Low Energy Microalgae to Biofuel at Commercial Scale

Low Energy Microalgae to Biofuel at Commercial Scale

Low Energy Biomass to Bio-fuel at Commercial Scale

Food and Fuel for the 21st Century


Microalgae have come to the attention of the industrial and academic community over recent years because of their ability to harvest the energy of the sun and provide valuable molecules that offer great potential to provide fuel for the coming century and relieve the need and destructive outcomes that are associated with traditional fossil fuels.


Solvent-free wet extraction of fuels and sugars


For commercial microalgal biofuels to become a reality, the high production cost of oil extraction must be dealt with. A large contributor to the production cost base is the solvent-based process for cell destruction and oil extraction from the algae, which is both expensive and environmentally damaging.


4 year pilot to commercial scale success


Cellulac recently concluded a 4-year pilot scale to commercial scale project using the SoniqueFlo Sono-Enzymolysis Cell Disruption process with specific objectives to:


  1. Demonstrate the technical feasibility of cell wall breakage of Nannochloropsis and Schizochytrium;
  2. Validate a lower cost for enzyme-solvent free extraction compared to the solvent-based process;
  3. Verify environmental benefits of the enzymatic-solvent free process;
  4. Obtain required regulatory approvals for food-grade algal oil extracted using enzymes; and
  5. Leverage project results to commercialize enzymatically extracted algal oil and achieve sales of lysis technology to producers of algal oils.

SoniqueFlo treatment significantly damaged or destroyed cells.


Schizochytrium samples post-treated with enzyme:

  • Confirmed a greater than 10 fold reduction in the enzyme dose required for lysis.
  • 87-94 % of available lipid was separated from hydrolysis reaction using a disk stack centrifuge
  • Shortening of hydrolysis time to just 2 hours was also possible.

The success of this trial indicates strongly that SoniqueFlo technology undoubtedly has a role to play in improving the economics of commercial-scale production using an enzyme-based solvent free wet extraction process of algal oils.


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Cellulac Formally Requests Metabolix Shareholders to Consider Merger Proposal

Cellulac Formally Requests Metabolix Shareholders to Consider Merger Proposal

Cellulac Formally Requests Metabolix Shareholders to Consider Merger

Cellulac merger proposal to Metabolix worth $40m in assets and offtake agreement of $38m rejected in favor of closing biopolymer business and spending $35m over 7 years on crop science project with no revenue.





London, UK. 25th July, 2016: Cellulac plc (@cellulac), is an industrial biochemicals investment technology company. Cellulac have been interested in Metabolix Inc., ($MBLX) for some time and after their announcement, in May 2016, of a strategic review, Cellulac made a formal proposal via the CEO to merge both companies. The proposal meant Cellulac would contribute industrial scale production assets with biochemical and biopolymer capacity, independently valued at up to $40m. In addition, terms for a manufacturers licensing agreement of the combined Metabolix and Cellulac biopolymer assets with access to debt and equity funding from Cellulac assets and shareholders for a commercially focused growth strategy of the enlarged entity.


The Board of Directors of Metabolix decided the $40m merger offer was not important enough to inform shareholders


A merger with Cellulac, based on the biopolymer intellectual property and associated institutional knowledge, would reduce Metabolix development overhead to a more manageable level where manufacturing license fees and future royalties would transform Metabolix, for the first time in 24 years, into a profitable part of an enlarged bio-based company. Synergies would contribute shared management and development costs across a larger corporate group, multiple revenue streams comprising of production equipment installations, recurring revenue from biochemical production, manufacturing product licensing agreements, process licensing with biopolymer offtake agreements worth $38m already in place.


Right up to July 2016, Metabolix continued to burn $2m a month. This was no surprise considering the content of the presentation at the Roth Investor Conference on the 15th March 2016 and reiterated in the year-end report later that month.


March 29th Metabolix conference call to investors the CEO stated:


“Looking ahead the company is turning its attention to the next step, moving from commercial pilot-scale operations to a commercial-scale specialties business”.


Yet within 7 weeks Metabolix had sold the exclusive global rights and future royalties on PHA use in medical devices for the price of less than one month’s burn rate.


