Results tagged “biofactories”

The New Biofactories

By Rob Carlson on September 18, 2012 11:05 AM

The New Biofactories
Robert Carlson, 2009
For What's Next, a Special Edition of the McKinsey Quarterly

(PDF)

Humans have been modifying biological systems for our own economic benefit for millennia. Improvements in crop yields and overall farming productivity have come from a continuing alteration of the genetic makeup--through selection and breeding--of the plants and animals upon which we rely. Now we find ourselves at the dawn of a new age of direct genetic modification. While the term "artificial life form" conjures up images of cyborgs or other creations of science fiction, the first such "artificial" creatures will actually be single-celled microorganisms. Even though these human-engineered life forms will be extremely simple, they will have an enormous impact on our world. Their biggest potential: the creation of biofuels and biomaterials, which have the promise to transform our entire economy.

The first explicitly artificial organisms emerged from recombinant DNA technology in the mid-1970s; this technology was commercialized with lightning speed. As of 2006, biotech drugs accounted for about $65 billion in sales worldwide. Just one drug, Epogen, has generated $10 billion in revenues since its creation. A molecular biologist--particularly when receiving stock options in a biotech start-up--would have to conclude that life forms that become "artificial" simply by the addition of one gene can be quite commercially significant.

Revenues from genetically modified "stuff" now exceed 1 percent of US GDP and are generated in three areas: drugs, agriculture, and industrial products like enzymes and plastics. These areas are growing at 10 to 20 percent per year, and together they are making a sizeable and growing contribution to the economy.

The biotech sector is also extremely productive. Between 2000 and 2007, biotech revenues added more than $100 billion to the economy, representing 2.5 percent of US GDP growth. This was accomplished by a biotech workforce of only about 250,000 people, less than one-sixth of one percent of the national workforce.

Yet the underlying technology is immature compared with that in other sectors of the economy. The majority of biotech products that have reached the market are the result of just a handful of genetic modifications and insertions. The commercial significance of the biotech sector will grow as its ability to engineer new biological systems expands.

Until recently, the complexity of these systems was limited in large part by the cost of development. The labor required to build and test a complex genetic circuit was prohibitive. But since the mid-1990s, productivity in reading and writing genes has been improving exponentially, while costs have plunged. Now relatively large pieces of DNA can be designed electronically, sent to a gene "foundry," constructed, and returned via express mail in just a few weeks. It is already technically possible to build stretches of DNA as long as those of small bacterial genomes (about 400 genes).

However, this is not the fastest road to commercially significant organisms. This is because the simpler the engineering task is, the greater the near-term economic impact will be. For example, aeronautical engineers do not attempt to build new aircraft with the complexity of a hawk, a hummingbird, or even a moth. They instead succeed by reducing complexity. Even the simplest cell contains far more bells and whistles than we can presently understand. Consequently, no biological engineer will succeed in building a system from scratch until most of that complexity is whittled away, leaving only the bare essentials. Real progress will come by adding to existing organisms just a few new genes--probably no more than 15.

Companies are already making substantive progress. Amyris Biotechnologies has modified yeast to transform sugar into useful compounds, including malaria drugs and biofuels that can substitute for today's jet fuel, diesel, and gasoline. The company will begin production of these fuels next year in converted ethanol fermentation plants in Brazil.

As biotech technology develops, biofuels and bioplastics produced this way will be easier and cheaper to make than ethanol or traditional plastics and they will perform better than even petroleum-based products. Their manufacture and use will also reduce the carbon emissions that cause climate change.

Such artificial life forms will fundamentally change how we power the economy, bringing about a switch from fossil fuels to biological feedstocks like sugar, starch, and cellulose. Biomanufacturing is less likely to be centralized, like petroleum refineries and ethanol plants, and will instead be more evenly distributed, like beer breweries.

Cars themselves might actually become the producers of the very fuels they consume. In the spring of 2007, researchers reported the successful construction of a synthetic pathway consisting of 13 enzymes from different organisms that can turn starch into hydrogen. This suggests a future in which sugar or starch--substances available at any grocery store--will go into our fuel tanks instead of gasoline. A fuel cell will use the hydrogen produced by engineered microbes in the tank to provide electric power for the car. Such a car would then become something of a cyborg, relying on living organisms to provide power to an inorganic shell. As one oil executive observed at a recent oil industry meeting, in this model "the car is the refinery".

If this innovation comes to pass, a very different marketplace is likely to arise. The infrastructure for shipping and refining petroleum overseen by that self-same executive might become less relevant in a new biotech world. Moreover, if distributed biological processing of simple feedstocks can compete in low-margin markets like liquid transportation fuels, then it will also make significant inroads with higher-margin products like fibers, plastics, flavorings, and scents.

It will soon be possible to devise enzymes and organisms that "eat" a diverse array of feedstocks. One good example is municipal sewage. Now mostly treated and disposed of as waste, this resource will initially be used to grow unmodified algae. The algae will in turn be fed to synthetic systems--think of these as "artificial cows", a fusion of robot and biology that is beyond even the "cyborg" car--engineered to make materials and fuels. Eventually, the algae itself will be engineered to directly convert sewage into products. And inevitably, these artificial cows will move out into the fields, closer to large-volume agriculture. Modern harvesting equipment is already often driven by autonomous, satellite-guided control systems. Imagine robotic harvesters equipped with bioprocessing modules slowly wandering around farmland, consuming a variety of feedstocks, processing that material into higher-value products like fuels and plastics, and delivering it to distribution centers. These hybrid "cowborgs" would thereby become autonomous, distributed biomanufacturing platforms, engineered to supply us with the fuels and materials that we need.

