Biofuels Outlook Update


Invest in biofuels today. At least, 2 people think you should — Vinod Khosla of Khosla Ventures, and Dr. Jens Riese of McKinsey & Co. who gave keynote speeches at the World Congress on Industrial Biotechnology and Bioprocessing.

An article from TheAutoChannel discussed this in further detail, but I want to highlight some important points from the post:

In a speech titled “The Role of Venture Capital in Developing Cellulosic Ethanol,” Khosla outlined the range of technologies currently being commercialized to convert cellulosic biomass to transportation fuels. Khosla said that the U.S. Department of Energy’s recent grants to cooperatively fund biorefineries that produce ethanol from cellulose is an acknowledgment that the technology is moving faster than expected. He said that a 100 percent replacement of petroleum transportation fuels with biofuels is achievable, and predicted that ethanol from cellulose technology will be cost competitive with current ethanol production by 2009.

Dr. Jens Riese of McKinsey & Co. also addressed the World Congress plenary session with a speech titled “Beyond the Hype: Global Growth in the Biofuels Industry.” Riese predicted that global annual biofuel capacity would double to 25 billion gallons over the next five years and could reach 80 billion gallons – meeting 10 percent of world transportation fuel demand, enough to replace the annual oil production for fuel of Saudi Arabia – by 2020. According to McKinsey & Company’s model, biofuels can economically replace 25 percent of transportation fuel with crude oil above $50 per barrel. He concluded that the race is on to build a biofuels industry and that companies should invest now.

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Biofuel Investment Jumps 4000%


Dramatic increases in Venture Capital in the area of Biofuels was realized in 2006. I just caught wind of an article from the Associated Press, Biotechnology that highlights one of the largest one-year increases in venture-backed funding I have ever seen.

An interview at Associated Press with Ron Pernick, who co-founded Clean Edge (a company tracking venture capital investment), said that “Venture capital investment in biofuels has increased from less than $1 million in 2004 to $20.5 million in 2005 to $813 million last year [in 2006]. Much of that investment is flowing to biotechnology companies that genetically engineer microbes that produce enzymes needed to break down crops into alcohol.” If we’re cracking out the calculator, that’s about a 4000%, or 40x increase year-over-year! Now, it is extremely helpful to the venture investors, and the companies, that the US Department of Energy (DoE) has awarded $385 million over the last four years (to six companies, albeit) to develop ethanol.

Please see Biofuels Spark Biotech Rally for the full article.

Some other relevant links include: Biotechnology Industry Organization, and US DoE.

Are you investing an a Biofuel company yet? Maybe you should jump on that wagon before it leaves town…

Banking on Global Warming


Many variables are contributing to the warmth of the world, at at the same time a whole of set of opportunities are arising as a result of the global warming bug.

Opportunities lay in:

  • Biotechnology applications for coal plants to “scrub” emissions before they are released
  • Cleaner oil refinery processing, to emit less carbon dioxide from oil sands particularly in Alberta, Canada
  • Carbon sequestration technologies to capture and store carbon dioxide deep within the Earth (still to be determined if this is a good idea)
  • Real estate and community planning of areas that are either going to become habitable and a lucrative shipping/trading centers (such as Nunavut, Canada described in this article)
  • Places will become flooded as ocean levels rise and entire cities are going to find themselves under 20 feet of water – technologies may be needed in advanced insulation from water, dam building, or something I can’t even imagine right now.
  • Cleantech: as an increasing number of emission laws come into place, there will be an escalating need for cleaner technologies to develop energy efficiently. This is not a new concept, merely a reinforcement of the need. I recently found out that Sustainable Development Technology Canada (SDTC) now has a $550 million not-for-profit foundation that bridges the gap in the innovation chain by fast-tracking groundbreaking clean technologies through development and demonstration in preparation for commercialization. There is certainly incentive for some businesses to consider developing their technologies in Canada, or perhaps, in partnership with Canadian businesses and educational institutions. Interested? Leave me your email in a comment and I’ll put you in touch with some people here in Canada!

