- 1. The Potential Future Impact ofBiotech on the Chemical
IndustryConversion of Renewable Feedstocksto Chemicals: technical
andeconomical perspectives from theview of a biotechnology
playerApril 22nd, 2009Thomas Schfer,Senior Director,
[email protected]
2. 2World leader in bio innovation and
industrialNOVOZYMESbiotechnologyIN BRIEF Ca. 50 % market share in
industrial enzymesState-of-the-art expertise in
microbiology,biotechnology and gene technologyStrong global
presenceSales of more than 700 differentproducts to more than130
countriesSales 2007: ~1.5 bn USDSales 2008: ~ 1.65 bn USD13% of
turnover spent on R&DCa. 5150 employees in 30 countries 3.
3Novozymes principles for >10 years:the tripple bottomlineWe
imagine a future whereour biological solutionscreate the necessary
balancebetween better business,cleaner environment andbetter lives.
4. Novozymes Vision is to deliver4Bio-Innovations in the coming
Biobased SocietyWe will deliver biotech solutions from renewable
feedstock to consumer & industrialmarkets 5. 5Renewable
Chemicals is a Strategic Growth Platformfor Novozymes:Global
drivers Support the Business Case Crude oil prices have shown
unexpected volatility 6. 6Conversion of Renewables is a Strategic
GrowthPlatform for Novozymes:Global drivers Support the Business
CaseContinued strong growth in China, India, Russia keeps demand
forpetro derived products highfrom 6.7 billion people in 2008 to 9
billion people in 2042-2050new middle classes arising esp. in
China, India, LatAm:additional 1 Bio consumersEnergy supply
security consequenceGrowing public environmental concernsGoing
Green, green mission statements andenvironmental/sustainability
goals defined bymany companiesTechnology developments to enable the
transition 7. 7We need a variety of sustainable
solutions:Biotechnologies are expected to contribute 8. 8We need a
variety of sustainable solutions:Biotechnologies are expected to
contribute 9. 9928/04/2009NOVOZYMES PRESENTATIONBiotechnology
enzymes can contribute- Decoupling use of resources from growthUse
of naturalresourcesEnzymes are efficient biological catalysts known
Business as usual from any living organism Used in production they
can increase efficiency and Enzymatic solutions yield of a wide
range of processes in our society With enzymes we can produce more
with less and contribute to the decoupling of economic growth and
use of naturalEconomic growthresources 10. 10Environmental impact
of industrial enzymes andbiosolutions in partnership with
customersMINUS Novozymes products contribute with a GHG emission
reduction of ca. 20 Mio t CO2 equivalents3,800 KG3,400 KGCO2
REDUCTION USING 1 KG ENZYMEIN DIFFERENT INDUSTRIES :1,300 KGMINUSUP
TO 600 KGBIOCATALYSISCEREAL100 KG150 KG 150 KG 200 KG 30 KG40 KGOIL
& FATS PAPERTEXTILES BIOETHANOL DETERGENT FOOD CO2 COST
PRODUCING 1 KGANIMAL FEED LEATHER ENZYME: PLUS 1-10 KG 11. 11Our
first steps into the biobased economy:1st and 2nd generation
bioethanolStarchEnzyme e.g. cornprocessFerment-Fermen-able tation
sugars process Pre-WasteCelluloseEnzyme treatment biomassprocess
processSteen Risgaard, CEO Novozymes: we havecommercialBI EN RG
CH33 solutions for CH22 biomass OHdegradation readyby 2010 12.
