An Interview with Eli Ben-Shoshan, Global Strategic Planning Director for Industrial Biosciences at DuPont

by Forum Staff

Eli Ben-Shoshan is Director, Strategy, M&A and Business Development, for DuPont Industrial Biosciences. Prior to joining DuPont in February 2012, Eli was Managing Director, Priolytics, where he worked primarily for his key client, Genencor (acquired via the DuPont acquisition of Danisco in 2011), in a business development capacity. Eli’s career spans strategy, finance, business development and business leadership with a primary focus in chemicals and related industries. He served as Vice President, Business Development, Kraton Polymers; Vice President, Negotiation Solutions, ChemConnect / CheMatch; Director of Finance & Business Development, Koch Industries / KoSa; and Strategy Consultant, Monitor Company. Eli holds Bachelor’s degrees in Physics and Economics and an MBA  from Stanford University. He is also a licensed CPA.

In an interview with The Fletcher Forum, Eli Ben-Shoshan discusses renewable energy technologies, the future of genetically modified foods, and the role of the private sector in mitigating the effects of climate change.

FLETCHER FORUM: There has been a lot of discussion about the potential of developing countries to “leap frog” and adopt technologies of developed countries around the world. This happened with cell phone distribution and many people think the same thing will happen with renewable energy technologies. Do you see this as a realistic scenario? Why or why not?

BEN-SHOSHAN: Absolutely. In fact, I think the emerging markets have a good chance of getting ahead of the developed markets like the United States and Europe very quickly. Primarily driven by the fact that there’s local demand, but the bigger issue is that there’s so much policy uncertainty in Europe and in the United States, particularly with the renewable fuel standard. Companies like mine are spending a lot of energy focused on regions that have more favorable and more stable policy environments to go make big commercial investments in.

FLETCHER FORUM: Given the challenges and failures of the large-scale climate negotiations at the international level, what role do you see multinational organizations and the private sector playing? What role do you think they have in terms of mitigation efforts?

BEN-SHOSHAN: I think it’s a big issue. I think it’s very important to focus on protection of the environment. When we think about the world going from seven billion to nine billion people and energy increasing forty percent over the next twenty years, we’ve got to be very cognizant of what we’re going to do to the environment to exploit and generate those kinds of resources. So it’s absolutely critical that we focus on sustainability while we’re doing it.

FLETCHER FORUM: There have been some concerns about how competitive biofuels can be with oil on an international level. What do you think the next five to ten years of the biofuels industry will look like?

BEN-SHOSHAN: First-generation biofuels today are competitive. When corn is very expensive, it becomes problematic. When corn is cheap, generally, those players do very well. But the processes are very efficient. They’ve been around for decades so the yields are great, the enzymes are great, so that’s all very good. Now let’s not forget oil and gas has a 200 year head start on us. So when you’re talking about biomass-based or second-generation biofuels, we’re just getting started. So the first plants out of the gate, they should be pretty good, but they do need policy help to really ensure that there is demand. The policy is not necessarily giving you a bunch of subsidies, it’s giving you a known amount of demand, and that’s stability. And that gives you a known amount of time to get to a few more generations down the road and really be competitive. But we’re just tip of the iceberg on the capabilities of the processes, the capabilities of the enzymes of the system, etc.

FLETCHER FORUM: Does a rising population and increased weather variation pose a challenge to the long-term effectiveness of biofuels? How do you anticipate having to overcome some of those challenges at DuPont?

BEN-SHOSHAN: Weather variance is important. We’re working on low water environment seeds after the droughts in the United States in 2010 and 2012. There’s been a lot of demand for seeds that can grow in low water environments. We spend a lot of energy working on enzymes that both allow animals to better utilize nutrients in grain-feed mixes, or improve the efficiency in yield and productivity of ethanol fermentation. So, we need to keep advancing these technologies so we can work in low water environments, because we’re going to hit droughts again. We’re going to have weather variance, and we’re going to have environments where there is more strain on crops and potentially fewer available crops in a given year.

FLETCHER FORUM: There is a large global push towards renewable energies like solar and wind, largely as a result of distribution difficulties in many areas where pipeline distribution would be too difficult and too expensive. DuPont is working on off-the-grid solar projects in India and other areas with similar challenges. How do you see these projects developing over the next few years and do you see that having any impact on the solar and wind markets in developed countries?

BEN-SHOSHAN: DuPont is huge in the solar business. With more than one billion in annual sales for the last three years, we are the largest specialty component manufacturer. We manufacture Tedlar® films and have been doing that for twenty to thirty years. We manufacture Solamet® pastes that improve the efficiency of solar panels. Demand is probably highest in places like China and India, where there is dramatic demand for this kind of technology. There are certainly favorable policy environments, which is good to see. We’re seeing that trend in the emerging markets. But I will also say that policy is favorable in the United States. It’s relatively stable, we’ve got good demand programs, and we’ll see that for the next few years. But we are seeing some issues with Feed-In tariffs being reduced in places like Japan and Germany and that’s going to slow down demand in those regions.

