A company called Genomatica, based in San Diego, says that it can make the key ingredient in spandex from sugar, and do so at a cost that competes with current chemical processes, which use fossil fuels. It has developed genetically engineered E. coli bacteria that excrete a chemical called 1,4-butanediol, or BDO, which is used to make a number of products, including textiles, car parts, and pharmaceuticals.

The company announced that it has demonstrated a proprietary process that allows it to produce the BDO at greater than 99 percent purity, a technical milestone that clears the way for the one-ton-per-day demonstration plant that it plans to build next year. (Total worldwide production of BDO is about 1.5 million tons.) The company also reported increasing the productivity of the bacteria to a level that it says is near what’s needed to compete with petroleum and natural-gas-based processes.

Christophe Schilling, Genomatica’s CEO, says that its process will reduce energy use for making the chemical by about 30 percent. It will also decouple its cost from the cost of fossil fuels. He predicts that the company’s process will cost 25 percent less than conventional methods used to make BDO, provided the price of oil stays above $40 to $50 a barrel and the cost of sugar is about 10 to 12 cents a pound.

A number of companies are developing or have recently developed biological processes to compete with ones that rely on fossil fuels. John Pierce, the vice president for technology at DuPont’s applied-biosciences division, says that recent improvements in genetic engineering are helping researchers design organisms to make various chemical products. In the late 1970s, DuPont attempted to make BDO with organisms but never commercialized the process. The company has been more successful since then, opening a plant in 2006 that converts corn into 1,3-propanediol (PDO), which is used to make a fibrous plastic called Sorona.

Pierce predicts that the next 15 years will see a significant shift toward using biological processes to make chemical intermediates, as fossil fuels become more expensive. “Historically, petroleum has been cheaper [than sugar]–that’s why we’ve had a petroleum age,” he says. “It’s been the place everyone goes to get cheap raw materials. We’re in a period of transition now, where it’s becoming more and more frequent that it’s cheaper to do a biological process.”

Genomatica was founded in 2000 based on a set of computational tools used to predict how changes to metabolic pathways–series of reactions by which cells metabolize nutrients–could cause them to produce desired products, and to sort through the thousands of different pathways to find the best ones to try in experiments. Recently, the company has added the ability to produce organisms designed with this software, including tools for inserting and removing genes and selectively evolving the organisms to survive in high concentrations of the desired product. In addition to BDO, Genomatica is developing biological processes for making ten other chemicals, including the solvent MEK, which it says it can produce in idled corn ethanol plants.

The company will face difficult challenges as it moves toward a commercial-scale process for making BDO. Schilling says that the productivity of the organism still needs to be doubled. He expects that the increased productivity will be achievable, noting that the company has already improved the productivity of the bacteria by 20,000 times, having started with only trace amounts 18 months ago. But the last doubling of output could be difficult to achieve, as the organism’s output becomes increasingly optimized.

What’s more, moving from a lab scale to commercial scale can take years, and there’s no guarantee that it can be done without incurring deal-breaking costs. Some things that are easy to do in lab flasks, such as delivering oxygen to the organisms in a solution, are much more difficult in commercial-scale vats, Pierce says. It took DuPont 11 years to begin producing its biologically made PDO. And there are other practical considerations. Are the organisms vulnerable to viruses? If there’s a power outage, interrupting the flow of oxygen or nutrients, how fast can the organisms recover?

If it is able to scale up the production of BDO from the small amounts produced in a lab to the one-ton-per-day demonstration plant, the company plans to form partnerships with large chemical manufacturers, such as Dow Chemical, BASF, or DuPont, rather than attempting to build its own commercial plants, Schilling says.