Advances inAdvances inIndustrial Biotechnology and Industrial Biotechnology and BiorefiningBiorefining

Matt CarrPolicy DirectorPolicy Director

Biotechnology Industry Organization

ACS National Meeting ACS National Meeting –– Engineering the Transition to the BioeconomyEngineering the Transition to the BioeconomyApril 10, 2008April 10, 2008

What is BIO?What is BIO?

• Biotechnology Industry Organization (BIO)

• Biotechnology trade association based in Washington, D.C.

• Over 1,100 member companies in all aspects of biotechnology

• Members in U.S. and 31 other countries

BIOBIO

Health CareHealth CareFoodFoodandand

AgricultureAgriculture

IndustrialIndustrialandand

EnvironmentalEnvironmental

What is IndustrialWhat is Industrial (White)(White)Biotechnology?Biotechnology?

The Third Wave in BiotechnologyThe Third Wave in Biotechnology

The Third WaveThe Third Wave

•• PharmaceuticalsPharmaceuticals–– well developed and growingwell developed and growing

–– over $20 billion in salesover $20 billion in sales

•• Agriculture BiotechAgriculture Biotech–– established and thriving in some marketsestablished and thriving in some markets

(e.g. U.S., Argentina, and Canada) (e.g. U.S., Argentina, and Canada)

NEXT WAVE:NEXT WAVE:

•• Fuels, Chemicals and ManufacturingFuels, Chemicals and Manufacturing

Industrial BiotechnologyIndustrial Biotechnology

• Application of life scienceslife sciences to traditional manufacturingmanufacturing and chemical synthesischemical synthesis

• Using micromicro--organismsorganisms(bacteria, fungi) and enzymesenzymes(specialty proteins) to improve manufacturing processes…

• …and make new ““biobasedbiobased””products and materialsproducts and materials from renewable feedstocks

Microbes Found in NatureMicrobes Found in Nature

Selecting & Improving MicrobesSelecting & Improving Microbes

Some Tools in theSome Tools in theIndustrial Biotech ToolboxIndustrial Biotech Toolbox

Genomics, Proteomics, and Genomics, Proteomics, and BioinformaticsBioinformatics

• Gene Shuffling

• High Throughput Screening

• Directed Evolution

• Metabolic Engineering

• Molecular Breeding

• Protein Engineering

• Extremeophiles

Our Ability to Cut and Paste Genes In Microbes Allows Us To Work in Tandem

With Nature’s Diversity Like Never Before

Industrial & Environmental Section Industrial & Environmental Section Member CompaniesMember Companies

Technology ProvidersTechnology Providers•Novozymes, Genencor, Codexis, Direvo

Feedstock ProvidersFeedstock Providers• Cargill, Tate & Lyle, Bunge, Ceres, Mendel

Chemicals IndustryChemicals Industry• DuPont, Dow, DSM, BASF, W.R. Grace

Biomaterials/Bioplastics IndustryBiomaterials/Bioplastics Industry• Natureworks, Metabolix

Biofuels IndustryBiofuels Industry• Abengoa, Iogen, Poet, BP, Chevron

Transforming theTransforming theTransportation Fuels IndustryTransportation Fuels Industry

BIOFUELSBIOFUELS

Industrial Biotech inIndustrial Biotech inBiofuels ProductionBiofuels Production

Industrial biotech is changing everything…

•• Starch EthanolStarch Ethanol– New enzymes for starch ethanol production

•• Cellulosic EthanolCellulosic Ethanol– Cellulase enzymes are making ethanol from

cellulose a reality

•• Higher Alcohols Higher Alcohols & Renewable Hydrocarbons& Renewable Hydrocarbons

– The future of fuels?

