Revving Up Nature’s Engines

July 10, 2006

Never mind drug breakthroughs, suddenly biotech is thriving down on the farm.

Scientists with San Diego biotech firm Diversa (nasdaq: DVSAnews people ) have descended into volcanoes in Siberia, plumbed thermal vents 3,000 feet deep in the Atlantic Ocean and crawled around the humid rain forests of Costa Rica. Their quest: microorganisms that survive in extreme surroundings by producing digestive enzymes that excel in withering heat and pressure–ideal for an industrial refinery.

Back in the lab Diversa rearranges the genes inside these enzymes to make them even better at what they do. One exotic breed Diversa has begun selling produces ethanol 30% more efficiently than conventional methods.

Biotech fueled a drug revolution but now has a new role: industrial superhero. The $1.5 trillion chemicals industry has raised prices 60% in three years as costs soar for their mainstay ingredients–oil and natural gas. In search of a replacement, the industry is turning to a new breed of superbugs and enzymes. Refineries of the future will spew out chemicals and plastics from corn sugar or wood pulp instead of from fossil fuels. Thus far the star of this new science has been ethanol, a car fuel made from corn, but around the world chemical, grain and biotech companies are working to produce auto paint, cosmetics, even apparel fiber from renewable resources.

A healthy dose of biotech innovation could reshape one of the biggest industries in the world. Two-thirds of global chemical production depends on oil or gas as its raw ingredient. If crops, farm waste or wood pulp were to replace fossil fuels in only 10% of the chemical supply, biochemicals would be a $150 billion industry, up from $30 billion today. “Carbon is carbon. It doesn’t matter if it was sequestered in an oilfield 100 million years ago or six months ago in an Iowa cornfield,” says James Stoppert, who runs the industrial bioproducts division of grain giant Cargill.

Biotech firms Diversa, Dyadic International (amex: DILnews people )ional,[/org] Metabolix, Novozymes and Genencor use the same genetic engineering tricks found in cancer research to produce superenzymes and bacteria that excel at turning corn into plastics. “We’re at a point in time where the industrial biotech sector can really take off,” says Karl Sanford, a vice president at Genencor in Palo Alto, Calif. “The development of genomics has given us tools that didn’t exist five years ago.”

Archer Daniels Midland (nyse: ADMnews people ) is building a factory in Clinton, Iowa that will annually crank out 50,000 tons of plastic naturally produced by corn-eating bacteria. Cargill’s NatureWorks division deploys bacteria to turn corn into a biodegradable plastic for water bottles, clothing and food packaging. In May DuPont (nyse: DDnews people ) and U.K. sugar company Tate & Lyle finished a $100 million factory in Loudon, Tenn. Its four fermentation towers, each nine stories high, use engineered bugs to turn corn glucose into a chemical building block used to make clothes and cosmetics. Carpets made with this new polymer accept dye more easily and resist stains better than carpets made with petrochemicals.

“Biology can make certain things better than traditional chemistry can,” says Charles Holliday, chief executive of DuPont, with $27 billion a year in sales. Holliday wants to derive 25% of revenue from nonfossil fuel sources by 2010, up from 17% today.

Most of the current market for plant-based chemicals and polymers lies in specialty chemicals used in soaps and detergents, says consulting firm Nexant in White Plains, N.Y. The U.S. Department of Energy wants to replace one-quarter of petrochemicals with bio-versions by 2030.

Henry Ford (nyse: Fnews people ), back in the 1930s, was one of the first to posit the use of soybeans as a source for plastics for his automobiles and fabric for his clothes. By the early 1940s, though, the easy availability and low cost of petroleum rendered veggie plastics unnecessary. Bioplastics look far more promising with oil at $70 a barrel. DuPont says its corn-derived chemical building block Bio-PDO, short for 1,3-propanediol, can compete with petrochemicals even when oil costs only $30 a barrel. Cargill says the unit cost for its bioplastic, PLA or polylactic acid, can more than match oil-derived PET, the stuff of two-liter soda bottles, when oil is as low as $40 a barrel. Early this year Cargill also began selling one of the first polyols made from vegetable oil. Polyols are a key ingredient in urethane foams, mattresses and cushions.

Bioplastics also erode harmlessly over time. In New Zealand Scion Research works to convert the waste stream from pulp and paper processing into a blend of microbial cell wall debris and plastic called polyhydroxyalkanoate, or PHA. Plant a PHA flower pot into the ground and and it biodegrades.

ADM’s factory in Clinton, Iowa will produce PHA for uses such as antiweed sheets for farmers to lay over their tilled fields. The sheets turn into water and carbon when the growing season ends. The Navy has asked about PHA forks that biodegrade in seawater. ADM’s new plastic, backed by 130 issued or pending patents, comes from tiny biotech Metabolix of Cambridge, Mass., formed by researchers at the Massachusetts Institute of Technology. They reengineered the pathways in an undisclosed microorganism to increase their ability to metabolize PHA.

ADM research chief Thomas Binder says Metabolix has “gotten the cost to where we can sell it competitively in the market,” although he won’t provide details. ADM can change the structure of the PHA polymer depending on what it feeds the bacteria: sucrose, vegetable oils or a petrochemical intermediate such as olefins. Its PHA thus could rival various plastics, including PET, polyethylene or polypropylene. “We’re moving toward higher value production than our basic line of business,” says Binder.

Getting the market to buy in is still a challenge. Cargill’s NatureWorks has a four-year-old factory in Blair, Neb. that can turn out 300 million pounds of PLA plastic each year, but it is said to run at only half that capacity. But volume doubled last year, and Wal-Mart (nyse: WMTnews people ) signed up as a customer in October.

Without a dose of biotech, DuPont’s new glucose-based Bio-PDO, a chemical intermediary that scientists had dreamed of for 40 years, still wouldn’t be ready. Using oil as the base, DuPont could make PDO for $10 a pound, but that was 20 times the cost of most commodity chemicals. Biotech and corn glucose offered a way out. In 1995 DuPont and Genencor began using sophisticated gene chips that let them study RNA activity inside the nucleus of E. coli bacteria. It was a daunting task. They had to figure out which of the nucleus’ 4,000 chemical reactions were tied to reproduction. If they could slow that down, the bacteria could devote more energy to pumping out pdo.

After seven years Genencor and DuPont scientists narrowed the relevant reactions to 80 and ended up genetically altering 20 of them and adding 10 new genes to enhance E. coli’s digestive productivity. Genencor scientists tested each batch of bugs in a room half the size of a football field filled with 30 14-liter steel fermentation tanks. They declared victory after producing a half-pound of Bio-PDO from one pound of glucose, a 500-fold gain in yield.

“This work is, frankly, without peer,” says John Pierce, a vice president at DuPont. He hopes a separate DuPont partnership with Diversa will find an economical way to make biofuel from agricultural waste. Using the stalk of the corn plant instead of the kernels could open up a limitless, renewable fuel supply.

Plastics So Green You Can Eat Them

These six materials are leading a new generation of bio-based chemicals made from agricultural crops and waste.

Click here to see the slideshow.

Source: Forbes


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