Biofuels companies are likely to face a wave of consolidation over the next 2 years as they try to limbo under the price of gasoline and fossil fuels.
ZeaChem is using a novel approach to biofuels fermentation by employing bacteria found in termites
This necessary marrying of small firms should enable a number of larger biofuels companies to match or beat the cost of petroleum-based fuels. The parity should happen in the next two to five years, says Lux Research’s Mark Bunger.
Bunger, a research director at the firm, said he sees companies “vertically” consolidating. Partnerships struck today will turn into acquisitions when companies that can complement one another.
For instance, a company turning biomass into glucose might merge with a enterprise turning glucose into ethanol, he said.
Today’s “partnerships will turn into mergers and unified companies that can really work together to lower costs over the next 18 to 24 months,” Bunger said on a Lux Webcast. “We expect to see quite a bit of that.”
The mergers should give a boost to the industry. Within two to five years, numerous biofuels will match or beat the cost of petroleum-based fuels, he said.
One biofuels company worth watching, though not necessarily for acquisitions, is ZeaChem, which has begun building a Colorado biofuels plant designed to turn poplar trees into fuels, chemicals and even plastics.
ZeaChem uses a novel approach to fermentation that employs bacteria found in termites. The process is nicely described in a MIT Technology Review article published Friday:
“The company employs a hybrid approach that uses a combination of thermo-chemical and biological processes. It first uses acid to break the cellulose into sugars. Then, instead of fermenting the sugars into ethanol with yeast, as is typically done, the company feeds the sugars to an acetogen bacteria found in the guts of termites and other insects. The bacteria convert the sugar into acetic acid, which is then combined with hydrogen to form ethanol.”
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