The strong smell of yeast and a palpable level of excitement were heavy in the air this morning at the opening of Amyris’s first pilot plant, located in Emeryville, Calif. Technicians in white lab coats were busy harvesting some of the first few gallons of the company’s “No Compromise” diesel fuel. The “No Compromise” branding, Amyris CEO John Melo said, is meant to communicate that this biobased diesel is “as good or better performing than petroleum diesel, without compromise to the environment or economics.”
The company, which crafts synthetic biological organisms to produce chemical compounds, will fine tune its process in Emeryville over the next year-and-a-half, and it aims to begin commercial production by June 2010 in Brazil. The initial feedstock for the plant will be sugar from sugarcane, but any sugar would work with the company’s genetically-modified yeast. Melo acknowledges that cellulosic feedstocks are coming up fast, and in 5 to 10 years he says Amyris might partner with or acquire a cellulosic biofuel company.
Melo described the company’s business model as “a capital-light model to scale up fast.” The company plans to partner with existing ethanol plants and convert a portion of those partners’ production capacity to make diesel and other chemicals using Amyris IP. The startup will then buy the products back from the refiner and take them to market, Melo said. The startup has already formed a joint venture with Santelisa Vale, Brazil’s second largest sugar grower, called Crystalsev, which aims to produce 200 million gallons of fuel a year by 2011 at several of its existing ethanol plants at a price of less than $2 a gallon.
The Brazilian partnership, Melo explained, gives Amyris access to ports and ships to export the fuel. Amyris plans to import it to the U.S. and sell its to large customers, like Wal-Mart (s WMT) and the U.S. government. Foreign ethanol is hit with a 54-cent-per-gallon tariff as it comes into the U.S., but Amyris would be importing hydrocarbons, not ethanol, and therefore avoid the tariff. Amyris is already marketing other companies’ biofuels in the Southeast to make sure its distribution channels will work.
To date, Amyris’ strategy hasn’t seamed particularly “capital light.” The company has raised more than $120 million in capital (see previous coverage here and here) from heavy-hitting cleantech and biotech investors, including Kleiner Perkins, Khosla Ventures, TPG Biotech and DAG Ventures.