Solazyme, Inc. (NASDAQ: SZYM) is taking another step toward large-scale production of fuels and chemicals from algae.
The company announced a joint venture with global agribusiness firm Bunge (NYSE: BG) to build and operate a commercial-scale oils production plant in Brazil. In 2010, Bunge took an equity stake in Solazyme.
Solazyme Bunge Produtos Renováveis Ltda., will be located next to Bunge’s Moema sugarcane mill in Brazil and will produce 100,000 metric tons of oil a year.
"Bunge is excited to partner with Solazyme to commercialize its innovative sugar-to-oil technology platform, which will enable us to link our sugar and vegetable oil value chains," says Ben Pearcy, Managing Director, Sugar & Bioenergy, and Chief Development Officer at Bunge. "The tailored oils we expect to produce will not only expand our portfolio and address the growing demand of the fuels and oleochemicals industries, but also increase our capabilities to leverage new technologies for future opportunities in sugar and bioenergy."
The plant will use Solazyme’s manufacturing process and then benefit from Bunge’s global presence in sugar and vegetable oil markets, large-scale processing experience and significant footprint in Brazil. It will be equally financed by the two partners and be operational in late 2013.
Separating the oil from algae has proven to be difficult and expensive. Solazyme’s solution is to grow algae in closed, indoor tanks where it ferments by feeding on sugar rather than using lots of land required for photosynthesis. This makes algae competitively priced with petroleum products, while also yielding byproducts derived from algae’s protein and fiber. Importantly, Solazyme can generate commercial volumes in just several days.
Solazyme is the first algae-to-fuels company to list on a major public exchange and its Solajet fuel was used in the first commercial flights to run on algae-based jet fuels. The company has a contract with United Airlines to deliver 20 million gallons of algae-based jet fuel a year, starting in 2014.
Until the biofuels market takes off, Solazyme is first targeting the nutrition market, offering alternatives to eggs, butter and oils, and the cosmetics market, with anti-aging products, a key growth area. Since the launch of its Algenist skin care line in 2011, Solazyme has generated about $3.5 million in sales, estimates Canaccord Genuity.
The chemicals market is very large ($3 trillion a year according to the American Chemistry Council) and is ripe for petroleum substitutes that can reduce greenhouse gas emissions, toxic byproducts, and lack of biodegradability. Chemicals enable production of about 95% of manufactured products in the US. Right now, the majority are made from oil, natural gas and coal.
The global market for biobased chemicals currently stands at about $170 (chemicals, plastics, fuels) and will grow to more than $500 billion by 2020, according to McKinsey.
This week, competitor Sapphire Energy raised $144 million, bringing its total backing to over $300 million.
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Has Bill Gates been had? Neither Sapphire Energy nor the Algal Biomass Organization responded to requests for comment
BY: CJ Ciaramella – February 22, 2012 5:00 am
The federal government awarded Sapphire Energy, a green energy concern, more than $100 million for a project that is behind schedule, has only created a fraction of its expected jobs, and is, according to some experts, at least a decade away from creating a viable product.
Founded in 2007, Sapphire is working to develop algal biofuel—a replacement to crude oil made from algae and able to be refined into gasoline, diesel, or jet fuel.
Sapphire raised $100 million from private investment firms, including ARCH Venture Partners. Bob Nelsen, a founding partner of ARCH, served on Obama’s National Finance Committee during the 2008 campaign.
A Washington Post investigation found billions of taxpayer dollars flowed to green energy companies backed by venture capital firms with ties to the Obama administration.
Sapphire was no exception. In 2009, executives, board members, and employees at Sapphire contributed almost exclusively to Democratic campaigns. For example, Sapphire CEO Jason Pyle has donated only to Democrats, according to the Center for Responsive Politics.
The company has received $104.5 million from the federal government, roughly half of which were 2009 stimulus funds from the Department of Energy, to build an algae-based biofuel operation in Columbus, New Mexico.
Sapphire has spent more than $1.8 million lobbying the federal government since 2008, with an appreciable spike in 2009, when there were several biomass-related bills up for consideration.
One such bill was the Algae-based Renewable Fuel Promotion Act of 2010, which would have expanded federal tax credits for biofuel to include algae-based fuels. It passed the House in 2010 but never made it to the floor of the Senate. The House bill was co-sponsored by Rep. Brain Bilbray (R., Calif.), whose district surrounds Sapphire’s San Diego headquarters. Bilbray is the only Republican to whom Sapphire executives and board members reliably contribute.
In 2011, the Algal Biomass Organization, which promotes the industry, hired one of the biggest law firms in the U.S., K&L gates, to advocate at the federal level. That same year, Tom Udall (D., N.M.) co-sponsored a new bill, the Renewable Fuel Parity Act of 2011, that would give algal biofuel the same tax breaks as other forms of biofuel.
There is considerable interest in developing algal biofuel. Sapphire was ranked 97 on a Forbes list of the most promising companies in 2011. There are several other companies working to develop the fuel as well.
However, like many stimulus projects, Sapphire’s new facility has faced delays. The plant was supposed to be operational by 2011, creating almost 750 temporary and 40 permanent jobs. But Sapphire did not break ground until June 2011.
In October 2011, two years after being awarded federal grants, the project had only employed 15 New Mexicans and spent $575,000. Sapphire Vice President of Corporate Affairs Tim Zenk told the Las Cruces Sun-News that the project has “a long ways to go.”
In November 2011, the federal government kicked more money Sapphire’s way—this time a $54.5 million loan from the Department of Agriculture.
According to the most recent quarterly report filed at Recovery.gov, the project is less than 50 percent complete and has created 36 jobs.
Questions have also been raised about the viability of algal biomass as an alternative fuel.
Mary Rosenthal, the head of the Algal Biomass Organization, predicted in 2010 that algal fuel could compete with oil within seven years. However, a 2010 report by the University of California Berkeley’s Energy Biosciences Institute said it would take a decade of testing to even determine if algae companies can produce mass quantities of fuel at competitive prices.
The fuel is not yet commercially available. The main consumer has been the U.S. Navy, which paid $12 million for 450,000 gallons of biofuel in 2011. That works out to $26.67 per gallon.
Neither Sapphire Energy nor the Algal Biomass Organization responded to requests for comment
fatalgae, I’m not clear on what your issue is – that it’s taking too long for algae fuels to be commercialized or that algae companies donate to the Democrats? Since the GOP would dismantle every renewable energy to keep the oil flowing, I can’t imagine any clean energy company donating to them. If you look at every single bill the GOP passes or tries to pass it’s about dismantling everything environment-related. If Democrats could get past the GOP on votes, we’d have a National Renewable Energy Standard by now, we’d be continuing federal tax breaks for the industry, along with a raft of bills that have been introduced by Dems but haven’t gone anywhere. We have to be patient – a brand new technology like algae fuels takes more than a few years to be commercialized.