The U.S. Department of Agriculture recently expanded its flagship “9003” loan guarantee program to include projects that primarily manufacture chemicals — not just fuels — from renewable biomass. Years of advocacy and leadership from BIO, Senator Debbie Stabenow, and others have effected this welcome change. Biosynthetic Technologies (“BT”) is pleased to be among the refreshed program’s early potential beneficiaries.
BT commercializes a novel renewable chemical compound poised to disrupt the large global industrial and automotive lubricant sectors. Through a proprietary catalytic chemical reaction process we convert oils from soy and other crops into fluids, known as biosynthetic oils or Estolides, that have proven highly effective as the base oil (majority ingredient) in motor oil and other industrial lubricants.
With superior performance, low production cost, and an outstanding environmental profile, these biosynthetic base oils have garnered tremendous interest from major lubricant players globally. These large brands have formulated and tested finished products using BT’s biosynthetic oil. The exceptional results have led to many purchase letters of intent.
BT is building a first-of-its-kind manufacturing plant where we will produce these breakthrough biobased chemicals at commercial scale. The production process, which also makes biofuel, has been proven out in a fully integrated, demonstration-scale plant that has operated successfully since 2014.
The USDA notified BT recently that this project is being advanced to their final evaluation phase. With this “green light” USDA has reserved funds to guarantee BT’s project financing. One of the largest U.S. banks, which has been very active in renewables, has issued a letter of intent to USDA to provide the loan.
From the trenches of commercialization and plant development, BT’s familiarity with peer companies, and past experience, BT has observed several challenges surrounding first-commercial renewables projects that must be accepted as reality in order to progress:
- Project development and technology commercialization take a long time. Upending an enormous global industry doesn’t happen without delays and curveballs. Renewable technologies are up against incumbents with deeply entrenched ways of doing things. Throughout the commercialization process, patience is crucial, and all stakeholders — investors, customers, executives, strategic partners, board members — must be patient.
- Securing the necessary financing is a fundamental challenge for virtually all developers of first-commercial projects in the renewables space, government support notwithstanding. Only financiers who understand supply chain dynamics, the demand landscape, and other market forces can get sufficiently comfortable with the project’s risk profile to proceed.
- Setbacks are the norm, and successful companies fight through them. Engineering kinks to work out; funds running low; key personnel yet to be in place; multiple major corporations needing to agree. Advancing the ball — if only a little bit at a time — across commercial, technical, financial areas to bring about a well-rounded project is crucial.
Recognition of and preparation for inevitable delays, financing challenges, and other setbacks can increase the likelihood of project success.
As a final note, innovation is at BT’s core. That’s why BT will again attend BIO’s World Congress on Industrial Biotechnology this April. It is a terrific forum in which to connect with potential partners and investors, gauge the policy landscape, and keep a pulse on the many exciting developments throughout the industrial biotech sector.
SVP, Strategy & Finance