Summary:

More bad news about cellulosic biofuel maker Range Fuels. The financially-strapped company reportedly plans to shut down its plant in Georgia after making just one batch of ethanol. It needs to more raise more money and tackle technical problems at its first commercial plant.

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The bad news about the layoffs at cellulosic biofuel maker Range Fuels just got worse. The financially-strapped company plans to shut down its plant in Georgia after making just one batch of ethanol, according to a post by Georgia Public Broadcasting.

The story quoted Bud Klepper, who’s not only Range Fuels’ technical advisor but also the original founder of the company that became Range Fuels (previously called Kergy). Klepper told the publication that Range Fuels is laying off most of its employees at its plant near Soperton, Ga, after it makes a single batch of ethanol, and the company will shut down the plant while it tackles technical problems and raises more money.

We guess that when the company told us earlier this week that it expected to start producing ethanol this week, it really meant it would produce just a single batch, followed by throwing in the towel on the plant and workers. That’s kind of like saying I’m going to start writing my novel this week, and then typing the title and calling it a day.

Range Fuels company spokesman Patrick Wright told us earlier this week that the company was letting go “a handful of people in Colorado and Georgia,” but he declined to disclose the number or reasons. Wright also said the company plans to meet a 2011 production goal set by the U.S. Environmental Agency.

Range Fuels, which is backed by investors including Khosla Ventures, has gotten quite a bit of public money to get its first commercial plant up and running. The U.S. Department of Energy awarded the company a grant of $76 million in 2007 to finance the Georgia plant. The U.S. Department of Agriculture approved a loan guarantee of $80 million, and that allowed the company to secure an $80 million bond in 2010 to fund the plant’s construction as well.

In between, the company raised a private B round of over $100 million from investors including Khosla, Passport Capital, BlueMountain, Leaf Clean Energy Company and Pacific Capital Group (with participation by the California Employee Retirement System).

Range Fuels is one of five companies that the U.S. Environmental Protection Agency has projected will be able to contribute to a total of 6.6 million gallons of cellulosic biofuel in 2011. A 2007 law required that the EPA set mandates for different types of fuels that can be blended into gasoline and diesel. Those mandates are supposed to lead the country to produce 36 billion gallons in 2022. Lawmakers nurtured ambitious goals to wean the country off the use of fossil fuels for transportation.

However, meeting those goals has proven clearly proven to be extremely difficult, mainly because many biofuel companies with promising technologies ran into technical problems or were unable to raise the hundreds of millions of dollars needed to build a commercial plant. Or both.

Congress initially set 100 million gallons as the 2010 target for cellulosic biofuel, but the EPA cut that to 6.5 million gallons. It appears that the industry might have produced less than 1 million gallons last year, reported ClimateWire on Tuesday, citing an estimate by a government analyst.

The EPA expects Range Fuels to produce 100,000 gallons of cellulosic ethanol and 2.9 million gallons of methanol at its Georgia plant in 2011. Although methanol doesn’t meet the current definition of cellulosic biofuel, the EPA said it’s considering changing that. The agency already counted Range Fuels’ projected methanol production in its 2011 goal.

Range Fuels began producing methanol last summer. At the time, Aldous said the plant had “less than 10 million gallons” of annual production capacity, but the plan was to expand it to 60 million gallons. Construction was to start this summer.

Aldous told the Colorado newspaper the Daily Camera this week that the recession and what he called a “public apathy toward green fuels” have hampered the company’s progress. The newspaper also said there was a “problem with the feed system at its plant.”

Aside from Range Fuels, the other four producers that could contribute to the 2011 pool are DuPont Danisco, Fiberight, KL Energy and KiOR.

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