County takes out USDA loan to buy land for wood pellet plant

http://msbusiness.com/blog/2013/08/06/county-takes-out-usda-loan-to-buy-lans-for-wood-pellet-plant/

by Associated Press
Published: August 6,2013

LUCEDALE — George County supervisors have signed off on $1.3 million in U.S. Department of Agriculture loans to pay for land where a new wood pellet plant will go.

The Mississippi Press reports that the USDA rural development loans will be used to purchase the property that will expand the George County Industrial Park.

Green Circle Bio Energy Inc. announced in June that the $115-million plant will produce up to 500,000 tons of pellets per year.

Wood pellets are shipped overseas to European utilities plants to use as biomass energy that complies with their stricter sustainability guidelines. The pellets are made from a mix of soft and hard woods.

George County secured a $1 million loan with no interest and a $283,000 loan with 1 percent interest.

They are both five-year notes.

“It took almost 10 months to get here,” Community development and communications director Ken Flanagan told supervisors yesterday. “With any luck, this fall we’ll get everyone together for a groundbreaking.”

The money will mostly be used to purchase the land, he said, and lease payments from the company will pay the note.

Any money left over from the loans will be used for road work.

Flanagan said the county will also be responsible for upgrading wastewater lines, and upgrading drinking water and process water to the site, among other infrastructure work.

That work will be funded through additional loans and grants that will be announced later, Flanagan said.

County leaders have said the mill will create 126 new full-time jobs in George County and others at the Port of Pascagoula in Jackson County.

The facility is expected to be operational by spring 2015.

Green Circle is wholly owned by the JCE Group, a privately owned international investment company headquartered in Gothenburg, Sweden.

BlueFire assures that Mississippi plant is still in the works

http://www.biofuelsdigest.com/bdigest/2013/03/11/bluefire-assures-that-mississippi-plant-is-still-in-the-works/

Isabel Lane | March 11, 2013 

 

In Mississippi, BlueFire director of business development and marketing Richard Klann responded in Ethanol Producer Magazine to concern that construction at the Fulton plant has recently stopped. Klann clarified that the company is still actively working to complete the 19 MMgy wood waste-to-cellulosic ethanol plant. Klann added that the company has been attempting to source the debt for the project after their application for a DOE loan guarantee fell through. Klann expressed hope that financing will be in place in the third or fourth quarter this year with construction restarting a few months after that. 

Local businessman testifies before members of Congress

http://www.baxleynewsbanner.com/archives/4383-Local-businessman-testifies-before-members-of-Congress.html

Wednesday, February 20. 2013

 

By Jamie Gardner

Fram Renewable Fuels President Harold Arnold, at the invitation of Congressman John Barrow, testified before the U.S. House of Representatives’ Energy and Commerce Committee’s Subcommittee on Commerce, Manufacturing and Trade on February 14 at the Rayburn House Office Building in Washington, D.C. The hearing, A Nation of Builders: Manufacturing in America, allowed members of Congress to examine manufacturing in America and to garner input from business leaders across the country.

“I’ve seen the great work the folks at Fram Renewables are doing right here in the 12th District of Georgia,” said Congressman Barrow.  “With expansion plans underway, Fram Renewables is creating jobs and pumping life into the economy, both in and around Baxley.  I look forward to welcoming them to Washington, and sharing their story with other members of the committee.”

Congressman Barrow, a member of both the full E&C Committee and CMT Subcommittee, visited Fram Renewables during his 2012 Made in Georgia Tour, and requested their participation in this hearing. The company manufactures and exports wholesale wood pellet fuel to utility companies globally.

Arnold offered his appreciation to the committee for the opportunity to speak and shared news about his company’s successes and future plans. Fram currently exports over 300,000 metric tons of wood pellets to Europe and has plans to increase to more than one million tons exported by 2015.

Arnold praised the U.S. Government for supporting businesses that increase American exports and thanked the government officials for assistance through the small business loan guarantee program. He further added to members of Congress that timely attention to American ports, such as Savannah and Brunswick, is vitally important to exporters as they rely on economical shipping rates to markets around the world.

