Range Fuels attracted
millions of dollars from private investors and both the Bush and Obama
administrations before the failure of its Soperton, Georgia advanced
biofuel plant. New Zealand's LanzaTech aims to coax success out of the
plant with a different technology.
Photograph courtesy LanzaTech
Published January 19, 2012
The sandy soils of central
Georgia nurture growth of bunchy wiregrass and longleaf pine. Here
between the blackwater Ohoopee and Oconee rivers, about 160 miles (260
kilometers) southeast of Atlanta, a fortune has been sunk in hope of
converting the abundant local biomass into fuel.
One
of the more spectacular failures in the renewable energy industry—the
Range Fuels collapse—played out here. Less renowned than the bankruptcy
of Solyndra last September, Range’s failure that same month similarly
involved the loss of millions of dollars in U.S. government funds and
private investment, all wagered on an innovation that promised to propel
an old technology to an exciting new level.
But
where bankruptcy seems to have spelled the end for Solyndra and that
California solar company’s technology, a new chapter is now being
written in the effort to brew advanced biofuel in the “Million Pines
City” of Soperton, Georgia.
Earlier this month, a
New Zealand-based carbon-capture and energy startup called LanzaTech
bought Range Fuels’ idle biorefinery in a foreclosure auction for just
$5.1 million. That’s a bargain basement price, considering the money
that Range Fuels had attracted from private investors and from both the
Bush and Obama administrations for its cellulosic ethanol plant here:
more than $160 million in venture capital, a $76 million grant from the
U.S. Department of Energy in 2007, a $6.25 million grant from Georgia in
2008, and an $80 million loan guarantee from the U.S. Department of
Agriculture in 2009.
LanzaTech
says it has a business plan and technology that can coax success out of
the Range Fuels plant. And one of the primary backers of LanzaTech’s
efforts here is the same venture capitalist who helped bankroll and
promote Range, technology investor Vinod Khosla. It’s now up to
LanzaTech to see if it can turn the promise of Soperton into a real
success for advanced biofuels and investors like Khosla.
High Hopes for Cellulosic
Producing
ethanol from cellulosic plant sources has been seen as the Holy Grail
of the renewable fuel industry. The U.S. corn belt may have perfected
the art of fermenting its crop to produce fuel alcohol, but controversy
abounds over the water use, the energy input for cultivating corn, and
the limits and long-term viability of turning an edible product into
fuel. That’s why President George Bush, in his 2006 State of the Union address,
pledged to fund research to commercialize ethanol from non-edible plant
material by 2012. Cellulosic ethanol companies also were in the first wave of alternative energy technologies backed by President Obama.
Although
cellulosic ethanol can be produced in the laboratory and at pilot
scale, the genetically engineered enzymes or heat needed to break down
the plant material into sugars is expensive. Not a single company has
succeeded in scaling up commercial cellulosic ethanol production in the
United States six years after President Bush’s vow.
Oil companies in fact were fined $6.8 million in 2011 for failure to meet the U.S. Environmental Protection Agency’s requirement that 6.6 million gallons of cellulosic ethanol
be blended into gasoline and diesel last year. Indeed, that target
marked a dramatic scaling back of the goal Congress set in 2007.
Lawmakers originally envisioned that 250 million gallons of cellulosic
biofuel would be helping to fuel U.S. vehicles by 2011. Although that
goal proved overly ambitious (in part because Range Fuels failed to meet
production estimates), it would have displaced only a small fraction of
oil dependence in a nation that burned 8.8 million barrels, or 370 million gallons, of motor gasoline per day in 2011, according to the U.S. Energy Information Administration.
If
things had gone as planned when Congress was setting cellulosic ethanol
goals, a large volume of that advanced biofuel would have been produced
in Soperton, the only incorporated town in Treutlen County, Georgia.
Range Fuels (formerly called Kergy, Inc.),
of Broomfield, Colorado, set out to establish a biorefinery here that
would produce 100 million gallons of cellulosic ethanol per year. There
would be plenty of feedstock in the “Million Pines City," named after a
local plantation where, in the late 1920s, a cotton farmer pioneered
the cultivation of pine trees as a crop. Today, pine tree plantations
dominate the landscape, and forestry makes up some 80 percent of all
land use.
Range had a two-step process. First,
it would use heat, pressure, and steam to produce synthetic gas from
biomass. Step two would be converting the gas to ethanol using chemical
catalysts.
Construction began in an industrial
park here in November 2007, but by 2009 Range Fuels had fallen behind
and dramatically reined in production goals. In
August 2010, the company squeezed out its first batch of methanol, a
wood alcohol fuel used in racing and some industrial applications.
(Range Fuels said at the time
that its methanol would be used to produce biodiesel.) But the facility
ran into technical problems with the gasifiers and the system for
feeding in biomass, and it never did produce any cellulosic ethanol that
would substitute for the corn ethanol now used in cars and trucks.
Range
Fuels closed the plant in January 2010, and filed for bankruptcy in
September 2011. At the time of its failure, it had received only half of
its expected federal grant and loan guarantee monies, amounting to a
loss of more than $85 million in public funds.