Biofuels reduce our dependency on oil In 2007 biofuel production
replaced 1 million barrels of crude oil every day (1) Todays
biofuel share of global transport fuel use is 1-2% with great
regional variation: Brazil: 50% US: 5% China: 2% EU: 1% This level
of biofuel production helped keep oil prices 15% lower than
otherwise* Biofuels can meet at least 25% of global need for
transport fuel in 2030 without significant increase in acreage used
for biofuel feedstocksSource: US DoE, Merrill Lynch, International
Energy Agency, UNICA, Renewable Fuel Association, EU Commission(1)
ca. 85 Million bbl crude oil are produced daily 13. Novozymes is
committed to 2nd generationcellulosic ethanolUnique, global effort:
Large projects with a handful of leaders (USA: POET, ICM, ADM,
Cargill / China: COFCO / Brazil: CTC) Implication across the entire
value chain focusing on integration of key processesFocus on the
main feedstock: corn stover & sugar cane bagasseMore than 100
R&D people are working on biomassWell on our way: Department of
Energy Grant 2001-2004 (17.8 MUSD) Substantial focus & scale-up
work since 2004 New funding allocated by the DoE (2008
2011)Novozymes will have a commercial solution in 2010 to serve
thefirst commercial plants 14. Starch & biomass processes are
important platform technologies: same input to other productsWe can
modify the1fermentation process Starch Enzymee.g. corn
processFerment- Fermen-abletation sugarsprocessPre- WasteCellulose
Enzymetreatmentbiomass processprocessEthanol is more 2than fuel its
a platform chemical 15. Platform technologies:Novozymes technology
goes far beyond fuel ethanol- metabolic pathway engineering is key
Bio energytransport, energyStarch Enzyme Bio materials e.g. corn
processplastic, polymers Ferment- ablesugars Pre- Commodity/ Waste
Cellulose EnzymeSpecialty treatmentbiomassprocess chemicals
processNewbio materials 16. Novozymes and Cargill have joined
forces todevelop commercial solutions for Bio-Acrylic AcidCurrent
petro-route for production of Acrylic Acid: Propylene Acrylic Acid
Propylene 2000: 430 USD/metric ton Propylene 2008: 1450 USD/metric
tonNew fermentation enabled route to Acrylic AcidStarch, 3-Hydroxy-
Bio-AcrylicBiomass Glucose Acid propionic acid NZChemical NZ
technology:Enzymatic downstreamOptimised pathways Processprocess
17. Acrylic acid is used in a variety of existingmarkets and
applications: the existingmarket size is 11 Bio USDillustrative 3.1
Million tons production in 2005 Serving high end industries such as
diapers,hygiene products, flocculants, coatings,dispersions and
adhesives A myriad of applications Growth 4 % Mainly in
SEASuperabsorbersFibers 3-HPAAcrylic Acid
Coatings,AdhesivesPolymers 18. The Bio-route for Acrylic acid is
competitive withcurrent propylene-based production
processesRegional Bio-Acrylic Acid Cost Competitiveness,160 000
tonnes per year140012001000$US per tonne 800 600 400 200 0 US LED
GlacialUS Bio-Glacial BZ Bio-Glacial CH Bio-Glacial Net Raw
Materials Utilities Direct Fixed Costs Allocated Fixed Costs
DepreciationSource: Nexant LED = Leader Technology, propylene
based. Costing year: 2006, Crude oil price: 65 USD/bbl(1)Glucose
price assumptions: US (14c/lb); BZ (sucrose 7 c/lb); China
(11c/lb)Source: Nexant 19. The capital investment in bio AA should
not be prohibitiveas it is competitive with its petrochemical
equivalent Petrochemical and Bio-Acrylic Acid Investment, 160 000
tonnes per year 400 350 300$US millions 250 200 150 10050 0US LED
Crude US LED Glacial US Bio-3HP US Bio-GlacialSource: Nexant Inside
Battery Limits Outside Battery LimitsOther Project Costs 20. The
bio-process acrylic looks competitive in a mediumcrude oil scenario
and even more competitive ifBrazilian sucrose prices
appliedBio-Acrylic Acid Indifference Curve, 160 000 tons per year
capacity 20 Technology Leader 18 16 Glucose, cts per lb 14 Equals a
US net corn price of $4/bu 12 10 8 Potential sucrose prices in
Brazil 6 Brazil 4 2 02025 30 3540 45 50 556065 70Crude Oil, $ per
bbl 21. 3-HP is a platform chemical on its own andwill potentially
enter existing and
newmarketshttp://www1.eere.energy.gov/biomass/pdfs/35523.pdf 22.
