Biofuel Companies at the Crossroad

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". . .final hurdle for biofuel—competing with the multi-trillion dollar petroleum industry"

Biofuel has narrowed its cost and performance gap to petroleum—but how will it become competitive?

According to Lux Research, a final and significantly more daunting hurdle now confronts biofuel developers—competing on scale with the multi-trillion dollar petroleum industry.

Clearing that hurdle will take enormous injections of cash, engineering support, and help in developing biofuel distribution channels—all resources that corporate partners are better equipped to provide.

Developers and corporations that hope to own a share of the biofuels market over the long run will need to form smart partnerships today.

The report, titled Aligning Contribution: Partnering Strategies in Biofuels and Biochemicals, analyzes criteria by which developers and corporations measure prospective partnerships, based on 30 in-depth confidential interviews with biofuel developers and prospective corporate buyers. It provides parties on either side of the biofuel table with guidance on how to proceed.

"Developers cannot hope to commercialize their technologies without buyers, and buyers will not have access to innovations without tech developers," says Lux's Samhitha Udupa.

The report identifies four different partnership models, including:
  1. Symbiosis: This partnership occurs when biofuel technology developers bring and share a demonstrably superior innovation to the partnership while corporations contribute heavily to synergistic applications, and tout their partner to others in the field.

  2. Predator/Prey: In this relationship, a hopeful biofuel developer aims to vertically integrate for added value, while a predatory corporation injects a little cash and reaps the public benefits of ties to the developer.

  3. Parasite/Host: Biofuel developers take the corporation's name and money, but hand over little more than patents, drawing resources out of the corporation while returning little value.

  4. Peaceful Coexistence: In this outcome, biofuel developers and corporations see the relationship as little more than an exchange of goods.

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