Starch Ethanol ProductionStarch Ethanol Production

New New ““nono--cookcook”” enzymes further enzymes further dramatically improving economicsdramatically improving economics……

Broin / Novozymes Process Broin / Novozymes Process for Corn Grain Ethanolfor Corn Grain Ethanol

• Advanced fractionation

• “No-cook” starch hydrolysis

Cellulosic Biomass: The New Cellulosic Biomass: The New ““Crude OilCrude Oil””

Corn stover

Wood chips

Sugar CaneBagasse

Salmassi and Leadbetter

The Pacific Dampwood Termite Zootermopsis angusticollis

Courtesy of Jared Leadbetter, CalTech, Pasadena, CA

Cellulosic Ethanol Activity

DOE Integrated Biorefinery Demonstration ProjectsAwarded Feb 28, 2007, $385 million

150 ML ethanol + methanol

GasificationWood residues and wood-based energy crops

GeorgiaRange Range FuelsFuels

70 MLEnzymatic Hydrolysis

Wheat straw, corn stover, switchgrass, and rice straw

IdahoIogenIogen

110 MLEnzymatic Hydrolysis

Corn fiber, cobs, and stalksIowaPoetPoet

75 MLAcid HydrolysisSorted green waste and wood waste from landfills

CaliforniaBlueFireBlueFireEthanolEthanol

50 ML + power, H2, ammonia

Gasification-Fermentation

Yard, wood, vegetative wastes

FloridaALICOALICO

40 ML + powerEnzymatic Hydrolysis

Corn stover, wheat straw, milo stubble, switchgrass

KansasAbengoaAbengoaBioenergyBioenergy

CapacityCapacityTechnologyTechnologyFeedstocksFeedstocksPlant Plant

LocationLocationCompanyCompany

DOE Small-Scale Biorefinery ProjectsAwarded Jan 29, 2008, $114 million

Fischer-Tropsch diesel

wood wasteWisconsinNewPageNewPage

Biogasolagricultural and forest product residues

OregonPacific Pacific EthanolEthanol

Biochem-organisolvehard and soft wood residuesColoradoLignolLignolInnovationsInnovations

biochemical-thermochemical

corn fiber, corn stover, switchgrass and sorghum

MissouriICMICM

TechnologyTechnologyFeedstocksFeedstocksPlant Plant

LocationLocationCompanyCompany

Higher Alcohols &Higher Alcohols &Renewable HydrocarbonsRenewable Hydrocarbons

•• BiobutanolBiobutanol–– Higher energy density, but Higher energy density, but

toxic to microtoxic to micro--organismsorganisms

•• Green gasolineGreen gasoline–– Use synthetic biology to Use synthetic biology to

produce organisms capable produce organisms capable of generating renewable of generating renewable petroleum surrogatespetroleum surrogates

BIOPOLYMERSBIOPOLYMERSPioneering Biobased MaterialsPioneering Biobased Materials

Biobased PlasticsBiobased Plastics

NatureWorksNatureWorks

–– Polylactic acid (PLA) via Polylactic acid (PLA) via fermentation from corn starchfermentation from corn starch

–– Marketed under brand name Marketed under brand name IngeoIngeo

–– Rapidly growing market share in Rapidly growing market share in fabrics and packagingfabrics and packaging

–– Agreement with WalAgreement with Wal--Mart to provide Mart to provide biobased plastic packagingbiobased plastic packaging

WorldWorld’’s First Biotech Fashion Shows First Biotech Fashion ShowBIO 2006 Annual Convention, ChicagoBIO 2006 Annual Convention, Chicago

Biobased PlasticsBiobased Plastics

DuPont / Tate & LyleDuPont / Tate & Lyle

• Bio-PDO (1,3-propanediol via fermentation from corn starch) under brand name SoronaSorona

•Biorefinery in Tennessee began production in late 2006 – 45 million kg per year production capacity – 100% sold out