Astonishingly, after wasting 2 months and what appears to be a further $4m in costs, the Metabolix Board declined the Cellulac merger offer.


The Board of Metabolix has been responsible for:


  1. The supervision, over 24 years, of $326m invested by shareholders in biopolymer research and development
  2. Appointing the current CEO in January 2014
  3. Raising and overseeing the current CEO spend $40m on the biopolymer business
  4. Presiding over an 89% drop in shareholder value in the last 30 months; and
  5. A 99% drop from all-time high
The same Board has now decided to:


  1. Write off the entire biopolymer business
  2. Dismiss 48 people relating to the biopolymer business
  3. Pursue a path of further shareholder value destruction in questionable scientific research for the next 7 years as a public company.
In a written note a former Metabolix Senior Scientist said:


In the case of PHA producing plants the PHA content in one leaf could not represent the low overall content of PHA in the biomass. Many public presentations were not telling the exact picture, but rather the ‘nice numbers’. As a scientist I always challenged this phenomena. The plant project today is on the table for rapid growing biomass. But knowing the rate limiting factors in growing plants it will not solve the world problems…

Cellulac Core Terms


  1. Cellulac merge on a 50/50% share for share basis with Metabolix
  2. The immediate cessation of the current business model of Metabolix avoiding further unnecessary expenditure
  3. The restructuring/divestment of the high R&D overhead and associated costs of Metabolix
  4. The business model focused on the commercial activities at the core of Cellulac technology
  5. Metabolix is renamed Cellulac to indicate a change of business model away from the R&D to a commercially focused Company
Questions for the Board



I have three questions for the Metabolix Board of directors:


  1. Why did you decline a merger proposal, without informing shareholders, valuing Metabolix in excess of $35m offering industrial scale biochemical and future biopolymer production capacity, access to asset backed debt and equity funding for commercial growth delivering multiple revenue streams from a combined technology platform that would make Metabolix a profitable contributor of the enlarged corporate entity?
  2. Was there a Board decision in May 2016 to close the biopolymer business when the Board signed off on the sale of patents for the exclusive global use of PHA in the high margin medical device sector for $2m, and if so, why was management allowed to burn through another $4m until the end of July 2016?
  3. Why are you willing to subject shareholders to 7 more years of equity value destruction by dilution, at $5m costs a year, with no foreseeable revenues, in an early stage research and development project, other than for survival with access to government grants?
In Closing



In my opinion, by declining the offer from Cellulac, current management and Metabolix Board demonstrate a complete lack of business acumen or commercial vision. Displaying utter contempt for shareholder value they are adopting a strategy that requires investment of $35m over the next 7 years leading to further destruction in equity value with no visibility of revenue, other than government grants.


It is incumbent upon the Board members, but especially Independent Directors, majority and minority shareholders to immediately review the reasons for this illogical decision and become vocal about Cellulacs’ offer that adds $40m in biochemical and biopolymer assets for commercial scale production and manufacturer licensing and offtake agreements. This is likely to be the last opportunity to transform Metabolix, a 24 year loss making company, into part of a high growth enlarged group with multiple revenue streams for biochemicals and biopolymers, which would be cash generative this year.

Gerard Brandon
Chief Executive



Registered Office

Finsgate, 5-7 Cranwood Street, London EC1V 9LH

Call us from UK +44 (122) 392 6660

Call us from US +1 (310) 421 2910



Cellulac is an industrial biochemicals investment technology company that collaborates with, and acquires, companies to exploit the combined production, intellectual property assets and institutional knowledge. We out-license non-core technology and expertise in exclusive and non-exclusive agreements, while at the same time, developing and extracting maximum value from the remaining core production and intellectual property assets that we acquire.


We seek to identify enzyme, bacteria, chemical process, fluid dynamic, electrical and software engineering efficiency opportunities within the bio-industrial technology sector that offer management synergies and hybrid integration and value added benefits to our existing technology platform. Such various technology combinations deliver valuable additions to production processes, improving margins and reducing costs in the bio-fuel and bio-chemical sector.

