Novozymes built new enzyme plant in U.S. due to tax credit

By Holly Jessen | May 31, 2012

Novozymes, a global biotech company, first considered building its newly built enzyme production plant in China but eventually zeroed in on the U.S. One big deciding factor was the $28.4 million tax credit from the U.S. government. “In the middle of a rather shaky global economy, it allowed us some confidence to speed up the construction process,” said Adam Monroe, president of Novozymes North America.

Novozymes inaugurated its enzyme plant in Blair, Neb., on May 31. One day later, Monroe joined Agriculture Secretary Tom Vilsack in a conference call to discuss the importance of the Advanced Energy Manufacturing Tax Credit and the Production Tax Credit, which President Barack Obama recently asked Congress to extend and expand.

The Advanced Energy Manufacturing Tax Credit is a 30 percent tax credit designed to advance the U.S.’s new biobased economy by supporting companies like Novozymes, Vilsack said during the call. There’s a great desire and need for this and other tax credits, which create opportunities for a clean energy future. Investments such as these will help increase farm income, create jobs and further reduce reliance on foreign oil, Vilsack said, adding that creates opportunities in the Midwest (and all over the U.S.) rather than in the Middle East.

Novozymes spent $200 million building the enzyme production facility. The tax credit from the U.S. government amounted to $28.4 million, or roughly 10 percent of the after-tax cost of the facility, Monroe said. Besides convincing the company to build in the U.S. the additional funding gave Novozymes the ability to build it with future expansion in mind. “As this market grows it won’t take us two years to add additional capacity,” he added.

Vilsack pointed to the jobs created by the new Novozymes enzyme plant—400 construction jobs and 100 permanent jobs now that the facility is completed. “Yesterday was a big day for Novozymes,” Vilsack said. “It’s also a big day for rural America and also a big day for new energy opportunities.”

The plant in Blair is a dedicated facility for the production of biofuel enzymes used by both first-generation grain-based and advanced biofuel plants. However, Monroe clarified that the company produces enzymes and microorganisms for 30 different markets, from baking to beverages and animal feeds. “Biofuels, today, is about 16 percent of our revenue,” he added. “It’s about a $2 billion dollar business.”

Novozymes is excited to be part of the emerging biobased economy because it sees the potential. Thanks to funding from the U.S. DOE the company has been able to reduce the cost of enzymes used in the production of advanced biofuels by 90 percent. “No longer are we discussing barriers around the cost of enzymes,” he said. “We have moved beyond that and now it is about getting steel in the ground and moving ahead and yesterday was a very good start on that. We wanted to be ready when this industry commercialized and we are.”