Top 10 Bioeconomy Markets and Predictions for 2019

January 08, 2019

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by Jim Lane (Biofuels Digest) A mere “The Year in Rewind” as we sail into 2019? Not the good ship Digest! Instead, we dust off our crystal ball and offer our predictions for the year ahead.

As the sunset of 2018 gives way to the dawn of 2019, once again roll the dice as we list theDigest’s 10 Top Advanced Bioeconomy Markets & Predictions for 2019.

10. Algae apps

After a couple of years back on the bench, algae has surged forward again with a new series of apps for transport and chemicals, ready for what has become a wavelet of companies increasingly focused on what Mazda is calling “Sustainable Zoom Zoom”. Yield, rate, crop protection — all important issues. But critical to taking algae forward are the apps — and 2019 looms as a renaissance at the algae app store.

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Mazda recently talked about algae being an important part of its Sustainable Zoom-Zoom 2030 initiative, as reported in NUU in October Their goal is simple to promote the wide-spread adoption of biofuels from microalgae growth and reducing its average ‘Well-to-Wheel’ CO2 emissions to 50% of 2010 levels by 2030, and to 90% by 2050.

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9. Star of India

For many of the issues that face India, many though not all find solutions in the bioeconomy. Especially in focus: the search for jobs, mitigation of the net emissions created by transport, and creating more insulation for the Indian economy against the rollercoaster of petroleum prices via diversification of the energy supply.

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Now, India is a refining nation and a consuming nation when it comes to petroleum, but not really a producer. So, the Ministry of Petroleum & Natural Gas is more open to alternatives than ministries in producer nations.

The goals of that unit are worth noting. They are:

1) To Take forward the Bio Ethanol, Bio Diesel & Waste to Bio Fuel programs in India
2) Suggest initiatives for Oil Marketing Companies in India to promote Bio Fuels
3) Suggest areas of Research &Development by IOL/BPCl
4) To study current status of Bio fuel blending program, suggest ways to overcome the hurdles, suggest field studies and pilot program for higher % blends
5) To Study the blending programs of leading countries and suggest best practices to be adopted by India for sustainable Bio Fuel Program
6) To achieve total coordination between Bio Diesel and Ethanol Industry to enhance production
7) To coordinate with bulk users such as Road Transport Corporations, Indian railways, Indian Defense, Shipping Industry and achieve reduction in consumption of fossil fuels
8) To achieve inter-ministerial coordination with other ministries such as Ministry of Rural Development, Ministry of Panchayat Raj, Ministry of New & Renewable Energy, Minister of Environment & Forests, Ministry of Heavy Industries and Public Enterprises, Department of Chemical & Fertilizer, Ministry of Agriculture for feed stock production and supply chain Management
9) To conduct Road Shows, Workshops, Seminars and other such awareness programs to popularize and increase bio fuel consumption
10) To suggest Road Map for effective implementation of Bio fuel policy in India
11) To Collate and recommend the efforts being made by various other Ministries, Industry, Academia, Research Institution and put forth to the steering Committee

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8. High-octane engines

... What’s octane worth? The easiest way to look at it is via average gasoline prices for various fuel grades. According to AAA, the most recent US average national fuel prices are:

2.358 regular unleaded (87 octane)
2.637 mid-grade (89 octane)
2.883 premium (91-93 octane)

If you prefer the wholesale prices, EIA has these, here.
1.583 regular unleaded (87 octane)
1.769 mid-grade (89 octane)
1.940 premium (91-93 octane)

Since these fuels generally vary only in octane content, you can average these prices out and discover an underlying value of 12.2 cents per point of added octane (retail) and 8.2 cents per point (wholesale).

Which suggests that the octane value of ethanol is much higher than its price. There’s 28 points more octane in a gallon of ethanol (113 is the RON+MON/2 rating that RFA notes here, compared to the standard 85-octane gasoline blendstock that refiners use) — and that gives you a value of $3.42 in retail value per gallon to the consumer in the added octane that ethanol provides, or $2.30 wholesale. The current price for ethanol is $1.48.

How does octane relate to fuel economy? One of the best starting points is the Mazda SKYACTIV engine, since it has sharply raised the engine compression and fuel economy that you might have seen with an older Mazda 6 — yet, it’s available in a lower compression version for the US market because of the lower octane in US gasoline. So, it gives us some good comparison data.

The 2010 Mazda 6 ran on a Mazda L-engine with 10:1 compression and its EPA mileage rating was 21 city / 30 highway. Today, the 2017 Mazda 6 is running on the SKYACTIV engine with 13:1 compression and has a fuel economy rating of 26 city / 35 highway. Mazda itself claims “significantly improved engine efficiency thanks to the high compression combustion, resulting in 15 percent increases in fuel efficiency and torque” yet cautions that US models will have 3-5 percent less fuel economy because of running on 87 octane instead of 91 octane fuels. So, you gain roughly 1 point of fuel efficiency for every 1 point of extra octane, in that scenario.

