The gradual feedstock change, Novozymes Thomas Schafer June 7, 2010

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Presentation that I gave on the impact of the gradual feedstock change. I focused on the perspectives for industrial biotechnology in a world with volatile crude oil prices.

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The gradual feedstock change, Novozymes Thomas Schafer June 7, 2010

  1. 1. The gradual feedstock change:Perspectives for IndustrialBiotechnology in a world withvolatile crude oil pricesThomas Schäfer, PhD 07/06/2010Senior Director,Innovation Office, Novozymes R&D CIB FrankfurtTsch@novozymes.com
  2. 2. 2 NOVOZYMES PRESENTATION – May 2010 EMEA Chemicals ForumNovozymes in brief 2009 Novozymes sales by industry GLOBAL PRESENCE • Global leader in Industrial Enzymes & Microorganisms • More than 700 products used in 130 countries within >30 different industries • 5,200 employees worldwide R&D 2009 market share of enzymes (industrial use) • Market leader in all main industries • 47% global market share within industrial enzymes • ~14% of sales invested in R&D • >6,000 patents in place PERFORMANCE • 2009 global sales USD 1.6B (FY 2009) • Operating profit margin 20% (FY2009) • ROIC 20.3% (FY2009)
  3. 3. OVERVIEW • STRATEGY • SEGMENTAL OVERVIEW • SUSTAINABILITY • FINANCIAL REVIEW • APPENDIXNovozmes – a Sustainability-driven Organization• Comprehensive set-up to support the organization in integrating sustainability into everyday work• Uniquely positioned to drive sustainable development: • Novozymes’ technology has significant potential to reduce environmental impact • Being responsible is part of the Company’s history and values Board of Directors Executive Management Sustainability Development department Geographical Business representatives representatives 3
  4. 4. 4 Can you imagine…
  5. 5. 5 6/7/2010 NOVOZYMES PRESENTATION The Challenges CONTENTS Selected Examples: • Selected Enzyme applications • Fuel Ethanol • Renewable Chemicals Conclusion: The Biobased Economy
  6. 6. 6/7/2010 NOVOZYMES PRESENTATION6 The Challenge Continued strong growth in China, India, Russia keeps Population demand for petro derived # (demographics) products high from 6.7 billion people in 2008 to 9 billion Demand people in 2042-2050 new middle classes arising esp. in China, India, LatAm: additional 1 Bio consumers “times of cheap crude oil are over” Energy supply security consequence Fossile Growing environmental Feedstocks concerns Green house gas emissions and global warming time
  7. 7. 7 6/7/2010 NOVOZYMES PRESENTATION 2000-2010: Strong increase of crude oil prices… http://www.mongabay.com/images/commodities/charts/crude_oil.html
  8. 8. 8 6/7/2010 NOVOZYMES PRESENTATION …with strong volatility Tuesday 26.05.2010 http://www.wtrg.com/daily/crudeoilprice.html
  9. 9. 9Sustainability drives Industrial BiotechnologyIncreasing support from scientificgroups supporting governments “Thus we face the consequences of burning of high sulfur coal, Bioeconomy Council depletion of petroleum reserves Germany for transportation, and excess CO2 US Academy of Sciences being produced as storedOECD hydrocarbon reserves are depleted.Increasing support from NGO´s …Sustainable, efficient and clean WWF sources of energy are crucial to reducing our dependence on and the depletion of fossil fuels. The New Biology can help propel the sustainable production of biofuels”
  10. 10. 10 6/7/2010 NOVOZYMES PRESENTATIONEnzymes reduce CO2 emissions Corporate target for 2015: Enable indirect CO2 emission reductions of 75 million tons by 2015NZ helped saving 28 Mio tons in2008 3,800 KGCO2 SAVINGS USING 1 KG ENZYME 3,400 KGIN THE MANUFACTURING OFCONSUMER PRODUCTS : 1,300 KGMINUS : UP TO 600 KG CEREAL FOOD BIOCATALYSIS 100 KG 150 KG 150 KG 200 KG 30 KG 40 KG OILS & FATS PAPER BIOETHANOL DETERGENT FOOD TEXTILES ANIMAL FEED LEATHER
  11. 11. 11 6/7/2010 NOVOZYMES PRESENTATION The Challenges CONTENTS Selected Examples: • Selected Enzyme applications • Fuel Ethanol • Renewable Chemicals Conclusion: The Biobased Economy
  12. 12. 12 The basis for the gradual feedstock change Biotechnology as key enabling technology to link feedstocks to products • Green Biotech • Industrial Biotech • In combination with chemical engineering/ downstream processing
