The Road Not Taken and Genomatica’s Renewable Chemicals Strategy

11/21/12Follow @bvbigelow

A few weeks ago, BP cancelled a $350 million project in Highlands County, FL, that was supposed to produce 36 million gallons of ethanol a year from “energy grasses” and other high-cellulose plants. In a statement at the time, the global energy conglomerate said it was refocusing its U.S. biofuels strategy on research and development—and on licensing its advanced biofuels technology.

Thus ended an ambitious effort that began with much optimism five years ago when BP disclosed a strategic partnership with Verenium (Nasdaq: VRNM), the industrial biotechnology company now based in San Diego.

“Everybody was doing advanced biofuels back then,” recalls Christophe Schilling, the CEO and co-founder of Genomatica, another San Diego industrial biotech. Crude oil prices soared to record highs in 2008, and rampant oil speculation dominated futures trading on the New York Mercantile Exchange. “There was high interest in biofuels in terms of energy security,” Schilling says. “We had this major issue.”

It was about that same time that Genomatica developed the strategy it has been following for the past five years—using the tools of biotechnology to genetically engineer bacteria to manufacture intermediate chemicals like 1,4-butanediol (BDO) in fermentation-based manufacturing processes. BDO is a high-value chemical, usually produced from crude oil, and an essential ingredient needed to make polyesters, polyurethanes, spandex, and biodegradable plastics.

For Genomatica, biofuels represents the road not taken, and that has made all the difference.

I recently met with Schilling and Genomatica CFO Michael Keane, and the outlook they describe sounds decidedly more upbeat than the anguished laments coming out of … Next Page »

Bruce V. Bigelow is the editor of Xconomy San Diego. You can e-mail him at bbigelow@xconomy.com or call (619) 669-8788 Follow @bvbigelow

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