This week’s Green Scene column in Crain’s Chicago Business: Clean-tech leaders partner with aviation to rev up Midwest biofuel biz

A new coalition composed of a local clean tech group, airline corporations and a municipal agency aims to boost Midwest development of biofuels for commercial aviation.

The Midwest Aviation Sustainable Biofuels Initiative recently was formed to accelerate research, development and investment in technologies in the region that target renewable energy for commercial airplanes. Key partners include the Clean Energy Trust, the Chicago Department of Aviation, United Airlines, Boeing Co. and Honeywell’s UOP sustainable energy division.

The first order of business for the group is twofold: An appointed advisory panel will deliver a report on the activity that’s already under way in the Midwest. The panel also will develop an action plan of how to take those pockets of productivity to the next level by attracting more funding and advancing research projects into commercialized products, says Seth Snyder, section leader of process technology research and energy systems at Argonne National Laboratory. Mr. Snyder is one of the leaders of the advisory panel and a biofuel technology expert. Those reports are expected to be complete by early 2013.

A number of Midwest engineers and entrepreneurs have taken ideas from research institutions and rolled out startups that are working on some aspect of biofuel development. For many, the goal is to develop commercialized products that can be used as a sustainable replacement for traditional imported fuel sources or fashioned into a fuel blend similar to the way ethanol is used in cars, notes Mr. Snyder.

Crain’s met with Mr. Snyder to learn more about the potential opportunities for entrepreneurs in the region to pursue the biofuel sector.

Seth Snyder

Crain’s: Why is there such great interest in developing biofuel technologies?

Mr. Snyder: It’s all about economics and the environment. We know fuel cost has a big impact on the economy. We import billions of gallons of oil each year (for aviation) and we’re not in control of what happens in the global market. If we replace much of that domestically we will stabilize the supply and stabilize costs.

From an environmental standpoint, it’s about controlling greenhouse gas (GHG) emissions. Transportation isn’t responsible for all GHG emissions, but by replacing (petroleum-based fuel) with biofuels you can reduce emissions by 60 percent or more. GHG emissions are increasing temperatures, which is having an impact on our climate, agriculture, water levels, hurricane patterns, you name it.

Crain’s: Why is the Midwest being targeted as a good place for this type of sustainable biofuel initiative?

Mr. Snyder: We have the feedstock available here with so much agriculture. We have the engineering capability to take things from the lab and put them at a full commercial scale. These will be industrial processes, not just projects in the lab.

Crain’s: Can you give a few examples of the type of biofuel technology where some of the R&D and investment is occurring?

Mr. Snyder: There are two ends from an R&D perspective. There’s feedstocks, as in what are you going to grow. There’s a lot of research in the Midwest involved in corn stover, the residue left over when we produce corn. And there’s research in new crops for biofuel, including switchgrass. There’s one startup in Chicago called Chromatin that got a few rounds of VC funding. They’re working on a feedstock called sorghum, but also using it for commercial sales for other products.

The other half is the companies that are taking what’s grown and doing the chemical conversions or fermentations to turn it into a biofuel. One that’s well-known is Amyris (out of California). More locally, there’s LanzaTech in Roselle and Virent in Madison (Wis.), which is a spinoff from the University of Wisconsin and a partnership with Shell to make jet fuel (among other products). Lately there is more activity on the conversion side.

Crain’s: How would you characterize the level of activity among research institutions, entrepreneurs and investors in the Midwest in biofuel technology?

Mr. Snyder: There’s been very high interest in the last seven or eight years among research institutions and there was some angel investing and creation of spinoffs over the last four years. But I expect there will be a slowdown now because there were some recent IPOs and most of them are under water. That’s because their value was based on potential and a business plan, not on revenues. As soon as one goes under, investors get skittish and pull back on funding.

Crain’s: Despite those market setbacks, you sound optimistic about biofuels as part of a long-term diversification strategy for the airline industry. How soon do you expect they will be part of that portfolio of fuel options?

Mr. Snyder: Right now we have some individual one-off commercial flights using biofuels, and they’re using it as a blend (with traditional fuel) just like ethanol is used as a blend for car fuel. Some companies, like Honeywell’s UOP business unit, are starting to produce fuel that meets airline industry specs. Then it’s a question of cost, and from there it’s a matter of availability.

You need to have supply that can provide for more than three flights a year. It’s really a matter of getting costs down and putting a supply chain in place. Unless we have policies that push it away, I predict we’ll see a lot more biofuel blends over the next 10 to 20 years.

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