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7. LCFS a-go-go

LCFS vs RFS, who is the greatest? Well probably a judicious combination of the two ....

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6. First-gen diversification

... Dairies produce about 25% of California’s methane emissions and have become targets of carbon regulations aimed to reduce climate change. With a carbon intensity under the California Low Carbon Fuel Standard of about negative 300, dairy biomethane is highly valuable, but needs to be collected at the dairy, pipelined to a central processing facility, then cleaned and compressed for use as Renewable Natural Gas in converted diesel trucks and other natural gas vehicles.

The project will initially connect about a dozen dairies to Aemetis’ ethanol plant in Keyes, California, with expansion plans to more than three dozen dairies in the local area. The Aemetis plant supplies Wet Distillers Grain feed to about 100 dairies.

It’s a sign of first-gen diversification we have seen most especially at Green Plains, which has been shedding ethanol assets and getting headlong into higher-value protein.

5. Strain optimization

In the competition between ZYmergen and Ginkgo BioWorks to vacuum up every venture-backed dollar in the bioeconomy Zymergen had the latest salvo. In California, Zymergen has raised over $400 million in Series C funding led by returning investor SoftBank Vision Fund. The round welcomes new investors Goldman Sachs and Hanwha Asset Management, as well as returning investors, DCVC (Data Collective), True Ventures, Two Sigma Ventures, DFJ and Innovation Endeavors.

The amount is believed to be the largest single-round capital raise in the history of industrial biotechnology, and exceeds the haul from most sector IPOs.

Specifically, Zymergen works on strain development — engineering strains for partners, or creating new ones — as they say, “working across microbes, products and traits”. To achieve its results, Zymergen uses artificial intelligence algorithms and robotic genomic “factories” to search the microbial genome, running tens of thousands of experiments to spot subtle signals of improvement.

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4. Fracking the sewers — The wood basket

There’s so much heat around renewable diesel and jet right now, it’s a wonder the feedstocks don’t spontaneously combust. By The Digest’s estimates, there’s been close to two billion dollars in investments in renewable diesel lately. And the capacity just keeps growing. Between World Energy, Zymergen, Phillips 66 and REG, Diamond Green Diesel, Fulcrum, Red Rock, Raj Renewables, Dynamic Fuels, and more, it’s really happening….More money going into renewable diesel than big timers Google or Tesla. Yep, that’s right.

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The big question is, where is the feedstock going to come from? There’s only so much grease out there.

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We think the big volumes lie in sustainable wood residues — sawmill leftovers, tops and branches, needles, forest thinnings, and ultimately in forest resources that are just as sustainable now as they were in the heyday of the newsprint industry — all those trees that supported newspapers are still out there, in search of new applications.

Which puta a premium on technologies that can turn wood into either fuels, chemicals or usable intermediates such as biocrudes or renewable sugars. Could be boom times for the likes of Ensyn, Renmatix or EnerSysNet.

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3. IPOs return (nutrition)

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2. Protein, protein, protein

Tied to our #6 prediction is the gold-rush like activity around advanced protein. First-gen ethanol tech is already in that business. More is on the way.

Case in point, last month, Green Plains and Optimal Fish Food LLC. today announced the companies have formed Optimal Aquafeed, a 50/50 joint venture to produce high-quality aquaculture feeds utilizing proprietary techniques and high-protein feed ingredients.

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And there are the methane-to-protein plays.

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1. The Big Heavy (heavy transport)— Jet, heavy truck, marine

... “By The Digest’s estimates, there’s been close to two billion dollars in investments in renewable diesel in recent months. And the capacity just keeps growing. Between World Energy, Zymergen, Phillips 66 and REG, Diamond Green Diesel, Fulcrum, Red Rock, Raj Renewables, Dynamic Fuels, and more.”

The trend? The new catch-all is Heavy Transport. Though there are huge opportunities in light-duty (such as high-octane engine technology), there are even bigger horizons and fewer alternatives in heavy transport. Ships, tractor trailers, jets, big farm equipment, and the like. If it moves far, liquids have a role to play because of their spectacular energy density. You can travel as much as 40 miles farther on a ton of liquid fuel than a ton of electric battery, it has been calculated. READ MORE

5 Minutes With… Matthew McKnight/Gingko (BioMarket Insights)

Tags

Aviation Fuel/Sustainable Aviation Fuel (SAF) India algae Sustainability BioChemicals/Renewable Chemicals Yields GHG (Greenhouse Gas Emissions) life cycle analysis (LCA) octane price/value ethanol prices 113 octane compression ratios internal combustion engine (ICE) Engine Development Engine/Fuel Co-optimization fuel economy fuel efficiency efficiency blendstock LCFS (Low Carbon Fuel Standard) Renewable Fuel Standard (RFS and RFS2) California Oregon British Columbia Investing funding Financing genetically modified organism (GMO) protein animal feed fish feed Tennessee octane High Octane Fuel (HOF) High Octane Vehicles (HOV) forest residue/waste Forest resources Green Jobs Canada markets/sales

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