International Consortium to Form Unique BioReactor Alliance in Green Dragon Innovation Park Outside of Shanghai—A Simulated Adaptive Challenge

An international consortium of companies is forming a unique alliance to produce biofuels from algae based on a cluster of breakthroughs in bioreactor design, synthetic genomics, and energy saving LED technology. “What makes this alliance so remarkable is not only how the companies have decided to combine their technologies but also the innovation culture the Green Dragon Innovation Park is co-creating with its participants to encourage such innovations,” reports Wang Ping-an, the visionary entrepreneur who conceived, help to finance, and organize the Green Dragon Innovation Park. 

The core technology in the alliance is being contributed by: Ein Gedi BioReactors (Rehoveth, Israel), Design Genomics (Santa Clara, California), Kawasaki Advanced LED Systems (Kawasaki, Japan), and Bangalore Energy Systems (Bangalore, India).

$ 20 million in initial financing is being provided by a group of investors and lenders: Royal Energy Finance, an English investment bank, Shanghai Energy Ventures, a Chinese venture capital firm, Hong Kong Insurance Company, and SureAir, an alliance of several major aerospace companies which have decided to pool resources to co-develop “the aircraft fuel of the future.” See: http://www.sciam.com/article.cfm?id=biodiesel-takes-to-the-sky. 

“In technical terms we are thrilled that our early tests suggest that we are near to delivering three fundamental commercial breakthroughs to the basic barriers in cost competitive biofuels production from algae using bioreactors,” announced Robin Blake, speaking for the alliance. “These are: 1. BioMass/Lipid Production--We have been able to engineer a specific form of algae in the lab to optimize biomass and lipid production with algae having a 50% lipid and a biomass production rate of 80g/m2/day, which is more than twice the current production rate in open pond systems. This breakthrough alone opens the door to commercial biofuels production from algae. 2. BioReactor Capital Cost—Our team has also been able to engineer a breakthrough bioreactor design which will reduce the capital cost by 75% and thereby permit large scale implementation of algae growth. This has been a principal obstacle. We are confident we now have a facility that will be able cost-effectively to capture CO2 from power plants and turn it into biofuels. 3. Protection Against Environmental Influences—We are able to engineer our algae species so that they are resistant to most forms of biological contamination which permits us to grow large amounts of algae without having a completely enclosed growth system. 

“As excited as we are about this alliance,” explained Mr. Wang, “we are equally happy that the efforts of many visionary planners, entrepreneurs, and investors in the Green Dragon Innovation Park are succeeding in attracting such extraordinary alliances.” Among the most interesting features of the Park are:
  • A competitive package of tax and financial incentives, including a 5-year tax holiday, low interest loans and loan guarantees.
  • Advanced fibre optic cabling for LAN networks.
  • Complete closed-cycle systems where each output is converted into an input for other Park systems, generating huge energy efficiency gains for all participants in the Park.
  • An Advanced Expert Knowledge Directory (EKD) which enables participants to search the Internet in new and more powerful ways and deliver instant and useful responses to critical questions.
  • Sound-centric computing, linked to automated and accurate translation, which enhances the power of the EKD and dramatically facilitates international communication.
  • Access to best international innovation practices through an Innovation Knowledge Trust, ongoing workshops, web casts, and visits by leading experts in the innovation field.
  • The stated intention by the Park’s owner to share Carbon Emission Credits generated by participants in the Park, according to a negotiated formula.
  • The Park is a foundation partner in an International League of Green Innovation Hubs which includes green parks and cities around the world, which Mr. Wang and a group of like-minded international entrepreneurs and investors are currently forming. Participants in The Green Dragon Innovation Park will enjoy additional benefits from membership in the League once it is organized.
The fact that the venture has advanced this far is tribute to Mr. Wang’s bold vision and the good will and formidable scientific talent of all the participants. Yet, recently as the honeymoon period is coming to an end, significant practical legal and alliance challenges are confronting the participants, and strains are developing which might doom the alliance even before it is launched. Some important questions are:
  • How can the ownership of intellectual property be best designed to help the participants best realize their collective vision, yet protect their unique technical contributions and interests?
  • Who will own new breakthroughs which are certain to derive quickly from the collaboration? Will a mega-patent strategy be viable? If this is not feasible, what cross-licensing and patent pool strategies will best advance the interests of the parties and the alliance?
  • Will the parties continue to compete within the Chinese market? In foreign markets?
  • How will confidentiality of the proceedings be assured? Or should some of the research be made open-source, perhaps inviting broad contributions from interested parties around the world, following the Innocentive Model?
  • If Carbon Emission Credits will be shared by the Park and the participants in this venture, what are the elements of a fair formula?
  • What is the governance and compensation model of the alliance? What are the best metrics of success? How can they be best designed to foster collaboration?
  • Some environmental groups have already started objecting to the large scale use of genetically modified algae and have began political and legal activities against the park.  How will these be overcome?
Mr. Wang and his colleagues have been concerned about the increasing miscommunications and increasing tensions among the parties, and have approached them with the idea of facilitating their discussions in order to expedite the launch with recourse to the skills of an “alliance mediation team.” This overture has been welcomed by all the participants, all of whom recognize their considerable investment in time and energy, and the huge upside stakes if the alliance can successfully be commercially launched. Accordingly, Mr. Wang has contacted ASAP’s Council on Alliance Law and Mediation and a Four Member Facilitation Team has been assembled including a Chinese, U.S. Japanese, and English mediators, the latter being supplied by the Centre for Dispute Resolution in London. Mr. Wang’s hope is that through alliance mediation and by utilizing some of the principles of The Art of Adaptive Action the parties will rapidly be able to negotiate an Alliance Charter and a specific MOU which will effectively address many of their core concerns.

