In Washington, D.C., the world’s largest seed company spent $1.71 million in the second quarter of 2011 to lobby the federal government, according to a disclosure report filed with the House clerk’s office by Monsanto Co.

The Company lobbied Congress and the U.S. Department of Agriculture over regulations that would affect the distribution of genetically engineered crops like the company’s Roundup Ready sugar beets and alfalfa. Monsanto also lobbied the U.S. Department of Agriculture and Environmental Protection Agency on issues surrounding subsidies for the growing ethanol industry.

US Agriculture Secretary Tom Vilsack, Massachusetts Energy and Environmental Affairs Secretary Richard Sullivan, and Agrivida CEO Dr. Michael Raab

8 billion gallons of new cellulosic biofuels capacity is mandated for 2016-2019 – here’s a sneak peek at corn stover technology that drop the price by 33 percent.

With ethanol trading at $2.53 per gallon for the October contract on the Chicago Board of Trade, fans (and stakeholders) of cellulosic ethanol have reason to be hugely excited by the news that POET closed its loan guarantee for the 25 million gallon Project LIBERTY plant at Emmetsburg, Iowa.

Especially given that last November the company revealed that it was producing cellulosic ethanol at $2.35 per gallon, “capex, opex and no subsides,” and that the company expects to be  at $2.00 when Project LIBERTY opens in 2013. That’s down from $6.00 per gallon when the pilot in Scotland, SD first opened.

Now, RBOB gasoline is trading at $2.66 per gallon for the same period – so, on the BTUs, ethanol fuel needs to reach $1.80 per gallon to have the same energy equivalence. Yes, there’s the price of carbon to consider, and there are RINs.

But we have far to go in creating the low-cost renewable energy systems that drive powerful industrial economies.

The Next Wave

Which is one of the reasons why engineers and executives alike are starting important discussions about what the second generation of cellulosic ethanol plants are going to look like. The first generation designs that will come out in the 2012-15 wave will be functional – and transformative compared to the prices per gallon that were being achieved in 2007-2010 – but not as profitable or viable as their operators would like them to be. As is always the case in manufacturing.

On the conference circuit this year, there is a tremendous amount of focus on getting steel into the ground and making first generation of cellulosic biofuels a reality. So, there is talk about financing, and policy, and building out the supply chain. As it should be.

Discussions about the 2016-2019 cellulosic biofuels fleet of manufacturing sites – what they will look like, and how they will change – are less common. Yet the second generation is where the big gallonage will happen.

In 2015, the Renewable Fuel Standard calls for 20.5 billion gallons of renewable fuels – that’s 15 billion gallons of corn ethanol and 5.5 billion of everything else, a lot of which will be expected to be biodiesel, renewable diesel, and possibly some Brazilian sugarcane ethanol.

By 2019, that number has jumped to 28 billion gallons – 8 billion gallons of capacity added to the system in those three years. At 50 million gallons per plant (and that’s on the high end – POET is looking at 25 million gallons per plant, in its current plan), that’s 160 new biorefineries.

Certainly there’s no reason to believe that industry is not capable of constructing at that rate, considering the pace of construction during the 2006-2008 ethanol boom.

But there will have to be a transformation shift in the enthusiasm of investors, which means a transformational shift in the economics that will further de-risk the scale-up.

Delivering pretreatment inside the feedstock

One of the most transformative cost shifts we have heard about in a long time – one at a very early stage, but ready for that 2016-2019 period, comes from Agrivida.

Now, if you’ve been following the story of Syngenta’s Enogen corn this year, that will be helpful in communicating what AgriVida is up to.

Enogen is that recently approved, transgenic corn, grown specifically for biofuels production, containing corn amylase – a special set of enzymes that activate at the dry-grind mill, after the corn kernels have been harvested. Those enzymes begin the pretreatment process – essentially, they soften up the corn.

What makes that process transformative is that the enzymes are grown by Mother Nature as the crop grows. No need to grow them in a fermentation tank, using (say) fossil fuel inputs. No need to transport the enzymes to the processing plants. Pre-treatment costs come down, perhaps dramatically, plus enzyme loads.

