Energy Cronies, the Sequel

http://online.wsj.com/news/articles/SB10001424052702304561004579137641380093248

A new round of green subsidies goes to some familiar names.

Updated Oct. 25, 2013 7:13 p.m. ET

 

Discretionary spending may be capped, but times are still flush for one group of federal clients—green energy companies. In September as the government headed toward a shutdown, the Department of Energy pushed out the door another $66 million in green-energy subsidies to 33 companies and research facilities. 

Some $34 million in grants were earmarked for "advanced liquid fuels" that are derived from gases, such as methane. Nearly 30% of those funds—almost $9.5 million—went to three companies, LanzaTech, Greenlight Biosciences and Coskata. What all three also have in common is investment by Khosla Ventures, the venture capital firm run by Vinod Khosla. The Silicon Valley investor has a knack for getting taxpayers to aid his companies. 

Vinod Khosla, founder of Khosla Ventures Reuters

 

Consider LanzaTech, which was founded in New Zealand and has offices in Illinois. In 2011, the Department of Energy announced that LanzaTech was one of three firms awarded $4 million each in grants to produce biofuels. The company also received a $3 million Federal Aviation Administration contract to work on "alternative" aviation fuel. LanzaTech's recent grant was for another $4 million and was the second largest of the 33 awards that the Energy Department announced. (The largest, $4.5 million, went to Greenlight, another Khosla-funded company.) 

In January, LanzaTech announced it was buying a cellulosic ethanol refinery in Soperton, Georgia, in a foreclosure auction for $5.1 million. The refinery owner, Range Fuels, was forced to liquidate despite being awarded a $76 million grant from the Energy Department in 2007 (it ultimately received $46 million) and a $80 million loan from the Department of Agriculture (it received about $40 million and repaid $2 million). 

The state of Georgia also provided money. 

You won't be shocked to learn that Khosla Ventures was a major investor in Range Fuels. The federal government lost more than $80 million on Range Fuels, and it is now investing another $4 million in a company buying assets of that previous failure. Mr. Khosla's venture company gets help coming and going. 

These recent federal grants were made a few months after Mr. Khosla hosted a fundraiser in June at his California home for the Democratic Senatorial Campaign Committee. Price of admission: $32,400. 

President Obama attended, as did Democratic Senators Michael Bennet (Colorado), Maria Cantwell (Washington) and Amy Klobuchar (Minnesota). 

A few days after the Energy Department announced its September grants, LanzaTech welcomed former Obama campaign director Jim Messina to its board of directors. When not dispensing his vast technical expertise about "advanced liquid fuels," Mr. Messina runs Organizing for America, which is Mr. Obama's vehicle for advanced liquid politics. 

Mr. Khosla tells us politics was not involved in the grants and that he hasn't visited the Energy or Agriculture departments or "talked to anyone in those organizations this year." He says he was only recently made aware of the LanzaTech and Coskata grants, and that GreenLight had applied for a grant before "we even decided to invest." 

He adds that these are "research grants" made through the Energy Department's ARPA-E program and are "not material compared to the commercial fundraising" of these companies. He nonetheless argues that ARPA-E funding "has been incredibly effective, and without it this sort of research would die." 

LanzaTech CEO Jennifer Holmgren says politics played no part in her company's grant. She says that such government grants allow companies to leverage their infrastructure to embark on "high-risk, long-term" projects that Wall Street or private investors wouldn't necessarily fund. 

The Energy Department claims its grants and loans are made on the merits, yet somehow big-dollar grants keep flowing to companies backed by the same handful of politically connected venture firms. The Obama appointees and career staff at Energy and Agriculture do not operate in a political vacuum; they are well aware who is connected and who isn't. 

Such political investing has resulted in such prominent green taxpayer failures as solar-panel market Solyndra (awarded a $535 million loan guarantee), the battery firm A123 (a $249 million grant), and electric car maker Fisker Automotive (a $529 million loan guarantee). If these investments are so wonderful, why can't Mr. Khosla and friends invest their own money and leave taxpayers out of it? 

Government has a role in funding basic research that can't otherwise attract private capital, but subsidies for commercial ventures lead to misallocated capital and taxpayer losses. They also increase political cynicism as taxpayers learn that the subsidies always seem to flow to the rich and powerful who finance the Democratic Party.

 

 

University of Georgia Researchers to Examine Public Opinion on Biofuels Industry in Southeast

http://www.biofuelsjournal.com/info/bf_articles.html?ID=129046

Date Posted: December 18, 2012

Athens, GA—Public opinion and local support may very well be the linchpins that determine the future of bioenergy in the United States.

The Southeastern U.S. is poised to become a major producer of bioenergy, and a wide range of bioenergy technologies are now in various stages of development in the region.

Will residents support the new ventures?

Who will grow the biomass?

Will those in established industries fight against it?

These are but a few of the critical questions that citizens, policymakers and investors must answer if bioenergy is to become a viable alternative to fossil fuels.

Now, researchers from the University of Georgia and the U.S. Forest Service are conducting studies in locations throughout the biomass-rich Southeast to find answers to these questions and more.

They hope their unique method of investigation, using a mix of complementary ethnographic methods, will provide a detailed understanding of public opinion about bioenergy while also providing policymakers and business owners with the information they need to make sustainable energy production thrive in their communities.

"We're planning to work on the ground throughout the Southeast," said Sarah Hitchner, a co-investigator and post-doctoral research associate at UGA's Center for Integrative Conservation Research.

"A lot of people talk about biofuels as being an obvious win-win, but it's more complicated than that."

Beginning in Soperton, Ga.-formerly home to Range Fuels and now the Freedom Pines Biorefinery owned by LanzaTech-and then moving on to other areas in Georgia, Alabama, Mississippi, Louisiana, Florida and North Carolina, the researchers will participate in the daily activities of community members and conduct in-depth interviews with a variety of stakeholders, such as landowners, industry representatives, potential employees and county commissioners.

"A big part of this kind of research is to listen to as many perspectives as possible," said Peter Brosius, professor of anthropology in the Franklin College of Arts and Sciences, director of the Center for Integrative Conservation Research and co-investigator in the study.

"From there you begin to see patterns emerge."

This approach, which allows researchers to develop familiarity and rapport with community members over an extended period of time, gives them a more detailed understanding of the various points of view that might not be fully captured by other less comprehensive research methods such as phone interviews or mail-in surveys, Brosius said.

"Researchers across the world have been developing technologies for the conversion of biomass resources into energy and fuels, but we don't have a very good understanding of the effects that a large-scale biomass energy industry may have on the communities involved," said Ryan Adolphson, director of public service and outreach in the College of Engineering and associate director of the Bioenergy Systems Research Institute.

Adolphson works with Georgia companies and state and federal policymakers on bioenergy industry development.

"This study will make great strides toward helping us understand those effects and assist in the development of a more effective biomass energy industry," Adolphson said.

Supported by a grant from the U.S. Department of Agriculture's National Institute of Food and Agriculture, which funds research projects on sustainable bioenergy through its Agriculture and Food Research Initiative, this integrative research aims to explain not only whether people support or oppose bioenergy development, but also what led them to form their opinions and what policies, institutions and events may have influenced their decisions.

"USDA and President Obama are committed to producing clean energy right here at home, to not only break our dependence on foreign oil, but also boost rural economies," said Agriculture Secretary Tom Vilsack.

"These projects will give us the scientific information needed to support biofuel production and create co-products that will enhance the overall value of a bio-based economy.

"Today, with a strong and diversified U.S. agricultural sector, the American automobile industry has a greater incentive for expanding use of bio-based products while supporting good-paying jobs here in the United States."

The researchers stress that as alternative fuel and sustainable industry grow, it will become increasingly important for potential companies to identify and understand the social and economic factors working for and against new ventures.

