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Verdezyne, Ave Atque Vale

Submitted by on May 16, 2018 – 11:30 amNo Comment

by Jim Lane (Biofuels Digest)  From Southern California the report has arrived that Verdezyne is winding down as a company, and today is the last day of operations. The low oil price environment has claimed another victim among the renewable chemical pure-plays.

Why oil prices have doomed more chemical players than fuels

In a nutshell, there’s no Renewable Chemicals Standard and these standards are essentially not so much about ensuring a market during periods of high prices as about ensuring a market during periods of oil price collapse. The legislators of the 2000s well remembered how oil markets responded to the encroachments of alternative fuels (from new fossil sources or biofuels) in the 1980s and 1990s — buy collapsing the price of oil.

For renewable chemicals, $25 oil left them nowhere to hide — exposed as they were to the market — technologies that looked interesting at $80 oil and of the first rank of importance at $100 oil suddenly looked like money-losing technologies with cheap oil. Investors wilted, offtakers disappeared, employees drifted off elsewhere. Some companies pivoted, several prominent ones remain.

But we’ve seen the end of Cobalt and Verdezyne, Chapter 11 restructuring at BioAmber, zombie company status at Myriant, and on and on. We’ve seen OPX Bio reposition and get sold, ZeaChem went over to fuels, then chems again, then was wound down. Joule died. LS9 was sold to REG where it has not yet flourished as hoped. Metabolix became Yield10 in a repositioning. Rivertop disappeared. Rennovia. Glycos Bio too.

For many, the exposure to commodity prices was a strategic error — some of them had come over from the safer, RFS-protected world of fuels sensing higher value opportunities in chemicals.

The Verdezyne backstory

We first penned about Verdezyne in 2010 in a review of the doings at the BIO World Congress, noting that “numerous early-stage investors appear to have shifted their integrated biorefinery children decisively towards the smaller, high-value markets in renewable chemicals as, at least, a “make money now” opportunity.”

 As we reported in May 2011, In California, BP and DSM invested an undisclosed amount in Carlsbad-based Verdezyne to fund the company’s start-up operations to help it build pilot plants that would (at the time) produce both ethanol and adipic acid from cellulosic feedstocks.

And, we began to warn on the future of fermentation technologies in early 2014, just before oil prices began to wane.  We wrote:

But the next wave is coming. Thermal and catalytic technologies. With exotic-sounding costs as low as $1.15-$2.18 per gallon. That is, low enough for fuels at scale with a solid RPI for investors. Several of them drop in to existing refinery infrastructure.

While the United States political establishment rocks and roils on the topic of immigration, there’s a topic that should occupy their time as well, and that is the problem of out-migration — specifically, technologies born or to an extent developed in the United States, being siphoned off overseas to serve the building of advanced, renewable, sustainable bioeconomies elsewhere.

Verdezyne had entered into a collaboration with Malaysian Biotechnology Corporation in its assessment of Malaysia as the destination for its first biochemical production facility in the Asia Pacific Region. The collaboration was set to accelerate Verdezyne’s process to full-fledged commercialization following the success from its pilot plant that was established in November 2011, with an eye on Malaysian palm oil.

Ave Atque Vale, Verdezyne, hail and fair well. Your demise stings more than most, because among all the renewable chemical players it was one of the most promising, and had come so far down the road to scale-up.  It feels a little like Aldrin and Armstrong actually landing on the moon and then are unable to open the door and step outside. Verdezyne felt one small step away from taking a giant leap for mankind.

We’ll stand by to learn the exact fate of the IP, which is substantial and may well find a new home. READ MORE

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