Very few organisms on our planet are larger than about one meter across. Most of the biomass production, and therefore most of the biological processing, occurs at scales of microns to centimeters. While organisms produced by nature face different constraints than those designed by humans, we may find ever more inspiration in microbes, insects, and cows for our future production infrastructure. We have barely begun to tap the promise of biotech.

It is the End of the World as We Know it, and I feel Strangely Ambivalent: Synthetic Biology 5.0

By Rob Carlson on June 27, 2011 1:42 PM

Synthetic Biology 5.0 has come and gone. I expected, as in previous years, to be busy liveblogging amid the excitement. I tweeted some during the proceedings (here is Eric Ma's summary of #synbio5 tweets), but this is my first post about the meeting, and probably the last one. I mostly just listened, took a few notes, and was delighted to see the progress being made. I was not nearly as amped up about the proceedings as in previous years, and I am still trying to figure out why.

Here are a couple of reasons I have sorted out so far. It was the end of the beginning of synthetic biology. The meeting was full of science and engineering. And that's about all. There were a few VC's and other investors sniffing around, but not nearly so many as in previous years; those who did show up kept a lower profile. There were also fewer obvious government officials, no obvious spooks, no obvious law enforcement officers, nor any self-identified Weapons of Mass Destruction Coordinators. And I only encountered a couple of reporters, though there must have been more. I skipped 3.0 in Zurich, but at 1.0 at MIT, 2.0 at Berkeley (parts 1, 2, 3, 4, 5), and 4.0 in Hong Kong (part 1), there was much more buzz. Synthetic Biology 5.0 was much shorter on hype than prior gatherings.

There was substantially more data this year than previously. And there was substantially less modeling. All in all, Synthetic Biology is substantially more ... substantial. It was like a normal scientific meeting. About science. No stunts from "civil society" groups looking for their next fear bullet point for fundraising. No government officials proclaiming SB as the economic future of their city/state/country. Just science.

What a relief.

And that science was nothing to sneeze at. There were great talks for 3 days. Here are a couple of things that caught my eye.

Jef Boeke from Johns Hopkins presented his plans to build synthetic yeast chromosomes. I first heard this idea more than ten years ago from Ron Davis at Stanford, so it isn't brand new. I did notice, however, that Boeke having all his synthetic chromosomes made in China. Over the longer term this means China is getting a boost in building out future biomanufacturing platforms. If the project works, that is.

As tweeted, Jack Newman from Amyris gave an update on commercialization of artemisinin; it should be on the market by the end of the year, which should be in time to help avert an expected shortfall in production from wormwood. Fantastic.

Pam Silver and her various students and post-docs showed off a variety of interesting results. First, Faisal Aldaye showed in vivo DNA scaffolds used to channel metabolic reactions, resulting in substantial increases in yield. Second, Pam Silver showed the use of those scaffolds to generate twice as much sucrose from hacked cyanobacteria per unit of biomass as from sugar cane. If that result holds up, and if the various issues related to the cost of bioreactors used to culture photosynthetic organisms are worked out, then Pam's lab has just made an enormous step forward in bringing about distributed biological manufacturing.

This is the sort of advance that makes me feel more sanguine about the future of MIcrobrewing the Bioeconomy. It will take some years before the volume of Amyris' Biofene, or Gevo's bio-PET, or Blue Marble's bio-butyric acid begins to impact the oil industry. But it is clear to me now as never before that the petroleum industry is vulnerable from the top of the barrel -- the high value, low volume compounds that are used to build the world around us in the form of petrochemicals. Biology can now be used to make all those compounds, too, directly from sugar, cellulose, and sunlight, without the tens of billions of dollars in capital required to run an oil company (see The New Biofactories).

So SB 5.0 was the end of the world as we know it. Synthetic biology is now just another field of human endeavor, thankfully producing results and also thankfully suffering reduced hype. I can see how the pieces are starting to fit together to provide for sustainable manufacturing and energy production, though it will be some years before biological technologies are used this way at scale. Perhaps this is less in-your-face exciting for the attendees, the press, and the public, and that may be part of the reason for my ambivalence. I fell asleep several times during the proceedings, which has never happened to me at SB X.0, even when overseas and jetlagged. I have never before thought of achieving boredom as constituting progress.

An Engineered Bug that Produces Isobutanol from Cellulose

By Rob Carlson on March 9, 2011 9:41 AM

This morning, Tom Murray at The Hastings Center pointed me to a new paper from James Liao's lab at UCLA demonstrating the first engineered bug that produces isobutanol from cellulose. Wendy Higashide, et al, ported the artificial butanol synthesis pathway from the group's earlier work in E. coli (see this previous post) into Clostridium cellulolyticum. Here is the article.

