Home' Technology Review : March April 2010 Contents TR
TECHNOLOGY REVIEW MARCH /APRIL
constructed inside the newly built Boa Vista sugar and ethanol
mill in Goiás. As part of the transaction, Amyris agreed to buy a
40 percent stake in the mill from its owner, Grupo São Martinho.
Its total payment, around $80 million in cash and stock, was the
highest price ever paid for milling capacity in Brazil, according to
São Martinho's president, Fábio Venturelli. Amyris wanted con-
trol over the construction of its first big plant, to make sure it goes
smoothly. But eventually the company plans to barter its technol-
ogy for access to sugarcane juice, a less expensive approach. The
idea is to have Brazil's sugar mills pay to retrofit their plants while
Amyris contributes its genetically modified yeast. Amyris would
then sell the farnesene and divide the profits with the mill.
Although the commercial terms may be complicated, the basic
pitch Amyris is making isn't: in an industry that in many ways is low
tech (more than half of Brazil's sugarcane is still hacked down by
machete-wielding day laborers), it promises to turn mills into futur-
istic biorefineries capable of turning out chemicals and fuels more
gene-sequencing pioneer J. Craig Venter, reached a $300 million
agreement with ExxonMobil last year to develop fuel-producing
algae. Yet Exxon's vice president for research and development,
Emil Jacobs, told the New York Times that he didn't want to "sugar-
coat" the project's chances. "For transportation fuels, if you can't
see whether you can scale a technology up, then you have to ques-
tion whether you need to be involved at all," he said.
The ability to make fuels in astonishing quantities isn't the only
thing needed for them to become a realistic option. They are also
commodities that are sold at rock-bottom prices. The petroleum
industry's product, liter for liter, is half the price of Coca-Cola.
Where were the main costs going to be in Amyris's production pro-
cess? If ethanol-industry averages held true, the sugar its yeast feed
on would represent over half the final price of making farnesane.
Those calculations were part of what led Melo to "plant the flag
firmly in Brazil," recalls investor Duyk. American corn, though
close at hand, would have been a poor bet. By 2007, booming U.S.
ethanol production had sent corn prices soaring so high that tens
of thousands of Mexicans demonstrated over the cost of tortillas.
When oil prices fell in 2008 and corn prices remained at record
levels, many U.S. ethanol makers could no longer make a profit.
Scale, cost, and competition with food supplies aren't the only
issues for biofuels. Amyris wanted to market its diesel as good for
the environment; its brochures claim that its "No Compromise"
fuels will release 80 percent less carbon dioxide into the atmo-
sphere than fossil fuels. Today, Brazilian sugarcane is the only
crop that can possibly back up Amyris's green marketing. Brazil-
ian studies say that sugarcane ethanol yields about 7 to 10 times
as much energy as it takes to produce the fuel; in contrast, ethanol
made from corn yields just slightly more than producing it con-
sumes. While the environmental impact of growing sugarcane
remains in dispute, it's clear that the process requires less energy
than cultivating corn. What's more, Brazil's biofuel producers are
more e cient than those in other countries, partly because many
Brazilian mills burn sugarcane waste to power their crushers and
distillers, reducing the use of fossil fuels.
As a market, Brazil may bring other advantages, too. The coun-
try's demand for diesel is high, so Amyris could build a respectable
business without ever exporting a drop. Brazil also has space to
increase production: sugarcane is now planted on about 3 per-
cent of Brazil's arable land, but the crop could expand onto more
than 100 million acres currently used for grazing cattle. "You could
probably quadruple and quintuple the cane production," says Bill
Haywood, the CEO of LS9 and a former oil company executive.
"That is poorly understood by the rest of the world. I think that
Brazil is going to be the birth of high-quality green diesel, just as
it was for ethanol."
In December, Amyris reached an agreement to build its first
farnesene plant, a 100-million-liter-per-year facility that will be
Take a tour of Amyris s plant outside Campinas, Brazil:
Links Archive January February 2010 May June 2010 Navigation Previous Page Next Page