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Summary:

For young companies toiling over how to convert plant waste and non-food crops into ethanol — the next generation of biofuels — the effects of the downturn are starting to play a familiar beat: access to capital is so limited that companies that could have snagged […]

For young companies toiling over how to convert plant waste and non-food crops into ethanol — the next generation of biofuels — the effects of the downturn are starting to play a familiar beat: access to capital is so limited that companies that could have snagged funds in better economic times are seeing their commercialization plans crippled. The latest is Coskata, one of the better known cellulosic ethanol makers, backed by car maker GM and venture capitalist Vinod Khosla. At the Wall Street Journal Eco:nomics conference this week, Coskata CEO Bill Roe said the company is now waiting for a loan guarantee from the Department of Energy to build its first commercial scale plant and that the plant is basically stalled until then.

coskataprocess

Coskata was previously hoping to break ground on the plant — expected to produce 50-100 million gallons of ethanol annually — this year and to complete the factory in late 2010 or early 2011. Coskata Chief Marketing Officer Wes Bolsen told us back in December that the commercial plant time line would probably run more solidly into 2011. When we asked Bolsen yesterday if there was a new time line for the commercial plant, he told us:

“We are highly encouraged by what Secretary Steven Chu and the Department of Energy are saying about how fast they can issue the loan guarantees. The Coskata technology is ready to deploy, but we are hesitant to put any revised timeline out there until we see the closing of the financing.”

Chu said last month that new loan guarantees will be offered under the stimulus legislation by early summer, and at least 70 percent of its share of the stimulus will be disbursed by the end of 2010. Bolsen further explained Roe’s comments and the effect of the downturn on the company’s ability to raise financing: “In this financial environment, banks are not lending to themselves, let alone renewable energy projects.”

If Coskata is having trouble, smaller less-well-connected firms will be struggling even more. Coskata told us last November that it was able to close a Series C round in financing, and the company is backed with at least $30 million from Globespan Capital Partners, GM, Khosla Ventures, GreatPoint Ventures and Advanced Technology Ventures.

Other cellulosic ethanol makers like Verenium, that has a similarly strong partner in oil giant BP, are feeling the effects of the downturn on commercial plant plans, too. Verenium is moving forward with its first commercial plant, but has pushed back breaking ground to 2010 from a previously planned timeline of 2009.

  1. Brian J. Donovan Saturday, March 7, 2009

    Louisiana will create jobs by growing ethanol demand, specifically hydrous ethanol demand, beyond the 10% blend market.

    Governor Bobby Jindal has signed into law the Advanced Biofuel Industry Development Initiative, Act 382, the most comprehensive and far-reaching state legislation in the nation enacted to develop a statewide advanced biofuel industry. The legislature found that the proper development of an advanced biofuel industry in Louisiana requires implementation of the comprehensive “field-to-pump” strategy:

    (1) Feedstock other than corn;
    (2) Decentralized network of small advanced biofuel manufacturing facilities;
    (3) Variable blending pumps, in lieu of splash blending, will offer the consumer E10, E20, E30 and E85; and
    (4) Hydrous ethanol.

    “Field-to-Pump” is a unique strategy created by Renergie, Inc. (“Renergie”) to locally produce and market advanced biofuel (“non-corn fuel ethanol”) via a network of small advanced biofuel manufacturing facilities. The purpose of “field-to-pump” is to maximize rural development and job creation while minimizing feedstock supply risk and the burden on local water supplies.

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  2. LittleWally Monday, March 9, 2009

    1) can someone please stop Brian Donovan’s spam for Renergie.
    2) Katie, the real reason Coskata can’t get financing for commercial scale is that it has not proved the concept with its pilot scale plant. How do you expect any investor to put money towards a $300 mil project without at least having one year’s worth of data from a pilot scale plant that shows the concept works!! You bloggers are missing big stories here – all the BS the vendors are spreading around. Ask some critical questions once in a while. Biofuels have great potential, especially non-ethanol fuels, but you can’t hurry these technologies – complex science and engineering (and feedstock development) takes time.

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  3. [...] Coskata was previously hoping to break ground on the plant — expected to produce 50-100 million ga…Coskata CEO Bill Roe said the company is now waiting for a loan guarantee from the Department of Energy to build its first commercial scale plant and that the plant is basically stalled until then. [...]

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  4. [...] and raised more money, but there was no way it could be immunized from the overall economic slump. Earth2Tech takes a look at Coskata’s current reality and finds that the company CEO Bill Roe recently [...]

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  5. [...] and raised more money, but there was no way it could be immunized from the overall economic slump. Earth2Tech takes a look at Coskata’s current reality and finds that the company CEO Bill Roe recently told [...]

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  6. [...] no wa&#121 it could &#98e i&#109&#109unized f&#114o&#109 the ove&#114all econo&#109ic slu&#109p. Ea&#114th2&#84ech &#116akes a look a&#116 Coska&#116a’s curren&#116 reali&#116y and finds &#116ha&#116 &#116he [...]

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  7. [...] Oxfam report, released before some of the more recent woes in the ethanol industry, said that demand for corn in the U.S. has skyrocketed due to [...]

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  8. [...] aren’t faring much better. Earlier this month, Coskata said it was pinning its hopes for a commercial plant on a loan guarantee from the DOE. Coskata, with backers including General [...]

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  9. [...] and raised more money, but there was no way it could be immunized from the overall economic slump. Earth2Tech takes a look at Coskata’s current reality and finds that the company CEO Bill Roe recently [...]

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  10. [...] because its backed by GM and Vinod Khosla, isn’t faring much better. Coskata CEO Bill Roe said this month that the company is now waiting for a loan guarantee from the Department of Energy to build its first commercial scale plant and [...]

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