Appling Pellets, Fram’s Baxley operation, opened for business in 2007 and provides approximately 40 jobs. The initial investment in the Appling facility was $25 million. The Baxley facility produces over 230,000 metric tons of wood pallets annually.

In 2012 the company opened a second facility in Lumber City and invested $10 million in this facility. The Lumber City operation employs 14 and creates 120,000 metric tons of wood pellets. Fram also broke ground on a third facility that will be built in Hazlehurst. The first phase of this project will employ approximately 50 people and require a $60 million investment. Eventually, phase two of this particular project will add another 25 jobs and an additional investment of $30 million. Arnold estimates that indirectly some 400 jobs will be retained or created in the various parts of the wood pellet supply chain.

While Arnold offered some words of praise to the U.S government, others that testified offered opposing views. As an example, one business owner of a steel company told members of congress that the U.S. government’s stringent regulations have been devastating to the steel industry across the country.

Will EPA weed out Chemtex International's plan for biofuel plant in NC?

http://www.bizjournals.com/charlotte/print-edition/2012/10/26/will-epa-weed-out-biofuel-plant-in-nc.html?page=all

Oct 26, 2012, 6:00am EDT
 
Susan Stabley: Staff Writer- Charlotte Business Journal

North Carolina scientists and conservation groups are trying to block use of an experimental plant for biofuel here because of concerns its growth could sweep the state as an invasive species akin to kudzu.

The U.S. Environmental Protection Agency is in the final stages of approving a rule change that clears the way for using arundo donax — also known as giant reed or giant cane — as a feedstock for the production of ethanol. That sparked a petition signed by organizations nationwide that included 15 groups in North Carolina against the use of the plant because of its proclivity to reproduce quickly and easily.

“We have a tiny window left to try and influence them,” says Aislinn Maestas, a spokeswoman with the National Wildlife Federation in Washington. “We want to encourage renewable fuels but also make sure they don’t do more harm than good.”

But this rule change is also key for a pending project by Chemtex International Inc., an Italian company that has its North American headquarters in Wilmington. In August, Chemtex won a guarantee from the U.S. Department of Agriculture to cover 80% of a $99 million loan for the construction of cellulosic ethanol refinery. “Project Alpha” has been proposed for a site in Sampson County, with hog lagoon sprayfields eyed for crop locations. Startup is scheduled for 2014.

Chemtex plans to create 65 full-time positions with an estimated average annual salary of more than $48,000 plus another 250 indirect jobs tied to feedstock supply, maintenance and transportation, the company says.

The refinery is expected to produce 20 million gallons of ethanol per year. Chemtex says it will work with farmers to grow about 30,000 acres of grasses, including miscanthus and panicum virgatum, better known as switchgrass. But its plans to also use arundo donax worry national organizations as well as groups in Gaston County and the Lake Norman and Mountain Island Lake areas.

“Buyer beware,” says Tim Gestwicki, chief executive of the North Carolina Wildlife Federation, who works from an office in Charlotte. “Why would we not want to err on the side of caution when the plant is known to be invasive?”

Separately, six groups — American Rivers, the Environment Defense Fund, N.C. Coastal Land Trust, N.C. Conservation Network, N.C. Wildlife Federation and The Nature Conservancy — called on the state in June to list arundo donax as a noxious weed. Cited in that request was a USDA study, also released in June, that found the plant has a 98.8% probability of being invasive in North Carolina.

California has spent more than $70 million in the past 20 years to control the spread of arundo donax. According to a report from the California Invasive Plant Council in Berkeley, the costs of eradicating arundo donax in that state range from $5,000 to $17,000 per acre. And some estimates run as high as $25,000 per acre.

“The risk is too high,” says Aviva Glaser, the National Wildlife Federation’s legislative representative on agricultural policy. “We shouldn’t even be looking at it at this point.”

But Delane Richardson, Chemtex vice president of business development, says there is commercial history of growing arundo donax in Italy “where it was eradicated without issue.” Richardson says it can cost as little as $100 an acre using the herbicide Roundup.

