The Advanced Ethanol Council, and the unity movement in biofuels policy – a Digest Q&A

http://biofuelsdigest.com/bdigest/2011/02/22/the-advanced-ethanol-council-and-the-unity-movement-in-biofuels-policy-a-digest-qa/

Jim Lane | February 22, 2011

In Washington, the dust has settled on the announcement by the Renewable Fuels Association that it is starting an Advanced Ethanol Council.

Here’s some brief Q&A on the background:

Q. What is the main goal of the Advanced Ethanol Council?

A. In a few words, production and tax credits. One of the most powerful drivers of both the petroleum and renewable energy business are investment tax credits – and biofuels don’t have any.

These can be structured to be transferable, in the early stages of project development, which allows them to be sold (at a discount) to companies that have profits to apply credits to, and that flow of dollars creates investment for energy projects. ITCs can also be structured so that the US Treasury can buy them back from projects, which simplifies the process of turning credits into investment capital.

Another way of achieving the same thing is to extend the cellulosic ethanol production tax credit, which currently sunsets next year – by extending that into, say, 2017, and also making those credits transferable and fungible (especially via sale to the Treasury), the industry can create investment capital flows that result in projects.

Q. Aren’t there other goals?

A. Sure, there are plenty. Coordination on the ethanol tariff, the VEETC (ethanol blender tax credit) – plus market access policies such as funding for blender pumps and flex-fuel car mandates. Not to mention loan guarantees. It’s a year in which the ethanol tax support system will be revised, and the AEC aims to rope in as many cellulosic ethanol players as possible to synchronize the “ask”.

Q. Is 2011 a year in which the Renewable Fuel Standard will be opened, and revised – for example to make the cellulosic ethanol mandate a true mandate?

A. Nope. Not unless the opponents of ethanol on the Hill have something to do with it. The mood on the Hill is considered too volatile and fractious this season to seriously look at RFS2 – the House voted this week, for example, to defund the entire rollout of E15 ethanol. Not an auspicious start with the new Congress.

Q. Who is heading the AEC?

A. Brooke Coleman, the current head of the New Fuel Coalition, is the new executive director. Bill Brady of Mascoma is the chairman. Digest readers will know him from his recent series on California’s Low Carbon Fuel Standard, and he’ll be penning a monthly column for the Digest this year.

Q: What’s Coleman’s take on the AEC?

A: “Ethanol is the most ubiquitous alternative fuel in the world. It is already replacing billions of gallons of foreign oil and stemming the loss of taxpayer dollars and American jobs to oil interests overseas. But we need to make sure that the ethanol industry keeps growing, with new technologies and advanced production processes that will allow the industry to diversify it’s feedstock portfolio and bring a new family of green fuels to the marketplace. There are a hand full of things that must happen in the marketplace to unleash the full potential of advanced ethanol. The Advanced Ethanol Council (AEC) was formed to address these critical areas, and we look forward to working with our partners in the ethanol industry to get it done.”

Q: What’s going to happen to the New Fuels Alliance – will it be folded into the AEC?

A: Coleman declined to speculate on a “way too early to say” basis, but we don’t think so. The New Fuels Alliance is, these days, funded and organized generally on a campaign by campaign basis, and we expect that there will be campaigns not suited to the AEC that the NFA will continue to undertake.

Q. What about the Cellulosic Ethanol Alliance – that loose coalition of companies also known as the “Thursday Club”?

A. Well, that group is, by and large, the backbone of this one, and generally speaking, you can consider the AEC a successor to the CEA. Sheesh, the three-letter acronyms are getting confusing, especially when you throw the American Coalition for Ethanol (ACE) into the mix.

Q. How does the AEC relate to some of the other advanced biofuels groups – isn’t this a slap in the face for the Advanced Biofuels Association or BIO, which also represent advanced ethanol as part of their outlook?

A. Well, not really. Ultimately, the producers of ethanol – be it cellulosic or otherwise – have a series of policy “must-haves” relating to market access, and blending ratios – that align them with ethanol interests more than, say, the makers of drop-in biofuels. We expect that the groups will closely coordinate on the topic of investment tax credits and production tax credits with other groups. Later on, they all can be expected to coordinate on the Renewable Fuel Standard.

You can expect that the AEC will be strong supporters of E15 ethanol blending and mandates related to flex-fuel cars and support for blender pumps. This will be a slightly different issue for groups such as the National Biodiesel Board and the Algal Biofuels Organization, and a non-starter  among the drop-in fuels crowd.

We would expect the drop-in fuels crowd, which generally coalesces within BIO and especially the Advanced Biofuels Association, to be more involved in the introduction of fuel and feedstock neutrality into the language of bioenergy legislation.

Q. What is driving the unity movement among biofuels policy groups?

A. Recognition that tax credits, as well as subsidies, other incentives mandates, tariffs, and other instruments of federal renewable energy policy, are going to be easy to ask for, tough to get out of the new Congress. Among ethanol producers, there is real concern that the ethanol blender tax credit (VEETC) will be allowed to expire this year, and fully expose the US ethanol industry not only to head-to-head competition with petroleum gasoline, but with Brazilian sugarcane ethanol – though, with sugar prices at record highs, concerns about the latter have faded to some extent in recent months.

The Media’s Role in the Range Fuels Fiasco

http://www.consumerenergyreport.com/2011/02/17/the-medias-role-in-the-range-fuels-fiasco/

Posted by Robert Rapier on Thursday, February 17, 2011

Now that it seems that the mainstream media has finally caught on to the fact that something went terribly awry at Range Fuels, it is time for me to close the book on them. This will be my last Range Fuels story, but I think there is a lesson to be learned here.

Waiting Until The Fat Lady Sang

In the past week, an increasing numbers of stories have covered the Range Fuels affair. The Wall Street Journal’s take was the most high profile coverage:

The Range Fuels Fiasco

Vinod Khosla stepped in with his hand out. The political venture capitalist founded Range Fuels and in March 2007 it received a $76 million grant from the Department of Energy—one of six cellulosic projects the Bush Administration selected for $385 million in grants. Range said it would build the nation’s first commercial cellulosic plant, near Soperton, Georgia, using wood chips to produce 20 million gallons a year in 2008, with a goal of 100 million gallons. Estimated cost: $150 million.

In early 2010, the EPA said Range would finally produce some fuel in 2010—but only four million gallons, not 100 million, and of methanol, not cellulosic ethanol. So taxpayers have committed $162 million (along with at least that much in private financing) to produce four million gallons of a biofuel that others have been making in quantity for decades. This politically directed investment might have gone to far more useful purposes.

