San Diego Start-up Plants Seeds For New Biofuel Alternative

In 2007, the jatropha bush was considered to be the next big thing in biofuel. Its plants produced a high-quality oil that could be refined into low-carbon fuel – a prospect that attracted millions of dollars in investment. But in the end, the plants didn’t grow enough petroleum-producing seeds. And then came the recession.

But a San Diego start-up called SGB persevered, and with advances in molecular genetics and DNA sequencing technology, the company’s crop is now capable of producing enough biofuel to be competitive with petroleum priced at $99 a barrel. Oil, for instance, is currently trading at around $100 a barrel. So reports The New York Times.  The company has received investment by Thomas, McNerney & Partners, Finistere Ventures, Flint Hills Resources, and Life Technologies Corporation.

“It is one of the few biofuels that I think has the potential to supply a large fraction of the aviation fuel currently used today,” says Jim Rekoske, Honeywell’s v.p. for renewable energy and chemicals.

SGB will be planting 250,000 acres of jatropha in India, Brazil, and other countries, enough to one day generate about 70 million gallons of fuel a year. Those kinds of numbers are once again generating interest, from the airlines, large energy companies, and anyone else looking for alternatives to fossil fuels. For them, jatropha is not just a way of complying with federal low-carbon fuel mandates, but it may be a good hedge against volatility in the price of oil.

The company’s biggest hurdle will be producing enough of the product, says Michael Cox, an analyst at Piper Jaffray. So reports the Times.

SGB is pleased with its hybrid product so far. Its chief scientist, Robert Schmidt, who specializes in corn genetics, says a typical wild jatropha bush will produce six to eight seed-bearing fruits. In Guatemala, the company has plants that have 60 fruits in a cluster, Schmidt said.

SGB isn’t the only one pleased. A consortium that includes BP, Airbus, and the Inter-American Development Bank inked a deal with SGB that called for planting 75,000 acres of jatropha in Brazil. As Europe and Australia impose caps on aviation carbon emissions, demand for alternatives is growing, Rafael Davidsohn Abud, the consortium’s managing partner, wrote the Times in an email.

But creating a hybrid plant that produces biofuel may not be SGB’s only discovery. In modifying jatropha, the company has found other genetic discoveries, such as traits that make certain strains of the plant resistant to excessive cold or heat. Such discoveries will be enormously valuable for plants like corn and soybeans in light of climate change, says Arama Kukutai, managing director at Finistere Ventures, a San Diego-based venture capital firm that has invested in SGB.

While the technology could be used to increase yields on a variety of fruits and vegetables, for now, SGB plans to license its technology to energy companies. But the company is securing patents on its hybridization process, creating a technology platform that can be deployed to discover genetic traits in other agricultural crops. So reports the Times.

SGB’s technology allows its scientists to identify potentially productive hybrids in the laboratory at the molecular level. It then crossbreeds them with plants from, say, Cape Verde in Africa, with plants that have different beneficial traits in, say, Guatemala. Lab experimentation like this used to take 10 years. It now takes about 10 months, said Eric Mathur, SGB’s chief technologist.

For now, SGB has a five-year head start over any agricultural giant that try to compete.

“It doesn’t matter how much money you have,” says Kirk Haney, SGB’s CEO. “You can’t make cells divide quicker.”

To read the full New York Times article cited in this story, click here


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