Recall that butanol is a much better biofuel than is ethanol. Butanol is also not hygoscopic (doesn't suck up water), which means it can be blended at any point in the distribution chain, whereas ethanol must be trucked/barged/piped in dedicated infrastructure until just upstream of a gas station in order to avoid pulling contaminating water into the fuel stream. Butanol has a long history of use as a transportation fuel, and has been demonstrated to be a drop in replacement for gasoline in existing engines. See, for example, the work of the 2007 iGEM team from Alberta, and my earlier post "A Step Toward Distributed Biofuel Production?" One advantage of making butanol instead of ethanol is that butanol spontaneously phase separates from water (i.e., it floats to the top of the tank) at concentrations above about 7.5% by volume, which substantially reduces the energy required to separate the molecule for use as a fuel.

The press release accompanying the Higashide paper describes the work as a "proof of concept". The team attempted to insert the butanol synthesis pathway into a Clostridum strain isolated from decaying grass -- a strain that naturally consumes cellulose. Unfortunately, this Clostridium strain is not as well characterized as your average lab strain of coli, nor does it have anywhere near the same number of bells, knobs, and whistles for controlling the inserted metabolic genes. The short summary of the paper is that the team managed to produce 660 mg of butanol per liter of culture. This is only about 0.07% by volume, or ~100 times below the concentration at which butanol phase separates from water. The team lays out a number of potential routes to improving this yield, including better characterization of the host organism, or simply moving to a better characterized organism.

So, a nice proof of principle. This is exactly the sort of technological transformation I discuss in my book. But this proof of concept is not anywhere near being economically useful or viable. Nonetheless, this progress demonstrates the opportunities ahead in relying on biology for more of our industrial production.

Presidential Commission for the Study of Bioethical Issues (Updated, and errata)

By Rob Carlson on July 8, 2010 11:08 AM

Here are the annotated slides (PDF) from my presentation this morning to the Presidential Commission for the Study of Bioethical Issues. (Update -- A word to the wise; a "crore" is an Indian unit indicating 10,000,000. We had an errant extra zero in our database, and I have now fixed the Indian biotech GDP number to reflect the correction.)

Now sitting in the audience, I've just heard Jim Thomas of ETC once again egregiously distort the Keasling-Amyris-malaria-artemisinin story. As usual he is quite well-spoken and reasonable sounding, and uses rhetoric well to his ends.

It may be true, as Thomas asserts, that switching artemisinin production to fermentation will harm the economic livelihood of "a few thousand" (his words) farmers in China and Africa. But he has left out of his calculation the 40% of the world's population that is at risk of malaria every year. He has left out the millions of children who die annually from malaria.

Quoting from my book (pg.98 -- I've left out the references as I am liveblogging from the meeting):

The cost burden of the disease on individual families is highly regressive. The average cost per household for treating malaria may be in the range of only 3-7 percent of income, but total and indirect costs to poor households can amount to one-third of annual income. The disease also disproportionately affects the young. Approximately 90percent of those who are killed by the parasite are African children under the age of ﬁve; according to the World Health Organization (WHO), a child dies from malaria roughly every thirty seconds.

In addition to staggering personal costs, the disease harms whole societies by severely inhibiting economic development. In affected countries, malaria reduces GDP growth by about 1.3 percent per year. These countries, moreover, contain about 40percent of the world's population. Over the past forty years, the growth penalty has created a difference in GDP that substantially exceeds the billions in annual foreign aid they receive. In 2000 the World Health Organization estimated that eliminating this growth penalty in 1965 would have resulted in "up to $100 billion added to sub-Saharan Africa's [2000] GDP of $300 billion. This extra $100 billion would be, by comparison, nearly ﬁve times greater than all development aid provided to Africa [in 1999]."

Because there was no technical means to eliminate the parasite in the middle of the twentieth century, this is clearly a number calculated to impress or shock, but the point is that the growth penalty continues to balloon. As of 2008, the GDPs of countries in sub-Saharan Africa would be approximately 35 percent higher than they are today had malaria been eliminated in 1965. The World Health Organization reckons that malaria-free countries have a per capita GDP on average three times larger than malarious countries. The productivity of farmers in malarious countries is cut by as much as 50 percent because of workdays lost to the disease. The impact of producing an effective and inexpensive antimalarial drug would therefore be profound.

Improving access to other technologies, such as bed nets treated with insecticides, would also be of substantial aid in reducing the rate of infection. Yet infected victims will still need access to cures. Prevention might be found in a vaccine, which the Gates Foundation also funds. However, even the most promising malaria vaccine candidates are only partially effective and cost even more than artemisinin. Microbial production of artemisinin would completely change the impact of malaria on billions of people worldwide. Artemisinin is presently derived from the wormwood tree and has been used as an herbal remedy for at least two thousand years. Its antimalarial activity was ﬁrst described by Chinese scientists in 1971. The existence of the drug and its physiochemical properties were announced to the world in 1979, although its precise molecular mechanism of action is still not understood. A method for chemical synthesis was published in 1983, but it remains "long, arduous, and economically nonviable."

Because natural artemisinin is an agricultural product, it competes for arable land with food crops, is subject to seasonal variations in supply, and its production costs are in part determined by the costs of fertilizer and fuel. As a result of the work of Keasling and his collaborators, it appears that, within just a few years, biological technology may provide a more-ﬂexible and less-expensive supply of drugs than now exists. Commercial production of artemisinin should commence in 2010, with a continuous annual production sufﬁcient to treat the 500million malaria cases per year.

