http://www.forbes.com/2008/03/19/superbugs-biofuels-innovation_leadership_clayton_jw_innovation08_0319innovation.html Strategy & Innovation
Superbugs May Save Biofuels
Josh Wolfe 03.19.08, 6:00 PM ET
A lot of people I talk to are giddy over the prospect of biofuels. I call them "biofools." Anyone who has analyzed the economics and environmental consequences of ethanol production closely will tell you that corn ethanol just doesn't make sense in its current state. It costs us a bundle and actually increases greenhouse gases. If you don't believe me, just check the most recent issue of Science or read a convincing analysis of the current biofuels on
www.Zfacts.com called "Carbonomics."
However, I don't think energy policy makers should throw in the "biofuel" towel just yet. In my research, I've discovered laboratories across the country experimenting on next-generation biofuel production that look promising. Many of these labs are pinning their hopes on microbial "superbugs."
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One approach to solving the corn-derived ethanol problem is to make ethanol from cellulosic material--the junk scraps of plants. Cellulosic ethanol can be made from non-food sources, from agricultural to municipal waste, and in addition to being cheap would impart environmental benefits far beyond those of corn-based ethanol. The problem is that it's difficult and costly to break down cellulose and transform it into ethanol.
Enter the microbes. Various enzymes and microbes found in nature already do these sorts of jobs, so innovative biofuel companies want to harness their powers, turning microbes into miniature biofuel factories. Some researchers are getting even more ambitious, turning ordinary microbes into superbugs: microbes that have been genetically enhanced to perform certain functions, like breaking down cellulose, extracting its sugars and fermenting the sugar into ethanol.
By tweaking the genetic makeup of the microbes and turning them into superbugs, researchers can cut down on the number of steps involved in the conversion process while increasing efficiency.
According to Lee Lynd, a professor of engineering and biology at Dartmouth College, by using microbes, 96% of the energy in sugar can be converted to ethanol, at least in theory. "Real processes achieve slightly less than theoretical yields and some energy inputs are also required, but generally speaking microbiological conversion is highly efficient," he says.
This isn't a huge surprise, because microbes already do so much in nature to regulate the environment--they are a natural choice for environmental technology and with advances in synthetic biology, optimizing nature's designs is becoming increasingly feasible. Says Lynd, "Worldwide, I think it is very likely that microbially produced fuels will be significant players. However, whether a particular country will use microbial fuels depends a lot on the resources available."
The cellulosic ethanol approach is being touted by the U.S. Department of Energy. Just listen to these remarks from the DOE, "Research, development and demonstration efforts focus on hastening the emergence of an advanced cellulosic biofuels industry, which will use primarily agricultural wastes, forest residues and energy crops (hemp and switchgrass, for example) not competing with food. The department has announced more than $1 billion of investment over the past year."
This support is good news for companies like Coskata and SunEthanol. Coskata is using patented microbes, bioreactor designs and a unique three-step conversion process to produce ethanol from cellulosic material, with a goal of reducing production costs to less than $1 per gallon by as early as 2010. Coskata's microbes are impressively energy efficient, producing more than 100 gallons of ethanol per ton of dry cellulosic material. Together the process and the resulting fuel can cut carbon emissions by as much as 84% compared with gasoline, according to an analysis by Argonne National Laboratory.
In February, Warrenville, Ill.-based Coskata partnered up with General Motors (nyse: GM - news - people ) "to promote a unique process for turning biomass into ethanol"--not a bad start for a company that's a little over a year old. The goal of the partnership is to find ways to produce ethanol not only from plant waste but from everything from garbage to old tires.
GM is scheduled to receive its first round of ethanol from Coskata's pilot plant in the fourth quarter of this year to be used in vehicle testing at GM's Milford Proving Grounds. GM now produces more than 1 million "flexfuel" vehicles. These hybrids run on a mixture of 85% ethanol and 15% gasoline. The ailing automaker is committed to rendering half of its vehicle production flex-fuel capable by 2012.
Coskata's current small-scale production capabilities aren't going to cut it, so earlier this month, Coskata teamed up with Kansas-based company ICM to design and construct an ethanol plant expected to open in late 2010 and to produce 50 to 100 million gallons of ethanol. Coskata isn't the only company looking to ICM to scale up their production capacity.