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Extracting real value from the Ethanol Industry

Extracting real value from the Ethanol Industry

Extracting Real Value From the Ethanol industry

Hybrid Solutions


There is no need to reinvent a billion dollar wheel of bio-industrial experimental development. True value can be extracted and integrated as hybrid synergistic solutions from the best-in-class of what already exists.


Over the last 10 years, the road to industrial biotechnology success, in the biofuel and biochemical sector, has been paved with yellow brick technology, paid for as if it were gold. There have been breakthroughs on many levels in pre-treatment, enzymes, fermentation and even downstream energy efficiency.


Cellulosic Ethanol Failure


Sadly, no single design has been enough to solve the scaling problems of a stand-alone Cellulosic production plant that is commercially viable. That is not to say that a solution does not exist if you are prepared to think and act outside a two-dimensional business model.


Valuable nuggets of gold can be found in this failed development Cellulosic Ethanol gold-rush and across the industrial biochemical industry. When pieced together as a total solution they offer the greatest financial incentive, and potential opportunity, to convert by-products of the $24bn ethanol production industry. This low margin commodity industry has the regulatory backing of the US Government (RFS) along with Federal and State Tax (LCFS) support. It is an industry desperate to reform into a high corn crush marginal return.


Dilemma: “Do Things Right” or “Do The Right Thing”


Industry participants have been getting financial support from government and pioneering investors. Failures have come on the back of MBA style case studies from managements doing things right. Success going forward lies, not just in doing things right, but doing the right thing by converting the unexploited by-product value that lies within the ethanol industry by building on the foundations of what remains failed, scaled, Cellulosic ethanol aspirations.


Gerard Brandon is CEO of Cellulac a company who have collaborated and acquired companies with intellectual property derived specifically from the biofuel and biochemical industry. By entering into exclusive and non-exclusive technology license agreements from the acquired non-core technology, Cellulac has been able to focus on the commercial development of the technology and management synergies. The mission is to extract maximum value from the remaining core production and intellectual property assets that are acquired.

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Have we Reached Peak Biofuel?

Have we Reached Peak Biofuel?

Have We Reached Peak Bio-fuel?

Is there really an energy security risk?


Former NATO Secretary General Anders Fogh Rasmussen is calling on Europe to increase the production of biofuels from an energy security perspective because of geopolitical risks. This is a tough ask if such increase in supply levels of 1st generation feedstock for fuel runs counter to the need to provide food security with an ever-increasing population.


Do we have any land left to grow food?


According to the “Global biofuel production, 1980–2013” U.S. Energy Information Administration, in 2011 the world production of ethanol was 545 billion gallons of which the US produced 61% and Brazil produced 26%. For biodiesel was 147 billion gallons. The EU accounted for 44%, the US 16% and Brazil had 11%.


The USDA reported that the growth of biofuel production between 2001 when 7% of the US corn crop was used for Ethanol production rose to 45% by 2013. US Soybean use for biodiesel rose from 2007 at 14% to 30% by 2013. The key reasons for biofuel production are mainly due to subsidies and fuel mandates. However, by 2013 the blending limits for ethanol in gasoline had reached its peak requiring an amendment to fuel mandates in blending ratios of ethanol to gasoline to increase production.


In Europe, where the vast majority of ethanol is produced from wheat, the EU 2020 targets require that 10% of transportation should be from biofuels. Adding to the restriction is that these targets have to be met with no more than 7% of the land, where currently as much as 5% is already being used for growing feedstocks for biofuel production. There are many opinions on the sustainability of biofuel production, from my own perspective in a recent article (“Biofuel, even cellulosic ethanol, is wasteful“) or on the use of land relating to the term “Peak Soil”.


Where has all the food gone?


There is substantial evidence that the increase in biofuel production over the last 10 years has resulted in an increase in volatility of the price of food. Subsidies and minimum fuel mandates that lead to any further growth in biofuel production in Europe, or any of the OECD countries, as suggested by Anders Rasmussen, for first-generation biofuels will likely contribute to food insecurity of consumers of food in low-income countries.


