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AGROFUELS & RENEWABLES: The latest frontier for biotechs: Industry

------------------------------- GENET-news -------------------------------
TITLE:  The latest frontier for biotechs: Industry
SOURCE: The Philadelphia Inquirer, USA
AUTHOR: The Associated Press, by Paul Elias

The latest frontier for biotechs: Industry

SAN FRANCISCO - Biotechnology was first applied in medicine, then
farming. Today, dozens of lifesaving drugs are on the market, while many
crops are genetically engineered to withstand weed killers.

Now, a two-year-old push to develop alternative fuels is driving
biotechnology's growth into the industrial sector.

Thousands of corporate executives and scientists gathered last week in
Orlando, Fla., for an industry trade show specifically aimed at touting
biotechnology's so-called third wave, industrial applications. The word
on everyone's lips: ethanol.

After decades of unfulfilled promise and billions in government corn
subsidies, energy companies may finally be able to produce ethanol
easily and inexpensively thanks to breakthroughs in biotechnology.

Most of the five billion gallons of ethanol produced annually in the
United States is still made by fermenting corn, but the crop is
expensive, and its use in biofuels cuts into the nation's food supply.
So the Canadian biotech company Iogen Corp. has developed a method for
deriving ethanol from a variety of plants including wheat, oats and
barley. Others are genetically engineering microbes to produce enzymes
that will convert the cellulose in crop waste, wood chips and other
plants into ethanol.

In his last two State of the Union speeches, President Bush helped
breathe new life into this once-sleepy biotech sector by touting the
need to ramp up production of this "cellulosic ethanol."

The president wants to reduce the country's oil consumption by 20
percent within 10 years, and he sees alternative fuels as the way to get
there. Bush visited the North Carolina biotechnology company Novozymes
Inc. last month to underscore the industry's vital role in accomplishing
that ambitious goal.

Government agencies led by the Department of Energy are sinking millions
into biotech projects aimed at making ethanol more efficiently. And
start-ups dedicated to turning plants into fuel have captured the fancy
of deep-pocketed venture capitalists like Vinod Khosla. The billionaire
cofounder of Sun Microsystems Inc. is investing hundreds of millions of
dollars in green technology, and was a featured speaker this year at the
World Congress on Industrial Biotechnology & Bioprocessing.

Other heavy hitters attending the conference included University of
California scientist Jay Keasling, Discover magazine's Scientist of the
Year in 2006 and a leader in the burgeoning "synthetic biology" field,
which aims to create living species that will spit out drugs and fuel.

Oil companies are also investing heavily in biotechnology these days,
and executives from ConocoPhillips Co., Chevron Corp. and Shell Oil
Corp. were on hand at Walt Disney World for the conference.

By contrast, these annual gatherings have historically been sleepy
affairs. Last year's industrial biotech meeting, sponsored by the
Biotechnology Industry Organization, drew little interest, even though
it was held in Hawaii in January. That state's lieutenant governor may
have been the biggest draw.

Past conferences have featured discussions on topics like biotech's role
in manufacturing enzymes used to help laundry detergent break down dirt
and give blue jeans the stone-washed look. But this year's meeting
focused on the industry's role in making ethanol and other alternative fuels.

The Energy Department has awarded up to $385 million over four years to
six companies to develop ethanol.

"We are moving into a very diversified fuel era," said Ron Pernick, who
cofounded Clean Edge, based in Portland, Ore., which tracks venture
capital investment. "Private investment is really taking off."

Pernick said venture-capital investment in biofuels has increased from
less than $1 million in 2004 to $20.5 million in 2005 to $813 million
last year. Much of that investment is flowing to biotechnology companies
that genetically engineer microbes that produce enzymes needed to break
down crops into alcohol.

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