Biofuels: The Next Generation

Includes: BP, DWDP
by: Michael Ferrari

Why is every analyst jumping on the ‘is China/India growth slowing’ bandwagon now?  The indicators that industrial growth and demand for raw material consumption have been evident for some time now, so the recent flurry of activity surrounding the Asian slowdown should really be a confirmation of what we knew was coming for months, not news. 

That being said, while at the SugarAsia 2008 conference last week, I was very impressed by some of the discussions on alternative fuels.  In this sector, the slowdown may be an opportunity rather than a hindrance.  Not only regarding the developments in India, but also in the way that even small producers were aware of how their crops (sugar, jatropha, small grains, etc) could fit into a future energy matrix that is nothing like the one that exists today. 

Fossil fuels will of course still be around, but the vision described over and over is (a) much more diverse and therefore fiscally robust, and (b) one that certainly is preferable from a policy and inflationary perspective.  It also blatantly pointed out how misguided and antiquated the current US farm policies are. 

Regarding next-gen fuels, I was also very happy to see in a couple of the talks following mine, the fact that there were some very detailed discussions on the innovative and important work of (not yet public) companies such as Synthetic Genomics, LS9, and Amyris, and also the Joint Genome Institute, among others. 

On the publicly held side, there was a lot of talk about the research efforts coming out of BP (NYSE:BP) and duPont, and while these giants have moved slow in the past, the market potential for some of their next-gen fuels initiatives may garner some attention in the months ahead.