OK, that’s first generation corn ethanol. What about cellulosic biofuels – can the same thing be done with corn stover?

That’s what Agrivida is up to.

“We are expressing all the cell wall degrading systems in the plant,” explains Agrivida CEO Michael Raab, “as the core part of our technology. We can control the activity of those enzymes so that in the plant we can express all the enzymes in dormant form. After harvest, we activate the enzymes in the material, so you don’t have to pretreat in the same way. It makes the process lower temperature, with a moderate PH, and takes out a lot of capital costs and those high costs of dilute acid pretreatment. Also, we really reduce the enzyme loading.”

Now, AgriVida is no fly-by night company. Its investors include Kleiner Perkins Caufield & Byers, Prairie Gold Ventures, DAG Ventures, Presidio Ventures, NorthGate Capital, and incTank Ventures, and its programs are supported by grants awarded by the National Science Foundation, the U.S. Department of Energy, including an ARPA-E grant, and U.S. Department of Agriculture.

So, what kind of transformative savings are we looking at?

“We use costs that are talked about publicly, for example the $2.35 per gallon figure that is frequently talked about., and within that there is $0.50 in enzyme cost and $0.60 for pretreatment when it includes capital depreciation. With our system, we would be in the $1.55 to $1.65 range,
taking out $0.40 in enzyme cost and $.30 in pretreatment.”

OK, Raab has my attention now. Combined with any improvements in feedstock costs, that definitely begins to bring cellulosic biofuels (made from corn stover, in this case), into the kind of cost ranges that get investors excited.

It’s the goal that BP Biofuels chief Phil New has been setting for his team, and by extension for the industry. His focus, he says, is not to make advanced biofuels but advantaged biofuels.

So, where is AgriVida in terms of timing?

“We are currently making three enzyme plants that will provide majority of that savings. In 6-9 months we’ll pick a leading candidate. from there, we’ll be working with the major corn seed producers, and we already have a deal with Syngenta, to integrate their corn lines. We also have the regulatory process because the grain will be used for animal feed, that can be anywhere from 4-6 years because the USDA will have us do a number of field trials at different sites and increase the acreage each year. Also, we’ll be bulking seed in those years, and we have to generate the seed to cross it into different lines. We’ll be ready in that 2015-17 period and we don’t see the industry running away before then.”

Corn stover great – what about other cellulosic crops?

“In our feedstock roadmap, we are working on corn stover, sorghum, and switchgrass. There’s
no reasons why our process wouldn’t work in trees, miscanthus or cane, but we selected those three, for reasons of focus, and because a lot of the accompanying technology for transgenic plants are fairly well implemented in those. We’ll build it out in other crops later.”

Business model?

“The processor would get a license, because in this case it would be integrated with their overall design because, for example, they would have the opportunity to process at low temperatures, or less than 100C, and take advantage of lower cost pretreatment. From there, we would work with growers to contract grow and supply to the processor.”

Always working with the processor?

“The model is very crop dependent. The easiest case if where the processor is vertically integrated – as you see in the case of sugarcane, where the mill owner also owns the plantation. There, it’s easiest to partner with producers – they grow, harvest, and we get a royalty. With crops like corn, the system is far more complex, and we are having discussions with the seed companies, the growers as well as producers to find the right fit. But cellulosic processing tends to be composed of sophisticated groups of companies, even now, working cooperatively together.”

The Bottom Line

So, there’s a look at the future – part of what we are identifying as a move towards an integrated “system of systems” to produce advanced biofuels at scale, involving a highly sophisticated coordination between all companies along the supply chain.

The good news is that there is substantial financial promise in the model. A reduction of between 70 and 80 cents per gallon by changing the feedstock and feedstock prices is, as they say, not nothing. That’s a third.

Big shift, worth keeping in sight as the industry goes through the necessary agonies of building out its first generation integrated biorefineries.

