FRSTNews
July 2008

From the Chief Executive

We’ve just announced a record $785 million in contracts in our main 2008 public good investment round. The round has been great for science and it is great for New Zealand.

There are 96 contestable contracts with 24 organisations including Crown Research Institutes, universities, other research organisations and private companies. They are worth $98 million in their first year and $438 million during their lifetimes, which range from two up to six years.

Further information on some of them is included in this FRST? News.

Additionally, a further 17 contracts are being negotiated with seven CRIs and two universities under the Stable Funding Environment initiative. These will be worth up to $43 million in their first year and up to $347 million in their lifetimes.

Most of the contracts will start from 1 October 2008,

Researchers put forward many high-quality proposals, which did not make the work of choosing between them easy. Of the investments we announced this week, 70 per cent are from our contestable process, where research organisations put forward bids for the available funds. It is an unfortunate fact of a contestable process that some good bids will miss out, but we are confident that we have a robust process that has seen us target the money to the research most likely to benefit New Zealand.

We had $121 million available for this round from maturing contracts and almost $20 million in new money from the Government’s May Budget, which enabled us to approve a record $141 million for year one of the contracts.

Other new Budget money is being invested through separate processes still underway.

It was particularly pleasing to see bids involving increased collaboration between research organisations, with a lead researcher and subcontractors, and proposals highlighting work for young scientists embarking on their careers, the kind of innovative people showcased by the Foundation’s MacDiarmid Young Scientists of the Year Awards, which will be announced on 14 August.

We are also in the second year of the Government’s Stable Funding Environment Initiative, which includes a number of negotiated (rather than contested) contracts in key areas that allow for longer-term planning by research teams. This initiative is in the process of being further developed as Stable Funding 2 to allow for the funding of strategic platforms of research. Initially, we propose working with various organisations to develop research platforms in renewable energy and hazards, to better co-ordinate and connect our investments in these areas. The platforms will be based on partnerships involving research organisations, businesses, Government and the Foundation.

Our investment decisions are a major part of the public research, science and technology funding but they are not the limit of our investment. The Foundation invests smaller amounts in specific areas through other processes. We also invest about $50 million a year to support firms doing research and development with our TechNZ programme – revamped in the wake of the new R&D tax credits to make it more accessible and better for business – which is being relaunched on 29 July.

Richard Templer

On another note, I am very pleased indeed to report that Richard Templer has accepted the position of General Manager - Investment Strategy. Richard, who has been with us since November 2007, has a strong science background with a PhD in engineering, experience as a researcher in Fisher & Paykel Healthcare and IRL, and more latterly as an investor in research through his role as GM - Research and Development? in Meat and Wool NZ.

He has experience in leading teams and has already made a valuable contribution across our organisation in the time he has been here.


Tricia Harris

Our Chief Scientist, Tricia Harris, who has been with us since 2004, has been signalling for some time her desire to “retire” to her new Bay of Plenty under-construction house. Tricia, a tremendous force within the Foundation, has told us she wishes to leave around October, but I am pleased she will assist us in progressing Stable Funding 2 and “breaking in” her successor first. We are actively seeking a replacement for the position.


Best wishes

Murray Bain

Sumptuous summerfruits to create luscious apricots for European niche

A new HortResearch project funded in the Foundation’s latest investment round aims to develop a particularly special and luscious apricot to fill a six-week gap in the European and Australian markets potentially worth $15 million a year.

Sumptuous Summerfruit has the very specific target of developing a new export market for apricots in the Northern Hemisphere, to provide a major growth opportunity for the summerfruit industry.

Feedback from the markets in Europe and Australia has identified a five to six-week market gap for fresh apricots in March and April each year. New Zealand is in the best position to fill this gap because of its relatively late harvest season compared with its competitors.

The current apricot cultivars, however, do not mature late enough and do not store for long enough to provide the eating experience of tree-ripe fruit of high and consistent quality demanded by the consumer. The Sumptuous Summerfruit project is all about reaching that goal.

The five-year, $4 million investment continues a Foundation-funded programme to breed supersweet summerfruit for the Asian market that has produced promising results.

The industry predicts exports of apricots could be increased from the current $9 million a year to $24 million a year in 2018 by targeting the six-week gap, providing an opportunity that only New Zealand production can fill. There are also opportunities to secure high prices for late season fruit in Australia.

HortResearch’s Summerfruit Breeding Programme Manager, Mike Malone, says the science this investment supports has always remained closely linked to outcomes that will be of direct benefit to growers.

“The breeding programme has been developed jointly with the summerfruit industry through Summerfruit New Zealand to ensure it meets their future needs.