An international consortium of companies is forming a unique alliance to produce biofuels from algae based on a cluster of breakthroughs in bioreactor design, synthetic genomics, and energy saving LED technology. “What makes this alliance so remarkable is not only how the companies have decided to combine their technologies but also the innovation culture the Green Dragon Innovation Park is co-creating with its participants to encourage such innovations,” reports Wang Ping-an, the visionary entrepreneur who conceived, help to finance, and organize the Green Dragon Innovation Park. 

The core technology in the alliance is being contributed by: Ein Gedi BioReactors (Rehoveth, Israel), Design Genomics (Santa Clara, California), Kawasaki Advanced LED Systems (Kawasaki, Japan), and Bangalore Energy Systems (Bangalore, India).

$ 20 million in initial financing is being provided by a group of investors and lenders: Royal Energy Finance, an English investment bank, Shanghai Energy Ventures, a Chinese venture capital firm, Hong Kong Insurance Company, and SureAir, an alliance of several major aerospace companies which have decided to pool resources to co-develop “the aircraft fuel of the future.” See: http://www.sciam.com/article.cfm?id=biodiesel-takes-to-the-sky. 

“In technical terms we are thrilled that our early tests suggest that we are near to delivering three fundamental commercial breakthroughs to the basic barriers in cost competitive biofuels production from algae using bioreactors,” announced Robin Blake, speaking for the alliance. “These are: 1. BioMass/Lipid Production--We have been able to engineer a specific form of algae in the lab to optimize biomass and lipid production with algae having a 50% lipid and a biomass production rate of 80g/m2/day, which is more than twice the current production rate in open pond systems. This breakthrough alone opens the door to commercial biofuels production from algae. 2. BioReactor Capital Cost—Our team has also been able to engineer a breakthrough bioreactor design which will reduce the capital cost by 75% and thereby permit large scale implementation of algae growth. This has been a principal obstacle. We are confident we now have a facility that will be able cost-effectively to capture CO2 from power plants and turn it into biofuels. 3. Protection Against Environmental Influences—We are able to engineer our algae species so that they are resistant to most forms of biological contamination which permits us to grow large amounts of algae without having a completely enclosed growth system. 