  13. 13. 13 Fermentation is a central part of Industrial Biotechnology Traditional: Enzymes Vitamines Aminoacids Ethanol Glucose from starch Bacteria Fungi Non-GMO and GMO
  14. 14. 14 Fermentation is a central part of Industrial BiotechnologyNEW: Traditional: Glucose Enzymes from Biomass, Vitamines agricultural Aminoacids waste Ethanol Emerging: Bio-polymers Bio-chemicals Chemical Intermediates ”AdvancedThe sugar platform fuels”
  15. 15. 1515 07-06-2010Novozymes delivers enzymes for the 1st generationbioefineries: “cheap sugar platform” as future feedstocks Largest supplier of enzymes to the existing fuel ethanol industry ~17% of total Novozymes sales in 2008 Predominantly a US business Yeast Bio- Enzyme Fermentation ethanol Starch process
  16. 16. 16 07-06-2010Novozymes technology leads the way to2nd generation biofuels: sugars from biomass Leading the way in development of cellulosic bioethanol in collaboration with industry leaders around the globe Starch Enzyme process Yeast Bio- Fermentation ethanol Waste Pre- Enzyme treatment Cellulosebiomass process process • New Enzymes • Ca. 150 people working on this • Improved Enzymes project • New, more profitable production • Across all regions strains • Using many technologies
  17. 17. 17 07-06-2010Cellic® 2010 launch Cellic CTEC2: The new product is launched in Feb 2010 The first commercially viable enzyme for cellulosic ethanol
  18. 18. 20X ENZYME COST REDUCTION OVER 3 YEARS GreenField ethanol •Largest fuel ethanol producer in Canada •R&D facility in Chatham, Ontario •1 ton/day pilot plant running for 3 years with repeatable results at multiple scales •Focus on corn cob and screening other feedstocksNovozymes Cellic® CTec2•20x reduction in enzyme costin three years•Validated in 5-T hydrolysis reactor•Two 50% reduction step changesfrom enzyme improvement 18
  19. 19. 19 07-06-2010 Renewable Chemicals CONTENT
  20. 20. 20 8/9/2009 NOVOZYMES CAPITAL MARKETS DAYConversion of renewables– Renewable chemicals fit well with Novozymes Leveraging central technology from Novozymes Leveraging partnerships with grain processors and chemical companies Yeast Bio- Fermentation ethanol
  21. 21. 21 8/9/2009 NOVOZYMES CAPITAL MARKETS DAYConversion of renewables– Renewable chemicals fit well with Novozymes Leveraging central technology from Novozymes Leveraging partnerships with grain processors and chemical companies Yeast Bio- Renewable Fermentation ethanol chemicals Heterogenous Renewable catalysis chemicals Novel Engineered pathway Renewable -- chemicals Novel bioprocess
  22. 22. 22 8/9/2009 NOVOZYMES CAPITAL MARKETS DAYConversion of renewables– Renewable chemicals fit well with Novozymes Leveraging central technology from Novozymes Leveraging partnerships with grain processors and chemical companies Yeast Bio- Renewable Fermentation ethanol chemicals Heterogenous Renewable catalysis chemicals Novel Engineered pathway Renewable -- chemicals Novel bioprocess
  23. 23. 23 07-06-2010Renewable Chemicals Renewable chemicals are in their infancy Dedicated pioneers have shown ”it can be done” – even with new molecules tio n ro duc tio n In p ro duc In p Branched Poly- hydroxy-alkanoates Poly-hydroxy- 9 butyrate (PHB) on 12/0 oducti I n pr
  24. 24. 07-06-2010 Biorefineries at ATV 24Existing bulk chemicals like PE can be made (Braskem):Ethanol as platform chemical
  25. 25. 07-06-2010 Biorefineries at ATV 25Bio-PE has positive impact on GHG emissions
  26. 26. 26 NOVOZYMES PRESENTATION – May 2010 EMEA Chemicals ForumRenewable Chemicals is a strategic focus areafor Novozymes “Sugar platform” as basis We strive to execute and build a pipeline to create a new business with committed partners who share our strategic intent Committed team including business development and R&D Four ongoing project with dedicated partners Bio-Acrylic acid Cargill Renewable Renewable Bio-Polypropylene Braskem Chemicals Chemicals Platform Platform Glycol Dacheng Not disclosed Not disclosed
  27. 27. 27 07-06-2010The technology – Engineered pathways A microbial cell is highly optimized by gene technology to produce a desired compound from a given feedstock in the highest amounts possible Here: not secreted enzymes, but intracellular pathways that consist of many different enzymes Novozymes example: Hyaluronic acid product 1 product 2 product 3Starch Ferment- able sugars Wastebiomass Renewable chemicals
