Lux Research releases report on cost reductions of bio-based materials and chemicals

Lux Research recently released a report entitled “Pruning the Cost of Bio-Based Materials and Chemicals.” According to Mark Bünger, Research Director and the lead author of the report, Lux Research analysts focused on various factors including cost drivers in gasification, enzymatic hydrolysis of cellulosics, as well as algae cultivation to determine opportunities where new technologies can turn them to profit. These are among their findings:

• Algae are a cost-intensive loser. In Lux Research’s model, algae cultivation yielded a 48% loss, which called into question its long-term prospects. The high capital costs for growing algae at industrial scale are the biggest problem because costs could amount to as much as US$202,000 per hectare.
• Syngas fermentation presents a great new product potential because of the many by-products that can be derived from the process. This was proven at lab, and larger scale; the possible by products include ethanol, butanol, acetic acid, butyric acid, 2,3-butanediol and methane. Among the leading start-ups in this area are ZeaChem, which is collaborating with Procter & Gamble, and LanzaTech.
• Cellulosic biomass presents possibilities, but costs need to fall. Although enzymatic hydrolysis is now being commercialized at new facilities like GraalBio’s plant in Brazil, using the latest enzymes from Novozymes and DSM, many parts of the process have to be improved. One of the areas that need improvement is harvesting or collecting biomass, which presents an additional cost of US$15 per ton or US$0.21 per gallon.

Mark Bünger and the Lux Research analysts concluded that there is a need for the bio-based materials; the chemicals industry new to tap newer, non-food sources of biomass and cellulosic material. In addition, volumes of feedstock should be raised before it can emerge as an economically viable alternative to petroleum-based products. At present, the high cost of capital and operations limit bio-based materials and chemicals to a few locations where corn and cane are plentiful and cheap. (July 31, 2012)