Cellulosic biofuel producer SunEthanol--founded in 2006 and based in Amherst, Mass.--is also working with ICM, targeting a pilot plant scheduled to be in operation by 2009. At the heart of SunEthanol's operation is a naturally occurring microbe, which they call "the Q microbe technology." In early March, the company was one of four companies awarded a total of $114 million over four years by the DOE for small-scale biorefinery projects with the goal of making cellulosic ethanol cost competitive in five years.
Cambridge, Mass.-based Mascoma is looking to move from microbes to superbugs. Co-founded by Dartmouth's Lynd, Mascoma designs and licenses novel enzymes and genetically modified bacteria to make cellulosic ethanol from things like wood chips.
In November, Mascoma acquired Indiana-based Celsys Biofuels, a company commercializing cellulosic ethanol production based on technology developed at Purdue University. The acquisition strengthens Mascoma's biomass processing capabilities as well as its IP portfolio. Now they are busy trying to get production plants up and running, with plans for a pilot plant in New York state, another in Tennessee and a large-scale commercial facility in Michigan. The multiple locales allow Mascoma to take advantage of a variety of local feedstocks as well as various state subsidies and tax breaks.
The state of New York is reportedly putting up $14.8 million, half the total cost, to build the pilot plant, while Tennessee is footing a reported $41 million. It will take a few years before these plants are in full operation, but Mascoma says it will have some of its technology on the market next year. Ethanol, however, is not necessarily the ideal fuel: It contains 30% less energy than gasoline and isn't compatible with existing infrastructure, like pipelines and car engines.
The ultimate goal, then, is to create microbes that can turn cellulosic biomass into hydrocarbon-based fuels, rather than those like ethanol, which are alcohol-based. No microbe found in nature can do that, though, so it's going to require cleverly designed superbugs.
Amyris Biotechnologies, an Emeryville, Calif., company that is developing anti-malarial drugs and alternative fuels, is trying to do just that, using synthetic biology to design microbes capable of churning out hydrocarbon fuels that are cheaper and cleaner than gasoline while being more energy efficient than ethanol. During its nonprofit collaboration with the University of California and OneWorld Health to fight malaria, Amyris realized that its synthetic biology techniques could be used to engineer microbes capable of producing biofuels, specifically a gasoline substitute and a diesel substitute.
In 2006, the company completed their first round of financing, raising $20 million from investors including Kleiner Perkins, Caufield & Byers, Khosla Ventures and TPG Ventures, and last September it secured $70 million in the start of a Series B round led by DuffAckerman & Goodrich Ventures. With that money in hand, it's now looking to build a pilot plant in its hometown of Emeryville, with a goal of getting its biofuels to market by 2010.
In December, the company appointed Jeff Lievense, a chemical engineer with the know-how for bioprocessing and scaling up fermentation processes, as senior VP of process development and manufacturing in their effort to take Amyris from the lab to commercial production.
Amyris's biggest competition is California-based LS9--a company that's also genetically engineering designer superbugs for nonethanol hydrocarbon biofuels that are compatible with today's pipelines and engines. The start-up was founded in 2005 by scientists from Harvard, including George Church and Stanford, including plant biologist Chris Somerville. Initial financing came from VC firm Flagship Ventures.
So far LS9 has attracted $20 million from investors. The company has found a way to take existing bacteria, like E. coli, and genetically tweak it to create diesel-producing strains. Whereas Amyris is focused on tweaking metabolic pathways that produce isoprenoids, LS9 works with those that produce fatty acids, which happens to be similar to diesel fuel, molecularly speaking.
It is also developing a bacterium that produces crude oil, which it calls "biocrude," that can be sent to refineries and turned into any petroleum product--because it's made from renewable feedstocks whose carbon was recently in the atmosphere; and rather than fossilized carbon, there's no net greenhouse gas emission. LS9 intends to open a pilot plant in California this year with the hope of having large-scale commercial manufacturing under way within the next four years. In the meantime, according to Church, the company should have some of its green products on the market within a year.