The USDA required the foreclosure sale this month to recoup some of its
losses. “LanzaTech is just looking to capitalize on a bargain, really,”
said Andrew Soare, an alternative fuels analyst with the research firm
Lux Research.
The fact that Range Fuels and
LanzaTech share a lead investor—Vinod Khosla’s Khosla Ventures—has
raised eyebrows because LanzaTech bought the Soperton site for a
fraction of the amount spent developing the facility. And both companies
have talked about big dreams for the site.
“Right now the equipment is
sized on the order of 4 million gallons,” LanzaTech CEO Jennifer
Holmgren said in an interview. “But, you know, some day I’d like to
build bigger units there. It’s a lot of land. It’s a lot of wood
residue. That site’s really not meant for a little facility. I can
imagine making 100 million gallons of fuel there,” perhaps within five
years.
A New Approach
However,
the companies differ when it comes down to the process for transforming
the biomass of Treutlen County, bordered by the Ohoopee and Oconee
rivers, two tributaries of the mighty Altamaha. LanzaTech, which has
named the old Range Fuels site Freedom Pines Biorefinery, plans to use a
gasifier to produce synthetic gas from biomass. That much is the same.
But while Range Fuels planned to use chemical catalysts for the next
step, LanzaTech’s technology uses microbes (specialized through genetic
modification and arrested evolution) to ferment the syngas.
At
Freedom Pines, LanzaTech intends to initially produce chemicals such as
butanol and propanol, rather than ethanol, which sells in high volume
but is a product that results in a relatively low profit margin, Soare
said. This is new ground for LanzaTech. Since its founding in 2005,
LanzaTech has concentrated its efforts mainly on capturing carbon
monoxide from industrial flues, and using its proprietary microbes to
convert the gas into ethanol fuel.
“Our organism
gets carbon and energy from a carbon monoxide molecule,” Holmgren said.
“One of the best places to find carbon monoxide is in steel mills,”
where the gas would normally be flared and released into the atmosphere
as carbon dioxide. And one of the best places to find steel mills, she
added, is China, which produces about half the world’s steel.
In
Shanghai, LanzaTech recently started up a 100,000-gallon-per-year demo
with Bao Steel. Speaking in a phone call from New Zealand, where 50 of
LanzaTech’s 85 employees are based, Holmgren said LanzaTech’s first
commercial facility would most likely be in China, with construction
beginning as early as next year. LanzaTech also has industrial partners
in India, where it’s using municipal solid waste as a feedstock. And in
partnership with Virgin Atlantic, Swedish Biofuels, Boeing, and others,
LanzaTech has also begun developing a renewable jet fuel using its
microbe-based carbon-capture system.
LanzaTech’s
acquisition of the Soperton facility will give the company a new
measure of independence, according to Holmgren. “Imagine our situation,”
she said. “We’re very excited about our work in the chemicals area, but
the demos and commercial facilities are controlled by partners. And so
we would have to ask them for permission. We would have to come to an
agreement,” to begin proving LanzaTech's technology for biochemical
production at any significant scale. “Why would somebody operating this
big ethanol plant care about us showing our technology or doing all the
process that’s required to deliver a chemicals play, right? We feel that
as a company, we need to have the ability to control the larger asset.”
It’s a Gas
At
the Freedom Pines Biorefinery, LanzaTech will be tackling a whole new
process: the gasification step, which was such a headache for Range
Fuels. Through its steel mill partners, Soare said, LanzaTech has
“access to free feedstock. So it’s surprising to see them go after this.
But in the context of how cheap it was, it did make sense.”
LanzaTech
plans to try fixing the Range Fuels gasifier. If that fails, Holmgren
said, LanzaTech will bring in a new gasifier from a partner. As Soare
put it, “They’re not a gasification company. If they can’t get the
gasifier to work, they’ll move on.” Soare expects that LanzaTech will
spend no more than a few million dollars working on the old gasifier.
Either
way, moving into chemicals production strikes Soare as a shrewd
strategy that could position LanzaTech for some lucrative deals down the
road. “Syngas to ethanol is a very challenging step,” he said. About a
dozen companies are working on syngas to ethanol globally, and a few
dozen are working on cellulosic ethanol generally. “If gasification
companies are unsuccessful, like Range, and if LanzaTech shows its
organism works, there could be licensing or acquisition opportunities.
Competitors will likely look to LanzaTech to help them switch to
chemical production if LanzaTech can demonstrate its technology works at
the Soperton plant.”
As for the U.S.
government’s hopes for cellulosic ethanol to enter the fuel market this
year, the EPA’s analysis is that there are six U.S. companies—each with a
differing technology—that could produce the advanced biofuel in 2012.
Therefore, the EPA set a goal of blending 8.65 million gallons of
cellulosic ethanol into motor fuel this year, over objections from the
oil industry that technology wasn’t available for producing that volume.
The EPA said the goal was important to ensure a viable market for
cellulosic ethanol, and the growth of the industry as Congress intended.
At
this point, not a drop is expected to come from Range Fuels’ former
biorefinery, which the EPA had projected would contribute 1 million gallons of cellulosic fuel to the U.S. energy mix in 2011. The agency is counting on no fuel production at Soperton in 2012.
This story is part of a special series that explores energy issues. For more, visit The Great Energy Challenge.
