He’s done with humans. He’s done with pine trees. Now Jim Watson, one of New Zealand’s leading biotech entrepreneurs, is trying to hook the big kahuna: an alternative to fossil fuels
Here’s a joke for the scientists in the room. A man walks into a bar and says, “I’m James Watson. Doctor James Watson.”
“Get outta here,” says the barman. “The founder of BioJoule?”
Okay, so that really was one for the scientists, but when one of New Zealand’s most prominent scientists shares a name with the Nobel Prize winner who discovered the structure of DNA, it’s worth a giggle.
Jim Watson (the Kiwi) certainly thinks so. Back when he was a postdoctoral student at Harvard University, along with the more famous Watson, he would enjoy freaking out the undergraduates with a “That’s Doctor Watson to you, young lady” routine. He still sniggers about it now.
That’s about where the similarities end. Famous biologist EO Wilson remembers the DNA Watson as “the most unpleasant human being I had ever met”. Our Jim is ebullient, engaging, witty. His eyes disappear into his cheeks when he descends into guffaws. And whereas the Nobel winner forged a blue chip career in academia, focused exclusively on genomics,this Jim has grazed, starting out as an immunologist, his first career being chief scientist for Syntex Corp, the Palo Alto pharmaceutical company now owned by Roche, and the Salk Institute, then as the founder of Genesis R&D, New Zealand’s first listed biotech stock.
“When I was a young scientist the big problems were in human health, especially cancer. Now the focus has changed. Science is now about the health of the planet. It’s an even more severe problem because we don’t get a second chance. That’s where I want to be playing”
Now Watson is onto what he’s calling his third career, and in his estimation it’s probably the most important: finding a sustainable alternative to oil. “When I was a young scientist the big problems were in human health, especially cancer,” he says. “Now the focus has changed. Science is now about the health of the planet. It’s an even more severe problem because we don’t get a second chance. That’s where I want to be playing.”
The playground is big: recent US estimates predict the venture capital investment into ‘clean tech’ (meaning alternative fuels and energy-efficient technologies) will be US$19 billion by 2010. To that end Watson and his colleagues, in 2006, formed BioJoule Ltd, a Genesis-backed R&D company investigating the potential of hardwoods to provide alternatives to oil. Genesis had a long track record in wood research so it’s not unfamiliar territory.
What is unfamiliar for Watson is what happened next. And to understand it properly you need to know some history. As our foremost biotech pioneer, Watson struggled to secure funding from Kiwi investors who have little appetite for the high risks and long horizons of science. Genesis R&D has underperformed. In 2004 it suffered a high-profile, expensive failure with its childhood eczema drug. Watson himself describes Genesis as ‘disappointing’ but remains hopeful that its patient shareholders will be rewarded in time.
So when Australian-born, Hong Kong-based entrepreneur David Milroy came down to New Zealand and offered to buy BioJoule, which was still nothing more than an idea, for $6 million, Watson and the Genesis shareholders were quick to say ‘yes’.
Milroy heads one of the region’s largest biofuel companies, PurePower Global. The deal, approved in December, sees Genesis pocket $6million in cash and $1 million in Pure Power shares.
“I’m really thrilled for the Genesis shareholders because I know they will do well from this deal,” says Watson.
Perhaps more exciting is how it is putting Kiwi science on the map. Pure Power tasked BioJoule’s seven scientists to complete the BioJoule pilot for a potential rollout through the Asia–Pacific region. They have also been anointed with the title Pure Power Technologies and given the task of providing R&D to the entire Pure Power group. It’s a mission that’s invigorating Watson, who has just returned from a fact finding mission throughout the region. He flicks a card over the desk: “Look, it’s even on my card: ‘energy evangelist’,” he laughs.
To really get a sense of the opportunity for alternative fuels, youneed look no further than the airline industry. Desperate to do its part—cynics will say to save its polluting arse—the industry, including an Air New Zealand-Boeing-Rolls Royce consortium, has been trialling B20, a mix of 20 percent biodiesel and 80 percent petro-diesel. The industry predicts a market of US$45 billion for this fuel mix in civil aviation alone, forecast to double in the next five years. Add to that cars, trucks, trains and ships, or anything that’s powered by diesel, and you can see the opportunity starts heading into silly numbers.
And then there’s ethanol, the dominant renewable fuel in Brazil anda fast-growing fuel in the US: it’s undergone a 500 percent increase in production since 2001. Last year some 13 billion gallons of ethanol were produced worldwide, contributing in no small part to the global food crisis as growers of maize and corn have been subsidised by the US and European governments to shift their attention from food court to forecourt. The market for renewable energy is big—really big—and growing.
When markets take off, venture capitalists are not far behind. In one year, clean energy’s share of venture capital investment more than doubled from 4.2 percent in 2005 to 9.4 percent in 2006; in dollar value, investment nearly tripled from $917 million to $2.4 billion. This is small beer: just last year, the Cleantech Group, the sector’s specialist tracker, projected venture capital investments in the sector will exceed $19 billion by 2010.