"This research has the potential to inform the policy process, but we are also pioneering a new method that is applicable to other sustainability issues," Brosius said.

"There is a lot of activity right now in bioenergy with different plants being opened and a lot of proposed plants using a combination of private investment and government incentives to get started," said John Schelhas, a research forester with the U.S. Forest Service and project co-investigator.

"We're looking at specific sites where bioenergy development is taking place, and we're interested in talking with community members and landowners who have various degrees of investment and interest in bioenergy."

Ultimately, the researchers hope that this project will not only yield important information about the future of bioenergy in the South but also serve as a springboard for future research designed to examine the social complexities of bioenergy development by investigating diverse perspectives and interests within the communities in which these new and proposed facilities are embedded.

"It's essential to understand the way people perceive, understand and talk about biofuels as bioenergy industries develop in this region," Schelhas said.

"And it seems like we will be able to provide more clarity about that."

For more information, call 706-542-5222.

Managing Woody Biomass: The Past Century in Review

http://biomassmagazine.com/articles/8349/managing-woody-biomass-the-past-century-in-review

Foresters and timberland managers have stabilized woody biomass in the U.S. for the last century, meeting consumer demand without exhausting supply.

 

By Joshua Kane Harrell | November 20, 2012

• 
  Source: USDA Forest Service, Forest Inventory Analysis Program

At the turn of the 20th century, U.S. President Theodore Roosevelt warned Congress, with subsequent hyperbole appearing in New York Times headlines, that “a timber famine is inevitable.” Gifford Pinchot, the first chief of the U.S. Forest Service, echoed the sentiment by proclaiming, “In 20 years, the timber supply in the United States on government reserves and private holdings, at the present rate of cutting, will be exhausted.”  The timber famine or scarcity never happened, despite the increased consumer demand placed on our nation’s timber resources through the Roaring Twenties, post-World War II boom and other high-growth periods.

The complete opposite of timber scarcity has occurred over the past century. To exemplify the purest definition of sustainability, the amount of forestland in the U.S. has remained stable around 750 million acres from 1907 to 2007.  Additionally, over the past two decades, forestland has increased by 20 million acres.  As of 2006, the volume of annual net growth exceeded the volume of annual removals by 38 percent. The U.S. is growing more timber volume than it is harvesting, by a fairly wide margin.

If a timber famine occurred, stumpage prices—the amount paid for standing timber— would have reflected the inherent scarcity. According to the revealing economic study by Johnson and Libecap, the annualized rate of change in stumpage prices during the perceived timber famine era remained a constant 6 percent.  Supply and demand stayed in relative balance, never approaching a supply shortage that could be termed a “famine.”

Why has the timber resource remained abundant in the face of growing demand?  Simply put, markets existed that created demand. A major factor aiding in the expansion of forestland is the presence of deep, well-established markets for wood products. A nation of consumers required wood for prosperity, thereby fostering development of private sector innovation in the form of technological improvements in milling and tree-felling technology, advances in silviculture, tree-seedling genetics and tree-farming practices, and the conversion of degraded agricultural lands to timberland plantations aided by federal government programs. In the wake of appreciating timber commodity prices, the consumer side of the equation responded with advances in wood conservation measures (e.g., utility pole treatment) and product substitution.

Burgeoning Biomass Markets

Differentiating from the aforementioned traditional timber markets, the woody biomass market, defined as supply for energy demand, emerged vigorously over the past decade.  Ironically, wood has been used as a source of fuel in the U.S. since the Colonial Era. Seen through the prism of contributing to cellulosic ethanol, heat generation and electrical power generation, the growth of this emerging market has largely been precipitated by government subsidies, legislative initiatives/mandates, increasing oil prices, negative pressure on utilization of food resources and environmental solutions for alternative energy sources. The pressures for the woody biomass market
to flourish present a dichotomy of optimism and pause for concern over the actual market formation.
Forisk Consulting LLC estimates there are a total of 452 announced or operating woody biomass projects in the U.S. with a projected operating capacity of 124.8 million green tons of wood annually by 2022. Of the projects that actually pass the Forisk screening criteria of successful project financing, proven technology, permitting, supply agreements, etc., Forisk projects that only 77 million green tons of wood annually will be needed, a decrease of 38 percent from the total capacity of all 452 projects. As a data point, the forest products industry currently consumes more than 500 million green tons of wood annually.

Anecdotally, Forest Investment Associates has directly met with dozens of potential biomass participants who have expressed interest in securing biomass supply to support potential bioenergy projects. While FIA has had the opportunity to fully evaluate the potential for adding value to timberlands through working with some of these participants, the exercises were largely in vain. Substantiating the screening process conducted by Forisk, most of these potential biomass participants are no longer in existence for a myriad of reasons.

Stalled Biomass Markets

What has hampered the development of the woody biomass market?  There is no doubt the financial crisis of 2008-’09 took a toll. Largely, project financing, technological capability and environmental resistance have squeezed out potential market participants. In the first instance, a number of enterprises tried to put the cart before the horse by attempting to secure long-term biomass feedstock supply agreements, in order to secure debt financing, in order to build a biomass-using facility.  It seems cliché, but FIA is a firm adherent of the “Field of Dreams” mantra, “Build it and they will come,” i.e., if new bioenergy facilities that consume biomass are developed, forest landowners will respond to meet the new demand by growing more wood.   

In technological capabilities, FIA's interest in the market was piqued in 2006 by an announcement of the Range Fuels’ cellulosic ethanol facility in Soperton, Ga. At full production, the facility was projected to consume 1.6 million green tons of woody biomass feedstock, in an economically depressed area that could have benefited greatly from the related jobs. Sadly, the commercial-scale feasibility of the two-step, thermochemical conversion process was lacking, at least in profitability. With cautious optimism, FIA turns to KiOR Inc. as it prepares for the start-up of the newly constructed cellulosic biofuel blend stock facility in Columbus, Miss. While liquid fuel production from biomass has struggled, pellet production is a proven, long-established technology that provides a reliable market in certain locales, albeit dependent upon European policy models.

Much of the interest in woody biomass as an alternative fuel feedstock originated from the idea of American energy independence and environmental opposition to fossil fuel sources. Ironically, the same environmental community has condemned the use of woody biomass, petitioning for an equal carbon emissions footprint as coal. In the same vein, the final U.S. EPA Tailoring Rule announced in 2010 treated the regulation of greenhouse gas emissions from biomass-sourced and fossil fuel-sourced electricity in an identical fashion. The EPA has deferred the permitting requirements until 2014 in order to gather more data, in the meantime injecting a fair amount of uncertainty into the market.

Despite the setbacks in the woody biomass market, one thing has remained constant: the continual and sustainable management of the timber (and woody biomass) resource.

Biomass Keeps Growing

As an open free-market participant, foresters are poised to participate in supplying the emerging demand. In order to generate the highest returns for our clients, timberlands are managed for the highest and best product, which is presently sawtimber.

 If the net present value shifts such that a pulpwood or energy rotation provides a better proposition, management strategies will be adapted, as demonstrated in competitive pulpwood markets in the Southeast. Once upon a time, the southern forest products industrial landowners planted 1,000 to 1,200 trees per acre for the primary purpose of supplying feedstock for their pulp facilities. The mantra was, “plant them thick, cut them quick.” Since then, the sawtimber market has grown in the South, and the forest industry as a whole has practiced more intensive silviculture coupled with advanced gains in genetics. The optimum economic sawtimber rotation is satisfied by planting 500 to 600 trees per acre (with current mortality around plus or minus 5 percent in first year).  This planting density allows for a first thinning between ages 13 and 16 to remove pulpwood and a small amount of chip-n-saw.  The increased residual spacing allows for sawtimber growth optimization over the next 10 years or so, until final harvest.