FLETCHER FORUM: So when you’re looking at entering emerging markets and looking at the policy and regulatory frameworks, what sorts of challenges do you find most commonly? What challenges are the most difficult to overcome and how do you handle it?

BEN-SHOSHAN: For us, it’s about uncertainty. We can deal with any policy. We just want to know that it’s going to be around for a while and it’s not going to be uncertain, it’s not going to change in a year or two, and you won’t really know what the environment is you’re getting into. That’s the biggest issue for us. That’s unfortunately what we’re living with in the United States today, and that’s what we’re generally seeing in Europe, where there is a little bit more stability in the emerging markets and good demand. That’s what we’re seeing and we’d like to see stability in policy.

FLETCHER FORUM: And as you’re expanding into these new markets, how realistic is it to expect to be able to have strong intellectual property (IP) protection, and what is the value of IP protection when you’re working so closely in that industry?

BEN-SHOSHAN: Intellectual property, especially in an emerging economy, is always very challenging and generally you’re weighing the ability to protect your technology versus the demand growth in the region. Let me just give you a few examples of IP environment and how we think about it. So, in the United States, you’ve probably got the best system and the lowest risk of loss. But we have seen situations where, if there are IP violations, the judicial system is such that you very often get into a mode that you can’t put in place or the court will not give you the right to an injunction against an infringer. Rather, they’ll be looking for you to find a solution based on a royalty. So, I’m not saying that’s an automatic, but that’s what you’re seeing more often in the United States, and that may limit the value of your IP protection.

In Brazil, you’ve got to have a transfer agreement in order to get your technology in place, and there are all kinds of rules regarding royalty limitations, which make it difficult to bring your technology there. Enforcement is extremely difficult in the region. I will say that all of those things make the environment tough. But again, you’ve got to weigh that against the demand in the region. You’ve got a policy that has a twenty to twenty-five percent ethanol requirement in the gasoline, which is as good as anywhere in the world and has a long history there. So, when you weigh all of that together, it’s a relatively favorable environment.

In China, you will always hear about the enormous risk of losing IP there. There are a lot of nightmare stories about technology ending up next door. There’s very little precedent to securing an injunction in China. The other policy issue that you always need to consider in China is that licensees have right to improvements of technologies, whereas in other areas around the world they have to buy that improvement. So, once you give somebody something, they’ll have the right to the improvement for life. So you’ve got to think about it from a commercial standpoint. How does that all work for you? Are you going to give them something and then a year later it’s gone and they have rights and you’ll never get paid again?

So, it’s very difficult. But generally, what that will do is give you other ways to defend your intellectual property. You will find ways. Maybe you don’t put your best technology in the region. Maybe you don’t put all of your technology there, so you have your product made in component parts at different plants. Maybe some is offshore and some is local. Maybe you find creative ways in your licensing arrangements so that if there is some sort of violation, there are implications thereof, contractually. So, you’ve got to get creative. And for the most part, commercial entities are willing to engage and find ways to work with them because the demand is so strong. It’s the policy piece that often frightens people away.

FLETCHER FORUM: DuPont is focused on food security and is focusing on genetically modified (GM) foods in the developing world, which has become a controversial issue. As the global population is rising, how do you see the GM food industry evolving and what sort of challenges do you anticipate having to overcome?

BEN-SHOSHAN: I think GM is here to stay. It’s too valuable in terms of improving crop yields, improving longevity of food, and improving processability of food. But then again, there are always going to be people who prefer non-GM. There may be countries that prefer non-GM, and that’s fine. They just need to weigh that versus the benefits of GM, and I think there are trade-offs. You can have whatever preference you want, but I think it’s here to stay. I think one question on trend is GM labeling. In the U.S., at the federal level today there is no requirement for labeling, but there is a lot of conversation at both the federal and state level about requirements to label products, for consumers. Who knows what the requirements would be but there are proposals to have that conversation, and I think those conversations should happen. Internationally, there are a couple of regions with labeling initiatives in place already. Those regions should be good case studies for determining public reaction to GM ingredients and labels. Whether ultimately there is some sort of labeling or not, we’ll see, and in what jurisdictions. But that seems to be the more serious conversation than the idea of GM just going away.

FLETCHER FORUM: GM food labeling was proposed in California, and it failed. Do you see it passing in the future?

BEN-SHOSHAN: I don’t know. We’ll see. It needs to be done in a way that is honest about what genetic modification means. The consumer needs to be educated, because there is a way it can be done where it is just a scare tactic, and there are ways it can be done to be a very informational process. And I think if it is the latter then it could be fine. So, we’ll see.

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