Selected other projects:untraditional partnershipsDuPont/BP:
ButanolDanisco/Goodyear: IsopreneAmyris Biotechnologies: Isoprene,
alternative fuelLS-9: alternative fuelsRoquette/DSM:
Bio-SuccinicMetabolics Explorer: L-Methionine,
1,2-Propanediol,1,3-Propanediol, N-Butanol, Glycolic
acidGenomatica: 1,4-Butanediol 23. 23The general challenges are
high Todays chemicals are a product of many years of optimisation
Costs are generally low Performance is generally top 24.
24Classical Chemistry is highly optimisedillustrative Petroleum
based chemistryLevel of optimisationOptimisation: challenge Scale
(Ethylene plant SA: 1.5 mio t) Energy efficiency Fixed cost
reduction Improved maintenance Sourcing /supply chains Value
engineering Plant reliability On-stream time Foundation
DevelopmentExpansion Diversification Maturity (1) time(1) Modified
from Value Creation, Budde et al. 2006 25. 25Classical Chemistry is
highly optimised illustrativePetroleum based chemistryLevel of
optimisationchallenge 1865: BASF1920: first (www.
BASF.com)ethyleneplant by UnionCarbide1856: Perkin purple dye 1892:
Viscose 1933: PEfrom aniline 1933: PVC 1939: Nylon 1941: Polyester
1954: Polypropylene 1958: Polycarbonatetime 26.
26Renewables/Biotech based chemistry is in itsinfancy but has to
compete on price &performance illustrative Petroleum based
chemistry What isLevel of optimisation the price of
yourproduct?challengechallenge Renewables/Biotech based
chemistryFoundationDevelopmenttime 27. 27The general challenges are
highTodays chemicals are a product of many years of
optimisationCosts are generally lowPerformance is generally
topYield & productivity for biotech routes must be on top:
R&D We can not afford to loose carbon in the future Capex must
be affordable Novel downstream processes are neededMost
Biorefineries still need to be built: infrastructure and they have
to compete with existing economy-of-scale of large petroleum
refineries Entry time for new chemicals is traditionally long:
strategy As shown for PLA, PHB, PHA Green alone does not sell
though consumer awareness increases The industry is focused on
price/performanceNew value chain needs to be assembled 28. 28The
potentials are significant . Total Value of Chemical products sold
in 2003: USD 1.24 trillion - Excluding pharmaceutical and consumer
products Here: Output by regionCommodity Chemical Market SizeJapan
(2005): ca. 360 Billion USDRoW Virtually all bulk chemicals
areproduced from oil and gas today Asia Technological advances
andWestern sustained high oil prices suggestEuropethat it is
possible to substitutemany bulk chemicals at a lower andUSA less
volatile cost using a biologicalroute Japan AsiaUSA Western Europe
RoWSource: modified from Value Creation, chapter 1Ed.Budde, Felcht,
Frankemlle, 2006, 29. 29 dedicated pioneers have shown it can be
done even with new molecules 1,3-propanediolPLA (Polylactic acid)
Branched Poly- hydroxy-alkanoatesPoly-hydroxy-butyrate (PHB) 30.
30but also existing chemicals like PE can be made(Braskem, Dow):
Ethanol as platform chemical 31. 31Bio-PE has positive impact on
GHG emissions 32. 32 The Board of Directors made an important
decision to approve the investment of R$488 million (ca. 200 Mio
USD) to build a unit producing ethylene made from 100% renewable
raw materials. Capacity of 200 kton/year. The green polyethylene
unit already has its building licenses and will be installed at the
Triunfo Complex. Braskem should become the first company in the
world to produce green polyethylene on an industrial scale, with
the plant expected to come online in the first quarter of 2011. 33.
