Biomass Conversion Driving commercialization › 655485906 › files › doc_downloads › ... ·...

Sebastian Soderberg, Vice President, Biomass Conversion

Claus Crone Fuglsang, Vice President, Bioenergy R&D

Novozymes Capital Markets Day, October 31, 2013

Biomass Conversion – Driving commercialization

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guide

This presentation and its related comments contain forward-looking statements, including financial expectations. Forward-looking statements are by their very nature associated with risks and uncertainties that may cause actual results to differ materially from expectations. The uncertainties may include unexpected developments in the international currency exchange and securities markets, market-driven price decreases for Novozymes’ products and the introduction of competing products in Novozymes’ core areas.

Safe Harbor Statement

2

9M 2013 PERFORMANCE • STRATEGIC UPDATE • BUSINESS DEVELOPMENT • BIOAG • BIOMASS CONVERSION • BETA RENEWABLES

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guide 3

Setting the scene

Biomass conversion is a transformational opportunity for Novozymes 10+ years in the making, the first commercial-scale plant is now online This presentation aims to provide an overview of the market and how Novozymes is adjusting its enzyme development strategy to serve the market

Agenda

Outline

• Executive summary

• Advanced biofuel markets

• Novozymes’ approach to the market

• Recap

• Q&A


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guide

External messages: • Beta Renewables to contract 15-25 biomass

conversion facilities with Novozymes as enzyme supplier by 2015-2017

• These facilities to generate turnover up to DKK 1 billion once operational

• Sales to at least 15 commercial-scale biomass conversion plants by 2017

Key objectives:

• Ensure that industry is commercialized and explore means to accelerate this

• Capture large share of first biomass plants to ensure first-mover learnings and market leader image

• Position Novozymes as clear market leader with key global and regional partners

4

Biomass Conversion has the aim to be a significant contributor to Novozymes’ long-term revenue growth target:

10% p.a. from 2015

Business should not negatively impact other NZ financial targets: EBIT of >24%, ROIC >22%

Biomass Conversion Is a Transformational Opportunity for NZ


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guide

Feedstock Capital Enzyme Other

5

Waste to value: Utilize cheap renewable feedstock to create low-cost, lower-volatility and sustainable biofuels/biochemicals

More with less: Get more out of arable land, existing infrastructure and market presence. For example, Brazilian plant to

increase output by 30-50% from same land, 20-40% in the U.S.

The Business Case for our Customers Rests on Two Desirable Elements (given Economic Viability)

1G ethanol (corn) Assumptions: • Corn @ USD 5.25/bushel • Depreciations

(Plant cost USD 2.00/gal) • Other = energy, water, yeast,

chemicals & labor • Enzymes: USD 0.04/gal

2G ethanol (biomass) Assumptions: • Biomass @ USD 50/ton • Depreciations


chemicals & labor • Enzymes: USD 0.50/gal

Sugarcane ethanol

Assumptions: • Sugar cost equiv. to USD 0.18/lb • Depreciations


chemicals

Illustrative example – Cost distribution by type of ethanol


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guide 6

• The number of projects choosing enzymatic hydrolysis conversion has increased from 7 in 2008 to 26 in 2013

• In addition to projects publicly announced, there is a significantly larger pipeline of projects in the making

• The market has shifted from a U.S. play to a global opportunity

• Important to note that not all facilities on the drawing board will make it commercially

Many More Potential Customers Are Interested in Biomass Conversion Today than 5 Years Ago

Commercial projects by region, 2013

2 - Crescentino - Maabjerg

2 - MYBiomass - Sabah

9 - Cofco/Sinopec - SQ - Datang - Dacheng - HNTG - Longlive - ZTE - Stategrid - Jilin Fuel

7 - POET-DSM - DuPont - Project Alpha - Fiberight - Abengoa - Canergy - Greenfield

6 - GranBio - Raizen - OAI - Rhodia - TMO - Colbiocel

Commercial projects: Projects either completed, under construction or publicly announced using enzymatic hydrolysis


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guide 7

Increasing Interest Has Led to Activity in All Segments of the Value Chain

Biomass Technology – pretreatment

Biotechnology* Ethanol

production Ethanol

distribution

Farmer co-ops Palm oil

producers Wood owners Municipalities

.

.

.