In order to stay diversified in timberland management options, research and operational endeavors have been deployed to couple the pulpwood regime with the sawtimber regime in the form of so-called flex plantations. This method provides for the interplanting of lower-value and higher-value genetic seedling stock. Whatever direction the traditionally deep timber markets or emerging biomass markets may take, land managers and foresters will be poised to provide forest products to both markets in order to meet demand.

Author: Joshua Kane Harrell, Certified Forester
Regional Investment Forester, Forest Investment Associates
jharrell@forestinvest.com
404-261-9575

Petronas and LanzaTech to Recycle CO2 into Sustainable Chemicals

http://www.heraldonline.com/2012/10/14/4336054/petronas-and-lanzatech-to-recycle.html

Published: October 14, 2012

ROSELLE, Ill. & KUALA LUMPUR, Malaysia — LanzaTech, a producer of low-carbon fuels and chemicals from waste gases, and PETRONAS, the national oil company of Malaysia will work together to accelerate the development and commercialization of technologies to produce sustainable chemicals from carbon dioxide (CO₂) and natural gas.

The agreement blends Petronas' deep experience and assets in the petroleum industry with LanzaTech's gas fermentation technology to create an economical and sustainable source of high value chemicals.

LanzaTech's proprietary fermentation process converts carbon monoxide (CO) in industrial waste gases, reformed natural gas and gas derived from any biomass source, into low carbon fuels and chemicals.

LanzaTech and PETRONAS will work together to extend this technology to include carbon dioxide (CO₂) containing gases from a variety of sources including refinery off gases and natural gas wells to produce acetic acid, a high value chemical with applications in the polymers and plastics markets.

"PETRONAS and LanzaTech have the ability to significantly impact the future of carbon capture by fundamentally changing the way we deal with waste CO₂," said LanzaTech CEO, Jennifer Holmgren.

"Rather than trying to sequester carbon deep into the earth, we will 'bury' it in a chemical. In this way, companies can not only comply with emissions reduction requirements, but also generate revenue along the way."

The joint development agreement (JDA) builds on the relationship between the two companies established earlier this year when PETRONAS Technology Ventures SdnBhd (PTVSB), the venture arm of PETRONAS, invested in LanzaTech's Series C round.

"We invested in LanzaTech because we saw an opportunity for PETRONAS to benefit from the integration of LanzaTech's technology in multiple areas of our business," said Haida Shenny Hazri, CEO of PTVSB. "This is a natural extension of LanzaTech's core gas fermentation technology and it is a natural fit with Petronas' commitment to achieving a sustainable future for all."

About PETRONAS

PETRONAS is the national oil and gas company of Malaysia and is wholly-owned by the Government of Malaysia. Together with its subsidiaries and associated companies, PETRONAS, a FORTUNE Global 500® company, has fully integrated oil and gas operations in a broad spectrum of the oil and gas value-chain. Its business activities include (i) the exploration, development and production of crude oil and natural gas in Malaysia and overseas; (ii) the liquefaction, sale and transportation of LNG; (iii) the processing and transmission of natural gas and the sale of natural gas products; (iv) the refining and marketing of petroleum products; (v) the manufacture and sale of petrochemical products; (vi) the trading of crude oil, petroleum products and petrochemical products; and (vii) shipping and logistics relating to LNG, crude oil and petroleum products. More information is available at: http://www.petronas.com.my.

About LanzaTech

LanzaTech is a leader in gas fermentation technology. It provides novel and economic routes to fuels and high value chemicals from waste gas streams. LanzaTech's unique process provides a sustainable pathway to produce platform chemicals that serve as building blocks to products that have become indispensable in our lives such as rubber, plastics, synthetic fibers and fuels.

LanzaTech's technology solutions mitigate carbon emissions from industry without impacting adversely food or land security.

Currently operating a pre-commercial facility in China using steel mill off gases for ethanol production, LanzaTech, a company founded in New Zealand is now a global organization with full commercial operation targeted for 2013.

More information is available at www.lanzatech.com

Read more here: http://www.heraldonline.com/2012/10/14/4336054/petronas-and-lanzatech-to-recycle.html#storylink=cpy

LanzaTech secures $15 million debt financing

http://www.ethanolproducer.com/articles/9206/lanzatech-secures-15-million-debt-financing

By Susanne Retka Schill | October 12, 2012

 

LanzaTech recently closed on $15 million in debt financing from Western Technology Investment. Earlier this year, LanzaTech closed a $55.8 million Series C funding round led by Malaysian Life Sciences Capital Fund, bringing the total capital raised to date to more than $100 million.

LanzaTech has developed a novel biological process of carbon capture involving proprietary biological microbes that can use a variety of waste gases as a nutrient source—including waste gases from industry, which would otherwise be flared as carbon dioxide. The process can also use syngas generated from any biomass resource, including municipal, organic industrial and agricultural wastes, as well as reformed natural gas.

The company has a 100,000 gallon-per-year demonstration facility operating in China using steel mill off gases for ethanol production. Full commercial operation is targeted for 2013. “The ethanol produced at the China steel mill has been tested and approved as fuel grade ethanol and we are currently preparing samples for additional testing,” CEO Jennifer Holmgren told Ethanol Producer Magazine. “The focus of the pre-commercial facility has been to run the process at scale and it has successfully demonstrated this to date.”

The company continues work at its Freedom Pines facility in Soperton, Ga., the former Range Fuels facility purchased at a January foreclosure sale. “We have increased our team on site and are accelerating the shakedown of the gasifier,” Holmgren said. Range Fuels was developing a cellulosic ethanol process based on Fischer-Tropsch technology and had been commissioning the facility when it ceased operations. 

The new financing for LanzaTech comes from WTI, a private investment firm based in Silicon Valley, that has provided more than $3 billion of debt and equity capital to technology and life science companies ranging from early-stage private companies to publicly-traded companies, including Facebook, Google and Juniper Networks. Their investments range from $250,000 to $30 million and are structured as fully usable, unrestricted growth capital.

"LanzaTech's team has developed an innovative approach to carbon capture and reuse that is already operating at scale," said David Wanek of WTI. "Their unique technology has the potential to have a real and significant impact on the global fuels and chemicals market. WTI is excited to be joining LanzaTech on its journey to commercialization and we look forward to great things from them."

"We are delighted to partner with WTI to accelerate our growth," Holmgren said. "WTI has an outstanding reputation and this venture debt completes our current fundraising. We will continue to invest our capital in LanzaTech's research and development program and to accelerate the commercialization of our integrated fuels and chemicals platform."

Milestones Reached

http://www.ethanolproducer.com/articles/9175/milestones-reached

Cellulosic ethanol is arriving, with commissioning under way and more than 100 MMgy under construction.

 

By Susanne Retka Schill | October 05, 2012

• 
  Abengoa Bioenergy’s 25 MMgy cellulosic ethanol plant at Hugoton, Kan., is beginning to take shape.
  PHOTO: ABENGOA BIOENERGY

The next five years—the often scoffed mantra of cellulosic ethanol developers—is getting whittled down to the next year or two. A milestone was reached this year when Blue Sugars Corp. got the first cellulosic renewable identification number (RIN) issued by the U.S. EPA. Another notable event happened in June, when Ineos Bio began commissioning its plant in Florida. Construction continues on several plants, while other projects are closing in on financing and new ones continue to be announced. For example, Chemtex International Inc. announced a new 20 MMgy project in North Carolina, even as it is commissioning its first, similarly sized plant in Crescentino, Italy.