National Corn Growers Association President Bart Schott released the following statement in response to President Obama’s Economic Growth and Deficit Reduction Plan:

“NCGA strongly supports the effort to get our federal budget under control and the need for shared sacrifice in order to achieve an equitable, balanced approach. We appreciate the recognition in President Obama’s plan of how important reliable effective risk management tools are to farmers and rural communities. While NCGA agrees the fiscal challenges before us require even greater efficiency in the delivery of farm safety net programs, we are deeply concerned by proposals that would directly undermine a farmer’s ability to purchase adequate insurance coverage at a time of heightened volatility in commodity markets.

“In addition, NCGA recently unveiled the Agriculture Disaster Assistance Program (ADAP), a plan that transfers a significant portion of direct payments for deficit reduction, with the remaining funds put toward an improved risk management program that better complements federal crop insurance.

“As the Administration and members of Congress begin to prepare for the next farm bill, we also ask that decisions and writing of the legislation be made within the committees of jurisdiction.”

Will the rise of designer fuels, chemicals and biomaterials put an end to crop growing system as we have known it?

Will customers vie for differentiation and performance as well as price? A new sorghum deal between Constellation Energy and Chromatin may point the way.

Earlier this week in California, Constellation Energy and Chromatin announced a memorandum of understanding to supply of renewable sorghum grown specifically for use as fuel, to two of Constellation’s California power plants.

In anticipation of this, Chromatin is growing three fields of biomass sorghum, a non-food crop that has a high energy content, is adapted to marginal lands, and requires less than half the water and chemicals of field crops such as corn or sugar cane.

First dedicated energy crops at scale for biomass-to-power

The story is attracting a lot of attention because it is, as far as anyone knows, the first at-scale use of a dedicated energy crop for power production. Biomass to power production has been, to date, generally based on the burning of traditional crops, woods and residues – though small-scale testing on energy crops has been going on for some time.

But there’s another aspect here, which will in the long-term prove more important as a trend. Constellation has not partnered with a biomass aggregator or a traditional forestry or crop company. Chromatin is a biotech company, which has been generally known for developing and  commercialized a mini-chromosome gene stacking technology.

Now, Chromatin has applied its own suite of technologies to sorghum feedstocks – including 50,000 different hybrids developed to date, acquired Sorghum Partners, and has developed a broad group of growers through its seed marketing operations – all of which it brings to partners such as Constellation Energy.

“California requires load-serving entities generate 33 percent of their power from renewable sources by 2020. If we can rely more on sustainable biomass to fuel our plants and capture greenhouse gases, we would be taking important steps toward generating the clean power that is the cornerstone of California energy policy,” said Steve Gross, Managing Director of West Region operations for Constellation Energy’s Power Generation group. “We were attracted to sorghum biomass because it offers potentially high energy content, and can be handled in our plants with only minor modifications to our equipment.”

Beyond yield – driving value through performance

But it is more than the story of an energy crop used for biomass-to-power, or a biotech company entering the field of energy crop supply-chain logistics. It is the story of where commodity crops and designer crops are going.

“We are getting 10-12 dry tons per acre,” Chromatin’s CEO Daphne Preuss told the Digest. “And that’s one of the things that’s critical. A lot of people talk yield, yield, yield. But a ton of high quality biomass is better, in terms of high BTUs. Today, our sorghum is expected to have an energy content that is more than 70 percent of coal – roughly equivalent to firewood. Our breeding and crop engineering program is generating new varieties of sorghum that are expected to have an even higher energy content with lower levels of ash and other contaminants. So, we look at this as a system – and ‘what is the value created?’. Sure, yield drives value, but you need to have quality.”

We talked briefly, not only about the BTUs, but a broader range of qualities, including trace materials, ash content, and more. The kind of precision that comes from having a portfolio of thousands of hybrids to choose from.

“There’s this popular idea going around – this idea of being feedstock agnostic,” said Preuss. “When you talk to plant operators, these are engineers who have been running their plants for a long time, in many cases. They have tight specs to make their plants work well. What you hear from them is “maximize this, none of this, I hate it when I have this, this is a deal breaker.” If supplies are limited, they are stuck with what’s available, but with a choice, they know what they want.”