Existing chain

* Enzymatic hydrolysis only ** Captive enzyme producer

**

**


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guide 8

Demand for Renewable Low-Emission Liquid Fuels Remains a Structural Growth Story

Source: ExxonMobil: The outlook for energy: A view to 2040, 2013 OECD/IEA world energy outlook, 2009 IEA: Key World Energy statistics, 2013

International transport forum, key data and trends, 2010

0%10%20%30%40%50%60%70%80%90%

100%

2007 2020 2030

100% 93%96%

Global passenger vehicles sales split by technology

* Passenger Light Duty Vehicles | Source: OECD/IEA World Energy Outlook 2009

770 million 1400 millionTotal size of global passenger vehicle fleet

Full electrical

Plug-in hybrid

Hybrid

Conventional ICE

Share needingliquid fuel(in full or partially)

Transportation energy demand by sector and region (millions of oil-equivalent barrels per day)

Global passenger vehicle sales by technology

Global oil use by sector

Projected world energy-related CO2 emissions (Mt)


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guide

Starch

Cellulose

Sugar

Enzyme techno-

logy

Enzyme techno-

logy

Bio-ethanol

Bio-chemicals

Pre-treatment

• Biotechnology is unique in its ability to be part of many different processes

• The sugar platform is key for biofuels and biochemicals

• Many technologies converting sugar to chemicals exist today, others are under development

• Ethanol can be fuel and a platform chemical

Biotechnology Can Be Used to Produce More than Ethanol – The Sugar Platform Is Key

Petro-based

feedstock

Ferment-able

sugar

Chemicals (bulk, fine, specialty)

Enzyme bio-

catalysis

Fermen-tation

Advanced fermen-tation

Chemical catalysis

Enzyme techno-

logy


http://intranet.nzcorp.net/sites/sustainability_toolbox/SustainabilityatNovozymes/Forms/Examples of sustainability integration.aspx

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guide 10

• Today 50+ countries have adopted blending mandates or targets

• From region to region, business cases factor in political incentives to a varying degree, depending on

certainty, level of longevity and enforcement of support mechanisms

Mandates and Political Support Have Been a Strong Driver of Current Market Status

Major global support mechanisms for biofuels


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guide

There Is Plenty of Biomass Available Globally

• Significant potential for sustainable biomass from agricultural residues

• Good global distribution of resources

• Potential to replace half of global gasoline demand by 2030

16

20

39

110

151

177

180

221

Australia

Mexico

Argentina

India

EU-27

Brazil

United States

China

Estimated agricultural residues available for biorefining by 2030, million dry tons

Source: Bloomberg New Energy Finance, “Moving towards a next-generation ethanol economy”, 2012


BASIC LAYOUT


guide 12

• Numbers vary with degree of belief in mandates and targets

• Scenarios reflect poor visibility, as cellulosic biofuels is just now proving technical and commercial viability

A Snapshot of Global Demand Scenarios for Cellulosic Biofuels Shows Potential and Uncertainty

*2022 *2022

0

2

4

6

8

10

12

14

16

18

2015 2020 2025 2030

Bn g

al

Goldman Sachs

Boston Consulting Group

Bloomberg New Energy Finance

Renewable Fuel Standard

The potential is there! Average scenario volume (excl. RFS):

2015: 0.5bn gal in 2015

2030: 7bn gal in 2030, CAGR of +20%!


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guide 13

Novozymes Has Clear Strategic Priorities in Biomass Conversion

Priorities:

1. Ensure first-mover advantage 2. De-risk technology 3. Adapt and utilize strengths

to enable customers

Target:

Serve 15 commercial- scale plants by 2017

Be the preferred supplier of enzyme technology for biomass sugar, fuel and chemical producers worldwide


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guide

• A changing customer landscape has created a need for multiple market access points

• A global business development team and regional R&D competencies support potential customers outside Beta Renewables

• The global BD team drives co-marketing agreement with Beta to attract new customers globally

1. Ensure First-Mover Advantage

14

Non-Beta partners

(e.g. Raízen, Cofco/Sinopec,

etc.)

Cellulosic biofuels/

biochemicals producers

Cellulosic biofuels/

biochemicals producers


BASIC LAYOUT


guide 15

• Beta Renewables is a leader in biomass conversion with the PROESA technology and owner of the world’s

first commercial-scale plant. As preferred enzyme supplier, Novozymes will gain access to significant new

business opportunities

• Beta Renewables to have contracted 15-25 new cellulosic biofuel facilities by 2015-2017

Partnership with Beta: To De-Risk Technology and Projects and Access Customers Worldwide

Cellulosic customer

BR/NZ joint hydrolysis cost guarantee AND accelerate large-scale commercialization of the industry

Enzyme supply Basic engineering & key equipment

PROESA license


BASIC LAYOUT


guide 16

2. De-risk Technology: Novozymes Has Been a Key Enabler of the Commercialization

0

100

200

300

400

500

600

700

800

900

1000

1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018

Novozymes' enzyme cost-efficiency development, 2000-2012

• 10X improvement over 12 years

• From main inhibitor to valuable tool

• Now other cost items hit the steep part of customers' development curves

Feedstock

Capital

Enzyme

other


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guide

CTec1 CTec2 CTec3

CTec A CTec A1

CTec A2

CTec B CTec B1

CTec B2 CTec C

17

3. Adapt and Utilize Strengths to Enable Customers

The game is changing, and Novozymes must stay ahead of the curve • From demo to commercial

