Ambitions for biologically sourced fuels bump up against the reality that making chemicals and fuels from organic material is still generally more expensive. One company is hoping to overcome that obstacle by tapping into the built-in way that plants make their own energy.
Plants use sunlight to convert carbon dioxide and water into food with oxygen as the byproduct. Research attempts to harness photosynthesis for industrial use, such as fuel and chemical production, have shown promise but remain unproven at commercial scale. Startup Phytonix aims to demonstrate it using its genetic engineering technology. The Asheville, NC, company has developed a way to engineer a type of photosynthetic bacteria, turning the microorganisms into tiny factories that churn out commercially useful chemicals while at the same time, reducing the environmental footprint of chemical production.
“It’s a solar technology, except we’re not creating electricity,” Phytonix founder and CEO Bruce Dannenberg says. “We’re producing solar chemicals and fuels.”
Advances in genetic engineering have turned up new ways to apply biological processes to health care, agriculture, and biofuel production. Phytonix employs cyanobacteria, a kind of bacteria that make their own energy through photosynthesis. Phytonix’s genetic modification could turn cyanobacteria into fuel producers. But Dannenberg notes that chemicals are more expensive than fuels, making chemicals the more valuable commodity. So Phytonix plans to use its technology to produce the chemical butanol.
If you’ve painted or varnished anything lately, there’s a good chance you used a product made with butanol. The chemical is used as a solvent in coatings and paints. Butanol, which is conventionally made from petroleum-derived chemicals, is also widely used as a component in producing other chemicals. The North American butanol market was $1.8 billion in 2013 and is projected to reach $2.3 billion by the end of 2018, according to MicroMarket Monitor. Most of the global butanol demand comes from the Asia-Pacific region, which represents 44.5 percent of the global butanol market. MicroMarket Monitor projects the Asia-Pacific butanol market will grow from $3.0 billion in 2013 to $4.3 billion by the end of 2018, driven by China’s chemicals demand.
Though cyanobacteria are sometimes called “blue green algae” and they sustain themselves through photosynthesis, they are actually classified as bacteria. Cyanobacteria are ideal for genetic engineering because the one-celled organisms have no nucleus, making it relatively easy to access the DNA, Dannenberg explains. Cyanobacteria work well for chemical production because of their ability to store glycogen for food. Phytonix’s engineered cyanobacteria can produce butanol for months, powered by stored glycogen.
Phytonix plans a modular and scalable system consisting of soft-sided vessels called photobioreactors, where the cyanobacteria will grow. These vessels will be illuminated with natural sunlight and fed carbon dioxide, which could come from a power plant or an industrial operation. A separation process will harvest chemicals directly secreted by the bacteria. Dannenberg says that the cyanobacteria are engineered with a biosafety feature that keeps them from surviving outside of this enclosed environment.
Biologically produced butanol has been around for some time, says Jose Bruno-Barcena, a North Carolina State University professor of microbiology, whose research includes biobutanol production from clostridium bacteria. Species of clostridium can produce acetone and butanol from starch, he explains. During World War I, that capability was used to produce acetone for making explosives. More recent clostridium research has focused on butanol rather than acetone, because butanol has higher industrial value, Bruno-Barcena says. While butanol can be used as biofuel, he says that hasn’t caught on because it’s more expensive to produce than gasoline.
Bruno-Barcena is unfamiliar with Phytonix but he says its photosynthetic approach, if proven, could be promising for commercial butanol production. The challenge he sees for Phytonix is scaling the process while also ensuring it competes on cost with current butanol production methods, particularly if the costs of inputs for conventional butanol drops.
“This is all a game of raw materials,” Bruno-Barcena says. “As raw materials go up and down, [chemical manufacturers] switch.”
It takes chemicals to make chemicals. Chemical companies, such as BASF and Dow Chemical, make butanol in a process employing the petroleum-derived chemical propylene. While gasoline prices are falling in tandem with plummeting oil prices—the price of a barrel of oil has dropped more than $30 in the last three months—petrochemical prices have been slower to fall. Propylene’s 1 percent drop in October to $1,311 per metric ton was the smallest price decrease of any chemical tracked in the Platts Global Petrochemical Index. Year over year, Platt’s basket of seven benchmark petrochemicals is down just 2 percent.
