Are “Bio-Refineries” the Next Big Thing?

It used to be that biotech referred mainly to big pharma, however energy giants now want in on what many feel is the upcoming biotech revolution. The next big thing could be "bio-refineries" that produce alternative energy for mass consumption. CNN Money reports that creating cost-efficient biofuels is generating a great deal of interest:

As the world gets hungrier for alternative fuels, industrial energy giants are scrambling to form partnerships with niche biotech companies. The race is on to create bioengineered enzymes that are at the heart of cost-effective ways of turning corn, sugar and even wood chips into a gasoline substitute called cellulosic ethanol.

Du Pont (DD – $51.50), Abengoa (ABGOF.PK $45.50) and Royal Dutch Shell (RDS-B – $87.21) have all found niche biotech companies to work with in order to find ways of creating bio-refineries.

Right now, most of the excitement is focused around cellulosic ethanol, which takes conventional ethanol to the next level. Such a process would involve using living components, enzymes and microbes that have been bio-engineered, to speed up key processes in the manufacture of biofuels. However, the process is quite a ways from coming to fruition.

Like many other alternative energy investments, this cellulosic ethanol idea presents risk. Investing directly in bio-refineries may not be the best option for individual investors. However, finding an established company that is investing in alternative energy could be a good move. You get the benefit of an established company, while at the same time setting yourself up to profit if the company's alternative energy investments pay off.

Disclosure: I own stock in none of the companies listed above.

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