The Ethanol Producer Magazine fall plant map, mailed with this issue, shows 6.25 MMgy of cellulosic capacity in the U.S. and Canada at nine demonstration plants and more than 104 MMgy under construction, coming online next year and in 2014. The industry knows only too well, though, that commissioning plants that are first-of-their-kind is fraught with uncertainty. Range Fuels was fast out of the gate, building a plant at Soperton, Ga., which it completed in late 2010. Based on well-known Fischer-Tropsch technology, an industry insider said the company thought it could skip from lab-scale to commercial-scale. They couldn’t. The company did succeed in producing methanol, but failed to successfully produce ethanol and ultimately defaulted on its loan. The plant was picked up at the foreclosure sale by New Zealand-based LanzaTech, which continues to evaluate the facility for use with its gas-to-fuels and chemicals process.

Cellulosic ethanol developments are still fluid. Coskata Inc. announced this summer it is refocusing its efforts and turning to natural gas as a feedstock to use with its technology, thus taking it off the list of cellulosic ethanol developers, at least for now. Royal Dutch Shell ended its support of cellulosic project development with its two big partners, Iogen Inc. and Codexis Inc., both of which announced big layoffs. One of the early technology developers, Terrabon Inc., filed for Chapter 7 bankruptcy in August, ending work on its MixAlco technology. Qteros made no announcements and company officials did not respond to repeated attempts for comment, but its website is down, local media reported the research facility was closed and in late September, its equipment was put up for auction. The changing fortunes of early developers and shifting business models is not unexpected, but progress is being made, nonetheless.

International Effort

It is a fitting irony that the first gallons of cellulosic ethanol assigned RINs in the U.S. were shipped to Brazil, as it underscores the internationalization of development efforts. The 20,000-some gallons of cellulosic ethanol was produced at the Upton, Wyo., demonstration plant operated by Blue Sugars Corp. (formerly KL Energy Corp.) The company announced its new name this summer, along with an extension of its development partnership and the first commercial licensing agreement with Brazil’s big oil company, Petrobras SA. Since 2010, the two have been collaborating on Blue Sugar’s technology, using bagasse as the feedstock. Petrobras used the shipment both for testing and to fuel a fleet at the United Nations Conference on Sustainable Development held in Brazil this summer. At that time, the company announced engineering had begun for the first commercial unit to be co-located at one of its sugarcane mills, with start-up slated for 2015.

“Petrobras has been an outstanding partner,” says CEO Peter Gross. “Petrobras supported us in many ways, not only financially, but also in the areas of R&D, engineering, industrial operations. One interesting example has been Petrobras’ experience from operating nine sugarcane mills in Brazil.
This has helped us in developing a technology designed to the industrial reality and requirements of sugarcane mills.” A large reduction in the use of enzymes was achieved in the most recent iteration of the hydrolysis process, he reports. “A change to multiple sugar streams and the breakdown of the process into several stages allows for great process and operating flexibility.”  Blue Sugars is returning to pine wood—its first feedstock of choice—in a new joint development program with Finland energy company ST1 Group Oy.

Internationalization is apparent in Florida as well, where the 8 MMgy Ineos New Planet BioEnergy LLC plant is being commissioned. The Vero Beach project is a joint venture between a Florida-based developer and Ineos Bio, one of the 15 business units of a company headquartered in Lyndhurst, Hampshire, U.K. Privately held Ineos Group Ltd. is the third largest chemical company globally, comprised of facilities acquired from BP chemicals when the oil company exited the commodity chemicals sector in 2005, along with other acquisitions. Ineos operates 60 chemical production facilities in 13 countries and licenses a large portfolio of chemical intellectual property. It purchased its cellulosic ethanol technology from Bioengineering Resources Inc. in 2008, along with BRI’s research facility in Fayetteville, Ark. More than 40,000 hours of run time have been chalked up in the pilot facility, and, with the company’s expertise in managing chemical facilities, Ineos Bio spokesman Dan Cummings speaks confidently about its ability to succeed. Commissioning, a complex process for a new, integrated process that includes gasification, heat recovery and power generation, began in June, he says. The technology is based on the microbial conversion of syngas into ethanol with separation through distillation, which Cummings adds is a continuous process taking just 10 minutes from when the feedstock enters the gasifier until it exits as ethanol.   

Commissioning of Chemtex’s commercial-scale plant in Italy has also been under way for some time. In early September, the boiler was being started up, says Dennis Leong, executive vice president, marketing and business development for Chemtex Global SA.  “We fully expect to have it producing in the November/December time frame.” Chemtex is the global engineering, procurement and construction (EPC) subsidiary of Mossi & Ghisolfi Group, an Italy-based, privately held chemical firm. In August, Chemtex announced it had received a conditional USDA loan guarantee for a 20 MMgy project in Sampson County, N.C., with a 2014 start-up targeted. Earlier, the project received a grant through the USDA Biomass Crop Assistance program to establish 4,000 acres of switchgrass and miscanthus.

Further south, a developer announced a 20 MMgy plant in Lenox, Ga., is under construction. A native of Australia, Scot Corbett, CEO of the World Ethanol Institute LLC, moved to the U.S. in 1993 to continue developing the paulownia tree as part of the World Paulownia Institute. While the company originally targeted its development of the fast-growing tree for forestry, he says it is now focusing on energy, both cellulosic ethanol and fuel pellets. The tree can be harvested on demand, and will regenerate from the stump annually, getting yields of 20 to 30 tons per acre per year.  The company has a patent-pending process called CHIPS, or combined heat, ice, power and steam. The pretreatment is a continuous process using steam explosion and acid hydrolysis, followed by standard fermentation using another technology provider’s modified yeast.  “We’ve done testing with the University of Georgia and reconfirmed with the labs at Golden, Colo.,” he says, “We’re pretty confident.” As a privately funded venture, the project has maintained a low profile, he adds. “We haven’t needed the exposure to get financing.” Other advantages are that the plant is co-located with a sawmill and plywood plant to share infrastructure as well as the fact that Corbett owns related companies to handle engineering, procurement and construction duties. “The building is up,” Corbett says. “The equipment is being ordered and we expect to be completed in late 2013.”

Abengoa BioEnergy is a familiar player in the U.S. ethanol industry, operating six first-generation plants with a total capacity of 374 MMgy. It is a subsidiary of Spain-based Abengoa, a big player in the renewable energy sector with major projects in wind and solar energy around the globe, as well as more conventional large power facilities. Its first cellulosic ethanol facility has been under construction in Hugoton, Kans., for a year. “The ferm tanks are up, the beer well is up, the distillation tower is up, the water treatment facility is done,” says Chris Standlee, executive vice president. “It’s looking like a plant now.” Abengoa has had staff on the ground at Hugoton for three years, he adds, getting feedstock contracts in place. The 25 MMgy plant will tap corn stover and switchgrass as feedstock. Even in a drought year like this one, Standlee says there will be plenty of biomass available. The company expects to require less than 15 percent of the available biomass from a 50-mile radius.

Ground has been broken at BlueFire Renewables Inc.’s 19 MMgy plant in Fulton, Miss., and some site work is ongoing, reports company spokesman Richard Klann.  The bulk of construction activity is on hold, however, awaiting financing.  “Our lender of record for a USDA loan guarantee was not approved,” he explains. “We’re trying a more traditional financing model.” BlueFire is in negotiations with China Huadian Engineering Co., a unit of China Huadian Corp., which is China’s fourth largest utility, to invest in the Fulton facility. Huadian would gain, in return, BlueFire technology. “We can help them with making their power plants more profitable and they’re interested in getting into the U.S.,” Klann says.

The company has also formed a new subsidiary, SucreSource LLC, to market its front-end process for sugar production, a concentrated acid hydrolysis with chromographic separation of acid from the sugars, recycling acid in the process. GS Caltex, a Korean oil and petrochemical company has a professional services agreement with SucreSource for pilot testing of its process for chemical production. “We’re doing the front-end technology to get the sugars and they’ll work on the back end,” Klann says. That plant will be operational by December.