So, Mr. Thomas, what about all the people who will benefit from inexpensive malaria drugs? It is, frankly, unconscionable and indefensible for you to continue beating this drum as you do. The human cost of not producing inexpensive artemisinin in vats is astronomical. If reducing the burden of malaria around the world on almost 2 billion people might harm "a few thousand" farmers, then we should make sure those farmers can make a living growing some other crop. We can solve both problems. Your ideological opposition to synthetic biology is is blinding you to the opportunities, and your version of reality would ignore the health and welfare of children around the world.

How's that for rhetoric?

Update: One other thought. Just one year of 1.3% GDP growth recovered by reducing (eliminating?) the impact of malaria would more than offset paying wormwood farmers to grow something else. There is really no argument to do anything else.

For a "Civil Society" organization, ETC is being decidedly uncivil on this issue.

Yummy, Corrosive Biodiesel

By Rob Carlson on June 8, 2010 10:37 AM

Yummy for microbes, that is. Who turn the methyl esters in biodiesel -- with some intermediate steps -- into hydrogen sulfide that corrodes carbon steel.

This according to a paper last month in Energy & Fuels, Aktas et al explore "Anaerobic Metabolism of Biodiesel and Its Impact on Metal Corrosion". The authors observe that "Despite the global acceptance of biodiesel, the impact of integrating this alternate fuel with the existing infrastructure has not been fully explored."

Here is a paragraph from the paper, full of interesting tidbits:

The chemical stability characteristics of biodiesel are well-documented,(3, 4) but the susceptibility of this fuel to biodegradation is not well-known. Biodiesel methyl esters are sparingly soluble in seawater, with a saturation concentration of 7 ppm at 17 °C.(5) Several studies showed that aerobic microorganisms readily degrade biodiesel.(6-8) The half-life for the biodegradation of the vegetable methyl esters in agitated San Francisco Bay water was less than 4 days at 17 °C.(9) However, anaerobic conditions prevail whenever heterotrophic microbial respiration consumes oxygen at a rate that exceeds diffusion. This is typically the case in subsurface environments, including oil reservoirs,(10-12) oil-contaminated habitats,(13) refineries, storage vessels, pipelines, oil−water separators, and ballast tanks.

In particular, it is interesting that biodiesel spills might be metabolized by bugs in the environment at a much greater rate than petrodiesel. Next, it is interesting that our steel infrastructure might be susceptible to more rapid degradation with the inclusion of bio-products. Plastics, anyone?

The paper concludes:

Our studies suggest that biodiesel can be quite easily hydrolyzed and converted to a variety of fatty acid intermediates by anaerobic microorganisms, regardless of their previous hydrocarbon- or biodiesel-exposure history. The acidic nature of these intermediates accelerates the pitting corrosion process of the most common metal alloy used throughout the fuel infrastructure.(39) The corrosion of pipelines, tanks, storage units, and associated equipment increases the risk of the release of hazardous materials to the environment, with concomitant pollution issues. With the widespread use of biodiesel as an additive to fuel supplies, it is at least prudent to consider how best to avoid the negative consequences associated with the microbial metabolism of these labile fuel components.

Something to watch, obviously.

Micro-Brewing the Bioeconomy: Beer as an Example of Distributed Biological Manufacturing (Updated, and again)

By Rob Carlson on March 3, 2010 12:37 PM

(Updated yet again, 19 June, 2011: Here is a technical report from Biodesic based on the post below (PDF). "Microbrewing the Bioeconomy: Innovation and Changing Scale in Industrial Production")

(I used this data as part of my report on the bioeconomy and biosecurity for the Biodefense Net Assessment: Causes and Consequences of Bioeconomic Proliferation.)

Ah, beer. The necessary lubricant of science. Always the unacknowledged collaborator in the Nobel Prize. Whether critical to the formulation of quantum mechanics in the pubs of Copenhagen, smoothing the way to the discovery of the double-helix in Cambridge, or helping celebrate an iGEM victory in that other Cambridge (congratulations again, almost-Dr. Brown and team), beer is always there.

And now it is helping me think about the future of biological manufacturing. Not just by drinking it, though I can't say it hurts. Yet.

Anyway, the rise of craft brewing in the US is an interesting test case, and a proof of principle, of distributed biological manufacturing successfully emerging in a market dominated by large scale industrial production. To wit, Figure 1:

Figure 1. The number of US large and small breweries over the last century. The (official) count was forced to zero during Prohibition. (Click on image for full-size.)

A Short, Oversimplified History of Craft Brewing

Before Prohibition, the vast majority of beer produced in the US was brewed by relatively small operations and distributed locally. There was no refrigeration, nor were there highways and trucks, so beer had to drunk rather than produced and stored in large quantities (modulo some small amount of storage in basements, caves, etc.). Moreover, the official count of breweries went to zero during the years 1920-1933. After Prohibition, brewing was regulated and small scale producers were basically shut out of the market.