• From breakthrough innovation to process and product optimizations

• From enzyme performance at lab bench to enzyme cost/performance at plant

Leverage premier position • Use global presence and experience to

guarantee enzyme delivery at scale • Develop individualized delivery models with

customers • Default is hub-and-spoke. Looking to add

capacity in Brazil

Customize • Total production cost will be further

reduced through customization • Enzymes will be developed to fit the

needs of specific cellulosic technology, customers, processes and feedstock

20 L 160,000 L

NZ


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guide 18

• Enzyme efficacy – a measure of the amount of enzyme needed to achieve a given level of conversion of

biomass to sugars – has been dramatically improved

• Average relative ”fold improvement” in enzyme performance over time on a range of industrially relevant

pretreated substrates is shown below

A Strong and Optimized Technology Backbone Will Guide Customization

0

2

4

6

8

10

12

14

16

18

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

Rela

tive e

nzym

e p

erf

orm

ance

CTec2

CTec

T. reesei baseline

T. reesei + BG

CTec3

Next-gen. lab prototype


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guide 19

Drivers of Enzyme Cost Reductions: Enzyme Discovery, Engineering and Production Economy

Protein engineering case: Design of an inhibitor-tolerant BG

Discovery case: GH61 is boosting hydrolysis

Production economy case: T. reesei expression

Recombinant CBH I Expressed in T. reesei where native CBH I has been deleted

“If it doesn’t express, it doesn’t exist”

+ recombinant GH61

No GH61 added

0.0

2.0

4.0

6.0

8.0

10.0

12.0

0.0

2.0

4.0

6.0

8.0

10.0

12.0

14.0

16.0

0 10 20 30 40 50 60 70

[Cel

lob

iose

]

Glu

cose

Rel

ease

(g/L

)

BG Loading (nM)

BG Titrations onto Celluclast 1.5L + GH61 + GH10 Xylanase + 40g/L Glucose

A. fumigatus Mutant

A.fumigatus

BG titration BG Variant

BG WT


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guide 20

First-wave commercial-scale ethanol plants will

initiate the realization of further cost-saving

potential in most cost elements through:

• Combined enzyme, yeast and process

optimization

• Design experience

• Operating experience

First-wave Commercialization … and Innovation Continues (a Game We Know)

Enzyme cost-efficiency development

2012 = index 100

Total production cost estimate

2012 = index 100

0

100

200

300

400

500

600

700

800

900

1000

1995 2000 2005 2010 2015 2020

History

Projection

40

60

80

100

120

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2005 2010 2015 2020

Enzyme Developments

Enzyme Developments

Enzyme and Process

Developments


BASIC LAYOUT


guide 21

• Different pretreatment technologies produce different hydrolysates and inhibitors

• Hemicellulose mix (C5 sugar types) also vary. Enzyme components must be tailored to match

As Industrialized Processes Are Locked into Place, Highly Customized Technologies Are Needed

Biomass Pretreatment Hydrolysate (biomass after pretreatment)

Cellulose Hemicellulose Lignin

0%

20%

40%

60%

80%

100%

0% 20% 40% 60% 80% 100%

0% 20% 40% 60% 80% 100%

0% 20% 40% 60% 80% 100%

0% 20% 40% 60% 80% 100%

Steam

Acid

Alkali

Org. solvents


BASIC LAYOUT


guide

Feedstock pretreatment

•Physical treatment

•Chemical intensity

Cellulosic hydrolysis

•Solids level

•Sugar composition

•Separation and side streams

Further processing

•Yeast

•Fermentation

•Catalysis

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• Diverging processes are being established at industrial scale

• For every process, there will be an optimal enzyme blend

• Every blend will require further optimization work

• Current CTecX blends contain over 8 separate, unique enzymes

Now the Time Has Come to Benefit from Customization for the Individual Process

Optimization opportunities, many are enzyme related


BASIC LAYOUT


guide

• Biomass conversion projects are firming up globally and interest is on the rise due to early-stage commercialization

• Novozymes has first-mover position today and will do its utmost to strengthen and leverage this position

• Enzymes are important for further total cost reductions

• Going forward, enzymes will be tailored to process and plant to give customers the best possible technology package – every time!

• Production know-how and scale are key competitive parameters

Recap


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Biomass Conversion Driving commercialization › 655485906 › files › doc_downloads › ... ·...

Documents

Transcript of Biomass Conversion Driving commercialization › 655485906 › files › doc_downloads › ... ·...