Publically traded companies like BlueFire keep their investors well-informed, with U.S. Securities and Exchange filings available for the public to read. Some companies have been quite aggressive in telling their stories as they seek to attract investors, while others, illustrated by World Ethanol Institute, lie low until concrete progress can be reported. “They’re all in the same place we are,” says Klann, “with a process that hasn’t been proven beyond the pilot or demo.  All work technically, but will they work economically at scale?” We’ll soon know the answer for that. 

Author: Susanne Retka Schill
Contributions Editor, Ethanol Producer Magazine
(701) 738-4922
sretkaschill@bbiinternational.com

Warnings ignored in Range Fuels debacle

http://www.ajc.com/news/business/warnings-ignored-in-range-fuels-debacle/nR2H8/

Posted: 7:30 a.m. Sunday, Sept. 2, 2012

By Dan Chapman 

The Atlanta Journal-Constitution 

It was the weekend before Christmas 2008 and Hosein Shapouri, a senior economist with the U.S. Department of Agriculture in Washington, was ordered to work.

His bosses needed an analysis done quickly of a proposed wood-to-ethanol factory in mid-Georgia. The Bush administration was leaving office the following month, and USDA officials wanted the deal sealed by then, Shapouri surmised.

In a blistering critique obtained by The Atlanta Journal-Constitution, Shapouri labeled the proposed Range Fuels plant “a high risk venture” that should raise “a red flag.” Three weeks later, top USDA officials approved the guarantee anyway.

Today, the Georgia plant’s failure is well-documented. The Soperton facility closed last year without producing a drop of usable ethanol. Taxpayers lost at least $75 million.

But an in-depth analysis by the AJC reveals that taxpayer money for Range Fuels was approved despite repeated warnings and strong opposition by some of the federal officials who vetted the project.

Other officials nonetheless favored giving Range access to as much as $162 million, including $6.2 million from the state of Georgia, according to documents obtained via the Freedom of Information Act.

Government support for alternative energy has become a hot-button political issue, pitting the promise of energy independence against the prudent use of tax dollars. Both the Bush and Obama administrations strongly supported Range, which was expected to showcase the feasibility of cellulosic ethanol, as did politicians of both parties keen to bring jobs to Georgia.
 
Washington continues to hand out grants and guarantees for the commercially unproven technology, which attempts to turn wood pulp, not corn, into fuel for cars and trucks. Last month, USDA approved a $99 million loan guarantee for a North Carolina grass-to-fuel factory.

Critics say giving taxpayer dollars to deep-pocketed corporations and billionaire entrepreneurs like Vinod Khosla, the primary financial backer for Range Fuels, is folly. They liken the Range fiasco to the failure of Solyndra, the solar energy project that received $535 million in federal guarantees and produced only political heat for the Obama administration.

“Solyndra had a lack of due diligence just as Range Fuels did,” said Sam Shelton, founding director of the Strategic Energy Institute at Georgia Tech. “It really hurts me to see Energy and Agriculture department moneys poured down the drain. Government should be involved in a lot of things, but commercialization of technologies isn’t one of them.”

The documents obtained by the AJC show that three USDA officials who vetted the project approved it. Three opposed it. And three others who made critical comments had their opinions redacted.
Federal officials say they learned valuable lessons from the Range Fuels collapse and have established safeguards to prevent recurrences.

“While the Agency is disappointed that this one company did not succeed … it is important to remember that USDA has a long history of successful lending that supports rural homeowners, business owners, utilities and cooperatives,” the agency said in a statement e-mailed to the AJC. The USDA says the delinquency rate on more than 1 million loans is a scant 2.16 percent, although relatively few involve alternative energy.

Shapouri, now retired, said decision-makers dismissed Range’s many, easily detectable faults.
“Nobody ever expected them to produce anything,” he said in an interview. “I told them not to finance it. They didn’t listen to me. They decided to rush, rush, rush and give them the money.”

 Push for alternatives

2007 was a heady time for the alternative energy industry, especially cellulosic ethanol projects that promised to turn Georgia’s abundance of pine trees into liquid gold while weaning the nation from imported oil and corn-based ethanol. Khosla, the billionaire co-founder of computer giant Sun Microsystems, announced in February the construction of the nation’s first pine-scrap-to-ethanol factory in Soperton, about 155 miles southeast of Atlanta.

Three weeks later U.S. Energy Secretary Samuel Bodman unveiled $385 million in grants to six cellulosic ethanol projects around the country, including $76 million for Range.

A University of Georgia study estimated the economic impact to struggling Treutlen County at $106 million a year. Nearly 200 people would find work at the factory, with suppliers and at nearby businesses.

With its lender, AgSouth Farm Credit in Statesboro, the Colorado company applied for an $80 million loan guarantee via the 2008 Farm bill. Such loan guarantees allow projects to arrange risk-free financing.

Between 2002 and 2006, Range’s technology had undergone 12,000 hours of testing in Colorado, using a variety of raw materials and operating conditions, according to the company’s feasibility study obtained by the AJC. But Range withheld some details, calling them “proprietary.”

Kevin Hicks, a USDA biofuels expert who helped review the loan guarantee, wrote in March 2009 that he and some colleagues didn’t have enough information and questioned plowing millions of dollars into so much unproven technology.

“Building a new manufacturing facility with one or two new processes is a risk,” the USDA researchers wrote. “Building a new facility with 51 percent new processes presents enormous risk.”

Hicks, who declined comment for this article, and colleagues added that “numerous other technical challenges exist.” Still, they wrote, the project has “merit and is more advanced in its planning than many of the other second generation biofuel projects to this date.” His final opinion was among those redacted.

‘Red flag’ raised

Even Range backers voiced concerns. Judy Raskind, a USDA rural development official, said in documents obtained by the AJC, “the risks and uncertainties of these still unproven technologies are consequential.” Nonetheless, Raskind “strongly recommended” that Range receive the guarantee.

“The opportunities for Range Fuels to be successful are strong,” she wrote. The “project is considered by the industry to have the greatest chance for success because of its robust economic viability and strong financial backing.”

Georgia officials, for their part, wholeheartedly supported a $6.2 million grant for the venture, mainly for the purchase of machinery. Treutlen County gave the company nearly 100 acres and tax abatements worth $33 million.

Yet a September 2007 memo from the Georgia Department of Community Affairs, obtained by the AJC via an open records request, noted that “the research is still years away from being completed and as of yet is unproven.”

Some federal scientists suspected Range wouldn’t be able to produce any ethanol, only methanol, a cheap and common additive used in plastics, paints, fuel and windshield wiper fluid.

By 2008 Range had scaled back production estimates from 40 million gallons of ethanol and 9 million gallons of methanol a year to 12 million gallons each.

The shift “should raise a red flag to any additional federal funding of the project until the discrepancy is resolved,” Shapouri, the USDA economist, wrote.

Hicks and fellow researchers also predicted that, by the time the federal money ran out, the “plant will probably not make ethanol on an economically viable basis.” Later, the USDA approved the switch-over to majority methanol production.



“That’s when the first alarm bell should’ve gone off,” said Robert Rapier, a chemical engineer whose R-Squared blog is widely read across the energy industry. “They went from promising something that had never been done before to something that was invented a hundred years ago.”

Range’s finances also raised red flags. Anthony Ashby, a USDA loan analyst who opposed the project, said Range lacked “cash flow” and needed more money before proceeding to later production phases, creating “a high level of risk for the government.”


Ben Anderson, one of USDA’s top administrators for rural development programs, said that Range’s financing was “not consistent” with the agency’s lending rules for alternative energy projects.

“The financing structure provides the potential for a larger Federal Government risk and exposure,” Anderson, who also opposed the project, wrote in January 2009.

After missing a production deadline and struggling financially, Range finally raised enough money by February 2010 for USDA to issue the loan guarantee. But technical difficulties plagued the plant throughout the year. A major investor pulled out.

The Soperton factory was mothballed in late 2010. The Energy Department terminated its agreement with Range thereby “reducing future financial risk for the American taxpayers.”

The agency said the final steps in producing usable ethanol “could not be successfully demonstrated with the time and funding available in this project.”

Lessons learned

USDA now requires more technical and financial information before, and after, approval of a loan guarantee.

“Obviously, hindsight is perfect,” said Brian Williamson, deputy commissioner of the Georgia Department of Community Affairs. “If we got the same deal tomorrow, we would use what we experienced from Range and learn from it.”

Another alternative energy company — also backed by Khosla — bought the foreclosed factory for $5.1 million and plans to produce ethanol via a different method. Williamson said the new company - which is using the taxpayer-funded machinery, but not getting additional aid - expects to one day honor the job-creation goals that triggered Georgia’s grant to Range Fuels.

The breakdown of taxpayer losses includes $43.6 million from DOE and $32 million from USDA. Georgia’s loss is $6.2 million - unless the factory’s new owners succeed.

The Energy and Agriculture departments continue to make loans to still-unproven cellulosic ethanol and other renewable energy ventures. Over the last two years, the agencies have dispensed more than $500 million in loan guarantees for projects that promise to turn solid waste, animal fat and cooking oil into fuel.

And, in August 2011, the Obama administration announced the investment of $510 million to produce specialized biofuels to fuel military and civilian planes and vehicles.

Khosla declined comment for this story. Earlier this year, though, he told the AJC, “you have to take risks to do any innovation and have breakthroughs in cost … The whole role of the Energy Department program was to encourage innovation. People forget that.”

Rapier, the energy expert and Khosla critic, said only scientifically sound projects are worthy of federal funding.


“But if you go out there, and make claims and take taxpayer money and don’t deliver,” he added, “you hurt the ability to raise money for realistic projects and you sour taxpayers on biofuels.”

---

RANGE FUELS TIMELINE

February 2007 — California dot-com billionaire Vinod Khosla announces the nation’s first wood-to-ethanol plant to be built in Soperton, Ga. The Range Fuels plant also receives $76 million from U.S. Department of Energy.
November 2007 – Groundbreaking for cellulosic ethanol factory.
December 2008 — Federal researchers and economists review Range’s proposal for an $80 million loan guarantee from the U.S. Department of Agriculture.
January 2009 — USDA conditionally approves loan guarantee.
February 2010 – USDA fully issues the loan guarantee.
December 2010 – A major investor pulls out. The DOE quits giving money to Range.
January 2011 – Soperton factory ceases operation and Range soon declares bankruptcy.
January 2012 – Foreclosed factory is sold for $5.1 million.

How we got the story:
Dan Chapman has followed the Range Fuels saga ever since the Colorado company announced in early 2007 the construction of an alternative energy factory in mid-Georgia. When the company went bankrupt and closed, the AJC dug deeper into the company’s finances and its ability to tap $600 million in state and federal grants and loans for a variety of alternative energy projects across the country. This year the AJC issued a flurry of open records requests for federal and state documents to understand why Range was given the OK to tap $162 million. Chapman reviewed more than 2,000 pages of documents.

One of the Decade's Biggest Examples of Wasteful Government Spending

http://moneymorning.com/2012/08/31/one-of-the-decades-biggest-examples-of-wasteful-government-spending/

August 31, 2012

 

By David Zeiler, Associate Editor, Money Morning

In February we told you that despite nearing $15 trillion in debt - now close to $16 trillion - the U.S. government decided to spend $592,000 last year to figure out why chimpanzees throw poop.

Now we've discovered yet another example of wasteful government spending that has burned up more than $1.5 billion of your tax dollars - with nothing to show for it.

We're talking about the fruitless pursuit of a biofuel known as cellulosic ethanol, surely one of the greatest government boondoggles of the past decade.

Cellulosic Ethanol Production: What You're Paying For

Both Republican and Democratic administrations have showered companies with grants and loan subsidies with the goal of turning materials like wood chips and switch grass into an ethanol fuel that could be used in automobiles.

 

 The 2007 Energy Independence and Security Act was so optimistic government spending could jump-start this unproven technology that it projected annual cellulosic ethanol production of 250 million gallons by 2011, 500 million gallons by 2012, and 1 billion gallons by 2013.

For good measure, the law also required oil refineries to buy the cellulosic ethanol to mix with their gasoline products, just as they do now with corn-based ethanol.

But five years and more than $1.5 billion later, cellulosic ethanol production is just a drop in the bucket.

Literally.

Until this year, no cellulosic ethanol had been commercially produced. So far this year, the sum total is 20,000 gallons produced in April (none was produced in May or June, the latest months for which data is available). 

 

That amounts to 0.04% of 2012's quota. 

Meanwhile, the government keeps throwing more tax dollars into the black hole of cellulosic ethanol, hoping someone will figure it out.

The Costly Dream of Cellulosic Ethanol 

 

Back in 2007, about a half-dozen companies received most of the initial wave of government spending to launch cellulosic ethanol production.

One company, Range Fuel, received a $76 million grant from the Energy Department and an $80 million loan guarantee from the Agriculture Department. Range's factory was supposed to process wood chips into 10 million gallons of ethanol a year.

The Range plant never produced any ethanol. Forced into liquidation, the Georgia factory was sold in January for $5.1 million.

Another company, Cello Energy, received no government money but was key to the EPA's rosy estimates of cellulosic ethanol production. Cello was projected to supply 70 million gallons in 2010, about 70% of that year's mandate. The company declared bankruptcy in 2010 without producing a drop.

The government brushed off those failures and instead turned its funding machine up a notch.

Last September, the Energy Department loaned Spanish-based Abengoa Energy $134 million to build a cellulosic ethanol plant in Kansas. Abengoa was also a recipient of a $76 million grant from the DOE back in 2007. 

The Energy Department said in December it would provide up to $80 million to help Mascoma build a cellulosic ethanol facility in Kinross, MI.

And just last week the Department of Agriculture announced a $99 million loan guarantee to Italian-owned Chemtex to build a plant in Sampson County, GA.

While it's possible the newer projects might bear fruit, it sure looks like the government is wastefully throwing good money after bad.

Forced to Buy a Biofuel That Doesn't Exist

Despite the lack of commercially available product, however, the Environmental Protection Agency (EPA) requires the oil companies to buy a fixed amount each year or pay a fine via "waiver credits."

Last year the EPA lowered the cellulosic ethanol requirement by nearly 98% to 6.6 million gallons. But with zero gallons available to purchase, the oil companies were forced to pay a $6.8 million penalty.

"As ludicrous as that sounds, it's fact," Charles Drevna, president of the National Petrochemicals and Refiners Association, told Fox News. "If it weren't so frustrating and infuriating, it would be comical."

For 2012, the EPA has lowered the requirement from 500 million gallons to 8.65 million gallons. However, with just 20,000 gallons produced so far, it looks like oil companies will again pay millions in penalties - for not buying something that's just plain unavailable.

"Congress subsidized a product that didn't exist, mandated its purchase though it still didn't exist, is punishing oil companies for not buying the product that doesn't exist, and is now doubling down on the subsidies in the hope that someday it might exist," scolded a Wall Street Journal editorial. "We'd call this the march of folly, but that's unfair to fools."

Why Cellulosic Ethanol Has Flopped

Turning grass and wood chips into a renewable fuel source sounds like a great way to reduce the country's dependence on fossil fuels, but making it a reality has proven very, very difficult.

Compared to corn-based ethanol, cellulosic ethanol is much more complicated to produce and costs about twice as much.

While cellulosic ethanol has existed in the laboratory for decades - the Germans first created it in 1898 -- the mass production riddle has remained unsolved.

That's also why relatively few private investors have gotten on board.

"It is expensive and it's difficult to do and it's relatively untried on a commercial scale," Ned Stowe, policy associate for the pro-renewable energy think tank, the Environmental and Energy Study Institute, told the Tampa Bay Times. "For private investors, it's seen as a risky venture because of the technological unknowns."

Solutions to those issues still may not make cellulosic ethanol viable as a significant fuel source.

Just to replace 10% of annual U.S gasoline consumption - about 13.4 billion gallons - cellulosic ethanol factories would need to process enough biomass each year to fill a line of semi-trucks stretching to the moon.

Last fall, the National Academy of Sciences weighed in with a report on the struggles of cellulosic ethanol. The main issue, NAS said, is "the high cost of producing cellulosic biofuels compared with petroleum-based fuels, and uncertainties in future biofuel markets."

In short, cellulosic ethanol isn't yet cheap enough relative to gasoline to make it a practical fuel option.

So, given the obvious futility of making this particular biofuel work, why does the government keep wasting money on it?

Politics, of course.

The government's generosity has helped the overall ethanol industry become a $42 billion behemoth that also happens to employ about 90,000 Americans. And farmers have become very fond of the various government subsidies they receive for growing ethanol "feedstock" such as corn.

"Ethanol would likely disappear from the market place absent federal subsidies and mandates," Sterling Burnett, senior fellow at the National Center for Policy Analysis, told Forbes. "Like so much of the federal pork bestowed upon special interests, ethanol is bad for the economy, bad for consumers and bad for the environment."

 

Answers for your biofuels questions: Coskata, LanzaTech, butanol

http://www.biofuelsdigest.com/bdigest/2012/08/05/answers-for-your-biofuels-questions-coskata-lanzatech-butanol/

Jim Lane | August 5, 2012 

 

Here in Digestville, we debut this week a content collaboration with Consumer Energy Report, a must-see content site that we recommend you check out and bookmark. Twice a month, we’ll check in with CER and excerpt their latest and greatest – including contributions from CER and Energy Trends editor and noted biofuels commentator Robert Rapier.
In our first collaborative, RR answers some questions from readers. One is on Lanzatech, and the other is about the feasibility  of filtering for butanol separations. The questions were slightly edited for brevity.

Q. I am interested if the decision by Coskata shall flow on to Lanzatech and their purchase of Range Fuels in regards to ethanol?

We are currently developing a project that incorporates a number of pieces, however we are considering the use of natural gas as a dual feedstock to produce critical volume likely producing methanol as a fuel and chemical base. Our view is to follow the lead by China and to develop technologies and processes around methanol to fuel. Currently we are are undertaking research and developing a possible business model.

Do you think we are going to see a vhs (ethanol) vs beta (methanol) situation develop in the future?

RR answers: Lanzatech has technology that was close to Coskata’s technology, so this is certainly a good question. In my opinion, Lanzatech is going to have a tough time making cost-competitive ethanol for many of the same reasons that caused Coskata to shift to natural gas. If you don’t want to make a full commitment to natural gas, I think a low-risk approach (but probably higher capital) is the one you describe in which you would have a capability of feeding natural gas into the process.

Natural gas should work fine in Lanzatech’s process, and would certainly be a lower capital option than wood waste. I know they would ideally like to process waste streams that contain a lot of carbon monoxide, but they are going to need the capability of building greenfield plants that provide their own feedstock. Natural gas could be a path forward.

As far as ethanol versus methanol, in my view methanol and di-methyl-ether (DME) produced from methanol are likely to gain a stronger foothold in China before they do so in the U.S. The U.S. agricultural lobby has not looked favorably upon methanol in the U.S., and I believe they will fight hard to keep it out of the fuel supply and protect ethanol’s market share. After all, there is already a large supply of cheap methanol in the U.S. and approximately none of it ends up in the fuel supply. I don’t expect that situation to change soon, but if you are thinking about China as a target market then your chances may be better there.

Q: This may be a dumb question (chemistry is not my area), but has anyone looked at simply filtering the butanol from the water?  What are the relative molecular sizes?

RR answers: This particular issue is in reference to the energy-intensity of separating a solution containing low levels of butanol. For reference, I have written in some detail about this issue in Butanol 101 .

It’s not a dumb question; in fact membranes can be used to separate butanol from water. The membranes I am familiar with don’t work on the basis of size differences (although some gas membranes do) but rather the relative polarity of butanol and water. Since butanol is a less polar molecule than water, some membranes such as polydimethylsiloxane (PDMS) that present a hydrophobic surface allow butanol to migrate into the membrane while excluding water.

This sort of separation can allow low-concentration butanol that is generally produced from biological processes (perhaps 2% to 6% butanol) to concentrate up to above the phasing concentration (~8% for n-butanol). Once the phasing concentration is reached, the energy requirements are far lower because the mixture separates into a butanol-rich phase containing maybe 20% water and a water-rich phase containing about 8% butanol. Therefore, instead of distilling off a mixture of 95% water and 5% butanol — which is extremely energy-intensive — you would distill a mixture that contains only 20% water.

The disadvantage is that the total costs of operating a membrane system are still not cheap. Chemical companies that produce billions of gallons of butanol each year are well aware of such systems, and have taken a look at the economics many times. But a fundamental difference between the petrochemical process and the biological process is that the former does not have to remove copious amounts of water as is the case in the latter. Therefore, the economics may be more compelling to utilize membranes for those pursuing the biological route.

Second Try: LanzaTech Grabs Failed Biofuel Refinery in Georgia Pine

http://news.nationalgeographic.com/news/energy/2012/01/12019-range-lanzatech-cellulosic-biofuel-ethanol/

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

Josie Garthwaite

For National Geographic News

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.

The March on Georgia: Renmatix raises $50M; LanzaTech buys Range Fuels site

http://www.biofuelsdigest.com/bdigest/2012/01/04/the-march-on-georgia-renmatix-raises-50m-lanzatech-buys-range-fuels-site/

admin | January 4, 2012 

 Renmatix and LanzaTech announce major advances in Georgia on the same day. Big Mo’? What does it all mean?

 

Our old friend, Brian Westlake, re-surfaces again to help us figure it all out, and delve into the real story.

“Well, g’day, g’day, g’day, what’s all this confusion about Renmatix and LanzaTech?” So began my friend Brian Westlake.

“Jim, I figured you’d call, completely stumped as usual. Let’s sort you out, matey, and quickly. Let’s make it quick. The waves here at Byron Bay are compelling. Now, what exactly are you hearing about LanzaTech?”

I explained that in Georgia, LanzaTech bought the Range Fuels Soperton site for $5.1 million at an auction yesterday at the property.

“And yer question is ‘what’s the value proposition?’ Is this something Vinod Khosla shoved down their throats? Something along those lines, ay?”

Yep. Although there been some confusion, I mentioned, as to whether LanzaTech bought RangeFuels or just the Georgia site.

“Bought Range Fuels? That’s total bollocks, mate. You’ve been reading ICIS again. The company wasn’t up for auction, it was just the site.”

Range Fuels Rewind

 

For a moment, we went through the Range timeline. Range Fuels closed its doors last fall after attempts failed to refinance, or sell the company as a whole. Range had stopped making payments on its government-guaranteed loans, and found its payments under a DOE grant suspended after the company had ultimately failed in its demonstration project, which called for the catalytic conversion of syngas into ethanol.

“And you think Vinod is behind this?”

Well, people are talking.

“Aw, Jim, you need to get to know these people better. Not Vinod’s style to impose on his CEOs. Not Jennifer Holmgren’s style to lead her company down a path that advantaged one investor.”

OK, I can buy that.

$25M in infrastructure for a $5.1M check

 

“Here’s the thing. It’s a $5.1 million deal for, I don’t know, $20 or $25 million in site value. Jennifer would tell you, “why be patient?” when you can get all that, for that, and right away, instead of waiting 12-24 months for Christmas.”

But, she could have bought the project directly via the USDA. Why run the auction risk?

“Not at that price, cobber. Now, you’ve got this all wrong.  Consider this acquisition similar to the LS9 deal.

Where that company picked up a 12 Mgy capacity site and fermentation infrastructure in Florida, last year, for under $3M, by cherry-picking a site out of foreclosure?

“There you go, much better already.”

Son of the Range gasifier

 

But what’s LanzaTech going to do with the Range Fuels gasifier?

“Ah, that’s right. Everyone’s got their knickers in a knot over the troubled Range gasifier, now in LanzaTech’s possession. But you don’t  need it, don;t you see. Whether it can produce beyond the 125 tons per day of biomass or so that it did demonstrate, well it's academic at the price they acquired the site.”

Academic?

“Jim, don’t you see? LanzaTech’s phone must be ringing off the hook with gasifier companies, vying for a partnership with LanzaTech. Especially now that they have branched out beyond industrial off-gases. Sean Simpson’s microorganism – and you know as a ridgy-didge Aussie I don’t hand out lollipops to Kiwis just for fun – that bug could well aim for other higher-value chemicals.

Isn’t LanzaTech looking more and more like Coskata?

 

“LanzaTech has one advantage you’re overlooking, They don’t have themselves embroiled in a trade secret dispute with INEOS Bio. But you’re missing the big picture. It’s not about Coskata. For that matter, there’s INEOS Bio active in that space, not to mention MSW-to-ethanol players such as Terrabon, Enerkem and Fulcrum, or wood-to-ethanol projects like Mascoma or American Process. It really doesn’t have much to do with all that.

So, what’s it about?

 

“Catch a clue, old mate. LanzaTech needs its own house, You’re all tied up in whether this is Vinod somehow escaping his fate on Range.

Their own house.

“Yeah. Let’s take the site LanzaTech is developing with Bao Steel in China to take advantage of waste gases from steel production.

Nice project that one.

“Well, try explaining to your new Chinese partners that you want to do some scale-up investigation on a new feedstock, one that isn’t off-gases from a steel blast furnace.”

Problematic, yes.

“Problematic?? Apoplectic! But you owe the duty to the LT shareholder to investigate all the possibilities inherent in the micro-organism. So there’s the problem of mixed objectives, disagreements and problems, avoided.”

What about jet fuel?

 

“And there’s another point. You’re coffee must be kicking in. It’s a site that can be utilized to make low-cost jet fuel from wood biomass in the US, for sale to the US military. Not to mention the bloody RFS.

The Renewable Fuel Standard

How is the RFS mixed up in this?

“You complete nimrod, how are you going to qualify a fuel made from industrial off-gases under RFS, when it specifies you have to make it from biomass? Where’s the biomass in a blast furnace?”

Ah.

Over to Renmatix

“Righto, I think we have you straightened out on that one. Now, what about Renmatix? What don’t you understand about that one?

Well, BASF announced plans to invest $30 million in the US technology firm Renmatix, as part of a new $50 million Series C investment round announced yesterday by Renmatix.

“Too right. Smart gang there at BASF. You didn’t believe me back in November when I said that BASF chairman Kurt Bock practically put it on a silver platter for you.

That’s right, what did they say?

“Only that they aim to grow 2 percentage points above chemical production and thus increase sales by an average of 6 percent per year until 2020. That’s a target of 115 billion euros. And they’re targeting emerging markets. And they are all over the sustainability angle. “Sustainability is becoming one of the main drivers of growth and value creation,” they said. Do you you need me to draw a map for you? They’re going to be looking at this sector to help them drive massive growth. That’s what I told you in November. You need to get the wax out of your ears.”

The Russians are coming

 

But who are the other investors? They raised $50 million, what about the other $20 million?

“Well, matey of mine, think Russia, that’s all I can tell you.”

Russia?

“They are streaming out of Russia, high net worths. China too. It’s built around key individuals, not some faceless Pushkin Equity Partners or Dostoyevsky Capital. Your CEOs and their boards will have to be all over them, but Renmatix clearly got the jump on a few companies. Wink-wink.”

What this country needs is a good five-cent sugar

 

What’s everyone’s interest in the low-cost cellulosic sugars that Renmatix makes? Why the heat right now?

“How dense can you be, Jimbo? If Renmatix’ technology works at scale, its a new game. Those are 4-cent sugars they propose to produce. Per pound. That’s well less than 40 cents per gallon for the feedstock. That’s like getting, say, 100,000 tons per year out of a full-scale Renmatix plant at the something like $20-$30 per bone dry ton of biomass. Plus, they’re talking less than $1.25 per gallon in capital costs. Total game-changers, those low-cost sugar companies. Keep your eye on all of them. Comet, Proterro, even Bluefire is getting into it.”

$20 per bone-dry tone. That’s cheap.

“Too right it is. I think Coskata is working with $55 per ton in its IPO, for a fuel that has an OPEX of $1.50 or less per gallon, according to the Coskata IPO.  You do the maths.”

What’s the Series C investment going towards – what do you hear?

“Don’t you talk to anyone anymore, Jim? Ask Mike Hamilton, the CEO over at Renmatix. Part of it will be equity, and there’ll be some technical development on other biomass.”

The BASF partnership

 

What about the relationship with BASF?

“Too soon to tell, isn’t it. They’ll both want a long-term relationship. Whether, and how, that spills over to a customer relationship, or technical partnership, that remains to be seen, ay?

Validating the industry

 

What do you think it says about Renmatix?

“It’s a complete validator of the technology. I mean, BASF, it’s not like they just parachuted into the space yesterday. It’s a $100 billion revenue company, with 100,000 people. They’re bigger than the global biofuels industry, all by their onesy. They’ve been watching it carefully, and putting their strategy together, for years. And they do their due diligence. That’s not someone else’s money they’re investing here – it’s hard yakka, making money in the chemicals business,. They’re not putting it into Renmatix on a finger-crossed basis. They are selective and diligent. But, it validates the whole space, really.”

Low-cost cellulosic sugars?

“No, you complete dolt, the whole space of biofuels and biomaterials. Look beyond how they are making the sausage – in this case, with a low-cost cellulosic sugar – and look at what they are trying to make. If BASF thought for a minute like those flaming idiots at the Wall Street Journal that there’s no hope in cellulose’s, this wouldn’t have happened.”

So, why Renmatix?

“It has to be the new management. Technology’s remarkable the same. Mike Hamilton’s an old sea dog in the chemicals business. They speak the same language now, as BASF. Sustainability. It’s a buzzword, but when you drill that down to providing a product from renewables at costs comparable to the old fossil fuels boys, Renmatix and BASF are completely on the same page. Everyone sees where it’s going, as far as the long-term value of trusting your company to the idea that someone ids going to be able to push a couple more holes in the ground and keep supplying you with low-cost fossil fuels, forever. It’s a non-starter.”

Cellulosics and the Journal

 

Er, what about those flaming idiots at the Wall Street Journal?

“Matey, it’s the editorial board. Do they ever come out of the cave? Their reporters are the real deal. But I wonder about that editorial page. That paper used to be about what companies like Dow, Dupont, Waste Management, and BASF were thinking. These days, the Journal must think that half the companies in their own Index are completely off their rocker. Here in Sydney we have the Financial Times, and they’re not making the same mistake. Everyone is jumping in.

“Which reminds me, time to jump back into the surf. We’re up at Byron, the surf is incredible. 1.5 meter swell from the east, should be over two meters by the weekend. Time to go now, over and out.”