But isn’t that a function of price, too?

“Sure,” said Preuss, “there’s a lot of ‘I will take this at that price,’ but there’s also a lot of ‘I won’t take this at any price.’ It’s knowing what you want, and from there we can go to the set of hybrids in the field, we can say, how’s this one? If its not quite what we want when we go to scale, well, we heard what they wanted, and we go back and optimize it to hit the mark.”

Biotech companies and supply chain management

It suggests an evolution in grower relations.

“We have growers  who are long-standing customers,” said Preuss, “and we have a very close connection. It’s a partnership. We routinely engage growers for our seed production, and through our networks, such as our partnership with Land O’Lakes, the largest grower co-op. We are introducing them to a crop, in a way they haven’t seen it before. In turn, that’s an expertise and a skill set that has value. We can ensure that the crop is grown the right way, so that it stays high value. You have to do it right, you have to watch the process.”

There’s value and rationale, then, for industrial biotech companies, in the business of supply-chain logistics?

“Even if you look at how utilities handle the supply of coal, they don’t get into managing supply chain. We are not looking at building a commodity process, but a high value product that performs, based on growers that are engaged, that have the training and understanding. Some partners want to backward integrate more than others, but a large group of parties are generally never interested in going that far into supply chain, and will pay for that service. That’s routine and easy for us.”

The two plants that will test burn the sorghum biomass are Rio Bravo Poso and Rio Bravo Fresno. Rio Bravo Poso is located in Bakersfield, Calif. and currently uses coal and petroleum coke as a fuel source. Rio Bravo Fresno is located near Fresno, Calif. and now burns agricultural and construction wood waste.

Chromatin’s first field for use at the Rio Bravo plants – 30 acres near El Centro in California’s Imperial Valley – will be harvested in September and October. To produce the biomass, Chromatin has engaged growers experienced in producing hay or forage for livestock feed. Two other fields – with a total of 65 acres in California’s San Joaquin Valley – also are under production to supply the Rio Bravo plants.

Chromatin expects to deliver the first shipments of processed sorghum biomass to the Rio Bravo plants in a few weeks.

In many ways, this kind of activity has been going on for a long time – when we look at how many people, how much effort, for example, Monsanto puts into corn – where the company’s work on supply chain and grower relations is as important in many ways as its development of technology – because of the role of supply chain in assuring that the results of the lab are carried through the field.

But, in the end, corn is a global commodity crop, even if the yields and performance are changing, and even if the traits and improvements that drive that yield and performance involve an array of seed varietals and planting strategies.

Performance driving value, through differentiation? A new role for synthetic biology.

We see something else emerging here – not only in the requirements of biomass power operations, but in the those requirements developed by biorefineries, or in the customers for the products of biorefineries. It is a shift from a focus on cost to a focus on the potential of increasing value by changing performance. But also, a change in a role from simply inproving performance across the board, to developing a suite of characteristics that can be differentially improved.

Harrison Dillon, the president of Solazyme, has talked about this as well, in terms of renewable oils. Visiting with prospective clients who have been dealing with opportunities for performance enhancement that have been eternally limited by the characteristics of crude oil (where variation is limited by choices between say, shale oil or Texas light sweet). “What kind of oil would you like?” Dillon asks. It is a new type of question for a new era.

What’s yo flava?

Indeed, “what kind?” is a question that is beginning to resonate in terms of the product range now available to industrial biotech players. They are making fuels, power, specialty chemicals, intermediate chemicals, plastics, flavors, fragrances, feed, fibers – even cookies. From “there’s a Tiger in your tank” to “tastes great, less filling” – that’s a range of differentiation available not only in the sector, but in the individual, differentiated brand.

In the old days, performance was simply not something where enough value could be created to justify the cost. Synthetic biology is changing that. The time and cost required to develop new high-performance crops is dropping, fast. There is an opportunity to move – in terms of meeting customer needs – from commodity production runs aimed at minimizing cost within a general commodity specification – to campaigns based on individual, or grouped, customer performance characteristics.

