E2 Law Blog : Environmental Lawyers & Attorneys : Greenberg Traurig Law Firm : Climate Change, Energy Legislation

Codexis, Inc., a San Francisco-based company developing biocatalysts to better enable the commercial use of cellulosic feedstock biofuels, among other things, has launched a $100m IPO.   

The S-1 warns potential investors the company's performance may be dependent on "the existence of government subsidies or regulations with respect to carbon dioxide emissions."  Codexis is far from unique in this respect - many alternative energy companies depend, to varying degrees, on government regulation to "make the market."  However, to date the government has generally failed to deliver and the alternative energy industry has suffered accordingly.  The Wall Street Journal notes:

An alternative energy, U.S.-listed IPO is something of a novelty. The last biofuels IPO was way back in December 2007, when Chinese biodiesel maker Gushan Environmental Energy Ltd. debuted. After that there have only been three IPOs – solar outfits Real Goods Solar, GT Solar and STR Holdings. (Hat tip to Dealogic for the data.) Battery maker A123 began trading a couple months ago also.

In retrospect, the alternative energy industry may have over-commited on "climate change" as a policy driver.  Now, with cap and trade bogged down in Congress, the industry's short and mid-term prospects are muddy, complicating private investment.  As discussed here, the industry should consider relying far more on energy security, and far less on global warming, to make its case in Congress.  

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As the Wall Street Journal reports, the biofuel industry is, yet again, suffering tough times.  The National Biodiesel Board has released a report claiming the industry "could be expected to collapse" unless the federal biofuels tax credit expiring December 31, 2009 is renewed.  However, Congressional action is uncertain, even as state and local governments fail to mandate biodiesel use. The tepid support is due, in part, to the fact feedstocks are typically food crops, as opposed to sugar cane, castor plants or algae, meaning biofuels swap food for fuel. 

Help may be on the way, though.  First, the Department of Energy is aggressively funding feedstock alternatives to grain and corn including algae.   Second, the USDA Animal & Plant Health Inspection Service is considering a petition from Syngenta Seeds, Inc. to deregulate corn genetically engineered to produce a microbial enzyme that facilitates ethanol production. If APHIS grants the petition, then the GE corn and its progeny would no longer be regulated and could be planted without APHIS permits or oversight, obviating some of the "food v. fuel" concerns through increased yields.            

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