The retreat of glaciers and arctic ice sheets are going to open up new shipping routes, key ports and new economic centers. One such gateway community is discussed an interview with a writer from The Atlantic, Gregg Easterbrook. I have to credit Paul Kedrosky for introducing me to this piece from his blog “Paul Kedrosky’s Infectious Greed“. The interview is as follows:

Early in this article you ask, “If the world warms, who will win? Who will lose?” But even the winners in this equation would seem to face grave risks. The Inuit of Canada may come to own valuable ports, for instance, but their traditional ways of feeding themselves and making a living will be decimated as the animals they hunt disappear. I suspect many people will consider the question and answer, “We will all lose.”

No, I don’t think so. In economics we don’t find many zero sum games and I don’t think this is a zero sum game. I think a lot of people and nations will come out ahead. The Inuit–the little semi-nation of Nunavut–is going to become significantly more valuable in a warming world. Right now Nunavut’s a frozen wasteland. I would love to be the guy with the Nunavut promotion account twenty years from now because I’m going to rechristen the place “the gateway to the hemispheres” and invite celebrities, and cruise ships will be stopping by, and the sign on the dock will say, “Welcome to Nunavut, Gateway to the Hemispheres!” We’ll see all kinds of wild economic activity up there. There will be change, yes. The traditional way of life will fade and be replaced with something else, maybe something zany, but change seems an inevitability of human experience. Really no society on earth, maybe the ones in the Amazon basin are the only exception, has been able to insulate itself from change. We can’t insulate ourselves from it and I doubt the Inuit will ever be able to do that, either.

On Technorati:

Global Warming, Cleantech and Canada


The world is ranting about global warming, and it should be. There is a very real problem, and finally politicians are appearing to try to combat them. Is their rationale money, power, influence or an actual regard for the sustainability of Earth?

In recent news President Bush announced an Ethanol deal with Brazil, which will work to increase the development of ethanol; Brazil produces much of its ethanol from sugar cane. Also today, the European Union heads of state agreed on a long-term strategy on energy policy, which followed agreements made in February 2007, when they agreed to cut greenhouse emissions by 20% by 2020. In Canada, Prime Minister Stephen Harper says that Kyoto targets are unattainable, as the former Liberal government committed to a reduction of greenhouse gases to 6% below 1990 levels … Canada is currently 35% over that mark (Vancouver Sun). So … what is Canada going to do to address this issue? Maybe allocate an increase to the investments in startups that are focusing on environmental biotechnology or cleantech solutions? Wow, that sounds like a good idea!

There are currently a number of Canadian company developing cleantech technologies, but certainly not enough. Of those companies innovating that space, most are grossly underfunded as many don’t even have websites! As the Toronto Star tech reporter, Tyler Hamilton, mentions in his cleantech blog – Clean Break – Sustainable Development Technology Canada (SDTC) , a fund created to finance cleantech startups, invested only $43.4 million on 15 new projects in 2005. The Alberta government is currently experiencing massive surpluses in the order of billions, its about time to start financing cleantech and environmental biotech startups so that Canada can remain competitive in the energy, or “Clean Energy” space in the future. Getting an early foothold in the market just seems like a good idea to me …

Canadian technology happens to be some of the most innovative in the world, so says Len Brody, who’s keynote address I saw at the Canadian Venture Forum. Nice guy, I managed to get myself a signed copy of his book Innovation Nation: Canadian Leadership from Java to Jurassic Park. I haven’t had a chance to read it yet, but if your patriotic and want to find out a little more about Canadian business … maybe grab yourself a copy. In any case, if Canadian technology is so innovative, then INVEST IN IT. The lack of funding at the early stage, is crippling the growth and development of Canadian companies. CEOs are constantly chasing money, to stay cashflow positive and burn rates are minimized, which doesn’t allow these start-ups to effectively execute on their business plans.