As some readers wrote to me and noted, the WSJ article reads as a condensed version of an article that I wrote a year earlier called Broken Promises from Range Fuels. Here is a sampling of other recent stories covering Range Fuels’ demise:

Plant closure bursts Ga.’s biomass bubble

Green-energy plant sucks up subsidies, then goes bust

Government Loses Bet on Range Fuels

The fact that it took an actual announcement from Range Fuels that they were closing the plant to draw this sort of scrutiny is troubling. People are now showing up for the autopsy, but there have been warning signs all along that there was a problem with the patient. Nearly five years ago I wrote an article critical of Vinod Khosla — chief promoter of Range Fuels — for making grossly misleading claims; exactly the kinds of claims that political leaders and the media gave him a free pass on as he lobbied for funding for his ventures.
Khosla wrote articles and delivered speeches in an effort to stir up public animosity against the oil companies, insisting they were were ripping people off and at the same time keeping renewable energy grounded. He declared war on these dinosaurs and their outdated technologies, and he offered up his solution: Silicon Valley know-how promoting companies like Range Fuels (now shuttered), Cello Energy (since then convicted of fraud), and E3 Biofuels (now bankrupt). Not once did I see any mainstream media stories challenging his claims or his credentials for making such claims. Those articles are coming now at a brisk pace, but why did it take this long?

The Media Served as a Vehicle to Promote Hype

In fact, not only were the claims not challenged, the media played a big role in helping establish the Range Fuels hype. Khosla was given a platform in many outlets to promote his companies. There were high profile (and uncritical) pieces on Range Fuels in The New York Times and in Forbes. Discover Magazine published a story on Range called Anything Into Ethanol. Given their previous gushing story on Changing World Technologies called Anything Into Oil — followed by CWT’s bankruptcy, perhaps Discover should stop trying to tell readers about the next big renewable fuel breakthrough. They don’t appear to have reporters assigned to these stories who know how to differentiate hype from reality.

Why should the media have sensed earlier that something was amiss? If they had simply applied the “it seems too good to be true” rule, perhaps some challenging questions would have been asked. I believed something was amiss because their claims ran strongly counter to what I knew about gasification and subsequent conversion into liquid fuels. They ran strongly counter to what I knew about the cost and length of time to build a plant. So I started to raise questions — but I also asked “why the mainstream media has completely missed this story.”

When I started to raise questions that the media should have been raising, people close to Range projected confidence and insisted all was well. Their CEO said that my critiques were “clearly misleading and inaccurate.” One of the engineers working on the project echoed that, calling me “misinformed about the Range Fuels project” and still insisting less than a year ago that “Range Fuels will be the largest cellulosic ethanol production facility in the world when it is commissioned with its final catalysts.” Ironically, he warned me that investigative articles like I wrote “do only harm to the biofuels industry, despite your misguided intentions.”

I tried to discuss technical issues with some of their people. While they projected great confidence, it was like we spoke different languages. I wanted to know about heat and material balances, and they wanted to talk about vision and drive. (That is not an indictment of all Range employees, but they definitely had some people in key positions who didn’t know much about the energy business). I was not the only person who noted a confidence/competence mismatch. I recently saw a conversation relayed that sounded very familiar to me:

I had a discussion with some of the engineers from Range in 2007 about how to adapt physical laws to their reality.

I remember the feeling of being reactionary – cautious and less dynamic among a crowd that had all the self confidence in the world. We were looking at some black stuff in a bearing – smelly – sticky – BUT IT WAS NOT – NOT – NOT TAR!!!

Why not – because their gasifier did not produce tar – because tar would kill the catalyst.

They really had visions – I remember a senior person saying to me “Of course we can change the law of gravity – NASA could put a man on the moon – it is just a matter of money.”

Everything I could say was – STOP – THINK – REFLECT – SEE – USE YOUR COMMON SENSE. All actions that did not at all match with a dynamic and fast moving venture investment – at this stage they where already 2 months behind schedule.

Perhaps it was the confidence that they displayed — even as things were not going as planned — that kept the media from becoming suspicious. Whatever the reason, the media failed to do their job of being more critical of the claims. There was no investigative reporting; the media lapped up the claims. I understand that positive stories sell — and what’s more positive than a miracle solution to our energy problems? But the media has a responsibility to ask tough questions in cases like this. This is especially important when public funds are involved. As this story correctly identifies, if it’s private money, then it’s just business. But when tax dollars are wasted in this way, not only did we throw money away, but people start to get angry (that’s when autopsy stories sell) and the credibility of the renewable energy sector is damaged in the process. The latter is what I sought to avoid, and yet can anyone argue that the sector hasn’t been damaged by such high profile failures?

Conclusion

It isn’t easy to blaze new paths (especially if you don’t recognize what is and is not a new path), and in no way should readers think I am criticizing failure. That’s the nature of research; most things do not pan out. We need people attempting new things, and many of our tax dollars on research are well-spent. But I prefer that my tax dollars are spent on projects that have received adequate due diligence. (Funding agencies like the Department of Energy are also at fault for their failure to properly vet this project). If a billionaire venture capitalist wants to learn the energy business, he shouldn’t be given a free pass to use public funds to learn hard lessons. If he believes his own hype, let him invest his own money and convince fellow private investors.

Despite their claims of a temporary shutdown, I don’t expect that the government will fork over more funds, especially given Vinod Khosla’s recent admission that the technology doesn’t work. (I have to wonder when he realized this, and why more than $300 million had to be spent so he could learn that lesson). I expect there will be a few more stories, but eventually Range will fade from public memory as just another company whose claims didn’t match their capabilities. If history is any guide, the next stage will be the lawyers moving in to see if they can recover any investor money.

But there are still many companies today that are making grandiose claims. That will continue to be the case as long as grandiose claims receive uncritical publicity which can lead to public funding. Companies like Joule Unlimited, Coskata, Bloom Energy, and KiOR come to mind. Three of the four are Vinod Khosla-backed companies, and their claims are similar in style to those made by Range Fuels. That in itself is not an indictment (and I am not suggesting that these companies are frauds), but isn’t it time for the media to start taking a more critical look? (Have a look at the Coskata link to see one of those typical non-critical views that Range Fuels was given). Once more, public funds are being sought and received, and it won’t take many more failures before “renewable energy” is viewed by almost everyone as a scam.

Next Up…

But how do you dig into these companies to separate what they would like to do from what they actually can do? In the next essay, I am going to offer up a primer in the art of performing due diligence on a renewable energy company. I will detail the kinds of questions that should be asked when covering one of these new companies claiming to have solved the energy crisis if they can only get their hands on a few hundred million tax dollars.

Pellet manufacturer buys Virginia port terminal

http://biomassmagazine.com/articles/5289/pellet-manufacturer-buys-virginia-port-terminal

 

By Lisa Gibson | February 16, 2011

• 
  Enviva’s acquisition of a deep water port terminal in Virginia will allow the company to export pellets from its recently announced plant in Ahoskie, N.C.
  

Pellet manufacturer Enviva LP will be able to expand its shipping capacity with the acquisition of a deep water port terminal in Chesapeake, Va. The investment will enable the company to receive, store and load in excess of 3 million tons of woody biomass for export annually.

The location is one of a few on the Eastern Seaboard suitable for the export of wood pellets and will serve as the shipment point for pellets manufactured at Enviva’s recently announced plant in nearby Ahoskie, N.C. The new plant will produce 330,000 tons of wood pellets annually from more than 600,000 tons of raw supplies, according to Enviva.