Though the logistics can be daunting, there is added value in high-performance, and as biology opens up new opportunities for value capture, and brings down the cost of value delivery through supply chain and engineering – well, that tells you where it might all go. Campaigns as sophisticated and varied as clothing factories – except programmed across bioreactors and fields instead of across the looms. That’s tomorrow, not today – but directionally, the Industrial Revolution drove the loom, and the Digital Revolution in computers and biology may well drive a new level of sophisticated delivery in agrienergy.

The fast crops, the big customers benefit, for now

Which suggests that there is a high premium value in crops that have fast breeding cycles – but also in those which have a well-behaved genetic system.

“In the energy crop space,” Preuss observes, “It’s been crop of the day. A lot of people have suddenly become botanists and scoured the earth for new options. Some of these emerging crops take a lot of time and investment to get the results you need. It’s reinventing the wheel, and I am not sure it’s needed.”

Of course, the other factor is a partner at scale, who “gets it”, and it is intriguing and pleasing to see that Constellation is entering the field in that role – where there is enough scale to invest in relationships and deliver high-value opportunities that improve substantially each year.

Making this MOU between Chromatin and Constellation more interesting than many.

In Washington, Informa Economics released a new study (funded by the Renewable Fuels Foundation) entitled “Analysis of Corn, Commodity, and Consumer Food Prices”. Informa concluded that “the statistical evidence does not support a conclusion that there is a strict ‘food-versus-fuel’ tradeoff that is automatically driving consumer food prices higher.”

The new study found that “…there has historically been very little relationship between annual changes in corn prices and consumer food prices. The corn price would be considered a statistically insignificant variable in determining what drives the food [consumer price index].”

“Ethanol is not the only driver influencing corn prices, and corn prices have not been the only factor driving consumer food prices,” said Bruce Scherr, CEO and Chairman of Informa Economics. “Rather, there is a complex and interrelated set of factors that contribute to corn and food prices. Further, the farm share of the retail food dollar is relatively small. Increases in other marketing bill component prices are contributing to food price increases.”

In Washington, the USDA says corn stocks will stay at 15 year lows for longer than expected with ethanol and Chinese imports as the main users of the anticipated supply. The most recent usage estimates were 3% higher than expected by traders, offsetting some of the expected increase in supply. Ethanol will become the largest consumer of corn for the first time ever surpassing livestock use.

On the road from Pilot to Player, three Khosla companies have gone far and fast – but now, the differentiating points become clearer. Who’s better now?

They share Khosla Ventures in their DNA, and are next-gen companies – but there, the similarities begin to fade. KiOR – making biocrude from woody biomass. Gevo, making isobutanol and jet fuel from corn. Amyris, making Biofene and renewable diesel from sugar.

Much has been written on the technologies – fascinating they all are – but as the companies are beginning to show differentiation in their go-to market strategies, analysts and observers have had the opportunity to differentiate between the companies in strategic terms.

Over the past few weeks, several star analysts have been writing furiously, amidst a blizzard of quarterly filings and initiation of coverage, about the future of the companies. Their intent? To inform the public investor about attractive investment opportunities – a worthy goal at any time. But they also, in their conversations and writings, have formed interesting views on the technologies and strategies themselves – and thereby offer cautionary tales and encouragements to project developers, communities, researchers, and government – on how the market views the various strategies out there.

So, let’s put some definition on the sectors, and then look at what the analysts have reacted to favorably, and those elements that leave them skeptical. Woe betide any company founders who, in heading for scale, tempt powerful analysts to give negative outlooks, express skepticism, or become perplexed.

The latest on Gevo

For the second quarter, Gevo reported earnings per share of $(0.48), below the Street’s consensus of $(0.39). Revenue from corn ethanol was low, though margins were high. The big announcement – Gevo announced that it signed its first definitive commercial off-take agreement with Sasol Chemical Industries. This agreement makes Sasol Gevo’s first isobutanol customer and will utilize the majority of its isobutanol production capacity into 2013. The agreement is an index contract with favorable economics for Gevo, and includes specific timing and pricing commitments.