“We will be using best practices that will prevent arundo being planted in areas where it can spread,” Richardson says. She notes arundo donax has been deemed the most promising biomass feedstock by the European Union. “It is already growing throughout North Carolina with no issues. We have multiple U.S. universities and officials from other countries that agree these practices are sufficient to prevent spreading.”

Richardson says arundo donax requires less land to supply the proposed refinery.

“We can feed the plant with 17,000 acres, not the 30,000 or 35,000 acres needed for switchgrass,” she says. “The farmer will make half as much with switchgrass compared to arundo.”

Chemtex must glean the ethanol feedstock within 50 miles for the refinery, she adds. “Finding 17,000 acres within 50 miles is reasonable; 30,000 is getting very tough.”

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

Fram Renewable Fuels Invests $91 Million To Expand Its Manufacturing Facility In Hazlehurst, Georgia

http://www.areadevelopment.com/newsItems/9-14-2012/fram-renewable-fuels-expansion-jeff-davis-county-hazlehurst-georgia883351.shtml

Area Development Online News Desk (09/14/2012)

Fram Renewable Fuels, a company that supplies of wood pellet fuel, will invest $91 million to expand its operations and open a second production plant in the Jeff Davis County city of Hazlehurst, Georgia, creating 80 new jobs.

“Alternative energy manufacturers such as Fram Renewable Fuels help keep Georgia top of mind as a strategic location for this industry, increasing our prominence around the world as a go-to location for these businesses,” Gov. Nathan Deal said. “Georgia is fortunate to have an abundance of forestry resources for Fram to expand its wood pellet operations, and meet the growing needs of its global customers.”

Headquartered in Richmond Hill, Fram Renewable Fuels currently operates Appling County Pellets in Baxley, a few miles east of its proposed plant in Hazlehurst. Fram said its new plant in Hazlehurst will help the company meet the expanded needs of its customers in Europe that use wood pellets for energy utilities. This plant will have a total production capacity of 500,000 metric tons of wood pellets per year, and will use pine logs and sawmill residuals as feedstock. Upon completion of the new manufacturing plant, Fram will be positioned among the top wood pellet export companies in the United States, exporting more than 900,000 metric tons of wood pellets annually.

“This is another step toward Fram’s mission to be a significant, reliable and cost effective supplier of wood pellets, and we are very happy that we were able to locate in an area where we already have roots,” said Fram President Harold Arnold. “The pellet business will continue to be a learning process and is no ‘walk in the park.’”

Fram’s Hazlehurst wood pellet manufacturing plant will be strategically located in South Georgia’s “wood basket,” providing efficient access to that region’s raw materials and other forestry products. This location also provides the company with convenient access by rail to the Port of Brunswick, where Fram will export its finished wood pellets to Europe from the port’s Logistec Terminal.

The Governor’s Office said in addition to the direct jobs to be created, this expansion is expected to lead to the creation of indirect job opportunities in South Georgia’s forestry industry to support the new pellet plant as increased amounts of wood are harvested to supply the plant. These new opportunities are expected to have a near-immediate impact in communities throughout this region of the state.

The Georgia Department of Economic Development said it collaborated with the Joint Development Authority of Jeff Davis County, Hazlehurst and Denton to manage this project, which also received a loan guarantee from the US Department of Agriculture as part of a Farm Bill to support establishment of renewable energy.

“This expansion is significant not only for Fram Renewable Fuels, but also for Georgia’s growing alternative energy sector,” said GDEcD Commissioner Chris Cummiskey. “From our plentiful natural resources to our high-performing logistics infrastructure, Georgia is uniquely positioned to be the best place for wood pellet manufacturers to operate. As the global demand for this product grows, we look forward to partnering with Fram and others in this industry to create future opportunities.”

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."

 

Wadley grant to fund recycled wastewater for biomass plant

http://chronicle.augusta.com/latest-news/2012-08-28/wadley-grant-fund-recycled-wastewater-biomass-plant

By Rob Pavey, Staff Writer

Tuesday, Aug 28, 2012 4:11 PM

The city of Wadley, Ga., will receive a $1,518,152 loan from the Georgia Environmental Finance Authority to develop infrastructure for a planned biomass plant that would burn wood products and shredded tires to make electricity.

The loan would finance a system to recycle treated wastewater from the city’s wastewater treatment plant, including 35,000 linear feet of 8-inch forcemain to deliver 100,000 gallons per day of treated effluent to the North Star Renewable Energy plant.

Wadley will pay 1.82 percent interest on the 20-year loan. It received a 1 percent interest rate reduction because the project will help conserve water.

The $70 million North Star plant would burn about 133,500 tons of forest products and about 38,500 tons of shredded tires per year to create about 24 megawatts of power.

Other recipients of GEFA grants announced Tuesday were the cities of Ashburn, Cuthbert, Jasper, Jeffersonville and Sylvester.

The authority manages Georgia’s Clean Water State Revolving Fund, a federal loan program that provides low-interest loans to fund wastewater infrastructure and water pollution reduction projects.

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 False Promise of Biofuels

http://www.scientificamerican.com/article.cfm?id=the-false-promise-of-biofuels

The breakthroughs needed to replace oil with plant-based fuels are proving difficult to achieve

By David Biello | August 10, 2011 |

Range fuels was a risky but tantalizing bet. The high-tech start-up, begun by former Apple executive Mitch Mandich, attracted millions of dollars in private money plus commitments for up to $156 million in grants and loans from the U.S. government. The plan was to build a large biofuels plant in Soperton, Ga. Each day the facility would convert 1,000 tons of wood chips and waste from Georgia’s vast pulp and paper industry into 274,000 gallons of ethanol. “We selected Range Fuels as one of our partners in this effort,” said Samuel Bodman, then secretary of energy, at the groundbreaking ceremony in November 2007, “because we really believe that they are the cream of the crop.”



That crop has spoiled in the ground. Earlier this year Range Fuels closed its newly built biorefinery without selling a drop of ethanol. Turning biomass into a commercially viable, combustible liquid is tougher than anticipated, the company has found. As expensive equipment sits idle, the firm is searching for more funding to try to solve the problem.

Coskata taps Fagen to engineer landmark advanced biofuels project in Alabama

http://biofuelsdigest.com/bdigest/2011/06/26/coskata-taps-fagen-to-engineer-landmark-advanced-biofuels-project-in-alabama/

By Jim Lane

June 26, 2011

In Illinois, Coskata announced today that it has issued a Letter of Intent with Fagen for engineering, procurement and construction services for the construction of its commercial cellulosic ethanol facility in Boligee, Alabama, that will be designed around the Coskata technology. Fagen and Harris Group will lead an EPC process that will include in its scope the project detailed design, procurement, construction and commissioning.

Coskata received a conditional commitment for a loan guarantee from the United States Department of Agriculture, and is working on the details that will be necessary to close the financing for the project.  The facility will convert sustainably harvested wood biomass into ethanol, a high-octane renewable fuel, and is expected to bring approximately 300 construction jobs and 700 direct and indirect jobs to Greene County, Alabama.

EPA reduces target for cellulosic ethanol

http://www.desmoinesregister.com/article/20110626/BUSINESS/106260327/Green-Fields-Vilsack-uses-Paris-trip-to-promote-biofuels

Written by Dan Piller
June 25, 2011

In a move that surprised no one, the U.S. Environmental Protection Agency on Tuesday cut the proposed target for cellulosic (read: noncorn) ethanol from the original 500 million gallons to 15.7 million gallons.
For this year, the EPA had slashed the original 250 million-gallon target to 6 million gallons.

The reason is the same: Efforts to make ethanol out of grass, corn residue, algae or other noncorn feedstocks are coming along much more slowly than anticipated. The U.S. this year will use an amount of ethanol just short of 14 billion gallons, of the 130 billion gallons of motor gasoline consumed.

"Biofuel producers face not only the challenge of the scale-up of innovative, first-of-a-kind technology, but also the challenge of securing funding in a difficult economy," the EPA stated.

Iowa has two cellulosic ethanol plants in the planning stage, by Poet in Emmetsburg and DuPont-Danisco in either Nevada or Fort Dodge. DuPont-Danisco, which received a $9 million grant from the Iowa Power Fund, has said it will go ahead with financing on its own but Poet is awaiting federal grants to add to the $20 million in state money it already has received.

Lack of federal loan guarantees slows alternative energy development

http://michiganmessenger.com/48707/lack-of-federal-loan-guarantees-slows-alternative-energy-development

 

By Eartha Jane Melzer | 05.02.11 | 2:56 pm

A solar cell manufacturing factory near Saginaw, a cellulosic ethanol plant in the Upper Peninsula and a renewable energy park at the former Ford Wixom Assembly Plant are among the Michigan alternative energy projects that say they have been delayed because they haven’t been able to secure expected federal loan guarantees.

The Detroit Free Press reports that the stalled projects, if actualized, would bring $1.2 billion in new investment in the state and more than 3,800 potential jobs.

Production that was supposed to start late this year [at the Ford Wixom renewable energy plant] has been delayed as Clairvoyant Energy and Xtreme Power, the companies behind the project, are still trying to line up the financing needed to buy the 320-acre property. So far, they have not succeeded in obtaining a loan guarantee from the U.S. Department of Energy.

David Hardee, Clairvoyant’s CEO, said the companies hope to complete the purchase of the plant at the end of this year, 12 months behind schedule. The firms are seeking loans from several banks in case they don’t get the loan guarantee. The first phase of the $600-million project will require investments of $250 million.

“Everything’s on track in Wixom,” Hardee said, noting that the companies have received the state environmental permits required for the deal.

The Free Press reports that clean energy companies feel they need federal loan guarantees because it is difficult to find private investors willing to fund expensive new technologies without a track record of success. But some are frustrated with the difficulty of obtaining government backed loans.

Last year, the U.S. Government Accountability Office examined the loan guarantee program and found that the Energy Department “has treated applicants inconsistently, favoring some and disadvantaging others.”
The lengthy approval process for the guarantees also has caused frustration, prompting eight renewable energy trade groups to send Energy Secretary Steven Chu a letter in September that expressed their concerns.

“It’s been difficult for companies,” said Martin Dober, the Michigan Economic Development Corp.’s senior vice president of entrepreneurship and innovation. “You can put a lot of time in this process and not come up with a good result.”

Rentech Receives Term Sheet for Loan Guarantee from U.S. Department of Energy for Recently-Acquired Advanced-Stage Renewable Power Project in Florida

http://www.businesswire.com/news/home/20110414005573/en/Rentech-Receives-Term-Sheet-Loan-Guarantee-U.S.

April 14, 2011 09:00 AM Eastern Daylight Time 

Rentech’s Rialto Project in Due Diligence Phase of U.S. Department of Energy Section 1703 Loan Guarantee Program as Renewable Fuels Production Facility

LOS ANGELES--(BUSINESS WIRE)--Rentech, Inc. (NYSE AMEX: RTK) today announced that it has received a term sheet for a loan guarantee from the U.S. Department of Energy (DOE) under the Section 1705 Title XVII Loan Guarantee Program, for an advanced-stage renewable power project in Port St. Joe, Florida, that would employ a Rentech-SilvaGas biomass gasifier to produce renewable power.

“We believe that once we demonstrate commercial application of our technologies, we can replicate these projects worldwide through development and licensing opportunities while driving down capital costs and increasing shareholder value.”

The Port St. Joe Renewable Energy Center (the Port St. Joe Project) had initially been developed by Biomass Energy Holdings (BEH), a subsidiary jointly held by Bianchi Energy Services, LLC and Biomass Gas and Electric, LLC. Rentech has acquired the project entity for no initial consideration. BEH may become eligible to recover from the project its development costs and a small carried interest in the project when it reaches financial close.

The project is designed to use a Rentech-SilvaGas biomass gasifier to provide synthesis gas to a combined-cycle power plant to produce approximately 55 megawatts net of renewable low-carbon baseload electric power (RenPower^TM) from approximately 930 dry tons per day of woody biomass. Most of the project’s power output has been contracted for sale to Progress Energy Florida under a long-term Power Purchase Agreement (PPA), with a small fraction available for sale on a merchant basis. The PPA has been approved by the Florida Public Service Commission.

Rentech has signed a detailed term sheet with White Construction for the engineering, procurement and construction (EPC) work that is intended to serve as a basis for a definitive lump-sum turn-key EPC contract. White Construction and Ford, Bacon & Davis LLC are finalizing the engineering work necessary to enter the EPC phase of the project. Construction of the Port St. Joe Project is expected to begin in August 2011, with the facility anticipated to be in service in 2013. The Port St. Joe Project would create nearly 200 construction jobs and approximately 85 direct and indirect jobs once the facility is operational.

The Port St. Joe Project is estimated to have a total project cost of approximately $225 million, based on the feasibility engineering. The DOE has provided Rentech with a term sheet, still under negotiation, for a potential guarantee of debt that is expected to represent the majority of the capital required for the project. The provision of a term sheet by the DOE is not an assurance that the project will be offered a conditional commitment or a loan guarantee. Rentech expects the project to qualify for a federal cash grant equal to 30% of eligible project costs under the U.S. Department of Treasury Section 1603 Grant Program for renewable power projects.

Rentech’s Rialto Project, which has been designed to produce both renewable fuels and power, remains in the due diligence stage of the loan guarantee process. Based on discussions with the Loan Program Office of the DOE (the LPO), Rentech will now pursue the Port St. Joe Project for a Section 1705 loan guarantee, and continue due diligence with the LPO on the Rialto Project under the Section 1703 loan guarantee program. The Section 1705 program, which was funded by the American Recovery and Reinvestment Act, imposes a requirement for start of construction by September 30, 2011. This deadline is absent from the Section 1703 program.

The Port St. Joe Project is better-positioned to compete in the Section 1705 process and begin construction before September 30, 2011, with an executed PPA for approximately 90% of its expected output with Progress Energy Florida. Compared to the Rialto Project, the Port St. Joe Project has a simpler design, and will have significantly lower capital costs and equity requirements.

The schedule for the Rialto Project under the Section 1703 program will enable Rentech to optimize the project in ways that would not have been possible under the approaching deadlines in the Section 1705 program. With the commercialization of Rentech’s biomass-to-power technology through the Port St. Joe Project, Rentech will focus the Rialto Project on commercialization of its synthetic fuels technology by shifting from the co-production of renewable power and fuels to a maximum renewable fuels configuration. Rentech will adapt the front-end engineering and design work recently completed by Fluor Corporation to maximize fuels production, and conduct a competitive RFP process for EPC contractors.

Rentech currently expects that the Rialto Project will be designed to produce approximately 1200-1500 barrels per day of primarily certified renewable diesel or jet fuel from approximately 1000 tons per day of green waste. The final choice between production of jet fuel or diesel will be determined by the highest value that can be commanded for the renewable and low-carbon attributes of the fuels. Rentech’s renewable fuels are expected to qualify for renewable identification numbers (RINs) as cellulosic fuels. Rentech’s drop-in renewable synthetic diesel is expected to generate a premium in California due to the state’s Low Carbon Fuels Standard. Rentech’s certified renewable synthetic jet fuel can offer significant value to airlines by helping them to comply with the European Union’s Emissions Trading Scheme which takes effect in 2012. Rentech is currently in discussions with several airlines regarding the potential purchase of fuels from the Rialto Project.

The Company is targeting a financial closing by the end of 2012 for the Rialto Project with the support of a DOE loan guarantee under Section 1703.

D. Hunt Ramsbottom, Rentech’s President and Chief Executive Officer, said, “Rentech is pleased to be working with the DOE on two separate projects that would commercially deploy Rentech’s biomass-to-power and synthetic fuels technologies.” Mr. Ramsbottom continued, “We believe that once we demonstrate commercial application of our technologies, we can replicate these projects worldwide through development and licensing opportunities while driving down capital costs and increasing shareholder value.”

Commenting on Rentech’s acquisition of the Port St. Joe Project, Herman “Buddy” White, President and CEO of both Bianchi Energy Services and White Construction, Inc., said, “Our family of companies shares the vision that the nation’s future economic security will come from a diverse national energy portfolio. To that end, we have been recognized for many years as a champion of alternative forms of power generation, and through our construction operations, White Construction has become known as the North American EPC leader in both the wind and solar PV industries. We first became acquainted with the SilvaGas technology approximately 10 years ago and upon keen due diligence, we believed beyond a doubt that SilvaGas was the ideal solution to utility scaled biomass fueled power generation. Upon the advent of the DOE loan guarantee program, we made the decision to combine efforts with another long time champion of the SilvaGas technology, Biomass Gas and Electric, to pursue the commercialization of the SilvaGas technology and develop what is today called the Port St. Joe Renewable Energy Center around such technology. It gives us great pride today to transition the development activities on the project to Rentech and to act as the EPC contractor to bring the project to fruition. We believe the unique advantages offered by Rentech's SilvaGas technology will help this innovative project set the standard for biomass energy production worldwide.”

About Rentech, Inc.

Rentech, Inc. (http://cts.businesswire.com/ct/CT?id=smartlink&url=http%3A%2F%2Fwww.rentechinc.com&esheet=6683916&lan=en-US&anchor=www.rentechinc.com&index=1&md5=c8871e5ebd779649634e6129b65db7e4), incorporated in 1981, provides clean energy solutions. The Company's Rentech-SilvaGas biomass gasification process can convert multiple biomass feedstocks into synthesis gas (syngas) for production of renewable fuels and power. Combining the gasification process with Rentech's unique application of syngas conditioning and clean-up technology and the patented Rentech Process based on Fischer-Tropsch chemistry, Rentech offers an integrated solution for production of synthetic fuels from biomass. The Rentech Process can also convert syngas from fossil resources into ultra-clean synthetic jet and diesel fuels, specialty waxes, and chemicals. Final product upgrading and acid gas removal technologies are provided under an alliance with UOP, a Honeywell company. Rentech develops projects and offers licenses for these technologies for application in synthetic fuels and power facilities worldwide. Rentech Energy Midwest Corporation, the Company's wholly-owned subsidiary, manufactures and sells nitrogen fertilizer products including ammonia, urea ammonia nitrate, urea granule, and urea solution in the corn-belt region of the central United States.

Safe Harbor Statement

This press release contains forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995 about matters such as the characteristics of the renewable fuels and power to be produced from Rentech’s technologies, the Company's development of its proposed renewable energy facilities in Rialto, California and Port St. Joe, Florida, the timing and finalizing of satisfactory commercial agreements related to the projects, the prospects and implications of loan guarantees from the Department of Energy and the prospects of receiving a Federal cash grant. These statements are based on management's current expectations and actual results may differ materially as a result of various risks and uncertainties. Other factors that could cause actual results to differ from those reflected in the forward-looking statements include the financial means of Rentech to build proposed projects, fluctuations in commodities prices including the price of oil and the materials necessary to construct projects, the impact of changing government regulations on the project permitting process and the qualification of renewable power and fuels, the DOE’s rejection of the Company’s loan guarantee application and factors set forth in the Company's press releases and periodic public filings with the Securities and Exchange Commission, which are available via Rentech's web site at www.rentechinc.com. The forward-looking statements in this press release are made as of the date of this release, and Rentech does not undertake to revise or update these forward-looking statements, except to the extent that it is required to do so under applicable law.

Contacts

Rentech, Inc.
Julie Dawoodjee
Vice President of Investor Relations and Communications
310-571-9800
ir@rentk.com