The Chesapeake port is Enviva’s second and the company will continue to ship pellets made at its Gulf region plants from its Mobile, Ala., port. The Virginia terminal was formerly owned by Giant Cement Co., which will continue to use a portion of it for cement sales. Expansion of the terminal will require 40 to 60 skilled workers and contractors during the initial phase of construction, and its permanent staff of 12 is expected to double by the third year of operation. Upgrades are expected to be complete in November, coinciding with pellet production at the new Ahoskie facility, according to Enviva.

“The Chesapeake region has for a long time been a key nexus of international trade in the United States,” said Enviva CEO John Keppler. “We are particularly excited to be one of the first green economy manufacturers to rebalance the flow of trade in favor of exports from this port in Virginia.” The company said the terminal purchase is a reflection of its commitment to ensuring the safety, reliability, sustainability and quality of its product. It also allows the company to better satisfy growing overseas demand for wood pellets.

The port terminal can accommodate a wide range of ships and loading options required for the export of more than 40,000 metric tons (44,000 tons) of Enviva’s pellets per vessel. The company is also looking into the development of at least two other manufacturing facilities in the Ahoskie area. Enviva’s customer base is mainly utility, industrial and retail customers throughout Europe, but increasingly in the U.S. With expansion plans on the horizon, Enviva’s pellet production capacity will exceed 1.3 million tons annually by the end of 2012.

A billion tons of biomass a viable goal, but at high price, new research shows

A new study from the University of Illinois concludes that very high biomass prices would be needed in order to meet the ambitious goal of replacing 30 percent of petroleum consumption in the U.S. with biofuels by 2030.

A team of researchers led by Madhu Khanna, a professor of agricultural and consumer economics at Illinois, shows that between 600 and 900 million metric tons of biomass could be produced in 2030 at a price of $140 per metric ton (in 2007 dollars) while still meeting demand for food with current assumptions about yields, production costs and land availability.

The paper, published in the American Journal of Agricultural Economics, is the first to study the technical potential and costs associated with producing a billion tons of biomass from different agricultural feedstocks – including corn stover, wheat straw, switchgrass and miscanthus – at a national level.

According to the study, not only would this require producing about a billion tons of biomass every year in the U.S., it would also mean using a part of the available land currently enrolled in the Conservation Reserve Program for energy crop production, which could significantly increase biomass production and keep biomass costs low.

"Most studies only tell you how much biomass is potentially available but they don't tell you how much it's going to cost to produce and where it is likely to be produced," Khanna said.

"Our economic model looks at some of the major feedstocks that could produce biomass at various prices."
Khanna and her team concluded that high-yielding grasses such as miscanthus are needed to achieve the 30 percent replacement goal, "but even then it's going to be a fairly expensive proposition," she said.

When miscanthus is added to the mix, the goal of 1 billion tons of biomass can be achieved, but at a cost of more than $140 per ton.

"Most studies consider costs in the range of $40 to $50 per ton, which is fine when we're talking about biomass production to meet near-term targets for cellulosic biofuel production," Khanna said. "But if we really want to get to the 30 percent replacement of gasoline, at least with the current technology, then that's going to be much more costly."
According to Khanna, miscanthus has been excluded from previous studies because it's a crop that has yet to be grown commercially, and most of the research about it is recent and still considered experimental.

"But across the various scenarios and prices our model considered, miscanthus has the potential to provide 50 to 70 percent of the total biomass yield," she said. "In most parts of the U.S., miscanthus is cheaper to produce than switchgrass, making it a very promising high-yield crop."

The study also contends that the economic viability of cellulosic biofuels depends on significant policy support in the form of the biofuel mandate and incentives for agricultural producers for harvesting, storing and delivering biomass as well as switching land from conventional crops to perennial grasses.

"Unless biomass prices are really high, these perennial grasses are going to have a hard time competing with crops like corn, soybean and wheat for prime agricultural land," Khanna said. "The economics works in favor of using the marginal, less productive lands, where corn and soybean productivity is much lower. But even then there are limits as to how much we would like to use that land for biomass. The more efficiently we can use the land, the better."

With biofuels, there's also the common perception that there's an unavoidable trade-off between fuel and food, Khanna said.

"That concern is much more prevalent when we talk about first-generation biofuels like corn-based ethanol," she said. "But for second-generation fuels, you can use crop residues as well as dedicated energy crops that can be grown on marginal land. This reduces the need to divert cropland away from food crop production. I'm optimistic that we can get considerable amounts of biomass without disrupting food production."

But relying on crop residues alone won't be sufficient to scale production up to levels set by the Energy Independence and Security Act of 2007, which limits the production of corn ethanol to 56 billion liters after 2015, and mandates the production of at least 80 of the 136 billion liters of ethanol from non–corn starch–based cellulosic feedstocks by 2022.

"Crop residue yields tend to be relatively low per unit of land – 2 to 3 tons per hectare," Khanna said. "That can get costly pretty quickly. There are also concerns about how much you want to take away because at some point it has a negative effect on soil productivity as well as water quality because it affects run-off. So there are limits to crop residues, which is why we have to take a closer look at energy crops."

Because even marginal land is costly and has some alternative use, both now and in the future, using it as efficiently as possible means focusing more on the highest-yielding energy crops, Khanna said.

"Clearly the way to go is with the high-yielding grasses, which means switchgrass and miscanthus, but what we found is that it's not going to be a single feedstock but really a mix of feedstocks," she said.

Different regions of the country have a comparative advantage in different types of feedstocks.

"Corn stover is more common in the upper Midwest and West, whereas miscanthus is more prevalent in the southern part of the country and switchgrass in the real northern and southern areas," Khanna said.


Provided by University of Illinois at Urbana-Champaign (news : web)

The Most Important Energy Bill in American History

http://www.americanprogress.org/issues/2011/02/arra_energy.html

The Most Important Energy Bill in American History

Reflections on Clean Energy in the Recovery Act, Two Years On

SOURCE: AP/Jamie Martin

Cade Gunnells, weatherization coordinator for three counties in central Alabama, points out insulation that was added to the home of Charles and Janice Uptain in Montgomery, Alabama, on March 20, 2009. More than 300,000 low-income homes have been upgraded with energy-saving weatherization thanks to the Recovery Act.

By Bracken Hendricks, Jorge Madrid | February 16, 2011

This column was originally published in Grist.

If the American Recovery and Reinvestment Act, or ARRA, had been an energy bill, it would arguably have been the single-most important piece of clean energy legislation in our nation’s history. It drove unprecedented new investments—both public and private—into modernizing America’s clean energy infrastructure. And its clean energy provisions alone have already saved or created 63,000 jobs and are expected to create more than 700,000 jobs by 2012. Now that ARRA has run its course, we need to stay committed to these investments to keep building the U.S. clean energy industry and remain globally competitive.

Newly elected President Barack Obama signed the historic economic recovery package into law two years ago this week. ARRA was an emergency measure to “stop the bleeding” from the worst economic downturn since the Great Depression, which the new president inherited from the previous administration.