“HortResearch has a strong relationship with Summerfruit New Zealand and is involved with other research ventures to enhance the viability and long-term welfare of the industry – in particular the ongoing development of the SummerGreen™ programme, which has a strong focus on environmental integrity and sustainability in summerfruit production.”

Mike Malone says the new research programme will continue to reflect real world needs, and focus on allowing the New Zealand industry to achieve tangible financial outcomes.

“New Zealand summerfruit is highly regarded in global markets. There exists huge opportunity to leverage that reputation, adding new and improved cultivars to our product offering will allow us to capture significant premiums in high value markets. This programme will deliver the world’s best late season apricot, the perfect compliment to other stunning summerfruit already being produced in New Zealand.”

TechNZ revamped following introduction of R&D tax credit

TechNZ, the Foundation’s business investment programme, has been reviewed and revamped following the April 1 introduction of the Government’s 15 per cent tax credit for business research and development.

As part of our review, we interviewed more than 100 TechNZ clients, and found there was a demand for more opportunities to network and learn from other businesses undertaking R&D.

As a result, we are hosting a TechNZ event on Tuesday 29 July in Auckland to share the changes and opportunities with clients and stakeholders.

The event will be a great opportunity to interact and network with some of New Zealand’s most dynamic and innovative business people, and hear how they developed technology and used innovation to grow their business.

The Foundation invests up to $50 million a year in New Zealand businesses through TechNZ to grow world class companies through innovative technology.

We have made some great investments in companies over the years and we will be using the event to share their success stories. We will also share our new direction, and facilitate a panel discussion about encouraging business research and development. The afternoon will conclude with a cocktail and networking function, attended by Research, Science and Technology Minister the Hon Pete Hodgson to officially relaunch TechNZ.

The programme includes:

• R&D snapshots session – hear first hand from representatives from LanzaTech, High Modulus and Endace about how they’ve used R&D to transform their businesses.
• Keynote speaker Neville Jordan, Chairman and Founder of Endeavour Capital, will talk about how he transitioned from entrepreneur to venture capitalist, and now supports the next generation of science and technology companies.
• An interactive panel discussion about harnessing R&D talent, and using innovation to grow your business featuring Phil O’Reilly from Business NZ, Claire McGowan from the Biopolymer Network, Andy Hamilton from the IceHouse and a representative from New Zealand Trade & Enterprise.
• Hon Pete Hodgson will officially launch the revamped TechNZ programme.

Spaces are limited. If you’re a business and interested in attending, please contact Natalie Corkery by Wednesday 23 July 2008 by telephone (04) 494 5166 or email technzevent@frst.govt.nz.

'Low-carbon petrol’ project could lead to big biofuels switch in NZ’s car fleet

Innovative biofuels developer LanzaTech has been awarded $12 million to develop a second-generation “low-carbon petrol” biofuel from industrial flue gas waste that could be used successfully to reduce petrol use in New Zealand’s large fleet of imported used Japanese cars.

The Foundation has approved the three-year investment in LanzaTech in the first major contract awarded under the Low Carbon Energy Technologies fund announced in 2007. It is one of the 96 contestable research projects in the Foundation’s main 2008 Investment Round.

“This is one of the most exciting projects of its kind we have invested in, with great potential to reduce our carbon emissions,” says Foundation chief executive Murray Bain.

“Many older New Zealand cars are second-hand imports from Japan that cannot run successfully on petrol blended with more than three per cent ethanol, and many newer cars cannot run on ethanol blends above 10 per cent.

“LanzaTech’s proposal is to produce fuel from industrial gas waste that has the potential to replace up to 90 per cent of petrol without infrastructure changes or engine damage.”

LanzaTech New Zealand Ltd is a private Auckland company formed in 2005 to develop technology to produce low-cost transport ethanol from industrial waste gases and other waste resources.

“New Zealanders are great innovators and LanzaTech is a great example of this. Through the development of pioneering technologies the company is addressing both a local and global need for low cost sustainable fuels,” says Stephen Tindall – an early stage investor in LanzaTech.

“LanzaTech sees enormous global potential in developing proprietary technologies to produce fuel from non-food waste resources that are produced in high volumes and are readily available today,” says Dr Sean Simpson, founder and chief scientist of LanzaTech.

The Foundation has invested smaller amounts from its TechNZ suite twice before in LanzaTech, but this investment of $4 million a year for three years is a major step upwards and is designed to help the company bring its technology closer to commercial operation.

A pilot plant design has been developed that will allow ethanol production to be demonstrated at scale over the next 12 months.

