There are six oddly-named streams in the bioeconomy, and it reminds one of the nomenclature of subatomic quarks. There is upstream, midstream, downstream, main-stream, waste-stream, and slip-stream. But of all the streams, perhaps there is nothing so vital yet muddled as the identity of the mainstream and that of the slipstreams.
What really drives the company from pilot to player — the high-value, small-market first molecules or the large-volume markets later on? What technologies will transform noxious waste into market gold?
Happily, along comes the Born Global Slip-Stream Challenge to help us provide some definition at this time in the bioeconomy’s evolution.
The Challenge aims to drive the development and commercialization of innovative products from biorefinery and bioenergy processes. The focus is on Biochar, Wood Ash, CO2, Lignin, Waxes and C5/C6 sugars with a goal to improve the overall profitability of bio-based projects and create replicable models for deployment in the U.S. and Europe.
It’s a Challenge that any company capable of producing a niche product should look into — as a means of accelerating towards commercialization — and more about that here. http://www.synthesis-vfp.com
It’s the sister project to the Maine Born Global Innovation Challenge — which addresses the global shift to a Bio-Economy and invites worldwide innovation into real projects and real revenues within The State of Maine.
That challenge aimed to: “commercialize innovative technologies by providing physical locations and real projects for market expansion and value creation. Companies of complementary technologies will be grouped into project teams, assigned to specific power plant locations, given funding for business/implementation plans and provided with investment/project financing for project execution.”
Which is to say, a soup-to-nuts development and financing system — designed to address the capital inefficiencies that have plagued the sector.
It is something more interesting than the theme of the past five years: capital light. For as Cellana CEO Martin Sabarsky once observed to The Digest, “capital light is a misnomer, because at the end of the day, to achieve anything at all for investors there has to be scale and someone has to put in a lot of capital.”
The Slippery Slope from Slipstream Today to Mainstream Tomorrow
Is Cool Planet a fuels company producing CoolTerra engineered carbon as a temporarily dominant side-stream, or the other way around? When John D. Rockefeller started out, he thought he was in the kerosene business as a drop-in replacement for whale oil, and they threw the gasoline into the Cuyahoga River, causing the river to catch fire on a couple of occasions. But later on, the slip stream became the mainstream — gasoline became the workhorse of Standard Oil’s dominance, and while they didn’t throw the kerosene over the side, they developed quite a bit of technology, including the Fluidized Catalytic Cracker, to ensure that they made as little of it as possible.
Later on, as petroleum-based chemistry took on coal-based chemistry, the question of what is the mainstream and what is the side-stream took on a new complexity. The revenue and the gallonage in the barrel strongly favors gasoline, diesel and jet fuel, but petrochemicals are the equal of fuels when it comes to the profits.
When it comes to national policy — is it a success when a business is successful even if the product set is mildly or wildly different than the original products that were envisioned. Is a company a failure that set out to make cellulosic ethanol if it makes boatloads of cellulosic natural gas, or fragrances, or flavorings.
Although it is fashionable to run down the Renewable Fuel Standard for not fostering the development of cellulosic biofuels on the steep, aspirational curve first envisioned by Congress in the 2007 Energy Independence and Security Act, it shouldn’t pass without notice that more than 200 million people around the world have experienced a product that EISA fostered — though EISA always intended to foster fuel development.
The products covered biochar, wood Ash, CO2, lignin, waxes and C5/C6 sugars.
The Bottom Line
Waste-stream, slip-stream, main-stream.
What begins in our thinking as a waste stream — think CO2 emissions, for instance — in the advanced bioeconomy is a slipstream waiting to happen. There are no wastes, only elements in the slipstream for which technology has not yet emerged to bioconvert into products of sufficient value.
And what of mainstream? That really comes down to the biggest driver of revenue, today. For a habitually under-capitalized enterprise, the first mainstreams might feel like very small potatoes — after all, the markets for astaxanthin and cyan colorings pale before the mighty volumes of fuels and basic chemicals.
First job for companies, however, is to survive as an enterprise. As we pointed out, even mighty Standard Oil, arguably the most successful energy company ever founded, didn’t start with the fuels market and not because it didn’t know how to make gasoline. It would take time before the markets were ready to provide sufficient demand so that petroleum could get the economies of scale needed to compete with coal — and for the market to organize itself so that petroleum refiners had pricing power in the market. Today, bioenergy producers have little to no pricing power, and until they achieve it they will be milling around in the higher-value, higher-margin markets.
But if Standard Oil is any example and if we correctly deduce the direction of companies like Renewable Energy Group and Green Plains, we may well see the emergence of companies with enough capacity and capital to force more price discipline on the market, and generate the types of margins that will support the development of even more capacity.
And the capital situation will be markedly assisted by the utilization of every molecule in the bio slipstream — and to that end, projects like the Born Global Slipstream Challenge may have as titanic a long-term impact on fuels as the Renewable Fuel Standard did on chemicals, flavors, fragrances, lubricants, plastics, packaging, and nutrition.