Two years later we can confidently say ARRA has worked. Broadly supported by industry and economists, ARRA infused $787 billion into our nation’s economy. It created investments, saved and created more than 3 million American jobs, softened the blow of the global economic collapse on unemployed workers, sustained the ability of hard-hit cities and states to keep vital public services afloat, and buffered countless American companies from the worst of the malaise.

But there is another less heralded—though in many ways equally important—story to be told about the Recovery Act: its boost to clean energy.

ARRA served over the last two years to sustain the fledgling American clean technology industry at a time when it was hard hit by economywide contractions in capital investment and struggling to remain globally competitive in the absence of a clear national energy policy. ARRA provided financing tools and signaled clear demand to investors. This helped U.S. businesses rebound, got new projects built, and put Americans back to work.

Clean energy technology now remains one of the fastest-growing sectors of the global economy and it is projected to grow to $2.3 trillion by 2020. ARRA committed more than $80 billion for the development and deployment of clean energy, and with this initial investment it has set a course for this country to compete with rising nations such as China, whose scale of investment in energy innovation dwarfs our own. China’s policy commitments position them to play a dominant role in emerging global clean energy markets.

A CAP comparison of ARRA investments in clean energy to what had originally been planned in the 2009 budget reveals that the Recovery Act more than tripled spending on innovative clean energy, efficiency, and modern energy infrastructure (see Table 1). For some technologies—such as smart grid investments—ARRA represented more than a 1,000 percent increase in clean energy innovation.



Contrary to conservative attacks—which are too often funded by fossil-fuel industries that seek to slow the pace of change—ARRA made substantial gains to our economy and activated a growing industry with its best years yet to come. With two years of hindsight, we can clearly see ARRA was in fact the most important investment in clean energy ever achieved by an American president.

A quick review of the facts:

• ARRA’s clean energy provisions alone have already saved or created 63,000 jobs and are expected to create more than 700,000 jobs by 2012.
• More than 300,000 low-income homes have been upgraded with energy-saving weatherization, saving families on average more than $400 on their heating and cooling bills in the first year alone and $161 million in energy costs nationwide.
• ARRA provided $500 million in funds for green job training that is already helping prepare workers to transition into the new economy—many in some of the hardest-hit regions of the recession.
• Inner-city green jobs have grown by 11 percent—more than 10 times the rate of job growth overall.
• A guarantee for a $1.3 billion loan has been finalized to support the world's largest wind farm right here in America.
• ARRA helped American motorists retire their gas-guzzling “clunkers” as well as help transition the U.S. auto industry to produce new electric cars and advanced batteries and retool assembly lines to make more fuel-efficient vehicles.
• Other measures such as the Treasury grant program (section 1603) proved essential to companies in financing new renewable energy projects, driving the industry’s rebound during the Recovery Act period.
• The Recovery Act’s investments of $80 billion for clean energy will produce as much as $150 billion in clean energy projects due to leveraging private investment.

These achievements are impressive. But they should be considered building blocks in a global industrial revolution. They are an essential part of the bigger picture: making America globally competitive in the 21st century with a stronger, better clean energy economy.

The Recovery Act’s purpose was to get the economy moving again, but through smart leadership it also helped move the economy in the right direction. It laid the foundation for a clean, innovative, and more efficient low-carbon energy future. It is a credit to the president and Congress that they recognized the historic importance of these one-time investments and directed the stimulus toward activities that anticipated the need for forward vision in a changing economy.

Clearly, our closest economic competitors understand the strategic importance of investing in more efficient and innovative infrastructure. China, for example, had a recovery package smaller than ours but invested at more than double the American rate. It spent $12.6 million every hour on clean energy in its stimulus. The story is even more pronounced in South Korea, which made greening their energy infrastructure a centerpiece of their economic competitiveness strategy (see Table 2).



Right now, the United States is transitioning its energy infrastructure from capital-intensive, dirty energy sources to clean, innovation-intensive, and job-creating clean energy sources. The unprecedented investment and leadership ARRA provided has accelerated this transition and laid an essential foundation for continued business growth and a sustained period of market innovation.

But these processes won’t continue on their own. Without clear policy commitments to clean energy, the United States risks ceding its gains and falling dangerously behind its competitors. We’ve made progress but these green seedlings of an emerging industry must be protected and cultivated to reach their full potential for driving domestic economic growth.

We must seize the leadership opportunity in this sector. The president should use the power of his office in the budget process, and through all executive agencies, to catalyze the market with clear and forward-looking policies that send a signal of commitment and stability to the private sector and continue to drive investment.

In the absence of these steps, the United States will see an exodus of firms and capital to countries that are bold enough to take action—namely Europe, China, and other emerging markets. Time and time again, U.S. private-sector firms lament a lack of clear and consistent policy on clean energy. This stymies investment and slows job creation.

What we need today is another Telecom Act, which used regulatory reform, tax policy, and public investment to drive the growth of entirely new private industries. This will pick up where the Recovery Act’s clean energy investments left off.

Congress’s to-do list, therefore, should include passing legislation that encourages research and development, provides needed capital to help breakthrough technologies reach the commercialization stage, and allows for the construction of necessary electric grid improvements to carry renewable energy.

To that end, Congress should expand and extend the Advanced Energy Manufacturing Tax Credit. It should also create new mechanisms for finance such as a Clean Energy Deployment Administration to promote early-phase commercialization of technologies and an Energy Independence Trust to fuel commercial deployment of mature technologies at scale.

Congress also needs to clearly define how new transmission infrastructure will be built to serve renewable electricity resources, set standards for smart grid technologies, and find a permanent solution to the challenge of using tax credits in project financing for renewable energy and energy efficiency in the built environment.

Further, a target of meeting 35 percent of all electricity needs by 2035 through energy efficiency and truly renewable energy sources—including wind, solar, geothermal, and wave technologies—would boost investors’ certainty that there will be a market for these sources. This number should constitute a floor, not a ceiling, for growth.

President Obama called for a surge of innovation and growth to be America’s next “Sputnik moment.” ARRA made an important down payment on this goal but it will take the collective will of policymakers and private-sector investment to prevail. On this two-year anniversary of the Recovery Act, we should look back with satisfaction that we have seen the American clean energy industry through a rough period in the global economy. But this is no time to rest on our laurels. The rest of the world will not wait for America to catch up. There is work to be done and America must lead the way.

Bracken Hendricks is a Senior Fellow and Jorge Madrid is a Research Associate at American Progress.