33 09/08/2007 1H 2007 Financial resultsThe biobased economy will
further drivetriple bottomline Business:Environment
EnvironmentBusiness: Futureless emission less emissionFutureEnergy
and (e.g.CO2),(e.g.CO2), Energy andMaterials replacement
replacement Materialsmarket of brute forceof brute force marketThe
biobased economy Trillion USD chemistrychemistryTrillion USDmarkets
sustainable sustainable marketswill create significant today today
agricultureagriculturebusiness, will bebeneficial for theJobs:
Jobs:e.g. in e.g. inenvironment and will developingdevelopingcreate
new jobscountriescountries where the newwhere the new feedstocks
arefeedstocks areNew value New value chainschains 34. 34Besides
technical risks there are generaluncertainties Decreasing crude oil
and propylene prices might make a bioroute less cost competitive
Pricing for renewable feedstocks might increase raw material costs
structure Decreased demand for Bio-Acrylic acid might influence the
growth scenarios for the project Infrastructure development might
delay the project 35. 35Besides technical risks there are 2009: Jan
generaluncertainties15.000 jobs lost in the chemical industry
Decreasing crude oil and propylene prices might make a bioroute
less cost competitive Pricing for renewable feedstocks might
increase raw material costs structure Decreased demand for
Bio-Acrylic acid might influence the growth scenarios for the
project Infrastructure development might delay the project 36. 36
and potential advantages are many Independence of volatility of
crude oil and itsderivatives (energy still needed) Cost
competitiveness (depends on crude oilprices and processes) Capex
reduction Improved carbon footprints throughproduction and
post-consumer value chainincl. reduced GHG emissions and
recyclingpotentials Exploit waste biomass Branding of green
products into the valuechain Novel molecules unattainable
frompetrochemical sources 37. 37ConclusionsWe are witnessing a
gradual change in our feedstock The Biobased Economy is coming
There is basically no alternative It is challenging - but it is
doable and the timing is right Offers exciting opportunities for
grain processors, technology suppliers and chemical companies and
for developing countries: they own the feedstock of the future
major innovations are expected 38. 38 The way forward into the
biobased economy will be in overlapping phasesPhase 4 (concept
phase): it does not happen 4deploy new tech, build overnightmore
infrastructure,invest in new technology,build markets and
innovation will go on from then for many years 3Phase 3 (R&D
phase):deploy new tech, buildmore infrastructure,invest in new
technology,build marketsPhase 2 (initiated):2 deploy new tech,
buildmore infrastructure, newvalue chains, invest inPlusnew
technology, buildmarkets 1 Phase 1 (today): employ existing
technology, build infrastructure and new value chains, invest in
new technology, build marketsFoundationDevelopment
ExpansionDiversification Maturity (1) 39. 39 The way forward there
are several alternatives to create4New Bio- energy (wind, solar,
materials biogas, nuclear): keep bio-carbon for materials
Bio-refineries 2nd generation:multiple feedstocks to
multipleproducts3 Gradual replacement of existing materials by bio-
materialsGradual replacement of 2existing materials by
bio-materials Bio-refineries 1st generation: specific2nd generation
feedstocks to productsfuel ethanol1 1st generation fuel ethanole.g.
dry milling, wet milling 40. 40 The way forward Drivers and
enablers: Crude oil prices above 504 USD and volatile Technology is
matured Policies, subsidies, CO2 credits Stakeholders Communication
3 Labour creation in rural areas (close to feedstock, limited
transport of feedstock) 2 Challenges and hurdles: New value chain
has to be assembled New infrastructure needed Crude oil below 30
USD/bll Bio-feedstock prices (sugar) above 20 ct/lb 1 No demand No
money for investments Economic crisis will cause delays 41.
41Bio-Innovations pave our way towards
regainedsustainabilitySustainability index (relative)Sustainable
agriculture Future Industrial revolutionFeedstock based Feedstock
based PLUS sustainable industrial processesIndustrial
revolutioncrude oil based timeHigh emmission load 42. 42Thank
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