• Polymer to be used for carpets, apparel, high-performance resins

Biobased PlasticsBiobased Plastics

Metabolix / ADMMetabolix / ADM

• Polyhydroxyalkanoates (PHAs) produced by micro-organisms fed with corn sugar

• Marketed under trade name MirelMirel

• Biodegradable in sea water

• Wide variety of applications

• Production to begin this year

Bacteria withplastic nodules

Soy Polyols

Cargill BiOH– Polyol derived from soybean oil

– Rapidly gaining market share in flexible polyurethane foams

– Winner EPA Green Chemistry Challenge Award

– 36% reduction in GHG emissions

RENEWABLE CHEMICALRENEWABLE CHEMICALPLATFORMSPLATFORMS

Sustainable Building BlocksSustainable Building Blocks

Industry DevelopmentsIndustry Developments

Renewable Chemical PlatformsRenewable Chemical Platforms

• At least 12 building block chemicals can be produced from sugars via biological or chemical conversions

• Many have excellent potential to compete with petrochemical equivalents

• Many new products possible with novel functionality or new applications

Top Value Added ChemicalsTop Value Added Chemicalsfrom Biomassfrom Biomass

Biobased ChemicalsBiobased Chemicals

Biobased 3HPBiobased 3HP

Cargill-Novozymes

• Announced in January agreement to develop breakthrough pathway from sugars to 3HP

3-Hydroxypropionic acid

Acrylic acid

1,3 Propanediol Acrylic esters

Poly(hydroxypropionate) or specialty polyesters

Malonic acid

Acrylic polymers

Acrylamide & hydroxyamides

Ethyl ethoxypropionate (EEP)

Cargill’s 3HP Chemical Platform Concept

Dextrose from Cornfeedstock

Microbial Conversion

CHEMICALS FROM CORN

CORN

CORNSTARCH

FIBERLevulinic acidFurfural and derivatives

Industrial starches

GLUCOSE

Fermentation Chemical conversion

Ethanol Others Gluconic acid SorbitolPolymers

H2O2

Lactic acidSuccinic acidCitric acidAcetic acidPropionic acidItaconic acidAromaticsAmino acids

LysineD,L-Methionine

1,3-propanediol2,3-butanediolABE

Starch copolymersXanthan gumAlginatesHydroxyalkanoate

PG, EGGlycerolSorbitanAscorbic acid

Syrups, sweeteners

Organic acids

FibersFibersMonomersMonomers

BioFuelsBioFuels

Green Solvents (ethyl lactate)Green Solvents (ethyl lactate)

LigninLigninPolyurethanesPolyurethanes

Organic AcidsOrganic Acids

PolyolsPolyols

PolymersPolymers

PolyestersPolyesters

Specialty ChemicalsSpecialty ChemicalsAgricultureAgriculture

Amino AcidsAmino Acids

PharmaceuticalPharmaceuticalPrecursorsPrecursors

HighHighPerformancePerformance

MaterialsMaterials

NylonNylon

EthanolEthanol

Feed AdditivesFeed Additives

It’s Not Just About Ethanol!

Lactic AcidTechnology

and Capabilities

BiorefiningBiorefining

Propylene GlycolPropylene Glycol

• New joint venture to develop and produce biobased chemicals

• First product will be propylene glycol (PG) from glycerin, an abundant co-product of biodiesel production

PolyethylenePolyethylene

Braskem

• Will begin producing 200,000 tons per year of biobased polyethylene from sugarcane (2009)

Dow

• Partnering with one of Brazil's largest ethanol players (Crystalsev) on 350,000 ton sugarcane ethanol to polyethylene plant (2011)

BiocatalysisBiocatalysis

IntermediatesIntermediates

SpecialityChemicalsSpecialityChemicals

Bulk chemicalsBulk chemicals

Amino acidsAmino acids

VitaminsVitamins

Biocatalysis

Chiral Compounds

PharmaceuticalPharmaceuticalManufacturingManufacturing

•• Reduce input costs 35% Reduce input costs 35% -- 65% 65% •• Reduce capital expenditures by over 25%Reduce capital expenditures by over 25%•• Ten strategic alliancesTen strategic alliances•• Patented production process for LipitorPatented production process for Lipitor•• 15 potential products and processes in R&D pipeline15 potential products and processes in R&D pipeline