More on the Recovery Act from CAP:

• Accomplishments of the Recovery Act by Heather Boushey

To speak with our experts on this topic, please contact:

Print: Megan Smith (health care, education, economic policy)
202.741.6346 or msmith@americanprogress.org

Print: Christina DiPasquale (foreign policy and security, energy)
202.481.8181 or cdipasquale@americanprogress.org

Print: Raúl Arce-Contreras (ethnic media, immigration)
202.478.5318 or rarcecontreras@americanprogress.org

Radio: Anne Shoup
202.481.7146 or ashoup@americanprogress.org

TV: Andrea Purse
202.741.6250 or apurse@americanprogress.org

Plant closure bursts Ga.’s biomass bubble

http://www.ajc.com/business/plant-closure-bursts-ga-838588.html

By Dan Chapman

Tuesday, February 15, 2011

The Atlanta Journal-Constitution

SOPERTON — The premise, and the promise, were brilliant in their simplicity: Turn tree waste into fuel, help break the Middle Eastern choke hold on America’s economy and bring hundreds of jobs to rural Georgia.

 (Bita Honarvar, bhonarvar@ajc.com) Range Fuels brewed this batch of methanol in August 2010 for its first run of production. The factory closed last month after producing only 100,000 gallons of cellulosic ethanol.

What wasn’t there to like?

Plenty, starting with the closing last month of the Range Fuels cellulosic ethanol factory that promised to help make Georgia a national leader in alternative energy production. Then there’s the money — more than $162 million in local, state and federal grants, loans and other subsidies committed to the venture.

Much of that has been spent; recovery would be difficult. Officials at Colorado-based Range Fuels, who didn’t return calls for this story, have said they plan to eventually re-open the Soperton plant.

But critics — ranging from budget hawks to renewable energy experts to dispirited locals — say the shutdown is a case of good money thrown at unproven science and lofty promises.

“We gave those subsidies in hopes of getting something in return — jobs,” said Wallace Little, a laid-off special ed teacher from Soperton who applied for a Range job. “And we hope they come back, as far-fetched as that sounds. We need jobs. We need them bad.”

Over the last six years, Georgia has successfully wooed a variety of companies specializing in biomass — cellulosic ethanol, corn ethanol, biodiesel, wood pellet, wood-to-electricity — with the goal of becoming a renewable energy leader. Many of the companies, though, are no longer in business.

Vinod Khosla, the dot-com billionaire behind Range Fuels, vowed in 2007 to “declare a war on oil” and said “cellulosic ethanol is the weapon we need.”

State and national officials were giddy when ground was broken later that year for the $225 million ethanol distillery outside Soperton, 155 miles southeast of Atlanta.

“Range Fuels represents a new future for our country,” proclaimed then-Gov. Sonny Perdue, flanked by dignitaries and beauty queens. “With Georgia’s vast, sustainable and renewable forests, we will lead the nation.”

U.S. Energy Secretary Samuel Bodman, who steered a $76 million federal grant to Range, said that “by relying on American ingenuity and on American farmers for fuel, we will enhance our nation’s energy and economic security.”

The U.S. Department of Agriculture followed up with an $80 million loan guarantee. Georgia officials pledged $6.2 million. Treutlen County, one of the state’s poorest, offered 20 years worth of tax abatements and 97 acres in its industrial park.

Private investors reportedly put up $158 million. In all, the project raised more than $320 million.

It hasn’t been enough.

By now, Range had expected to produce 20 million gallons of ethanol. Seventy Georgians would have jobs, denting Treutlen’s 13.3 percent unemployment rate.

Range shut down in early January. Only a few employees in Soperton remain.

Bud Klepper, plant manager for Range Fuels, told The Soperton News that the shutdown is “not permanent,” adding that the company seeks additional financing.

“We’re just taking him at his word that it’s just a temporary shut down,” said John Lee, executive director of Treutlen’s development authority. “There’s nothing else we can do.”

Ryan Alexander, president of Taxpayers for Common Sense in Washington, said the government should seek to get its money back.

“Cellulosic ethanol might be a better alternative for the environment, but the government needs to act with fiduciary responsibility and take care of tax dollars to minimize our risk,” she said. “Recouping that money should be on the table.”

State saw gold in plan

Range and Georgia seemed a perfect match. Georgia has 24 million acres of forests, and Range said it had the money and the science to build the nation’s first commercially successful cellulosic ethanol factory.

Tree limbs, grasses, cornstalks, hog manure, municipal garbage and other limitless supplies would be transformed into fuel to be blended with gasoline. Less oil would mean fewer greenhouse gases. Because the process doesn’t use corn, food prices wouldn’t be affected.

Range said the factory would open in 2008 and eventually brew 100 million gallons a year. Company officials talked of a dozen plants across Georgia, producing a billion gallons of ethanol and filling local and state treasuries.

Georgia officials were smitten. A University of Georgia economic impact study concluded that Treutlen County alone would gain 194 direct (factory-related) and indirect (restaurant, hardware store, etc.) jobs with an annual $5.8 million payroll. UGA pegged the statewide economic impact at $150 million.

In October 2007, Georgia awarded Range $6.2 million from the OneGeorgia fund, which uses tobacco settlement money for rural development. The Range subsidy is one of the largest grants ever given by OneGeorgia.

Range told Georgia officials that other states were also in the running for the cellulosic factory. OneGeorgia’s governing board, which included Perdue, Lt. Gov. Casey Cagle and the directors of the state’s economic development, community affairs and revenue departments, decided the $6.2 million grant would help seal the deal.

“The majority of the companies we work with have historically strong track records of success,” said Nancy Cobb, executive director of OneGeorgia. She added that officials “recognized that, particularly in rural Georgia, a small portion of tobacco settlement money should be calibrated toward higher risk projects with the potential for a higher return on investment.”

Range used the grant to buy a catalytic converter, feedstock distributor and an auger. All but $200,000 has been spent, Cobb said, adding that Georgia isn’t likely to receive any money back. Under terms of the contract, Range has until 2015 to invest at least $150 million into the factory and create at least 50 jobs before the state would consider any penalties.

“We always anticipated that this was going to be a challenging project,” Cobb said. “We don’t yet know if Range Fuels will take this project to the next level with another group of investors or whether someone else will acquire them. But we’re not throwing in the towel at this point.”

Washington, too, believed in Range and Khosla, who co-founded Sun Microsystems. In return for the federal grant and loan guarantee, the government expected progress toward an alternative energy future. The Environmental Protection Agency pegged cellulosic ethanol production at 100 million gallons in 2010, of which Range was supposed to produce one-fifth.

Production fell short

That was wishful thinking.

EPA, citing technical and financial difficulties bedeviling the nation’s six cellulosic ethanol producers, slashed the mandate to 6.5 million gallons for 2010. Critics doubt even that amount was manufactured.

Alabama’s Cello Energy, for example, also expected to produce 20 million gallons, never made a drop and closed after its owner was found guilty of misrepresenting its science and the company went bankrupt.

Khosla Ventures, Vinod Khosla’s private equity firm, reportedly invested $12.5 million in Cello.

The EPA eventually lowered Range’s cellulosic ethanol output to 100,000 gallons, which Range said it produced, according to Klepper, before shutting down.

David Aldous, president of Range Fuels, told a Colorado newspaper last month he was seeking more money to ramp-up production in Soperton to a commercially feasible level. He also said the factory had trouble processing its raw material, mainly pine scrap.