From Pavel Molchanov, at Raymond James: Recommendation. While fully recognizing the inherent execution risks in an early-stage story such as this, we believe Gevo is well positioned to be a leader in the Gen2 biofuel space, with a capital-efficient and highly scalable business model, rapid access to numerous chemical and fuel end markets, and a wide range of industry partners. We reiterate our Outperform rating. GEVO shares are currently trading at a 22% discount to our DCF estimate of $21.45, detailed on page 2. Given Gevo’s unique technology platform and “scarcity value” as one of the few publicly traded Gen2 companies, we believe a multiple of ~1.1x DCF is warranted, which yields our target price of $24.00.

The latest on Amyris

For the second quarter, Amyris posted earnings per share of $(0.78), below the Street consensus of $(0.61). Revenue was down for third-party ethanol sales. The big announcement – a term sheet with Total Gas & Power USA to form a joint venture to commercialize Amyris No Compromise Renewable Diesel. Under the contemplated agreement, Total would fund expanded R&D at Amyris and provide capital for the acquisition and construction of dedicated production facilities. Investment figures exceeding $1B by Total, and expansion of Amyris cane crush volume to as much as 30 million tons – enough to produce 2.4 billion gallons of conventional ethanol – have been mooted.

From Pavel Molchanov, at Raymond James:  “We remain structurally positive on Amyris’ strategic positioning in the Gen2 biofuels space. The announcement of a renewable diesel joint venture with Total (TOT/$51.63/not covered) further highlights the breadth of Amyris’ product platform and partnerships. The high degree of visibility for Amyris’ route to commercialization and its multifaceted partnership approach both provide positive differentiation. We reiterate our Outperform rating. AMRS shares are currently trading at a 13% discount to our DCF estimate of $26.45, detailed on page 2. Given Amyris’ unique technology platform and “scarcity value” as one of the few publicly traded Gen2 companies, we believe a multiple of ~1.2x DCF is warranted, which yields our target price of $31.00.

GEVO vs AMRS stock performance - Gevo in blue

From Rob Stone and James Medvedeff of Cowen & Co: “Q2 revenue and cash loss missed the Street, due to the non-core fuels distribution segment and higher expenses. However, cash burn should be much lower in H2 on a ramp in bioproducts sales and customer funded R&D. A new deal with Total to commercialize diesel should provide substantial development support and new capacity, freeing up AMRS volume for more specialty chemicals, and raising our 2014-15 estimates. We see 60% plus upside in AMRS relative to the market in 12 months. Reiterate Outperform (1).” The analysts lifted their cumulative cash earning per share for the 2011-15 period to $11.53 per share, from $9.65. They see the company growing to $2.5 billion in sales by 2015.

The latest on KiOR

Rob Stone and James Medvedeff of Cowen & Co write: “KIOR has developed a proprietary process to convert biomass into gasoline and diesel blendstocks, compatible with existing infrastructure, using abundant, non-food feedstock. It should be cost competitive, but also benefit from biofuel mandates. Customers are in place for the first commercial plant, expected on line in H2:12. Scaling from there points to huge long-run cash flow. We see 50%+ upside relative to the market in 12 months.”
Stone and Medvedeff highlight four factors in his enthusiasm about KiOR. The massive nature of the fuels market and the 36 billion gallon Renewable Fuel Standard. The company’s scale up to 10 tons per day with 500 tons per day by late 2012. The 59,000 tons per day surplus in the primary feedstock, southern yellow pine. Finally, the substantial margins, which lead Stone to model cash growth to $9 billion by 2022, and $38 billion by 2032. The analysts intiated coverage on KiOR last month with an Outperform rating.