Tweaking existing microbes and altering their metabolic pathways so that they make the products you want them to make sounds fantastic--but not quite as fantastic as the idea of building a microbe-powered energy factory from scratch, customized to your exact specifications. That's exactly what the ever-ambitious Craig Venter has set his sights on: designing superbugs from scratch that can do everything from turning cellulosic biomass into ethanol to producing hydrogen fuel from sunlight, to sequestering carbon dioxide from the atmosphere.
To accomplish this, he and Nobel laureate Hamilton Smith co-founded Synthetic Genomics in 2005. In addition to working in the lab designing genomes intended to code for new types of cells that can carry out whatever functions the designers want, the company has also been voyaging around the world searching for undiscovered microbes with novel metabolic pathways.
This idea of creating new life from scratch may sound like science fiction, but it's not. Venter's Synthetic Genomics got a huge boost recently after his team successfully created the largest man-made strand of DNA ever, synthesizing a 582,970 base pair genome modeled on the bacterium M. genitalium. Venter & Co. created a genome from scratch, but not life itself.
The next step is to insert his new genome into a cell and see if the life form "boots up." Though M. genitalium itself is not suitable for industrial manufacturing, the synthesis is a landmark technological achievement and an important proof of principle for Venter’s Synthetic Genomics.
Moving forward, the company still needs faster, cheaper genome construction technology. A final product--an entirely man-made superbug working as the ideal energy biofactory--is coming, but not anytime soon. Companies working with existing genomes are likely to produce useful fuels faster.
There's one more segment of the superbug industry I want to tell you about: the companies that provide basic genetic engineering services. Whether you're tweaking an existing microbial genome or building a superbug from scratch, you're going to need synthetic DNA and genetic engineering devices. That's where a company like Codon Devices comes in.
Codon, founded in 2004 in Cambridge, Mass., by Church and Keasling as well as Drew Endy and Joseph Jacboson (both of MIT), produces the BioFAB production platform, production technology for synthesizing DNA. With solid investor backing and a strong IP portfolio, Codon is poised to play a significant role in the superbug business. According to The New York Times, gene synthesis industry sales are already about $50 million a year and growing rapidly.
Others in this segment include Blue Heron Biotechnology, a Washington-based company founded in 1999. Blue Heron's core technology is the GeneMaker, a proprietary high-throughput design and synthesis platform for synthesizing DNA sequences. With Blue Heron, Invitrogen (nasdaq: IVGN - news - people ) is the co-exclusive worldwide distributor of GeneMaker. Blue Heron provided more than 80% of the DNA Venter's team used in creating its synthetic version of Mycoplasma genitalium, and already works with hundreds of life sciences and pharmaceutical companies, so for them the superbug biofuel business is just gravy.
In March, however, Codon filed a lawsuit against Blue Heron for alleged infringement of five patents related to the preparation and manufacture of nucleic acids. Blue Heron is fighting back and at this point its hard to say what the effects of the suit may be--but worth keeping an eye on.
Companies that provided DNA synthesis for Venter's team are DNA 2.0 and GeneArt. DNA 2.0 has synthesized more than 20 million base pairs for thousands of customers and opened a European branch in Basel, Switzerland, earlier this month in order to reach out to international markets. GeneArt, headquartered in Regensburg, Germany, and traded on the Frankfurt Stock Exchange, reported a 59% increase in sales earlier this month and projects increases in sales to reach 16.5 to 18 million euros this year.
In my opinion, designer microbes have to be used for biofuel production for biofuels to be a competitive and viable source of energy. Now the challenge is to take these processes from the lab to large scale commercial applications. There are lots of start-ups but don't count out the incumbents. Harvard University geneticist George Church mentions DuPont (nyse: DD - news - people ). "DuPont routinely uses 2.4 million liter batches of E. coli to make propanediol." Church is referring to DuPont's work with Genecor, modifying E. coli bacteria so that they turn glucose into propanediol to make stain-resistant fabrics.
Make way for the superbugs!
Excerpted from a recent issue of Forbes/Wolfe Emerging Tech. Click here for more analysis by Josh Wolfe and to subscribe to Forbes/Wolfe Emerging Tech Report
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