Is Codexis [NASD:CDXS] the Next Apple (NASD:AAPL)?
It’s Apple 2002 promise, at Apple 2002 prices. Now, can Alan Shaw and team pull it off? At Codexis, they think so – do you think so? We’ll continue to watch the space closely. _altenergystocksThe case for Codexis looks interesting, in the intermediate run. Rather than to make biofuels from valuable cane sugar, Codexis intends to make high value chemicals and fuels from the leftover bagasse.
Codexis' argument is based upon possession of a large mass of free and renewable feedstock -- cane bagasse -- and a portfolio of advanced and economical cellulose-to-fuels and chemicals technologies it has been developing.
Sugarcane is 1/3 sugar, 1/3 bagasse and 1/3 tops and leaves, in round numbers. As mechanical harvesting brings the tops and leaves off the fields and into the mix, it can release the bagasse for higher value creation opportunities, than simply burning it to generate power, as happens today.And every year, roughly the same amount of bagasse becomes available at roughly the same price -- free.
Given a 50-mile radius, says Shaw, there are opportunities for utilizing up to 60,000 metric tones of bagasse, per project, in the nearer term, and up to 100,000 MT in the future.
$600 billion, by the numbers
That bagasse is already paid for, aggregated at the mill. You can make $3 fuels or $6 chemicals from it, with feasible margins on either. Say, at 100 gallons per tonne. And there are more than a billion tonnes of bagasse available from the land that the Brazilian government has approved for cane cultivation. So, somewhere north of $600 billion in value, just in the bagasse.
Which is where the value really lies, says Shaw. The cane sugar, he says, is too exposed to the food markets and commodity speculation. But no one eats bagasse, and you need advanced technology to unlock the value. That’s a barrier to entry that preserves value, he says. _altenergystocks
Of course the $600 billion figure represents the potential value in all the bagasse in Brazil. But the first advanced technology company capable of profitably utilising the bagasse -- converting it to valuable chemicals and fuel economically -- is likely to move rapidly to gain access to a significant portion of this newly valued resource.
And there are a lot more countries in the world where sugar cane could potentially be grown, if it were worth a person's while to do so.
Can you imagine a situation where sugar cane were grown for the bagasse, with the sugar produced as a by-product? Such a thing would make the food for fuels debate seem almost ridiculous. Particularly if other waste biomass residues were to become utilised on a similar scale.