With the aid of refrigeration and transportation, large scale breweries took off. Consolidation took its toll -- beer is pretty close to a commodity, after all -- and the number of breweries in the US shrank until about 1980. In 1979, Jimmy Carter signed legislation reopening the market to small brewers. This is an interesting and crucial point, because as far as I can tell nothing else substantive changed about the market. (OK, so it was more complicated than this -- see updates below.) Deregulation reopened the market to craft brewers and the industry blossomed through organic growth and the preferences of consumers (more on this in the Update below). (Conclusion: Emerging small scale, distributed production can compete against an installed large scale infrastructure base.)

(Update 18 Aug 2010) There seems to be some upset out in blogland about the idea that Carter deregulated craft brewing. See the first comment to this post. I don't think it changes my story about biological manufacturing at all, but for the sake of clarity, here is this: On February 1, 1979, President Carter signed the Cranston Act, which allowed a single adult household to brew up to 100 gallons of beer per year. A household with two adults could brew up to 200 gallons per year. For more, see here, or this nice 2009 article from Reason Magazine by Greg Beato, "Draft Dodgers: For DIY brewers, Prohibition lasted until 1978. But once unleashed, they revolutionized the industry." From Beato's article: "After Prohibition ended, the Federal Alcohol Administration Act of 1935 laid out a new set of liquor laws. Home winemaking for family use was granted a tax exemption; home brewing was not. If you were making any amount of beer, you had to obtain a permit and comply with a long list of regulations." Prior to the Cranston Act, brewing beer at home, or in small volumes anywhere, was hard to do because of federal regulations. After the Cranston Act, people could concoct all kinds of interesting liquids at home. So it sounds to me like Carter deregulated craft brewing.

(re-Update 19 August, 2010: Tom Hilton, at If I Ran the Zoo, makes some nice points here. Namely, he observes that there were additional changes at the state level that legalized brewpubs. Note that not all craft brewers are brewpubs, and this distinction appears to be glossed over in much of the criticism of this post. Anyway, it is pretty clear that reality was more complicated than the summary I gave above. No surprise there, though, as the heading of the section contains the word "oversimplified"...)

Better yet as a reference is a peer-reviewed article by Victor Tremblay and colleagues entitled "The Dynamics of Industry Concentration for U.S. Micro and Macro Brewers." (Link. Review of Industrial Organization (2005) 26:307-324) Here is their description of what happened in 1979 (the original text contains an obvious typo that I have corrected in brackets):

Changes in government policy also beneﬁted micro brewers. First, the legalization of home brewing in February of [1979] stimulated entry, since most early micro brewers began as home brewers. Second, states began lifting prohibitions against brewpubs in the early 1980s. Brewpubs were legal in only six states in 1984; Mississippi was the last state to legalize brewpubs in 1999. Third, the government granted a tax break to smaller brewers in February 1977. According to the new law, brewers with annual sales of less than 2 million barrels paid a federal excise tax rate of $7.00 per barrel on the ﬁrst 60,000 barrels sold and $9.00 per barrel on additional sales. Brewers with more than 2 million barrels in sales paid an excise tax rate of $9.00 on every barrel sold. In 1991, the tax rate rose to $18 per barrel, but brewers with annual sales of less than 2 million barrels continued to pay only $7.00 per barrel on the ﬁrst 60,000 barrels sold annually. This beneﬁted the specialty sector, as all micro breweries and brewpubs have annual sales of less than 60,000 barrels and all of the larger specialty brewers have annual sales of less than 2 million barrels.

So a combination of changes to federal regulations and federal excise taxes enabled small players to enter a market they had previously been prohibited from. That home brewing had been almost non-existent prior to 1979 points to another interesting feature of the market, namely that the skill base for brewing was quite limited. Thus another effect of legalizing home brewing was that people could practice and build up their skills; they could try out new recipes and explore new business models. And then, wham, in just a few years many thousands of people were participating in a market that had previously been dominated by large corporate players.

(end Update)

The definition of a "craft" brewer varies a bit across the various interested organizations. According to the Brewers Association, "An American Craft Brewer is small, independent, and traditional." Small means less than 2 million barrels a year (at 26 Imperial gal or ~~30.6~~ 31 standard gal per barrel); independent means less than 25% owned by a non-craft brewer; traditional means either an all malt flagship beer or 50% of total volume in malt beer. There is a profusion of other requirements to qualify as a craft brewer, some of which depend on jurisdiction, and which are important for such practical concerns as calculating excise tax. Wikipedia puts the barrier for a craft brewer at less than 15,000 barrels a year. According to the Brewers Association, as of the middle of 2009 there are about 1500 craft brewers in the US, and about 20 large brewers, and about 20 "others", with brewpubs accounting for about 2/3 of the craft brewers.

Show Me the Hops. Or Wheat. Or Honey (if you must).

Brewpubs and microbreweries are so common that the majority of Americans live within 10 miles of a craft brewer, and it is a good bet that there is one quite close to where you live. The Beer Mapping Project can help you verify this fact. Please conduct your field research on foot.

Beer generates retail revenues of about $100 billion in the US (brewery revenues are probably less than half that), contributing combined direct and indirect jobs of about 1.9 million. But craft brewers account for only a small fraction of the total volume of beer brewed in the US. According to the Beer Institute's "Craft Brewers Conference Statistical Update - April 2007" (PPT), three brewers now supply 50% of the world's market and 80% of the US market. See Figure 2, below. The Brewer's Association clarifies that only 5% of the volume of beer brewed in the US is from craft brewers, who manage to pull down a disproportionate 9% of revenues. (Conclusion: Small scale producers can command a premium in a commodity marketplace.)

