Drop In, Scale Up? (10/6/11)

Drop In, Scale Up? Ed Dineen, CEO, LS9 Alan Shaw, CEO, Codexis Jonathan Wolfson, CEO, Solazyme Next-generation biofuels are on the verge of a breakthrough but aren’t ready to displace conventional fuels, three Bay Area biofuel company CEOs say in this Climate One talk. The CEOs insist that their fuels must compete on price with conventional gasoline or diesel, with or without government support, or a price on carbon, which means they have to scale up, fast. For biofuels to scale, all agree, they must be drop-in fuels. Meaning, says Jonathan Wolfson, CEO, Solazyme, “a fuel that fits directly into the existing infrastructure without modification.” “You’ll not replace mass transportation, internal combustion engines, in our lifetime – not at mass scale,” says Alan Shaw, CEO, Codexis. “What drives it is a liquid transportation fuel. We need an alternative to that. We’re still in the very early days. And that’s because the technology is not ready to be deployed at scale.” Ed Dineen, CEO, LS9, says “for the type of technologies we’re practicing” – second-generation biofuels – “I think three years you’ll start to see plants be established. And once the initial plants get established, and we learn the technology, the acceleration will pick up,” he says. “The bigger issue is the capital intensity of these plants,” he adds. “If we see a world of $150 [per barrel] crude, I think that’s going to accelerate the pace of this technology,” he says. Agreeing with Jonathan Wolfson, Shaw says that “the key driver of economics here is feedstock costs” – in this case, sugars. Promisingly, he says, the second-generation cellulosic sugars that he and fellow panelists’ are developing run about a tenth the cost of their first-generation predecessors. The larger price competition, biofuels pitted against conventional crude, would be a fairer one, Wolfson says, if the two sides were evenly matched. “There is one thing people forget, which is that the big integrated oil companies have had 100 years to bury subsidies in all kinds of places. People are talking about Industry should stand up, and We should all be dependent on alternative and renewable fuels meeting parity with petroleum. But the truth is parity isn’t parity because of all these hidden subsidies.” This program was recorded in front of a live audience at The Commonwealth Club in San Francisco on October 6, 2011 Learn more about your ad choices. Visit megaphone.fm/adchoices