  28. 28. 28 07-06-2010Case 1: Bioacrylic acid, market Existing market = USD 11 billion Annual production = 3.1 million tons (2005) Annual growth = 4% Upside: 3-HPA is a building block by itself Serving many different applications, including high-end industries such as diapers, hygiene products, flocculants, coatings, dispersions, and adhesives New applications
  29. 29. 29 07-06-2010Case 1: Bioacrylic acid, partnership with CargillCurrent petro route for production of acrylic acid Propylene Acrylic acidPropylene 2000: USD 430/metric tonPropylene 2008: USD 1,450/metric tonNew fermentation-enabled route to acrylic acid Chemical Enzymatic Engineered downstream process pathway process
  30. 30. 30 6/7/2010Case 2: Novozymes Green Polypropyleneproject with Braskem Goal: Development of large-scale production of polypropylene from sugarcane. Use: in plastic used in e.g. food containers, drinking straws, and water bottles to washing machines, furniture, and car bumpers. Market: second most widely used thermoplastic with a global consumption in 2008 of 44 million metric tons. The market is estimated to be USD 66 billion, with an annual growth rate of 4%. Partner: Braskem is the largest petrochemical company in Latin America with ongoing interests in a bio-based economy: Braskem is currently building a 200,000-tons-per-year green polyethylene plant in Brazil with ethanol from sugarcane as the raw material. Timing: Initial development will run for at least five years (from end 2009)
  31. 31. 31 07-06-2010The challenges are enormous– Traditional chemicals are from an optimized industry Petroleum-based chemistry Optimization: Scale Level of optimization Energy efficiency Fixed cost reduction Improved maintenance Sourcing/supply chains Value engineering Plant reliability On-stream time … Foundation Development Expansion Diversification Maturity Time
  32. 32. 32 07-06-2010…while renewable chemicals are in their infancy Petroleum-based chemistry Level of optimization Renewable chemicals have to compete on price and performance No subsidies New infrastructure Renewable chemicals industry Time
  33. 33. 33 07-06-2010 Biorefineries at ATVSo why pursue this? The market is gigantic Total value of chemical market in 2003 ~ USD 1.24 trillion Commodity chemical market in 2005 ~ USD 360 billion Virtually all bulk chemicals are produced from oil and gas today Trends are in place Sustained high oil prices suggest that it is possible to substitute many bulk chemicals at a lower and less volatile cost using a biological alternative Further drivers (customer request for renewable products and population growth) suggest a role for biotech * Excluding pharmaceutical and consumer products Technological advances SOURCE: Modified from Value Creation, chapter 1 Ed. Budde, Felcht, Frankemölle, 2006.
  34. 34. 34Selected other projects:”untraditional partnerships” DuPont/BP: Butanol Danisco/Goodyear: Isoprene Amyris Biotechnologies: Isoprene, alternative fuel LS-9: alternative fuels Roquette/DSM: Bio-Succinic Metabolics Explorer: L-Methionine, 1,2-Propanediol, 1,3-Propanediol, N-Butanol, Glycolic acid Genomatica: 1,4-Butanediol
  35. 35. Rethink Detergents: a traditional industryReplaceChemicals- Bioinnovateyour detergent It started as a dream!
  36. 36. The BasisEnzymes are becoming increasingly competitiveDetergent raw material prices 1993-2007 Enzymes - independent of oil prizes170160 159%150140 133%130 126%120110100 90 80 70 60 50 40 39% 30 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 LAS AEO Zeolite Enzyme Savinase 12 T to UL
  37. 37. 37 Conclusion: Biobased Economy Less energy Less water Less chemicals Better utilisation of raw materials Less CO2 Ability to convert agricultural feedstocks Ability to produce food, feed, fibres, fuels & materials
  38. 38. 38 07-06-2010 Biorefineries at ATVFuture perspectives and implementation– The way forward will be in phases Biorefineries based on cellulosic input, multiple feedstocks => multiple products Biorefineries based on starch input, specific feedstocks => specific products
  39. 39. 39The time is ripe for sustainable solutions Climate change Growing population Scarce resources For questions and comments please contact me under Tsch@novozymes.com or: ++45 3077 6444

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