“As excited as we are about this alliance,” explained Mr. Wang, “we are equally happy that the efforts of many visionary planners, entrepreneurs, and investors in the Green Dragon Innovation Park are succeeding in attracting such extraordinary alliances.” Among the most interesting features of the Park are:
  • A competitive package of tax and financial incentives, including a 5-year tax holiday, low interest loans and loan guarantees.
  • Advanced fibre optic cabling for LAN networks.
  • Complete closed-cycle systems where each output is converted into an input for other Park systems, generating huge energy efficiency gains for all participants in the Park.
  • An Advanced Expert Knowledge Directory (EKD) which enables participants to search the Internet in new and more powerful ways and deliver instant and useful responses to critical questions.
  • Sound-centric computing, linked to automated and accurate translation, which enhances the power of the EKD and dramatically facilitates international communication.
  • Access to best international innovation practices through an Innovation Knowledge Trust, ongoing workshops, web casts, and visits by leading experts in the innovation field.
  • The stated intention by the Park’s owner to share Carbon Emission Credits generated by participants in the Park, according to a negotiated formula.
  • The Park is a foundation partner in an International League of Green Innovation Hubs which includes green parks and cities around the world, which Mr. Wang and a group of like-minded international entrepreneurs and investors are currently forming. Participants in The Green Dragon Innovation Park will enjoy additional benefits from membership in the League once it is organized.
The fact that the venture has advanced this far is tribute to Mr. Wang’s bold vision and the good will and formidable scientific talent of all the participants. Yet, recently as the honeymoon period is coming to an end, significant practical legal and alliance challenges are confronting the participants, and strains are developing which might doom the alliance even before it is launched. Some important questions are:
  • How can the ownership of intellectual property be best designed to help the participants best realize their collective vision, yet protect their unique technical contributions and interests?
  • Who will own new breakthroughs which are certain to derive quickly from the collaboration? Will a mega-patent strategy be viable? If this is not feasible, what cross-licensing and patent pool strategies will best advance the interests of the parties and the alliance?
  • Will the parties continue to compete within the Chinese market? In foreign markets?
  • How will confidentiality of the proceedings be assured? Or should some of the research be made open-source, perhaps inviting broad contributions from interested parties around the world, following the Innocentive Model?
  • If Carbon Emission Credits will be shared by the Park and the participants in this venture, what are the elements of a fair formula?
  • What is the governance and compensation model of the alliance? What are the best metrics of success? How can they be best designed to foster collaboration?
  • Some environmental groups have already started objecting to the large scale use of genetically modified algae and have began political and legal activities against the park.  How will these be overcome?
Mr. Wang and his colleagues have been concerned about the increasing miscommunications and increasing tensions among the parties, and have approached them with the idea of facilitating their discussions in order to expedite the launch with recourse to the skills of an “alliance mediation team.” This overture has been welcomed by all the participants, all of whom recognize their considerable investment in time and energy, and the huge upside stakes if the alliance can successfully be commercially launched. Accordingly, Mr. Wang has contacted ASAP’s Council on Alliance Law and Mediation and a Four Member Facilitation Team has been assembled including a Chinese, U.S. Japanese, and English mediators, the latter being supplied by the Centre for Dispute Resolution in London. Mr. Wang’s hope is that through alliance mediation and by utilizing some of the principles of The Art of Adaptive Action the parties will rapidly be able to negotiate an Alliance Charter and a specific MOU which will effectively address many of their core concerns.

Notes and Resources:

1. Confidential Instructions to the Participants will be provided by the end of December 2007.

2. Access Passwords to ASAP/Energy Voyager’s Advanced Marketing and Competitive Intelligence Networks in Green Alliances and BioFuels. Please visit: (www.energyvoyager.com; also http://www.energyvoyager.com/html.php)Green Alliances -- as2001; Biofuel -- BI6001.

3. Registered participants will have special access to The Art of Adaptive Action, an online video course specifically designed to handle complex negotiations presenting adaptive challenges as presented by this case.

4. Some useful links relating to the central scientific questions:

Question 1:  algae biomass production/lipid oil yield acre (contributed by William Moulton, CTO, Energy Voyager Corporation)

(c) Copyright 2007 by Energy Voyager. All Rights Reserved.  

Algae Cultures to Biofuels: Modeling and Simulation of the Algae to Biodiesel Fuel Cycle



5. Some recent bio-alliance cases:
Member Login (optional)
Username: 
Password: