediate chemical used in the manufacture of nylon 6,6. And Genomatica, LanzaTech and even Global Bioenergies were looking at butadiene.

But here was the pitch for this drop-in replacement. There was the carbon benefit, and the financial benefit

What happened?

Oil prices crashed, and the risks associated with new technology were still there but the forgiving margins had gone with the wind. The carbon benefit was there, but the financial benefit had wilted, and we found out quickly how much the carbon benefit was valued by partners — it was a nice to have, even a must-have, but the relentless focus was on payback. Many companies moved into “wait and see” mode, and that has pushed smaller renewable chemicals companies into the brink of the abyss, and more.

The Rule of Thirds

But then, there’s the demonstration step. Again industry has to nearly triple its investment, or companies go by the wayside. And investment has to triple again to take companies to commercial-scale. Consider it a rough Rule of Thirds, which is to say that unless industry is piling in the money, we start to see really interesting and transformative companies withering on the vine, unable to reach scale and eventually running out of money for operations.

Boom times help — when biobased in in vogue, that helps. When oil prices spike or supply crunches, that helps. When oil prices crash, when strategics consolidate, when margins are tough in the main-line business whose cash-flows provide the capital for innovation — those are crucial factors to, on the negative side.

All of those are in play right now. Though oil prices have crept up, they are in the 60s and edging towards the 70s, not in the 90s edging towards $100. Meanwhile, consolidation in the face of tough times for the agri-giants is all around us and we hear every day about ADM’s interest in Bunge, Bunge’s exit from the sugar trade and renewable oils, a travel freeze at Cargill that has stretched from weeks and now is measured in months as that company slashes costs.

Capital becomes very hard to come by. It becomes a cruel form of musical chairs, and now the music has stopped for Rennovia.

But biobased goes on, and the race for biobased nylon goes on — and we continue to see companies reaching scale via the butadiene route and that may in the end prove to be the technology path that wins out. READ MORE

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