Ethanol is the only commercially available biofuel that can be blended with petrol, but it has a lower energy density than petrol, which reduces the distance a vehicle can travel on a tankful, and it can only be used in low blends in existing vehicle fleets.

LanzaTech's solution is to produce higher energy density biofuels that can be safely blended with petrol up to at least 90 per cent.

“The introduction of low carbon transport fuels is an important route to reducing greenhouse gas emissions. Ethanol is a first generation biofuel and a great place to start, but LanzaTech see an opportunity to develop technologies to produce fuels that are more similar to petrol in terms of their handling and performance,” said Dr Simpson.

The contract will enable LanzaTech to develop and scale up to an investor-ready stage a commercially viable process for producing low carbon petrol, a high energy density, second generation biofuel.

The earlier Foundation investments enabled the company to establish itself as a technology leader, attracting a substantial shareholding from an investor consortium led by Silicon Valley based Khosla Ventures.

“The use of waste resources for fuel production is an excellent way to produce sustainable transport fuels at low cost. This award to LanzaTech affirms New Zealand’s commitment to solving the climate crisis and finding alternatives to oil through cutting edge research,” says Vinod Khosla, Founder of Khosla Ventures.

Murray Bain said the Low Carbon Energy Technologies fund seeks to assist public and private organisations that have completed basic research and have demonstrated the potential of a new technology to move through the pilot/demonstration plant stage.

“Largely due to climate change concerns, hundreds of millions of dollars are being spent on biofuels research internationally. We are delighted to be investing in such innovative technology developed right here in New Zealand,” he said.

MacDiarmid Awards finalists go before the judges

The 20 finalists in this year’s Foundation-sponsored MacDiarmid Young Scientists of the Year Awards presented their research to a panel of four judges in Wellington this week.

The panel comprised Professor Richard Faull of Auckland University, Professor Carolyn Burns of Otago University, Professor Peter Jackson of Canterbury University and Professor Charles Daugherty of Victoria University.

Research presented by the finalists covered a wide variety of topics from building a 3D camera, through to designing vaccines to combat cancer.

The panel’s decision on who will take home the title of the 2008 MacDiarmid Young Scientist of the Year will be announced at a gala dinner in Auckland on August 14. Tickets to the event can be purchased through the Foundation’s website.

Shellfish industry headed for bright future through major new research project

A major research project led by Nelson’s Cawthron Institute intends to transform the aquaculture industry with new high-value shellfish species and dramatically improved growing conditions to allow a much-extended harvest season.

As part of its latest investment round, the Foundation is investing $14.8 million over five years in the institute’s Adding Value to Cultured Shellfish research project.

Shellfish aquaculture currently contributes some $256 million a year to the New Zealand economy and is dominated by a single species, the Greenshell mussel, which is grown from wild seed and marketed largely as a commodity product.

The seasonality of wild stock means consistent volume and quality are difficult to achieve. Competition with existing users for new inshore farm space makes expansion difficult. The dependence on a single species exposes the industry to risk.

Foundation chief executive Murray Bain says Cawthron’s project aims to turn those constraints into opportunities by unlocking the full potential of existing species and water space; new water space and new high value species; and by securing these gains through proactive risk management.

“Cawthron has assembled a team with a strong track record for delivering high quality research that makes a real difference to the New Zealand seafood industry,” Murray Bain said. “The strengths of Cawthron and Crop & Food will be combined to deliver a comprehensive and vertically integrated whole of value chain programme, focused on developing new tools and technologies that will lead to enhanced shellfish stocks and effective management of risk.”

The newly formed national organisation, Aquaculture NZ, is implementing a sector strategy that includes a target of $1 billion in sales by 2025. Its draft strategy identifies the need to drive sustainable growth through increased efficiency of production systems, innovation for new species and productions systems, and security through management of biosecurity and other risks. This research programme has been developed in response to the strategy and the priorities of New Zealand’s major aquaculture companies.

Maori owned businesses are major players in the aquaculture sector, so the spill-over benefit to Maori business development will be significant.

The project will see the targeted application of selective breeding to the existing Greenshell mussel value chain to increase grower and processor revenue by shortening the crop cycle, increasing per hectare yield, increasing process yield, and maximising the yield of high value grades.

A biosecurity risk management framework and new tools for pest and disease management will ensure the future security of the industry.

Cawthron is partnering with the Crown research institute Crop & Food Research Ltd as well as Victoria University for the project, which is receiving strong support from several leading aquaculture companies and organizations to ensure the research results have good applicability for the industry in order to grow and sustain the New Zealand aquaculture industry.

Cawthron chief executive Gillian Wratt says the research is vital to growing and protecting our shellfish export markets.