Figure 2. US beer market share. (Click on image for full-size.)

Here is an interesting question to which I do not have an answer: how much beer brewed by large producers is actually bottled and distributed locally? "Lot's of beer", where I don't have any real idea of what "lot's" means, is produced via contract brewing. It may be that "large scale production" is therefore not as centralized as it looks, but is rather the result of branding. This makes some sense if you think about the cost of transportation. As beer (regardless of its source) is mostly water, you are paying to ship something around that is usually plentiful at the destination. It makes a lot of sense to manufacture locally. But, as I say, I have yet to sort out the numbers.

Brewing as an Example of Distributed Biological Manufacturing

All of the above makes brewing an interesting test case for thinking about distributed biological production. Craft brewers buy feedstocks like everybody else, pay for bottles and probably for bottling services, and ship their product just like everybody else. They may be much smaller on average than Anheuser Busch, but they survive and by definition make enough money to keep their owners and employees happy. And they keep their customers happy. And their thirsts quenched.

Above, I identified two important conclusions about the craft brewing market relevant to this story: 1) Craft brewing emerged in the US amidst an already established large scale, industrial infrastructure for producing and distributing beer. 2) Small scale, distributed production can command a premium at the cash register.

As we look forward to future growth in the bioeconomy, more industrial production will be replaced by biofactories, or perhaps "industrial biorefineries", whatever those are supposed to be. Recall that the genetically modified domestic product (GMDP) now contributes about 2% of total US GDP, with the largest share for industrial products.

This story becomes particularly relevant for companies like Blue Marble, which is already producing high value, drop-in replacements for petrochemicals using biological systems. (Full disclosure: Blue Mable and Biodesic are collaborating on several projects.) As feedstocks, Blue Marble uses local waste agricultural products, macro- and micro-algae, sewage, and -- wait for it -- spent grains from the microbrewery next door. (How's that for closing the loop?) Products include various solvents, flavorings, and scents.

The craft brewing story tells us that consumers are quite willing to pay a premium for locally produced, high quality products, even before they learn -- in the case of Blue Marble -- that the product is organic and petroleum-free. It also tells us that small scale production can emerge even amidst an existing large industry.

Can Blue Mable and other companies compete against enormous, established chemical and petroleum companies? In my experience, the guys (and they are nearly universally guys) at the top of the oil industry don't even get this question. "It is all about steel in the ground", they say. In other words, they are competing based on the massive scale of their capital investments and the massive scale of their operations and they don't think anybody can touch them.

But here is the thing -- Blue Marble and similar companies are going to be producing at whatever scale makes sense. Buildings, neighborhoods, cities, whatever. Any technology that is based on cow digestion doesn't have to be any bigger than a cow. Need more production? Add more cows. This costs rather less than adding another supertanker or another refinery. Blue Marble just doesn't require massive infrastructure, in large part because they don't require petroleum as a feedstock and are not dependent on high temperatures for processing. Most of the time, Blue Marble can do their processing in plastic jugs sitting on the floor, and stainless steel only comes into the picture for food-grade production lines. This means capital costs are much, much lower. This is a point of departure for biomanufacturing when compared to brewing.

(Update: Perusing old posts, I discovered I did a decent job last year of putting this scale argument in the context of both computers and the oil industry, here.)

Beer is close to a commodity product, and it is the small scale producers who get a better price, even though their costs will be roughly the same as large scale producers. Blue Marble generally has substantially higher margins than petrochemical producers -- and by focusing on the high margin portion of the petroleum barrel they are going to be stealing the cream away from much larger companies -- but Blue Marble's costs are much lower. What is the financial situation of a large petrochemical company going to look like when they lose the market for esters, which can have margins of many hundreds of dollars per liter, and are left with margins on products closer to gas and diesel at dollars per liter? This is a different sort of play than you would see in brewing.

Now, I am not guaranteeing that distributed biological production will win in all cases. Large beer brewers clearly still dominate their market. It may be that biological manufacturing will look like the current beer industry; a few large players producing large volumes, and a large number of small players producing much less but at higher margins. But craft brewing is nonetheless an existence proof that small scale, distributed production can emerge and thrive even amidst established large scale competition. And biological manufacturing is sufficiently different from anything else we have experience with that the present market size of craft brewing may not be that relevant to other products.

"The New Biofactories"

By Rob Carlson on March 17, 2009 10:18 AM

(Update: McKinsey seems to have pulled the whole issue from the web, which is too bad because there was a lot of good stuff in it. The text of my contribution can be found below.)

I have a short essay in a special edition of the McKinsey Quarterly, What Matters. My piece is waaaay back at the end of the printed volume, and all the preceding articles are well worth a look. Other essayists include Steven Chu, Hal Varian, Nicholas Stern, Kim Stanley Robinson, Yochai Benkler, Vinod Khosla, Arianna Huffington, Joseph Nye, and many more. Good company.

Here is the essay: "The New Biofactories" (PDF), Robert Carlson, What Matters, McKinsey & Company, 2009.