Noting propylene’s relatively stable price, Dannenberg insists Phytonix can compete with the big chemical companies, which spend $4 to $5 to make each gallon of butanol. Dannenberg says Phytonix’s technology can produce butanol for $2 a gallon, perhaps even less. Cutting the price by more than half could threaten big chemicals companies. But they could also become partners. Dannenberg says both BASF and Dow have expressed interest in Phytonix’s technology, though he concedes that chemical companies aren’t likely to invest or partner with any early-stage company until its technology reaches the demonstration stage.
Focus on Photosynthesis
So far, biofuel technologies have struggled for traction at commercial scale. In just one example, Berkeley, CA-based Bio Architecture Lab, which farmed seaweed whose sugars were fermented to produce ethanol, landed high profile industry partnerships with chemical company DuPont (NYSE: DD) and oil and gas producer Statoil. But Bio Architecture abandoned the effort last year after concluding that its raw seaweed was worth more than the processed fuel.
Dannenberg founded Phytonix in 2009 after seeing that most biofuel research focused on biomass fermentation, not photosynthesis. Though Dannenberg has a zoology degree, he had spent the bulk of his career in computers and semiconductors. He later worked for an Asheville capital management firm investing in green and alternative energy. Dannenberg says his interest in bioenergy stems from his original biology background.
The synthetic biology knowledge for modifying cyanobacteria is not concentrated in any one place, so Dannenberg searched the world for expertise. Phytonix has partnerships with Old Dominion University, South Dakota State University, and Uppsala University in Sweden. That wide-ranging search led Dannenberg to Phytonix’s intellectual property. Dannenberg found the technology that became core to Phytonix through a chance meeting with scientist James Lee, who had discovered a way to insert genes into cyanobacteria that code for butanol production. Lee, who worked at Oak Ridge National Laboratory, had developed his cyanobacteria technology apart from his Oak Ridge research and was looking for a company to license it. Phytonix licensed Lee’s technology in 2010.
Others are pursuing biobutanol, but as a fuel. Butamax, a BP (NYSE: BP) and DuPont joint venture, is researching biobutanol that could be produced in existing ethanol facilities. Venture-backed Cobalt Technologies, a startup in Mountain View, CA, is researching butanol made by fermenting biomass. Cobalt claims production costs between 30 and 60 percent less than petroleum-based butanol. The company most closely resembling Phytonix might be Bedford, MA-based Joule Unlimited, which genetically engineers cyanobacteria to produce ethanol, not butanol. Joule says recent test results from its New Mexico demonstration plant approach commercial-level ethanol production. Joule has raised $160 million to date, led by Flagship Ventures.
With Joule producing ethanol and Phytonix pursuing butanol, Dannenberg says the technologies and business goals don’t overlap. Phytonix’s technology was granted a U.S. patent in May; patents in other countries are pending. The company has financed its work so far with just $2 million, raised from angel investors and partners. Building a pilot production plant that could produce up to 5,000 gallons annually is the next step. But Phytonix needs new financial backers; Dannenberg is aiming for a Series A round of $6- $10 million that could come from strategic partners and venture capitalists.
Bruno-Barcena, the NC State microbiologist, says that unless Phytonix’s technology is considerably more productive than existing butanol technologies, the company will need a lot of land to reach commercial scale. Dannenberg acknowledges that commercial production could require thousands of acres but says Phytonix has no such construction plans. After the pilot plant, the goal is to license the technology to large companies for use at their facilities. In addition to being a cheaper way of producing butanol, Dannenberg says the technology fits industrial objectives to reduce carbon emissions and could slide in alongside oil, natural gas, and biofuel sites, feeding from their waste carbon dioxide.
Phytonix projects that every 138 gallons of butanol it produces will eliminate one metric ton of carbon dioxide. The potential to put carbon dioxide to beneficial use could be a huge selling point, Bruno-Barcena says. But he cautions that even when technologies work, they may not be economically viable. Phytonix must prove both the science and the economics of its technology.
“From the moment you grow an organism to the moment of a purified product, always, cost is what wins the battle,” he says.