KIOR vs GEVO stock performance - Gevo in blue

A look at Gevo, Amyris and KiOR, from Piper Jaffray

Michael Cox and Mike J. Ritzenthaler at Piper write:

Along with our initiations on KiOR (KIOR, OW/$20) and Amyris (AMRS, N/$25), and the increase in public companies in the sector, we are revisiting our thesis on the broader Industrial Biotechnology sector we first outlined over a year ago. Favorable technology development, commodity prices, and an increase in strategic investments over the past 3-5 years have converged to produce numerous public companies and a burgeoning pipeline of industrial biotechnology companies looking at the public markets as a potential next step. Our favorite ideas in the space (including GEVO – OW/$28 and KIOR) have advanced technologies with high yields, lowest possible feedstock costs, truly fungible end markets, and a capex structure that enables the company to control its growth rate…Using our methodology, we see the best opportunities for Gevo and KiOR.

On the fuel vs chemicals question, Cox and Ritzenthaler write: “While fuels markets are attractive from a volume perspective, we believe most technologies used to target this segment will struggle with margin sustainability…We are somewhat more positively disposed to the basic &intermediate chemicals segment of the industry due to the higher value output of the process.

Without naming Amyris, they question the company’s capital-light strategy: “The widely touted ‘asset-light’ business model is synonymous with slow growth and limited visibility. It is generally based on the premise that a large corporate sponsor will fund 100% of the capex and split the profits 50/50 with the technology provider. Cox and Ritzenthaler focus in on what they see as a problem with the strategy, from the industrial biotech investor point of view: “The corporate sponsors are not known for their financial nimbleness: the smaller technology provider will always want the larger firm to move more quickly in deploying capital.” Also, they warn, “if the sponsor is responsible for site selection or offtake, it is key to understand how much better the economics are for the sponsor.”

The Bottom line on the bottom line?

Enthusiasm is strong for the value in the space as the company’s commence scale-up – but some differentiation in opinion is emerging regarding the Amyris strategy – while all see the commitment from partners such as Total as a massive aid in scale-up – Piper is signaling they they are not yet convinced that the trade-off of access to capital is worth the burden of dragging a heavy corporate anchor around, in the form of slow-moving partners.

On KiOR, we see enthusiasm for the business model – more than occasionally, we hear the tut-tut from informed observers as to the viability of the process at scale. We’ll have to wait and see.

Generally, there’s broader enthusiasm for the Gevo model – which maintains the commercial freedoms of a build, own, and operate strategy – by proving capital towards conversion of existing corn ethanol facilities – they have some of the freedoms of a build, own and operate strategy without the capital intensive and time-intensive nature of the undertaking. The achilles heel in the near-term – informed observers mention the dependence on corn as a commodity feedstock.

Tomorrow, Solazyme reports

So there you have it – three companies in the advanced biofuels space – diverging opinions, much to consider. Today, Solazyme reports its Q2 earnings, and we get to look at the space all over again.

One thing is for sure – the transparency of the public market is giving us all a much better window into the souls of the various companies, their feedstocks, models and the nature of their partnerships. The road to scale may not be getting any easier, but the fog is surely lifting for those who march behind.

In Washington, RFA Vice President Geoff Cooper took issue with the contention that US corn yields are rising because of, simply, increased fertilizer use. ”Data from USDA show that 2010 application rates of the three common macronutrient fertilizers (nitrogen, potassium, and phosphate) were the same–or below—the application rates seen in the early 1980s. Thus, nitrogen application per bushel of corn produced is down more than 30% since the early 1980s, while potassium and phosphate usage per bushel are down some 40%.”

In Indiana, a US district court judge will begin hearing arguments on the consolidated case for alleged GreenShift patent infringements on Aug. 22. Reports show that 15 ethanol plants have been named in the case including those by ICM, GEA Westfalia Separator, GEA Mechanical, and Flottweg Separation Technology that claim the companies infringed on GreenShift’s corn oil extraction technology. ICM continues to offer its oil extraction technology to customers.

In Illinois, ethanol prices on the Chicago Board of Trade are rallying on high corn prices thanks to a hot summer that keeps shrinking expectations for the corn crop. Crude oil prices have also advanced, helping to push ethanol prices to three-week highs, up 22% this year. The crush margin is running at between 23 and 24 cents per bushel.