Lara Abrams Communications

Strategic Thinking For Business

The Abrams Clean Tech Report

Genomatica Changes The Game

Monday, October 27th, 2008

I walked away from Always On’s Going Green Conference a couple of weeks ago with one fascinating company on my brain: Genomatica. I’ve been waiting sometimes patiently – and largely not so – for a company like Genomatica to show up on my radar, because I’ve wanted a bigger picture of how we’re really going to get off oil. That’s the truth. There are too many products within the retail chain that require oil as a feedstock in the manufacturing of them, for me to have had all my questions answered from the partial solution sets that have been put on the table, including wind and solar.

Then Genomatica popped on my radar. And I was really intrigued.

Genomatica’s figured out how to make a commodity chemical – 1,4-butanediol (BDO) – from a renewable (instead of petrochemical) feedstock. BDO, for those of you wondering, is one of the world’s most important commodity chemicals, with approximately 3 billion pounds produced annually from oil and gas, and it is a key precursor to specialty solvents, plastics, pharmaceuticals, fine chemicals, certain automotive components, electrical and elecronics components, and apparel fibers. So if you’re wearing it, sitting on it, drinking from it – there’s a good chance a petrochemical feedstock was used in the making of that “it”. So let me say this one more time, just so the enormity of the implication sinks in: the same commodity chemical that was used to produce your “it” can now be made withOUT a petroleum-based (i.e. Gas or oil) feedstock, AND it can be made at a lower cost than what manufacturers are paying for their current petroleum-based feedstock. [Currently, projected costs show that even with factoring in the cost of collecting the feedstock (cellulose to sugar), the process should be 30% cheaper than processes that use oil and natural gas.]

Not surprising to hear, Genomatica plans to offer a broad range of biologically produced industrial chemicals from a variety of renewable feedstocks, ultimately, though they’ve begun their process using sucrose and genetically engineered E. coli. (Yes, sugar and E. coli. No, not the kind of sugar on your kitchen counter. Industrial fermentation processes like Genomatica’s do not use the refined sugar that you have in your kitchen. Industrial fermentation uses what is commonly called “raw sugar.” And with Genomatica’s technology it is conceivable to use direct sugar cane syrup before it is even processed into “raw sugar.” It’s cheaper and less energy intensive; to create BDO a significant amount of energy as heat is required when using oil or gas.)

Genomatica’s new method using engineered bacteria is much less energy intensive because the BDO is made in fermentation tanks at normal temperatures below 105 degrees Fahrenheit or 40 degrees Celsius. The bacteria has been altered so that it can thrive in water with high concentrations of BDO, and this is interesting to know because the E. coli that Genomatica has genetically altered in this process secretes BDO – growing faster the more it produces more BDO. Even more interesting is that e. coli can only grow if it secretes BDO. The sugar water concentration, if you guessed, does indeed act to stimulate growth. The BDO is then purified, separated from the water.

I would expect this new method of creating BDO to become more and more conveniently available to the market; it theoretically should also dictate greater security of supply since customers shouldn’t face the same degree of sourcing challenges with sugar as a feedstock that they do with petroleum as a feedstock because the amount of sugar needed for the global chemicals market is very small relative to the global sugar market. For example, four world-scale BDO plants would represent about 1 percent of world sugar supply. Sugar is produced all over the world and can be grown in a wide range of places, so producers have the capacity to respond and increase production to match demand more easily than is the case with petroleum-based feedstock suppliers.

Granted, nothing’s a sure thing, and Genomatica is aware of the potential for market dynamics to shift such that sugar prices could rise significantly; I’ve been told that the company can re-engineer the micro-organism to use other more favorable feedstocks. That’s good.

I personally don’t think it’s going to take too long to convince BDO producers to use the process to create plastic. It’s a no-brainer for BDO producers, it seems to me, so prospective clients should be clamboring. The company just needs to execute flawlessly. And to that point, my sense is that Genomatica’s got a world-class CEO on board; and there’s something else special, too, obviously, as I’ve heard through the grapevine that people are begging to come work for the company, even if there’s no position open to fill. And the company has strong venture backing from vcs such as Mohr Davidow, Draper Fisher Jurvetson, and Alloy Ventures. This technology’s so disruptive from my humble perspective that even if there are a couple of other players in the market, Genomatica’s on its way. I expect this company to be a home-run for its investors, BDO producers and consumers, ultimately. It is, quite frankly, a company that gives me real hope for the future.

Lara Abrams Communications

Strategic Thinking For Business

The Abrams Clean Tech Report

Genomatica Changes The Game

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