“I’m totally energised by this. I feel like this is Jim Watson, Part Three—to be allowed to dream and have the financial backing to achieve those dreams is very exciting”
Enter Pure Power. The company is as ambitious as its name suggests, attempting to pull together an Asia–Pacific conglomerate of renewable energy funders, inventors, producers and processors. It is sourcing,for example, millions of litres of palm oil in Indonesia to turn intobiodiesel in the US. It’s building a US$1 billion processing plant in‘petroleum alley’ in Texas that will process up to 380 million litres of biodiesel a year.
“The demand for energy—just think about the needs of China and India alone—is rising like a very steady ramp. Even without the effect of climate change, fossil fuels can only partly supply this demand,” says Milroy.
His ‘vision’ is to create an umbrella company that encompasses breakthrough technologies at one end to commercial processing and supply at the other. It’s the sort of idea Milroy seems born for. At just 39, he had already experienced the kind of boys-own adventures many would envy, pulling together teams of engineers, technicians, financiers and digger-drivers to lay fibre-optic cable around the world. “At one point, we owned 32 ships including two submarines,” he says with a grin.
“I’d semi-retired when I was approached by a group building ananaerobic electricity generation facility in Vietnam. I was fascinated but I also asked who was coordinating all the renewable energy projects in Asia? No one, it seems. Once you start thinking in terms of the scale of a continent you find yourself pretty much alone. From my telco background, I’ve got a great network of finance people and engineers who have experience in dealing at this level.”
So Milroy founded Pure Power, a Hong Kong company that’s been tapping into the riches of Kyoto-approved carbon credits and renewable energy funds to build that processing plant in Texas and buy a rag-bag of renewable energy projects around Asia–Pacific. Which is how he ended up in Auckland shaking hands with Dr James Watson.
The Kiwi connection
Milroy’s journeys through Asia–Pacific in search of renewables took him to Blenheim, where they’re getting crude with their poo.
Startup biotech company Aquaflow Bionomic Corporation may have a fancy name but it has an even fancier idea. It harvests wild algae from the Blenheim sewerage ponds and transforms it into bio-crude, a nearly-stage biodiesel. The process has numerous benefits. Algae isn’t food, so there’s no exacerbating the world food shortage; it grows anywhere there’s water, including the ocean, opening enormous potentialfor farming and harvesting worldwide; and it potentially releases a clean water byproduct for use in agriculture and industry. (You’ve readabout Aquaflow in Idealog #5).
The Blenheim team has already processed a working fuel and in March announced it has now perfected a continuous harvesting process. Not surprisingly the breakthrough technology attracted huge media and scientific interest. Co-founder Vicki Buck was named this year by the Guardian newspaper as one of “50 People Who Could Save the Planet”.
Aquaflow didn’t escape David Milroy’s interest either: in 2007, PurePower took a 19.9 percent stake for $3 million. Nick Gerritsen, co-founder and spokesperson for Aquaflow, says the company entertained many offers but Pure Power was the only major investor invited onboard. “We’re philosophically aligned,” says Gerritsen. “They have along-term view, and have invested in value, not in revenues, neither of which you get from the New Zealand investors. And they have channels to markets and networks.”
A key attraction, says Gerritsen, is Pure Power’s interest in a ‘distributed’ energy network. Under this sustainable approach to energy production, local communities generate their own power, using methods that are suited to local conditions. For example, Marlborough might be a great place to run an algae system where there’s ready access to waste water and a need for irrigation. In Taupo, where farm run-off is an issue, the BioJoule technology might be more useful. “That’s why we’ve built our processing plant to fit into a 40-foot container. It’s designed to be deployed into small communities, where appropriate.”
While Milroy was down under to complete the Aquaflow deal, someone suggested he meet Jim Watson and the BioJoule team. Milroy does not muck about.
Watson: “He made us an offer to buy 100 percent of BioJoule. We’ve had other offers but this was different for a couple of reasons. First,it plugs us directly into Asia where there are strategic imperatives to find alternatives to oil that are not derived from soy, corn, rape or sugar cane. That makes woody material and algae pretty interesting. Second, Pure Power has the business and infrastructure that New Zealand investors simply can’t offer.”
For his part, Milroy was impressed with the R&D capability inthe BioJoule team. “The first project I have asked them to look at is the waste material in palm oil production. The trunks, husks and branches are all burned or turned into compost. Our philosophy should be ‘nothing is wasted’ and that’s the kind of thinking that I’ve seen in New Zealand.”
It’s an approach to investment and innovation that has the Kiwis genuinely excited. “This is a great opportunity for New Zealand,” says Gerritsen. “We’ve invested a lot in ICT but you’ve got to move to where the market is. Right now it’s in clean tech which is much better suited to New Zealand strengths because you need a combination of ICT, biotech and engineering.”
Watson is like a pig in biomass. “I’m totally energised by this. I feel like this is Jim Watson, Part Three—to be allowed to dream and then have the financial backing to achieve those dreams is very exciting.”
Watch this space.