“Their technology did not work,” said Sam Shelton, research director for Georgia Tech’s Strategic Energy Institute who has long questioned Range’s scientific claims. “It was a high-risk technological development program. Chemical processing plants just don’t scale-up that fast. They were promising too much too quick.”

The Energy Department largely concurred.

“The final step — catalytic conversion of the gasifier products to ethanol — could not be successfully demonstrated with the time and funding available in this project,” the agency recently wrote.

The Energy Department suspended payments to Range last month thereby “reducing future financial risk for the American taxpayers.” In an e-mail to The Atlanta Journal-Constitution, the agency said it had given Range $43.6 million so far with another $5 million obligated. It did not return calls seeking clarification.

Folks in Soperton can only hope Range re-opens.

“You see what it’s like around here. Businesses are closing. Storefronts are empty,” said Little, the former school teacher. “I see hope moving further and further away.”

For now, though, Soperton’s future sits mirage-like on the edge of town — shiny, but silent and unused.

“If nothing else,” quipped Lee, the economic developer, “it would make a nice Jack Daniels distillery.”

Dismantling Energy Apartheid in the United States

http://dissidentvoice.org/2011/02/dismantling-energy-apartheid-in-the-united-states/

A Black History Month Special Report

by Robert D. Bullard / February 9th, 2011

Much attention in recent years has been devoted to green energy and reducing the human carbon footprint to counter the global warming and climate change threat. According to the U.S. Energy Information Agency, the electric power sector is the largest source of energy-related carbon dioxide emissions by end-use sectors, accounting for 40.6 percent of all energy-related CO₂ emissions, followed by the transportation (33.1%), and the residential and commercial sector (26.3%).

The movement to renewable energy is the preferred strategy to clean energy future for our nation. Clean energy market is growing. More than $243 billion in new investments were made in clean energy in 2010. Yet, in 2009, renewable energy’s market share reached just 8 percent of the total U.S. energy consumption. It is worth noting that biomass energy generation made up 50 percent of the renewable energy in 2009.

Biomass incineration is now being promoted as green and clean energy and a strategy to combat climate change. However, burning biomass to generate electricity is toxic, and is neither “green” nor “clean.” Generally, biomass facilities emit more carbon dioxide per megawatt hour than burning fossil fuels, as well as NOx, particulates and other hazardous air and water pollutants that threaten human health and the environment. Biomass facilities include a range of operations from the burning of municipal solid waste (trash), tires, construction/demolition wood waste, crop and animal wastes, energy crops, trees, gas from digestion of sewage sludge or animal wastes, and landfill gas. Biomass can include any non-fossil fuel that is arguably “organic.”

Unfortunately, “green” biomass (like energy crops) is often used as a foot in the door to bring in more toxic waste streams. The American Lung Association of New England (ALANE) outlined major environmental concerns in a Biomass Position Statement:

Biomass emissions contain fine particulate matter, sulfur oxides, carbon monoxide, volatile organic compounds, and various irritant gases such as nitrogen oxides that can scar the lungs. Like cigarettes, biomass emissions also contain chemicals that are known or suspected to be carcinogens, such as polycyclic aromatic hydrocarbons (PAHs) and dioxin.

The ALANE believes that as a nation “we cannot afford to trade our health to meet our energy needs.
Many “clean wood chips” burning biomass plants can easily turn to burning more contaminated fuels (which may be cheaper or even free), or get paid to take really dirty wastes like trash or tires. Public opposition to biomass facilities has driven siting that follows the “path of least resistance,” which often translates to states where environmental regulations are lax and companies are given huge tax incentives to build these kinds of incinerators, and investors count on the local residents being uninformed and apathetic. Environmental justice siting concerns often get buried in the excitement and notion of “green energy.”

Zoning laws are often legal weapons deployed in facilitating energy apartheid. Local land-use and zoning policies are the root enabling cause of disproportionate environmental and health burdens borne by low income and people of color in the United States. Zoning Boards have the power to rezone land in favor of locally unwanted land uses or LULUs, even over the objections of local residents. A 2003 National Academy of Public Administration (NAPA) report, “Addressing Community Concerns: How Environmental Justice Relates to Land Use Planning and Zoning“, found that most planning and zoning boards members are men; more than nine out of 10 members are white; most members are 40-years-old or older; and boards contain mostly professionals and few, if any, nonprofessional or community representatives.

More often than not, a disproportionate share of low-income neighborhoods are deemed compatible with industrial use and thus get shortchanged in the neighborhood protection game. No amount of zoning has insulated the most vulnerable African American communities from the negative health impacts of industrial pollution. The struggle to dismantle energy apartheid—and gain equal access to clean and green energy—has become yet another quest for environmental justice and end the politics of pollution.

Anyone who knows anything about Black History in the U.S knows too well that African Americans have never been the first to get the “best of the best.” Clean energy and green jobs are no exception. The de facto energy apartheid policy of “talking green” and “acting dirty” hits African Americans and other people of color especially hard.

It should not be a surprise to anyone who has studied the environmental justice and noxious facility siting in the U.S. to learn that the first biomass energy facility in Texas, Aspen Power Plant, is not slated for Houston’s affluent River Oaks community but is being built in a mostly black and poor community in Lufkin. The plant is being built on Lufkin’s north side which has a long history as a “dumping ground” for polluting facilities. More than 77.4 percent of the residents who live within a one-mile radius of the biomass plant are African Americans; and 58.3 percent of the residents found within a two-mile radius of the plant are African Americans. These findings are consistent with a 2005 Associated Press study showing that African Americans are 79 percent more likely than whites to live in neighborhoods that are suspected of posing the greatest health danger.

Lufkin’s African American residents bear the greatest burden for the city hosting the biomass plant since blacks make up just 26.6 percent of the city’s population. African Americans comprise 14.8 percent of Angelina County population and 12 percent of Texas population. In 2007, the city’s Planning and Zoning Commission proposed to allow the facility to be located next door to the black community. City officials failed to notify its North Lufkin residents about this plan. However, the Lufkin City Council passed a zoning change in August 2007 to allow the plant to be built in the north side community.

Lukfin’s Aspen Plant was financed with both public and private funds. It received $750,000 from the state of Texas for roads, parking, engineering and administrative services. Akeida Capital Management (ACM), an environmental asset management firm focused on investing in renewable energy infrastructure, provided a $14.1 million junior loan to Aspen Power to complete construction of the plant which began in late 2008. Angelina Fuels, Aspen Power’s sister company, will provide the plant with approximately 1,500 tons of biomass per day from timber harvesting, sawmill and municipal cleanup activities in and around Lufkin. The Aspen Power facility is expected to create approximately 50 new jobs. Public opposition and legal battles to the plant forced Aspen Power to spend an additional $10 million on air pollution controls.

