CRIs forces with US enzyme co on biofuels

NZ CRIs join forces with leading US enzyme discovery company to develop NZ biofuels industry

For Immediate Release
23 January, 2007

New Zealand Crown Research Institutes Scion and AgResearch have formed a research programme with US-based Diversa Corporation (Nasdaq: DVSA) which could ultimately see New Zealand's entire vehicle fleet running on New Zealand-grown and manufactured biofuels.

The partners have agreed to coordinate their technology development initiatives to target the feasibility of a transportation biofuel industry in New Zealand that uses bio-based feedstocks such as trees and grasses.

The three organisations have recently completed a preliminary study, undertaken at Scion in Rotorua and Diversa in San Diego, to investigate the potential for applying Diversa's enzymes to New Zealand-grown tree stocks to convert the wood into sugars, which can then be fermented and refined into ethanol and other products.

Scion Chief Executive, Dr Tom Richardson, says the results from the preliminary study are extremely positive, which has prompted the three organisations to agree to move forward and conduct a feasibility study to further assess the technology and economics of a transportation biofuel industry in New Zealand.

In addition to determining the technical and economic feasibility of a New Zealand biofuels industry, the new study will produce a roadmap to identify potential risks or barriers to commercialisation as well as specific technical and commercialisation plans. If the results of the feasibility study are positive, the three organisations will work together to bring this vision to reality.

More than 50 per cent of New Zealand's energy use is fossil fuel based, with the country consuming more than 3 billion litres of petrol annually.

The Ministry of Climate Change is finalising New Zealand's strategies to respond to climate change, decrease carbon emissions, and to develop and produce secure, clean energy at affordable prices. The partners believe New Zealand's forestry industry has the potential to meet these goals, by providing renewable and sustainable energy alternatives from an environmentally beneficial resource.

Diversa will employ its proprietary metagenomic enzyme discovery and optimization technologies in order to develop robust enzymes designed for cost-effective wood biomass conversion and to improve fermentation performance. Diversa is a leader in the development of high-performance specialty enzymes, with commercialized enzyme products and development-stage programs in the biofuels sector. Its Chief Executive Officer, Edward Shonsey, says resources such as New Zealand forests could be used to make ethanol and replace a significant proportion of imported petrol.

"This is one of the most exciting and profound projects I have ever been involved in, and we are looking forward to deploying Diversa's powerful enzyme discovery and development technologies to create new cocktails of enzymes to convert wood to ethanol cost-effectively," commented Mr Shonsey.

"This represents an opportunity to have a positive impact on the future of New Zealand and other countries with abundant cellulosic biomass such as wood. Successfully developing new cocktails of enzymes to convert wood to ethanol could really change the paradigm of energy thought and policy."

"We are combining our enzyme technologies with the research capability and expertise at Scion and AgResearch to determine whether a biofuel industry would work in New Zealand," he says.

Scion's Dr Richardson says Scion has expertise in forestry and forest products research, and this will be a key component of the next phase.

"We have great breadth across our organisation to apply to this study, from biochemistry right through to resource availability and logistics, and sustainable land use modelling.

"New Zealand has seven per cent of its land mass in plantation forests. The developing energy and climate change policies should anticipate an ever expanding range of products and environmental services from these forest resources.

"This particular project will look at how we might use some of this renewable resource to replace petrol in New Zealand cars. In particular, we will be investigating whether novel enzymes could be used as part of the pulp and paper manufacturing process to make ethanol and other co-products, and the full flow-on implications of such a shift," he says.

"New Zealand is in a unique position of being able to investigate the real possibility of transforming from a petrochemical-based to a carbohydrate-based economy," commented AgResearch Business Development Manager Dr Richard Curtis.

"The project will also assess other potential feed stocks such as grass. Whilst plantation forests provide a standing biomass, the project will consider a range of feedstocks for biomass production and turnaround time. The Forage Biotechnology and Forage Improvement teams at AgResearch will provide the expertise for this component of the project."

AgResearch also has considerable expertise in catchment and life cycle modelling and will bring this capability to the study in terms of efficient land use in the New Zealand context.

"As a leading provider in research for climate change and sustainability, AgResearch is delighted to be involved in this exciting project for renewable energy in New Zealand."

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Backgrounder

AgResearch
AgResearch is New Zealand's largest Crown Research Institute with acknowledged expertise in biological science, therefore having a key role to play in boosting the productivity of our bio-dependent economy. AgResearch applies its expertise in biosciences and genetics to improve productivity and market success from forage to the supermarket shelf. The outputs of those endeavours directly benefit farmers, agribusiness and those involved in the food and health sectors. AgResearch aims to seek areas of common interest and opportunities for investment and cooperation where pooling of resources promises faster and better results than would occur otherwise. AgResearch aims to support pastoral farming that is not just highly profitable but sustainable – where for a given unit of effort, more economic value is created yet with a smaller environmental footprint.

Scion
Scion is a Crown Research Institute developing sustainable biomaterials for future generations. Scion is focused on applying a deep knowledge of plantation forestry, wood and fibre to the development of new biomaterials from renewable plant resources. Scion has been recognized as a leader in forestry science since its beginnings as New Zealand Forest Research Institute in 1947. Scion has expanded its research capabilities to meet the growing consumer demand for renewable materials and products from plants. Scion offers wide ranging technical and scientific capability to anyone in the business of producing materials or creating products using renewable plant resources.

Diversa
Since 1994, San Diego–based Diversa Corporation has pioneered the development of high-performance specialty enzymes. The Company possesses the world's broadest array of enzymes derived from bio-diverse environments as well as patented DirectEvolution® technologies. Diversa customizes enzymes for manufacturers within the alternative fuel, industrial, and health and nutrition markets to enable higher throughput, lower costs, and improved environmental outcomes. For more information, please visit www.diversa.com.

Forward-Looking Statements
Statements in this press release that are not strictly historical are "forward-looking" and involve a high degree of risk and uncertainty. These include statements related to the extent to which New Zealand's vehicle fleet may ultimately run on biofuels, and the extent to which a transportation biofuel industry may ultimately develop in New Zealand, statements related to the extent to which New Zealand's forest industry can provide renewable and sustainable feedstocks for biofuels, and Diversa's ability to discover and develop enzymes designed for cost-effective wood biomass conversion. Such statements are only predictions, and the actual events or results may differ materially from those projected in such forward-looking statements. Factors that could cause or contribute to differences include, but are not limited to, risks involved with Diversa's new and uncertain technologies, risks associated with Diversa's dependence on patents and proprietary rights, risks associated
with Diversa's protection and enforcement of its patents and proprietary rights, Diversa's dependence on AgResearch and Scion in connection with the research program, the ability to commercialize products, risks associated with delays in obtaining regulatory approval for products, the development or availability of competitive products or technologies, and the future ability of Diversa to enter into and/or maintain collaboration and joint venture agreements, including the research program. Certain of these factors and others are more fully described in Diversa's filings with the Securities and Exchange Commission, including, but not limited to, Diversa's Quarterly Report on Form 10-Q for the quarter ended September 30, 2006. These forward-looking statements speak only as of the date hereof. Diversa expressly disclaims any intent or obligation to update these forward-looking statements.

ENDS

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