Carl Zimmer on Synthetic Biology for Biofuels

By Rob Carlson on January 8, 2009 12:10 PM

Carl Zimmer has a nice piece in Yale Enivronment360 on continued efforts to build bugs that produce fuel, "The High-Tech Search For A Cleaner Biofuel Alternative". The article extensively quotes Steve Aldrich, President of Bio-era, on the trade-offs of using sugar cane as a source material.

Craig Venter makes an appearance arguing that the best long-term bet is to build photosynthetic bugs that use atomspheric CO2 to directly produce fuel. Maybe. This would require containment facilities for culturing engineered bugs, where those facilities also must capture sunlight and CO2 to feed the bugs. The costs for this infrastructure are not insignificant, and this is exactly what is presently standing in the way of large scale algal biodiesel production.

Here is the question I keep asking in these circles: why not just grow naturally occurring algae, which can be grown at extremely high yield in a wide variety of conditions, as food for bugs hacked to eat cellulose? If there is no algae to be had, just throw in another source of cellulose or other biomass. There would be minimal concern over growing modified organisms that might escape into the wild. The processing of biomass into fuel under would also be under conditions that are easier to optimize and control.

I'm not suggesting this is the only answer, but rather that it appears to balance 1) the costs of infrastructure, 2) concerns over enviromental release of genetically modified organisms, and 3) provide an efficient processing infrastructure that could use a wide variety of feedstocks.

Amyris Opens Biodiesel Pilot Plant

By Rob Carlson on November 12, 2008 1:37 PM

Amyris appears to be making good progress towards meeting their goal of getting biofuels to market by 2010. They just opened their first pilot plant in California, with the aim of importing fuel into the US from Brazil within two years. The output of the pilot plant will be used to gain EPA certification. The announcement pretty well tracks with my previous posts about biofuels.

Here are a few graphs from the press release:

Amyris' diesel is characterized as a No Compromise™ fuel because it is designed to be a scalable, low‐cost renewable fuel with performance attributes that equal or exceed those of petroleum‐sourced fuels and currently available biofuels. Other attributes include:

Superior environmental performance: Preliminary analyses show that Amyris diesel fuel has virtually no sulfur and significantly reduced NOx, particulate, carbon monoxide and hydrocarbon exhaust emissions relative to petroleum‐sourced diesel fuel.
High blending rates: Because Amyris renewable diesel contains many of the properties of petroleum diesel, Amyris can blend the fuel at high levels ‐‐ up to 50 pecent ‐‐ compared with 10‐20 percent for conventional biodiesel and ethanol.
Compatibility with existing infrastructure: Unlike many commercially available biofuels, Amyris expects to distribute its renewable diesel through the existing fuel distribution and storage infrastructure, thus speeding time to market while minimizing costs.
Adaptive: Amyris can produce its fuels from a broad range of feedstock including sugarcane and cellulosic biomass. It is starting with Brazilian sugar cane because it provides the most environmentally sound, economical, and scalable source of energy available today.

"This new diesel fuel has all the characteristics to make an important contribution toward solving our global transportation energy and climate crisis," said John Melo, chief executive officer of Amyris. "The opening of our pilot plant is a significant business marker for us, taking us one step closer to bringing our diesel fuel to market."

Craig Rubens at earth2tech provides interesting coverage, and his story notes:

Melo described the company's business model as "a capital-light model to scale up fast." The company plans to partner with existing ethanol plants and convert a portion of those partners' production capacity to make diesel and other chemicals using Amyris IP. The startup will then buy the products back from the refiner and take them to market, Melo said. The startup has already formed a joint venture with Santelisa Vale, Brazil's second largest sugar grower, called Crystalsev, which aims to produce 200 million gallons of fuel a year by 2011 at several of its existing ethanol plants at a price of less than $2 a gallon.

The Brazilian partnership, Melo explained, gives Amyris access to ports and ships to export the fuel. Amyris plans to import it to the U.S. and sell its to large customers, like Wal-Mart and the U.S. government. Foreign ethanol is hit with a 54-cent-per-gallon tariff as it comes into the U.S., but Amyris would be importing hydrocarbons, not ethanol, and therefore avoid the tariff. Amyris is already marketing other companies' biofuels in the Southeast to make sure its distribution channels will work.

To date, Amyris' strategy hasn't seamed particularly "capital light." The company has raised more than $120 million in capital (see previous coverage here and here) from heavy-hitting cleantech and biotech investors, including Kleiner Perkins, Khosla Ventures, TPG Biotech and DAG Ventures.

I understand the present need for scale, both physical and financial, and earth2tech's skepticism seems a bit naive. Amyris is facing enormous competition, both from established petroleum companies and from other start-ups. As I would not expect any of these companies to have a firm lock on IP surrounding biological production of fuels, Amyris must establish itself and its brand quickly and rely on first-mover advantage. (I wonder how thoroughly they are scrubbing the waste stream? Dumpster diving for competitive intelligence takes on a new meaning here.) Shell is dropping seven billion on upgrading a single refinery in Texas. Amyris seems pretty light in comparison.