Georgia is another state where biomass incineration has been welcomed. According to the Energy Justice Network, Georgia has 12 operating biomass facilities, 4 under construction, and 5 proposed facilities. The Census places the 2009 Georgia African American population at 30.2 percent. Biomass plants tend to be located in Georgia counties where African Americans are overrepresented in the population. For example, 7 of the 12 (58.3%) operating biomass plants are located in counties whose black population exceeds the percent black in the state—ranging from 40.0 percent to 58.5 percent; 3 of the 4 (75.0%) wood biomass incinerators that are under construction are in majority black counties ranging from 53.7 percent black to 65.3 percent black; 3 of the 5 proposed plants (60%) are located in counties where the percent black exceeds the state average; a majority of the proposed and under construction biomass plants—5 of the 9 or 55.6 percent—are located in counties where the black population is 50 percent or higher; and 13 of 21 (61.9%) biomass plants that are either operating, under construction, or proposed in Georgia are located in counties whose percent black population exceeds the state average, ranging from 33.5 percent to 65.3 percent.

Residents in Valdosta, Georgia are fighting to block a 40 megawatt biomass incinerator slated for construction on a 22-acre site in their community. The community is already overburdened with polluting industries and heavy truck traffic. The Valdosta Wiregrass biomass plant is slated to be built next to a sewer treatment plant and within 2 miles of an incinerator, two predominantly black elementary and one predominantly white elementary schools, and a Head Start program serves over 165 children ages 3-5. Eight out of every ten residents (82.0%) who live within a mile of the proposed biomass plant are black; more than three-fourths (79.0 %) of the residents who live within a two-mile radius of the proposed plant are African American.

The Valdosta-Lowndes NAACP branch and their supporters claim the plant siting is environmental racism. They raised their claim with the newly appointed EPA Region 4 administrator, Gwen Keyes Fleming—the first African American to hold the post—at a summit held in Atlanta in November 2010. The NAACP along with more than 40 other groups representing “poisoned communities” in EPA Region 4 delivered a Call to Action to EPA demanding an end to environmental injustice perpetrated on people of color and low-income communities.

The Georgia Environmental Protection Division (EPD) held public hearings in May 2010 where residents asked it to consider “cumulative health impacts” in the permitting facilities rather than its traditional “smokestack by smokestack” evaluation. The biomass incinerator is being marketed as a “clean energy” project. However, many Valdosta and Lowndes County residents disagree, views held by a growing number of anti-biomass and incineration and forest protection campaigns. The facility is far from clean. It will burn more than 640,000 tons of wood every year and emit 87-89 tons per year of tiny particulate matter smaller than 10 microns in size (PM10), dangerous particulate pollution because it lodges permanently in people’s lungs. More than 50 diesel trucks per day will travel to and from the incinerator 24-hours a day, 365 days a year.

Residents in Lithonia, Georgia, a suburban city located just outside Atlanta, successfully blocked a 20-acre biomass facility from locating in their community. Lithonia is 80 percent African American. The plant is a joint venture between a minority-owned firm called Green Energy Partners, Inc. and AECOM, the largest design-build firm in the world with clients in more than 100 countries.

The $50 million facility was first killed by the Lithonia City Council. It was later resurrected by an alternate site just outside the city limits—falling under the jurisdiction of the DeKalb County Board of Commissioners, who approved the plant in a 6-1 vote in July 2010. Construction on the plant is scheduled this month. The DeKalb County plant will operate around the clock and is projected to burn more than 100,000 tons of yard waste – wood chips from trees and leaves – to generate 10 megawatts of electricity to power 7,000 homes. It plans to sell the electricity to the Georgia Power Co.

The biomass plant is projected to generate about $220,000 a year for DeKalb in revenues for DeKalb County government for the next 20 years. It is promoted as an economic development project since it will create 100 jobs during construction and 25 permanent positions, and add $50 million to the tax digest. However, Lithonia residents question whether 25 permanent jobs—that may or may not go to nearby residents—will be worth the health, environmental, and economic risks (impact on property values). They fear the 24-hour plant operation will bring harmful emissions, noise and unwanted truck traffic and diesel emissions to their community.

Residents who live near power plants must not only contend with potential exposure from the facilities but also face environmental health threats from truck traffic and vehicle emissions, especially diesel emissions from trucks. Diesel traffic emissions also impact indoor exposures. Long-term exposure to high levels of diesel exhausts (generally at the level of occupational exposure) increase risk of developing lung cancer. Diesel engine emissions contribute to serious public health problems, including premature mortality, aggravation of existing asthma, acute respiratory symptoms, chronic bronchitis, and decreased lung function. Diesel engine emissions have also been linked to increased incidences of various cancers in more than 30 health studies. Diesel particulate matter alone contributes to 125,000 cancers in the United States each year.

The average African American household emits 20 percent fewer greenhouse gases than its white counterparts. Yet, African Americans are being asked, or rather forced, to bear a disproportionate burden in hosting “dirty” energy plants. More than 68 percent of African Americans live within 30 miles of a coal-fired power plant, the distance within which the maximum effects of the smokestack plume are expected to occur. In comparison, 56 percent of whites and 39 percent of Latinos live in such proximity to a coal-fired power plant. Over 35 million American children live within 30 miles of a power plant, of which an estimated 2 million are asthmatic. Coal-burning power plants are the major source of mercury pollution, a neurotoxin especially harmful to children and developing fetuses. About 8 percent of U.S. women of childbearing age are at risk from mercury pollution.

While Americans talk about a “green energy future,” the continued siting of “dirty” coal-fired power plants raises some major environmental justice concerns. Nowhere is this disturbing trend more apparent than in Georgia. In 2009, African Americans made up 30.2 percent of Georgia’s population. However, two of the three (75%) proposed coal-fired power plants seeking permits in Georgia are located in majority black counties. All three of the proposed coal-fired power plants are located in Georgia cities ranging from 49.6 percent black to 60.4 percent black. The proposed Georgia coal-fired plants include: Greenleaf Coal Power Plant in Blakely (60.4% black) in Early County(50.0 % black); Fitzgerald Power Plant near Fitzgerald (49.6% black) in Ben Hill County (32.6 % black); and the Washington County Plant near Sandersville (59.3% black) in Washington County (52.7% black). Clearly, Black Georgians shoulder a disproportionate burden of energy apartheid that’s practiced in the state.

Recent proposals to jump-start the nuclear power industry have sparked debate and environmental justice concerns among African Americans. Georgia’s mostly African American and poor communities are also being targeted for risky nuclear power plants. For example, the first nuclear power plants to be built in decades are being proposed in Georgia with an $8.3 billion federal loan guarantee. The loan guarantee will help the Atlanta-based Southern Company build two more nuclear reactors in the mostly African American Shell Bluff community in Burke County, GA. The county is 51.1 percent black. The two new reactors would each produce 1,000 megawatts, and would work with two existing reactors at a site near Waynesboro, GA (62.5% black).

Much more research is needed on energy apartheid nationally. More policy analysis is needed to clarify who gets what, when, and why, and where “green” and “clean” energy is headed and where the same old “dirty” energy plants are being proposed and sited across the country. Talking about “going green” is very different from actually going green. Talk is cheap. The time is long overdue to put an end to “energy apartheid” in the United States—where “clean energy” is reserved for the more affluent white Americans and “dirty energy” targeted for poor and people of color.

