Weekly Insider (Water Security & Recession's Impact on Nano)

Here are two great insights on water security in Israel and the recession’s impact on nanotech, both from Lux Research’s Lux Populi

1. Water Security Carries a High Cost for Israel’s Citizens:

Changes in Israel’s water industry are having a drastic effect on the nation’s water bills. At the start of the year, Israel’s national water company, Mekorot, which provides 80% of the nation’s water, increased water rates by 25%. Additionally, rates will increase by another 16% during this summer, and at least another 2% at the start of 2011. Currently, water rates range between $1.5 and $2 per cubic meter.

The additional money will help fund a rapid integration of desalination plants into Israel’s water infrastructure. Currently, Israel sources 80% of its drinking water from Lake Kinneret. However, recent water usage levels have caused the lake to drop 1.5 meters in the past two years, and created a total deficit of 2 billion cubic meters. In a report, Mekorot stated there is a 38% chance that the lake will drop to a level by the end of 2010 that prohibits further pumping.

Mekorot instituted a program in 2008 to drill relief wells, which reduced water sourcing from Lake Kinneret by nearly 50%. The company’s long-term water solution involves installing a series of desalination plants that draw from the Mediterranean Sea. Currently, three plants are fully operational, providing approximately 150 million cubic meters of water per year. A fourth plant in Hadera became operational in December 2009, and is expected to reach its full capacity of approximately 125 million cubic meters per year within a few months. Mekorot is planning on bringing two additional plants online by 2012, bringing the total production to 600 million cubic meters, or 80% of Israel’s residential demand. The Israel Water Authority predicts that the increased water production will end the country’s water shortage within three years.

Once completed, the company will invest an additional 5 billion ILS ($1.36 billion) to install a new east-to-west pipeline. The company will focus on reducing water loss with the new pipeline, but it has not made an estimate on the increase in yield at this time.

Even with such drastic rate increases, Mekorot’s CEO believes that the company will still endure heavy losses, and the company is already facing an $8 billion gap in the project’s funding. This indicates that the Israeli people can expect further increases over the coming years. The Israeli government has attempted to ease the impact on customers by temporarily suspending the national Drought Tax until April 2010. At this time, there are no additional plans for government funding or support of the project.

2. The Recession’s Impact on Nanotechnology

The economic downturn has hit key nano-enabled product segments hard, particularly automotive, construction, and electronics. The output of these three sectors is immense, accounting for 10% of the U.S. GDP in 2008, and 9% worldwide. Plus, because all are big end markets for nanomaterials and their intermediates, the disruption within them has rippled back up the value chain.

As a result, Lux Research has lowered its previous projections for nano-enabled product revenues by 21%: We now expect nanotechnology to generate $2.5 trillion in 2015. Hardest hit will be two nanomaterials and two types of nanointermediates.

Among materials, carbon nanotubes and ceramic nanoparticles will see the biggest impact from the recession, due largely to their out-sized applicability in the struggling automotive and construction sectors. The relatively diverse applications for ceramic nanoparticles will enable them to recover more quickly. Among nanointermediates, nanocomposites and coatings will take the biggest whack. However, both should return near previously projected revenue levels by 2015.

Weekly Insider (Bernie Marcus, Home Depot-Founder)

While I’m traveling, please enjoy this exclusive video sit-down with Bernie Marcus, founder of The Home Depot on nanotech and entrepreneurship.

Bernard Marcus, co-founder of Home Depot, free-market absolutist, aquarium builder and philanthropist is way into nanotechnology these days. It isn't that the home-improvement billionaire has suddenly become an expert in the science of manipulating matter at the most granular of levels. (The "nano" in nanotech refers to one-billionth of a meter.) But as a major donor to Georgia Tech's Nanotechnology Research Center - the university officially is opening the doors of the new Marcus Nanotechnology Building later this month - Marcus has started looking for opportunities to share his thoughts on the subject.

Click here to see the full video of his interview.

Weekly Insider (Steve Jurvetson at the speed of thought)

In yet another exclusive interview, this week I sit with Steve Jurvetson of DFJ.

There aren't many investors as sharp, quick or multidisciplinary as Steve Jurvetson, managing director of Draper Fisher Jurvetson. His firm is a leading venture capital firm with affiliate offices around the world and one of the most active energy and clean-tech investors. Steve was the founding VC investor in Hotmail, Interwoven and Kana. He also led the firm's investments in Tradex and Cyras (acquired for $8 billion), and in pioneering companies in synthetic biology and molecular electronics. Previously, he was an research and development engineer at Hewlett-Packard, where seven of his communications chip designs were fabricated. His prior technical experience also includes programming, materials science research and computer design at HP, the Center for Materials Research and Mostek.

At Stanford, he finished his bachelor of science, electrical engineering, degree in 2.5 years and graduated No. 1 in his class. He also received master of science, electrical engineering, and master of business, administration, degrees from Stanford, and serves as co-chair of the NanoBusiness Alliance and president of the Western Association of Venture Capitalists.

Creative Disruption - Writing The Code Of Life

Forbes: The late science fiction author Sir Arthur C. Clarke once said, "Any sufficiently advanced technology is indistinguishable from magic." What's some magic you've seen lately? 

Jurvetson: Some of the most interesting magic I've seen recently is in the domain of genetic alchemy, where you can change one organism into another by swapping DNA. We are on the cusp of being able to write the code of life as if it were a poem or computer program. That gives us a whole new set of capabilities, in what I would call a second generation of industrial biotech, where we don't just cut and paste from nature but we actually write code from the ground up however we choose.

Five or 10 years ago, folks would have said it's impossible to change one organism into another by swapping out 100% of its DNA, yet this has been demonstrated in the past year by Craig Venter and his team at Synthetic Genomics. This is just a precursor to the next step, which is putting a fully synthetic chromosome into a single-celled organism.

Have you invested in this science? How does it work?
Yes, I sit on the board of Synthetic Genomics, and we have two other investments that are also in this new generation of modifying organisms for building chemicals. They're really focused on designing systems to produce evolved organisms to do useful work. They do this by starting with an organism that naturally makes a small amount of a chemical of interest. Then, they'll analyze its metabolic pathways and cripple the organism along all dimensions exceptfor the one they want to make chemicals.

Therefore, in order to survive and reproduce, the organism is forced to evolve to produce more of the chemical that you desire. Some early work in this space by a company called Genomatica has shown a 20-fold improvement in yield from this directed evolution technique.

What's the business case for developing highly advanced technology to produce what are essentially commodity chemicals?
It is true that some folks are going after commodity chemicals, like fuels, where you're selling into a huge global market with commodity price swings. What they're betting on, though, is price position. Although they won't have international protection for their end product--you can't patent ethanol, for example--they can create protected pathways to make chemicals that are far more cost-effective than any other petroleum-based process.

So whether these new processes are consuming waste feedstocks, or stranded feedstocks that were too expensive to ship around previously, or true free wastes like CO2 from the air--you are unlocking value with this technology.

Another interesting aspect to this directed evolution approach, and what separates it from prior generations of biotech, is that your process can actually get better over time.

In past production systems, organisms would "drift" over time--that is, they mutate away from producing the chemical you want, because it is a profligate waste of their resources and energy. But in directed evolution, you've tightly coupled the reproductive pathway of the organism to the chemical of interest, so as time goes on, even if you're not trying to modify the system in any way, the process itself gets better over time instead of worse!

View my complete interview with Stever Jurvetson at Forbes.com.

NanObama!

www.nanobama.com