Ever met a cool Dane? Read on. This item is from Nick Mackie, who was the first -- and currently is the only -- Western reporter to be based in post-1949 Chongqing, deep in China’s interior. This area is China’s “Wild West” and Mackie often hits the road in a jeep to find fresh stories; he’s blogged for us on everything from rural microcredit to sporting scandals. Here he profiles a dapper Dane with great expectations:
Steen Riisgaard makes an impression. With a steely eye and convincing pitch, he promises to slash China's hydrocarbons consumption - if he gets the chance.
The President & CEO of Novozymes -- a biotech company with a billion-dollar annual turnover -- has both a product and a plan to cut China's annual gasoline consumption by 10 percent by 2020. That translates into tens of millions of tons of CO2 emissions.
We're talking about second-generation biofuel - cellulosic bioethanol to be precise - which would be blended with hydrocarbon fuel to power standard motor vehicle engines.
This second-generation product initially relies on crop waste, such as corn cobs, which is usually burned off. That contrasts with bio-processing in place today which, some argue, competes with the food chain for raw supplies -- notably sugar cane, corn, wheat and barley. Once the project is up and running, other non-food energy crops like switchgrass and hybrid poplars could be introduced.
Actually, the biotech industry had its first crack at developing fuel from waste products some 34 years ago, after the 1974 oil embargo when crude prices “leapt” to US$ 10 per barrel. But the research back then remained theoretical due to comparatively high production costs.
With crude hitting US$ 142 a barrel in June 2008 -- albeit now hovering around US$ 50 -- times have changed. “This is no longer a dream,” says Riisgaard, “This is a technology ready for development, one year down the road.”
Meticulous in his language and appearance, Riisgaard is a man on a mission. Back in the mid 1970’s, he was a young research microbiologist in Denmark before joining Novo Nordisk -- famous for insulin production –- in 1979 to focus on enzyme development. Simply put, these are complex proteins which speed up biochemical reactions, and are commonly used in manufacturing medicines, detergents, textiles, and even food.
In 1982 Riisgaard set up the company’s enzymes R&D unit in Tokyo. He was then 32; within eight years he was promoted to executive v.p and effectively become Novo Nordisk’s Mr. Enzyme, with responsibilities for China as well. In 2000, he became CEO when the newly formed Novozymes demerged with the insulin division.
He's a man committed both to the science and to his company, which incidentally occupies 47 percent of the global market in industrial enzymes. (I can’t help but note this is no geek in a white lab coat: Riisgaard selects his attire with formulaic though seemingly effortless precision.)
His firm produces the key tech, enzymes, that make the chemistry financially viable. The company has a plant in Tianjin plus a joint venture at Taicang, near Suzhou, which Riisgaard calls “the biggest enzyme producer in the world”. But it also needs corporate and production synergies. The complete cycle requires input from two huge, state owned, Chinese partners: COFCO and Sinopec.
COFCO, China’s largest grain and foodstuffs importing and exporting group, is already involved in processing first generation biofuels. Therefore it has the logistics capability to collect raw materials in the hinterland, as well as experience in factory crop-to-fuel conversion. Meanwhile the oil refining and distribution giant Sinopec brings its engineering and distribution expertise to the partnership.
The three firms signed a joint development agreement in February to develop 2G biofuel, and their new project is now awaiting a green light from the country’s strategic economic planning bureaucracy, the National Development and Reform Commission before it can proceed. “There is some hesitation at this point in time,” acknowledges Riisgaard. The Chinese government is very careful before approving high-profile projects that are, as yet, untested in its marketplace.
But the proposed development of 2G biofuels comes at a time when Beijing wants to boost domestic consumption, especially in the countryside, and to develop alternative energy sources. With 250 bioethanol factories planned -- and US$ 13 billion to be invested over 10 years, delivering an estimated 6 million new jobs -- the mandarins are listening.
In the early days, 2G biofuel production would cost US$ 2.7 per gallon, which is higher than traditional gasoline, but then could drop to US$ 1.3 by 2015. It should be noted, however, that the viability of second-generation biofuels is based on a crude oil price of at least US$ 60 per barrel.
Novozymes is engaged other projects worldwide, too. It has pilot and demonstration facilities in the U.S. states of North Carolina and Nebraska, with an output target of 25 million gallons in 2011. But, because of the mainland's low collection costs, China is an especially promising prospect. “This is a new market opportunity,” promises Mr. Riisgaard. The dapper Dane with the steely eye has his sights firmly focused on the Middle Kingdom as the target.