Our Climate Justice Movement demands that clean, green, and renewable energy be made available to all Americans without regard to race, color, national origin, or income. It is unlikely that we as a nation can achieve sustainability and a green energy future without addressing these equity issues. Too few African American elected officials and leaders from government, business, civil rights, faith-based, academia, and think tank organizations are speaking out against energy apartheid. We need a national summit that brings together diverse sectors and leaders from the African American community to develop a plan of action. This is the right thing to do. And this is the right time to do it. We must speak and do for ourselves and protect our communities if we are to be part of and reap the benefits, and not get left behind or on the sideline of a clean energy future.

Robert D. Bullard is director of the Environmental Justice Resource Center (EJRC) at Clark Atlanta University and author of Race, Place, and Environmental Justice After Hurricane Katrina: Struggles to Reclaim, Rebuild, and Revitalize New Orleans and the Gulf Coast (Westview 2009). He can be reached at: rbullard4ej@worldnet.att.net. Read other articles by Robert D., or visit Robert D.'s website.

The Range Fuels Fiasco

http://online.wsj.com/article/SB10001424052748704364004576132453701004530.html

FEBRUARY 10, 2011

A case study in the folly of politically directed investment.

President Obama's budget next week is expected to include even more subsidies for renewable energy. Before Congress bellies up to that bar one more time, it ought to dissect the fate of Range Fuels and the wood chips fad.

As taxpayer tragedies go, Broomfield, Colorado-based Range Fuels has all the plot elements—splashy headlines, subsidies and opportunistic venture capitalists. Range got its start in 2006 when George W. Bush used a State of the Union address to extol wood chips as a source for cellulosic ethanol that would break America's "addiction to oil." Mr. Bush pledged that with government funding cellulosic ethanol would be "practical and competitive within six years."

Vinod Khosla stepped in with his hand out. The political venture capitalist founded Range Fuels and in March 2007 it received a $76 million grant from the Department of Energy—one of six cellulosic projects the Bush Administration selected for $385 million in grants. Range said it would build the nation's first commercial cellulosic plant, near Soperton, Georgia, using wood chips to produce 20 million gallons a year in 2008, with a goal of 100 million gallons. Estimated cost: $150 million.

The media and political class swooned. Bush Energy Secretary Samuel Bodman attended the plant's groundbreaking in November 2007, hailing Range as a private-sector "pioneer" that would "reduce our dependence on foreign oil." Range was celebrated in the New York Times and Forbes.

In 2007, Congress doubled down by mandating that the U.S. use 100 million gallons of cellulosic ethanol yearly by 2010, and 250 million gallons by 2011—though not a single commercial facility existed at the time. The Environmental Protection Agency explained in a subsequent report that the bulk of that initial 100 million gallons would come from Range Fuels and another Khosla-funded venture, Cello Energy.

By spring 2008, Range had also attracted $130 million of private funding, the largest venture investment in the nation in the first quarter of that year. Investors included such prominent VC firms as Blue Mountain and Khosla Ventures and California's state pension fund, Calpers. The state of Georgia kicked in a $6 million grant, and all told Range raised $158 million in VC funding in 2008.

The result has not been another Google. By the end of 2008 with no operational plant in sight, Range installed a new CEO, David Aldous. In early 2009, the company said production was not expected until 2010. Undeterred, President Obama's Department of Agriculture provided an $80 million loan. In May 2009, Range's former CEO, Mitch Mandich, explained that the problem was that nobody had figured out how to produce cellulosic ethanol in commercial quantities. Whoops.

In early 2010, the EPA said Range would finally produce some fuel in 2010—but only four million gallons, not 100 million, and of methanol, not cellulosic ethanol. So taxpayers have committed $162 million (along with at least that much in private financing) to produce four million gallons of a biofuel that others have been making in quantity for decades. This politically directed investment might have gone to far more useful purposes.

As a closely held firm, Range Fuels doesn't disclose financial details. But Range technical adviser Bud Klepper told Georgia Public Broadcasting last month that the company would create only one batch of cellulosic ethanol of unspecified size—then shut the Georgia plant and lay off all but four employees as it seeks to raise still more money and work through some technical issues. A Range Fuels spokesman didn't return calls seeking more details.

As for current Range CEO Mr. Aldous, he's blaming this failure on—brace yourself—Washington's failure to impose a tax on carbon via cap and trade. "The critical issue is really that there's no mechanism to price carbon today," he told a Colorado newspaper. He also blamed "public apathy toward green fuels."

Apathy? How many other products get the Presidential seal of approval, taxpayer subsidies, forced-purchase mandates and glowing media attention?

As for Mr. Khosla's other great cellulosic hope, Cello Energy filed for bankruptcy last year. The EPA, which had projected that Cello would create 70 million gallons, has dropped Cello from its list of potential suppliers. More broadly, the EPA last year had no choice but to reduce the government's 100 million gallon target for 2010 to 6.6 million gallons. It is also fiddling with the definition of what qualifies as a "cellulosic" fuel. Perhaps Newt Gingrich will ask EPA to let corn ethanol make the cut.

If there's a silver lining here, it is that the folly of this exercise in corporate welfare has been exposed so quickly. There is no excuse now for throwing more money after bad, or to listen to more self-serving pleas from superrich investors who want taxpayers to finance their politically correct attempts to get even richer.

Alabama sawmill to produce biomass power

http://biomassmagazine.com/articles/5277/alabama-sawmill-to-produce-biomass-power

By Lisa Gibson | February 08, 2011

• 
  A sawmill operation in Alabama is installing a steam turbine to generate 7 megawatts of electricity using bark and sawdust.
  PHOTO WESTERVELT CO.

Alabama-based land resource organization The Westervelt Co. recently broke ground on a biomass power generating station at its Hale County, Ala., sawmill operation.

A partnership with utility Alabama Power Co., a subsidiary of Georgia-based Southern Co., the project will include installation of a steam turbine to generate 7 megawatts of electricity from the burning of sawmill residues such as bark and sawdust. The facility is expected to begin operating in October of this year, according to Robby Johnson, Westervelt marketing manager. He declined to release a cost estimate for the project, which was initiated by new company Westervelt Renewable Energy.

A long-term power purchase contract between Alabama Power and Westervelt will provide competitively priced renewable energy that will translate into savings for Alabama Power customers, according to Westervelt. “Alabama power is always looking for better and more environmentally friendly ways to produce reliable, cost-effective power for our customers, including alternative and renewable energy,” said John Kelley, director of forecasting and resource planning for the utility.

The groundbreaking was attended by U.S. Rep. Terri Sewell, D-Ala., as well as Republican State Sen. Gerald Allen, Johnson said. The renewable energy project is Westervelt’s first and Alicia Cramer, vice president of business development hopes it’s not the last. “We are very excited to launch our first renewable energy project,” she said. “With abundant biomass resources in Alabama, we hope this is one of several projects incorporating wood and related byproducts as an alternative energy source.”