Washington Editor

WASHINGTON - The Senate this week passed an energy bill that has the attention of many industrial and environmental biotechnology companies, given its provisions related to bioengineered ethanol.

"This is a pretty big deal for the industrial biotech space," said Brent Erickson, the executive vice president of industrial and environmental matters at the Biotechnology Industry Organization.

The legislation received solid backing in the Senate, which voted 85-12 in favor of the bill that could lead to expanded ethanol production. And importantly for the biotech industry, it includes not only measures aimed at increasing ethanol through standard means - that produced from corn grain - but also incentives to scale up development of ethanol generated from crop biomass such as corn stover or wheat straw, courtesy of biotech-engineered enzymes.

The legislation includes portions of a bill recently introduced by Sens. Tom Harkin (D-Iowa) and Richard Lugar (R-Ind.) that creates greater incentives for bioethanol and biobased plastics production from crop biomass and provides funding for research and development of new biotech enzymes. Called cellulases, they can be used to convert cellulose from agricultural waste into simple sugar molecules, far more inexpensively than current technology allows, and then the sugar is fermented into ethanol.

"The energy bill creates demand not only for conventional starch ethanol, it also creates demand for ethanol from cellulose," Erickson told BioWorld Today. "That's really a new type of ethanol that isn't in commercial development yet."

He estimated the current worldwide enzyme market at $3 billion. Among firms that stand to gain from the legislation are enzyme development companies such as Genencor International Inc., of Palo Alto, Calif., and Novozymes A/S, of Bagsvaerd, Denmark, both for conventional ethanol and that produced from cellulose. Also in the mix are biobased plastics-interested firms such as DuPont, of Wilmington, Del.; Dow Chemical Co., of Midland, Mich.; Cargill Inc., of Minneapolis; and Metabolix Inc., of Cambridge, Mass. Those plastics are derived from cellulose-based sugars.

Among other things, the Senate legislation would require American gasoline suppliers to blend 8 billion gallons of ethanol annually into the domestic fuel supply by 2012, another component backed by BIO. At present, about 4 billion gallons are produced domestically each year and that could be expanded to the proposed requirement, though not much beyond because of other corn grain needs such as animal feed. But Erickson noted that annual yields of biotech-engineered ethanol could total 100 billion gallons.

"That's orders of magnitude larger when you start using crop wastes or cellulose to make ethanol," he said. "So we could conceivably supply 25 percent of our domestic transportation fuel needs with bioethanol over the next 25 years."

The bioethanol-related measures include incentives to deliver the first billion gallons of annual production. Funds would be allocated for proposed projects through set payments on a per-gallon basis for the first 100 million gallons of annual production, followed by a reverse auction competitive solicitation process through which production incentives are awarded to the lowest bidders, with no more than 25 percent of the funds committed for each auction awarded to a single bid.

The House already has passed energy legislation, as well, though its version does not include the amendment related to the biofuel provisions. Still, both chambers will work to draft a final bill amenable to all sides, and Erickson expects the bioethanol components to remain on the table.

"We've found that there is pretty good bipartisan support for these issues," he said. "Also, some agricultural groups like corn growers and wheat growers are supportive, so that gives us some solace that it's not just BIO standing behind this."

Erickson also said it's positive that House Speaker Dennis Hastert (R-Ill.) comes from a corn state, adding that he expects both sides to complete the energy bill by November.

Industrial Biotech An Expanding Field

Should a final bill receive President Bush's signature, the legislation certainly would lend incentives for the technology's commercial scale up. Already, Iogen Corp. in Ottawa, Ontario, has produced cellulose ethanol for commercial consumption. And Erickson noted that Genencor and Novozymes recently improved their enzyme efficiency by 30 times, per terms of contracts with the Department of Energy.

But bioethanol plants cost between $150 million and $300 million to build, costs that could be offset by additional provisions in the energy bill.

Nevertheless, interest in such fuel alternatives is growing. As that legislation is moving through Congress, Synthetic Genomics Inc. publicly unveiled itself and its plans to engineer synthetically devised organisms - modular cassette-based systems - to perform specific biological energy functions using reprogrammed cells as bio-factories.

Applications relate to energy and other industrial fields. With regard to the former, the Rockville, Md.-based company said the use of its technology can lead to alternative energy sources that could impact energy markets by generating non-petrochemical, cleaner-burning fuels.

The company's founding chairman and CEO, J. Craig Venter, noted its ability to synthesize photosynthetic and metabolic pathways due to advances in high-throughput DNA sequencing and synthesis, as well as computing and bioinformatics. The use of diverse sets of genes, including those from more than 300 fully sequenced genomes, will allow the company to develop synthetic organisms for specific industrial applications.

Other founders include its president, Juan Enriquez, Nobel laureate Hamilton Smith, the company's executive vice president and co-chief scientific officer, and David Kiernan, another executive vice president and general counsel.

Synthetic Genomics will collaborate with and sponsor research at the J. Craig Venter Institute, a nonprofit organization that employs about 200 staff and scientists in genomics, microbiology, human and evolutionary biology, bioinformatics, high-throughput DNA sequencing, environmental biology, information technology, biological energy research and synthetic biology. Beyond energy, the company expects that its host cells can generate biological energy also applicable to industrial organic compounds, pharmaceuticals, carbon dioxide sequestration, fine chemicals and environmental remediation.

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