Codexis has developed biotech routes for Codexis has developed biotech routes for producing and discovering pharmaceuticalsproducing and discovering pharmaceuticals

Already 5% of chemical sales dependent on biotech today

• Biotech dependent (examples)

• Sales value

• (USD billion)

• Alcohols, organic acids

– Ethanol

– Citric acid

• Amino acids– Glutamic acid

– Lysine

• Vitamins– Vitamin C

– Vitamin B2

• Specialties– Enzymes

– Flavors and fragrances

• 15.0

• 2.0

• 1.5

• 1.0

• 1.0

• 0.3

• 2.0

• 1.5

5% of today'schemical salesalready rely on

biotech

• Pharma chemicals

– APIs, advanced and basic intermediates • 7.5

–Major activities of all large players through acquisitions, alliances/JVs and R&D

–Opportunities to enter biotech via M&A or collaborations decreasing due to consolidation

From McKinsey and Company

– Invested in biocatalytic production of chiral

intermediates• BASF

– USD 18 million for project house biocatalysis – Acquired Aventis Research & Technologies – 10% of USD 450 million R&D budget on biotech

research

• Degussa

– Plans to invest USD 260 million in cell culture vessel• Boehringer

Ingelheim – Invests USD 180 million in mammalian cell

culture and will expand microbial fermentation • Lonza Group

– Acquired NSC Technologies for USD 125 million• Great Lakes

– Will expand cell culture and microbial fermentation

– Plans a facility for purification of transgenic products

– Expands biotech development groups

• DSM

Large Playersalready heavily investing and

new opportunities are decreasing

Large Playersalready heavily investing and

new opportunities are decreasing

MarketPotential

• McKenzie and Co. estimates show that about 20% of the chemical market (US$280 Billion) could be biotech production by 2010

• The total value creation potential in the chemical industry alone could be as high as $160 billion US by 2010

WHY NOW?WHY NOW?

The Perfect Storm

EnablingGovernment Policy

Ready Technologies

Economic PressureMarket Pull

Lack of Energy Security

Increased Demand for Biobased Products

GlobalCompetition

Why Industrial Biotech?Why Industrial Biotech?

FeedstocksFeedstocks

–– ReliableReliable

–– LowLow--costcost

–– DomesticDomestic

–– AbundantAbundant

1.3 billion tons of biomass potential in US*1.3 billion tons of biomass potential in US*•• Enough for 165 billion gallons of biofuels (40 x current)Enough for 165 billion gallons of biofuels (40 x current)

•• Could theoretically meet 100% of current US gasoline Could theoretically meet 100% of current US gasoline demand of 140 billion gallons per yeardemand of 140 billion gallons per year

*U.S. Department of Energy*U.S. Department of Energy

Environmental ProfileEnvironmental Profile•• BioplasticsBioplastics**

–– Could cut US petroleum consumption by Could cut US petroleum consumption by 145 million barrels/year145 million barrels/year

–– Compostable: could cut plastics in waste Compostable: could cut plastics in waste stream by 80%stream by 80%

•• Cellulosic EthanolCellulosic Ethanol–– Could cut US GHG emissions 22% by 2050Could cut US GHG emissions 22% by 2050

•• Enzyme bleachingEnzyme bleaching (paper, textiles)(paper, textiles)**–– Reduces chlorine use 10Reduces chlorine use 10--15%15%

–– Cuts energy use 40%Cuts energy use 40%

–– Cuts water use 18%Cuts water use 18%

**New Biotech Tools for a Cleaner EnvironmentNew Biotech Tools for a Cleaner Environment(available at (available at www.bio.org/indwww.bio.org/ind))

Why Industrial Biotech?Why Industrial Biotech?