“We are pleased to be able to make such a significant contribution to the industry,” she said. “

“The research will give the industry greater control over the quality of their product – enabling them to reap the same benefits from selective breeding that have been enjoyed by land-based industries for hundreds of years. Linking in with Aquaculture New Zealand’s market research and Crop & Food’s sensory experts will enable us to provide industry with the ability to develop a range of high value products for consumers seeking safe, sustainable and healthy seafood.

“This is about providing practical research-based solutions that will help boost our export industry,” she said.

Weeding out the value of totara

Totara has been getting a bad rap up north as a weed, but research by Scion is investigating how to turn the native tree into a useful crop.

Indigenous tree specialist Dr David Bergin is leading a three year project, jointly funded by the Foundation and the Sustainable Farming Fund, in conjunction with the Northland Totara Working Group, to look at sustainable management of regenerating totara on farmland.

“It may be hard for people outside Northland to imagine, but totara are so abundant in this region that farmers consider them weeds. We want to find ways to manage them as a sustainable crop for wood production,” David Bergin says.

Totara on ten farms in Northland are being studied to find optimum methods for thinning and pruning to create faster growing, good form trees for production.

“The future vision is that totara becomes an asset for farmers. Sustainable timber production is the primary focus, but totara is also important for other issues such as increasing indigenous biodiversity, controlling erosion, improving water and soil quality, and providing shelter and shade for stock.”

David Bergin says totara grow naturally on many sites, so there’s no planting, spraying or fencing costs. Naturally regenerating totara is often found on steep hillsides which are less productive areas of pastoral farming. Totara can also be readily established as plantations. Silvicultural trials are being established in existing plantations for those keen to plant totara as a woodlot.

“Our research is now focusing on silvicultural trials to compare totara’s responses to a range of different levels of human intervention. We want to know what’s needed to turn this considerable resource into a future long-term supply of speciality timber,” he says.

This current project is now concentrating on ongoing field sampling and assessment, an evaluation of wood quality and utilisation, determining methods for quantifying the resource on farms, and exploring options for developing a supply chain of sustainably grown totara for specialty end use.

Another important role that totara could potentially play is as a permanent forest sink. Trees store more carbon than grassland, so totara crops have the potential to earn landowners carbon sink credits, under the Kyoto Protocol.

Foundation business manager Diana Whiting is enthusiastic about the work. "I see an exciting opportunity to focus research so New Zealand realises the economic potential of indigenous forestry. Maori are increasingly key stakeholders in the forestry industry and have an important role to play. The Foundation has invested more money in this area recently to acknowledge the greater role native species may play in the long term sustainability of the forestry sector."

New generation of hybrid plastics will be in your ear and improving your food

A new generation of anti-oxidant and anti-microbial plastics being developed by the University of Auckland could be used for such high-value purposes as diaphragms for noise cancelling headphones and extending the shelf-life of packaged products while reducing the use of food additives.

The Foundation is investing $8 million over six years in the university’s innovative Hybrid Plastics project as part of its latest investment round.

The hybrid plastics being developed incorporate conducting polymers and nano-particles into commercial plastics to create new, high-value, low-volume industrial applications encompassing anti-microbial and anti-oxidant plastics, marine surface materials and functionalised fibres and surfaces.

The research will lead to hybrid plastics with antioxidant and anti-microbial characteristics being used in packaging that will extend the shelf-life of packaged products while reducing the use of food additives; and for other purposes such as making a monolithic ear-piece with anti-microbial properties that can be used in devices like bud earphones for MP3 players and hearing aids.

The Science Leader for the Hybrid Plastics project, Professor Ralph Cooney, points to the level of industry interest in the new hybrid plastics as being exceptional.

“These hybrid plastics incorporating both commercial plastics and new age conducting polymers provide a fast track for New Zealand companies into the new age of nanotechnology. There has been exceptional level of local and international industry interest across a very wide range of applications. It has been something of a watershed for New Zealand materials R&D.”

Foundation chief executive Murray Bain says a significant number of New Zealand manufacturers should be able to achieve transformational growth from export sales by adopting the university’s hybrid plastics.

“The New Zealand plastics sector has set a stretch goal of doubling its revenues to become a $4 billion earner within 10 years with the assistance of R&D innovation based on initiatives such as this one in hybrid plastics, linked to a strong export drive,” he said.

By incorporating conducting polymers and other novel materials into conventional polymer products, the plastics industry has the potential to create a broader range of new high value commercial products.