Writing at Cleantech, Emma Ritch provides an excellent tidbit: "The company has shelved its plans for a bio-gasoline". "We're focused on the products with the highest value," Melo said. "We're not investing our resources in developing a bio-gasoline because we see the U.S. as the last gasoline-based economy." That is particularly fascinating, as Melo is the former President of BP Fuels. It is also a change since I heard Zach Serber speak at SB 4.0 last month in Hong Kong. The fluctuating price of oil may be important here.

Unfortunately, Ritch mischaracterises the competitive landscape a bit: "Amyris plans to use the cheapest nonfood feedstock available, which for now means sugarcane... The company could also use algae for its biodiesel--much like Solazyme, LiveFuels, GreenFuel Technologies and many others." In contrast to Amyris, the latter three companies are directly producting fuel in algae, with Solazyme feeding sugar to bugs in the dark and completely skipping photosynthesis. (Hmm...I wonder what sort of selection pressure that is putting on their algae strains?) If Amyris does use algae -- sorry, when Amyris starts using algae -- the company will almost certainly be using it as a feedstock fed to microbes that then produce fuels. This would require building a front-end process onto their yeast production system, but I don't see that as taking very long to happen. See my earlier post on Blue Marble Energy.

Things are moving forward. I would note that I see a lot of stainless steel in the photos of Aymris' pilot plant. I am no fermentation jock, but it seems that they could probably use solvent resistent plastic as their culture vessels. Here is one home-brew kit that basically just consists of plastic buckets. Maybe that is a step for later.

Congratulations to everyone at Amyris. Keep up the good work.

Company Profile: Blue Marble Energy

By Rob Carlson on October 6, 2008 12:35 PM

A couple of months ago I met the founders of Blue Marble Energy at a party for the Apollo Alliance. Following up, I sat down with the CEO, Kelly Ogilvie, to learn about Blue Marble, which is the only "algal biofuel" company I have come across that really makes sense to me. (While at the party, I also chatted with Congressman Jay Inslee for quite a while. Smart fellow. Anyone interested in energy policy should have a look at his book, Apollo's Fire: Igniting America's Clean Energy Economy.)

Full disclosure: Blue Marble and Biodesic may begin collaborating soon, so I am not an entirely disinterested observer.

Blue Marble Energy is built around the idea of "recombining" existing biological processes to turn biomass into valuable products. From the website: "[Blue Marble Energy] uses anaerobic digestion to generate natural gas and other valuable bio-chemical streams." The company is distinguished from its competitors by its focus on using micro- and macro-algae harvested from natural blooms, including those caused or enhanced by human activity, as feedstock for artificial digestion systems modeled on those of ruminants. Blue Marble combines different sets of microbes in a series of bioreactors to produce particular products.

In other words, Blue Marble is using industrialized, artificial cow stomachs to produce fuel and industrial products.

The company's general strategy is to first digest cellulose into synthesis gas (carbon dioxide and hydrogen) using one set of organisms, and then feed the synthesis gas to organisms that generate methane or higher margin chemicals and solvents. The company expects to produce 200-300 cubic meters of methane per wet ton of algal feedstock. While biofuels are an obvious target for technology like this, the company also recognizes that fuels are a low margin commodity business. Thus Blue Marble also plans to produce higher margin industrial products, including solvents such as various esters that sell for $400-800 per gallon.

While other companies are attempting to directly produce fuels from cultured algae, Blue Marble believes these efforts will be hampered by growth limitations in most circumstances. Biofuel production from algal lipids synthesized during photosynthetic growth requires conditions that cause metabolic stress, resulting in lipid production, but that also limit total biomass yield to ~2-5 grams per liter. In contrast, Blue Marble "respects the complex ecology", in the words of Mr. Ogilvie, and relies on photoheterotrophic growth of whatever happens to grow in open water.

Blue Marble has already obtained contracts to clean up algal growth caused by human activity around Puget Sound. The company typically harvests ~100 grams per liter from these "natural" algal blooms. Future plans include expanding these clean up operations around the U.S. and overseas, and growing algae in wastewater, which would provide a high-energy resource base for both closed and open system growth. In principle, because the technology is modeled on ruminant digestion, many different sources of biomass should be usable as feedstock. Experience thus far indicates that feedstocks with higher cellulose content result in higher yield production of fuels and solvents.

Compared with other algal biofuel companies, Blue Marble does not presently require high capital physical infrastructure for growing algae. However, the company will rely on marine harvesting operations, which bring along a different set of complexities and costs. I wonder if the company might be best served if it outsourced harvesting activities and focused on the core technology of turning biomass into higher value products.

While the Blue Marble is not now genetically modifying their production organisms, this will likely prove a beneficial move in the long term. Tailoring both the production ecosystem and the metabolisms of component organisms will certainly be a goal of competitors, as is already the case with companies spanning a wide range of developmental stages, including DuPont, Amyris, and Synthetic Genomics. Yet whereas modified production organisms grown in closed vats are likely to face little opposition on any front, genetically modified feedstocks grown in open waters are another matter. For the time being, Blue Marble has an advantage over plant genomics companies because in the company's plans to use unmodified biomass as feedstock, whether algae or grasses, it will avoid many regulatory and market risks facing companies that hope to grow genetically modified feedstocks in large volumes.

They have a long way to go, but in my judgement Blue Marble appears to have a better grasp than most on the economic and technical challenges of using algae as feedstock for fuels and materials.