Therefore, if public assistance is provided to promote first-generation biofuel production for the purpose of energy security or reducing greenhouse gas emissions, an impact assessment should be undertaken where such policies impose upon food security. The short and long-term implications of such policies on the undernourished and the vulnerable must be explicitly considered in any policy evaluations of their costs and benefits.


Where else can they go?


There is a risk that negative effects of any growth in biofuel production will add to an increase of economic migration. With the potential of as many as 8 to 10 million migrants moving into Europe due to food price volatility that may not only affect low-income countries.

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Biofuels Perfect Storm

Biofuels Perfect Storm

Biofuels Perfect Storm

Biofuels Perfect Storm


Since August 2015, ethanol has traded at a premium to gasoline which is unusual by historical standards. This is likely to continue until oil prices rebound into the $45-50 per barrel range. Even with this situation, 2015 ethanol production managed to post a 3.8% growth for 2015. And in the midst of the seriously depressed oil market of 1Q 2016, ethanol volumes have produced year on year growth in the first two months of this year. The downside for producers is that production margins are near their lowest levels since 2012.

Ethanol Spread
There is an incentive for blenders to use Renewable Identification Numbers (RINs) credits they may have accumulated because ethanol is more expensive than gasoline. It is more expensive to blend the extra ethanol into gasoline while the logical economic benefit is to use the RINs for any obligation that they’re not covering with their 10% blend. In addition, the issue of the blend wall has not yet been addressed.


So tight, or in some cases non-existent, crush margins are crippled by substantial debt and assets, most of which are in negative equity. Increasing stockpiles of oil, and Russia confirming this morning that no legal agreement has been reached on reduction in oil outputs. Iran is now looking to regain market share after the easing of sanctions. Oil prices look set to be spiking merely on short-term covering and could drop back to test the lows of $26.


The price of sugar has dropped back to 2009 prices which caused Brazil producers to increase ethanol production to 60% of their sugarcane (more details on Brazil below).


United States (US)


The growth in US ethanol production coincides with the run-up in the production capacity that began as early as 2000. There were fast growth rates in emerging markets and a debt-fueled boom time in developed countries that collapsed heading into the financial crisis before seeing a shake out.


Ethanol M&A, work on ironic inverse relationships. Transaction numbers spike after bad times and dip during good times. High margins work against deals. Low margins produce them. Simply put, when profitability goes up, ethanol M&A activity generally goes down. For example, after the 2008 downturn, 29 ethanol plants traded hands in 18 transactions before the end of 2010. Improved margins, starting in 2010, yielded only five ethanol plant acquisitions in four deals in 2011. Production margins sagged in 2012, spurring the sale of six ethanol plants late in the year and setting the stage for double-digit transactions in 2013 when 13 ethanol plants were acquired in 10 transactions of that year. The ethanol industry then cycled into an 18-month stretch of record margins from mid-2013 through late 2014 which explains why there were only five ethanol asset transactions completed in 2014.


These high margins provided a window of opportunity to reschedule existing and establish new debt structures with three high-profile debt facilities secured by producers in 2014. They include a $66 million senior credit agreement completed by Southwest Iowa Renewable Energy, a $225 million senior secured credit facility completed by Green Plains Renewable Energy, and a $40 million loan and security agreement secured by Aventine Renewable Energy before the company moved ahead with its merger with Pacific Ethanol. With margin pressures in 2015, 10 biofuel transactions, worth an estimated $800 million in value, were closed involving 13 plants.




Over the last few years, it has not been easy for ethanol producers. The government reduced credit lines provided by the Brazilian Development Bank. Droughts hit harvests in the Center-South region, where roughly 90% of sugarcane is grown. Debt-burdened companies, as many had taken out loans during former President Lula da Silva’s desire to make Brazil the “green Saudi Arabia.”


Falling global sugar prices hurt an industry reeling from the 2008 financial crisis. Government policies also undermined the ethanol sector. In its bid to control inflation, the government capped gas prices and removed the infrastructure tax on gasoline, making hydrous ethanol uncompetitive at the pump. Consumers quickly switched fuels, leading to a 10% decline in 2012. As a result, many producers invested in anhydrous ethanol or switched back to sugar. Forty ethanol plants went bankrupt.