This will provide improvements ranging from enhanced shelf-life of perishable products, to waste minimisation of packaging polymers and the preservation of product quality en route to market, while simultaneously reducing environmental impact

A strategic benefit of this programme is that it provides an “early adopter” advantage for New Zealand firms selling high-value, low-volume products in niche markets as they become aware of and exploit opportunities associated with the adoption of conducting polymers.

The project will draw on research expertise from three University of Auckland materials research centres - the Polymer Electronics Research Centre, the Plastics Centre of Excellence (an initiative with Plastics New Zealand through the Government’s Partnerships for Excellence scheme) and the Centre for Advanced Composite Materials.

Professor Cooney is head of The University of Auckland Tamaki Integration Campus, which has an existing R&D cluster in industrial materials, including major components of the three research centres above. Auckland UniServices Ltd supports the commercialisation of all of these activities.

New milestone for Global Expert? service

The Global Expert service reached a milestone in late June, when the 100th client search was conducted.

Global Expert is a fast, accessible and affordable service for New Zealand companies seeking expert, confidential assistance. The service helps business find and fund international and Kiwi experts for any stage of a R&D project from invention to commercialisation and all steps in between. The end result is improved productivity, faster time to market and better decisions.

The value to clients and regions was also validated, when Global Expert and the Foundation were nominated for the Champion Canterbury Business Awards during the month and our profile will be judged, leading to finalists being announced on 1 August.
Nine months ago, Global Expert was featured on Canterbury Television’s, Canterbury Business Week programme and has been invited to appear again in conjunction with TechNZ during July, to discuss the overall Foundation investment process and its relevance not only to Canterbury, but to New Zealand and how Global Expert can link small businesses into the process.

The Foundation is targeting support to sectors of the economy that can produce world class companies through its TechNZ programme.

Global Expert and TechNZ actively support business sectors such as Manufacturing, BioTech and Food & Beverage. This has been demonstrated through sponsorship of events such as Thrive, NZBio Conference 08 and the NZIFST 08 conference where a Specialist gave a keynote speech covering successful partnerships with Government and highlighted R&D support available for the food and beverage sector.

More information on Global Expert may be found at:
www.frst.govt.nz/expert/global
Phone: 0800 GET EXPERT (0800 438 397)
Email: globalexpert@frst.govt.nz

Roots the route to environmentally sounder intensive farming

Crop & Food Research is embarking on a project to reduce the environmental impact of intensive farming by developing cultivars with high-performance root systems for pastures and crops.

The project will use conventional breeding and molecular technologies to get a significant improvement in root performance for New Zealand’s major pastoral (ryegrass and white clover) and arable (wheat, barley, oats, peas) crops in such areas as water uptake, nutrient use, soil structure modification and pest control.

The aim is to develop plants with much-improved root systems that require less water, pesticides and fertiliser, enabling New Zealand to compete strongly in overseas markets where consumers are increasingly demanding “green” food products.

The Foundation is investing $7.5 million over five years in the “Roots for sustainability” project, a project in its latest investment round.

Foundation chief executive Murray Bain says growth in New Zealand agriculture has historically depended on farming intensification, strongly underpinned by crop genetics and selection of performance traits under high water and nutrient inputs.

“However, the sustainability of this growth and access to overseas markets is at risk as water availability becomes limiting, soil quality declines, nutrient input costs become prohibitive and nutrient losses such as nitrogen and phosphate leaching and gaseous emissions become more highly regulated and a focus of consumer concern,” Murray Bain said.

“This innovative research project with its new and multi-disciplinary focus on improved roots will significantly reduce the environmental footprint of our pastoral and cropping systems and contribute to continued overseas market access with environmentally ‘clean’ exports. We will see more effective water, nutrient and pesticide use, with reduced nitrate leaching and nitrous oxide emissions long term.”

Crop & Food estimates that $149 million a year will be added to New Zealand agriculture through reduced input costs such as irrigation, fertiliser and pesticides, and improved productivity of dryland systems and marginal soils from water uptake efficacy, nutrient recycling and soil structure modification.

The proposal is a collaborative effort between Crop & Food Research and AgResearch and will also build on existing significant collaborations with CSIRO Plant Industry, Australia.

Crop & Food Research chief executive Mark Ward says the new investment represents a significant commitment to enhancing New Zealand’s plant breeding capabilities.

Part of the investment supports a national germplasm collection which contains important material with which to develop new crops with new root systems.

“New Zealand’s food exports depend on access to quality crops, produced sustainably, and so this work underpins New Zealand’s ability to continue to increase its exports of quality foods.”

“We’re delighted with the new investment and will be working closely with a range of significant New Zealand companies to develop enhanced food and forage crops for the future,” Mr Ward says.