Some biofuel companies, which create oil from nonfood sources such as algae and wood, have found a new market in the specialty chemicals industry, the Wall Street Journal reports.
Because ramping up production efforts to make biofuels competitive with petroleum has proved slow and expensive, biofuel still isn’t a serious threat to the gas industry, the WSJ says. And that’s why some biofuel companies are turning to higher-margin specialty chemicals markets to make money.
But Andrew Soare of Boston-based Lux Research tells the WSJ the problem in seeking out a quick revenue fix is that biofuel producers could get trapped in low-growth markets.
Solazyme, which grows genetically modified algae, is looking to make money from its technology any way it can, CEO Jonathan Wolfson tells the WSJ. That means targeting skin care products, food supplements and industrial chemicals.
In addition, Blue Fire Renewables, which converts waste material into sugars that can be processed into fuel, has seen increasing demand from chemical companies. CEO Arnie Klann tells the WSJ the company even changed its name from Blue Fire Ethanol to reflect its growth in the nonfuel market.
And Gevo, which uses yeast to convert sugars into a solvent that can replace gasoline and jet fuel, has yet to sell the product as a fuel, but estimates it could get $3 a gallon by doing so, compared to $4.50 a gallon in the chemicals market.
Gevo tells the WSJ specialty chemicals helped it raise $100 million.
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