Why Biobased?Why Biobased?

CostCost–– Ethanol now as cheap or cheaperEthanol now as cheap or cheaper

to make than gasolineto make than gasoline•• Corn grain ethanol: $1.20 / gallonCorn grain ethanol: $1.20 / gallon•• Crude oil @ $60 / barrel = $1.42 / gallonCrude oil @ $60 / barrel = $1.42 / gallon

before refinement into gasolinebefore refinement into gasoline

–– Bioplastics now as cheap orBioplastics now as cheap orcheaper than petroleumcheaper than petroleum--basedbasedalternativesalternatives

•• WalWal--Mart to switch to PLA for itsMart to switch to PLA for its114 million clam114 million clam--shell containersshell containers

Why Biobased?Why Biobased?

NEW INDUSTRIAL

BIOTECH PROCESS

One Step Fermentation with genetically modified micro-organism

VITAMIN B2

Revolutionary Technology:Revolutionary Technology:

Vitamin B2 Production

OLD CHEMCIAL

PROCESS

Many Steps

Glucose

Ca-Arabonate

Ca-Ribonate

Riobolactone

Ribose

Ribitylxylidine

Phenylazo-RX

VITAMIN B2

Vitamin B2:Vitamin B2:How Biotech Made a DifferenceHow Biotech Made a Difference

•• Hazardous waste generation and land Hazardous waste generation and land disposal of hazardous waste greatly disposal of hazardous waste greatly reduced by over 70%reduced by over 70%

•• Waste to water discharge reduced 66%Waste to water discharge reduced 66%

•• Air emissions reduced 50%Air emissions reduced 50%

•• Production Costs reduced by 50%Production Costs reduced by 50%

Why Industrial Biotech?Why Industrial Biotech?

Politics and PolicyPolitics and PolicyNational security, unemployment, rural economy concerns = National security, unemployment, rural economy concerns =

Increasingly supportive federal, state policies:Increasingly supportive federal, state policies:

–– $150 million Presidential Biomass Initiative$150 million Presidential Biomass Initiative•• Announced in State of the Union addressAnnounced in State of the Union address

–– $385 million Biorefinery Demonstration Program$385 million Biorefinery Demonstration Program•• Announced by Department of Energy in FebruaryAnnounced by Department of Energy in February

–– Federal Biobased Preferred Procurement ProgramFederal Biobased Preferred Procurement Program

–– State biomass initiativesState biomass initiatives

–– Eventual climate change legislationEventual climate change legislation

Value Creation &Climate Change

• Significant pollution prevention benefits, including CO2 reductions

• GHG regulation will favor biobased

• Companies using industrial biotech will be able generate marketable CO2 credits or create internal regulatory flexibility

Bioplastics: NatureWorks PLA

7.9

3.4

6.8

3.4 3.4

1.9

3.2

1.7

0.00

1

2

3

4

5

6

7

8

9

Nylon 66 HIPS Cellophane (film)

GPPS PET SSP PP PET am PLA 2005 PLA2006/2007

The use of a renewable feedstock + the purchase of RECs allows NatureWorks PLA to achieve GHG neutral

PlasticsEuropePLA1 PLA1

w/RECs

[lif

ecyc

le k

g C

O2

eq./

kg

po

lym

er]

• 20-80% reduction vs. petroleum competitors

Who Will Benefit in theChemical Space

• Large players with broad skills in biotech or good biotech partners will capture the full value creation potential

• Smaller players can benefit by partnering with each other or larger players or by forging strategic partnerships with industrial biotech companies

5th Annual World Congress onIndustrial Biotechnology and Bioprocessing

April 27-30, 2008

Chicago, IL

SAVE THE DATE!

www.bio.org/worldcongresswww.bio.org/worldcongress

ConclusionsConclusions

“Fill it up with corn stalks

please”

www.bio.org/indwww.bio.org/ind