These policy changes, combined with rain in Brazil’s sugar-producing Center-South region have kick-started the Brazilian ethanol industry again. Producers shifted almost 60% of their sugar harvest to ethanol, and sales rose 28% between July 2014 and July 2015. Producers remain heavily indebted, global sugar prices are low, and gasoline price controls are still in place.


However, the debt fallout remains and in June 2015 Petrobras announced their intention to sell off nine of their sugar and ethanol production plants. On Aug. 26, 2015, leading turnkey sugar and ethanol crushing plant supplier Dedini filed for a court-supervised debt restructuring. In September 2015 India’s Shree Renuka filed for creditor protection in a Brazilian court.


European Union (EU)


In the late 90’s, the EU market of ethanol was in surplus with a production of around 2 billion liters, out of which 1.3 billion liters was of agricultural origin for a demand of around 1.7 billion liters.


Today, with the production of 6 billion liters (1,585 MMGY – million gallons per year) of agricultural ethanol within the EU for a domestic market of around 7.9 billion liters (2,087 MMGY), the EU is a net importer of ethanol.


The EU ethanol industry is highly protected as the EU imposes a tariff of €0.19 per liter ($0.72 per gallon) on undenatured ethanol and an import duty for denaturated ethanol of €0.10 per liter ($0.38 per gallon). With the Transatlantic Trade and Investment Partnership (TTIP) trade agreement between the European Union and the United States, such tariffs may well be reviewed. However, with a risk of low-cost ethanol dumping, which was the reason tariffs were initiated in the first place, it may well be that the EU lobby groups will demand implementation of non-tariff barriers such as sustainability criteria.


Cereals are now the main feedstock used for ethanol production (67%) followed by molasses from sugar beet (27%). Ethanol production currently absorbs only 3% of EU cereal production so does not play an important role in the European cereal market. This is in stark contrast to the 40% of corn production used for ethanol production in the US.


Between 2014 and 2024, ethanol production from cereals is expected to rise from 2.2 million tonnes oil equivalent to 2.7 million tonnes oil equivalent which would cover around 50% of ethanol use in the EU. Nevertheless, this is not expected to account for more than 5% of cereal production and therefore would still have limited impact on agricultural markets within the EU.


2nd Generation Advanced Biofuel

US Support


Second generation cellulosic ethanol in the US was knocked back by the Obama administration on Nov. 30, 2015, with the news that there would be no aggressive set cellulosic targets or increase in overall ethanol numbers — leaving cellulosic projects in the unenviable position of competing for market share with first-generation ethanol.


While the US EPA’s 230 million gallon target for cellulosic biofuels for 2016 is almost double the 123 million target for 2015, this is partially being met by biogas producers. As of September 2015, biogas producers had ratcheted up production sharply and had reached a 160 million gallon annual rate, leaving not much headroom for liquid cellulosic biofuels.


EU Support


Guidelines within the EU Commission for environmental protection and energy 2014-2020 indicate that EU State aid investment in new and existing capacity for food-based biofuel is no longer justified. State aid investment is only allowable for the conversion of food-based biofuel plants into advanced biofuel plants to cover the costs of such conversion. Therefore investment aid to biofuels may only be granted in favor of advanced biofuels.


This should result in changes in the use of feedstock for ethanol production, moving away in the medium term from the use of cereal food crops.


Is ethanol dead?


No, not by a long shot. The US ethanol industry is highly fragmented. There is ongoing consolidation, but it is far from over. The top six ethanol producers, those with more than 500 MMGY of production capacity, make up 45% of industry-wide capacity. The remaining 55% is comprised of 140 plants, divided among more than 50 companies. This includes a large number of farmer co-ops, most of whom own only a single plant. Needless to say, this landscape creates room for large multi-plant operators to improve efficiency across areas of energy, by centralizing marketing and logistics and increasing the margin crush by balancing low margin ethanol with higher value-added biochemicals compatible with ethanol production.

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