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Biofuel maker ZeaChem lines up $232M loan award from USDA

Ucilia Wang — Thu, 26 Jan 2012 17:00:36 +0000

The long-promised but perpetually fledging biofuel industry still remains a big focus of government support. The U.S. Department of Agriculture announced Thursday that it has made a conditional commitment for a $232.5 million loan guarantee to ZeaChem to build the company’s first commercial-scale refinery to turn plants into fuels and other chemical products.

This is the same USDA program loan guarantee program that delivered a loan guarantee to now-defunct biofuel maker Range Fuels. To date, none of the next-gen biofuel companies have produced advanced biofuels at any commercial scale, despite hundreds of millions of funding in venture capital and government funds.

The loan guarantee will enable ZeaChem to build a plant in Boardman, Ore., which could produce 25 million gallons per year of products. At least 51 percent of the plant’s production will be cellulosic biofuel (including ethanol), and the rest will be chemicals such as acetic acid and ethyl acetate, the USDA said. The total cost of the project is around $390.5 million, the USDA added.

With the guarantee, the government promises to pay back the loan if ZeaChem isn’t able to. Silicon Valley Bank will arrange the loan, said ZeaChem CEO Jim Imbler during a conference call. The rest of the project cost will be equity coming from “a variety of sources,” but Imbler declined to divulge more details.

ZeaChem will have to meet certain performance goals before the USDA will complete the loan guarantee package, Imbler said. The company will work on meeting them starting this year through a demonstration plant located next to the site for the proposed commercial refinery. ZeaChem announced the completion of the demonstration plant earlier this month, and the plant will make acetic acid and ethyl acetate. ZeaChem also plans to produce cellulosic ethanol at this demonstration plant later this year.

Colorado-based ZeaChem is among the many companies that have been trying to move into commercial production of their advanced biofuel technologies. Problems with technology development and lining up financing have been two big stumbling blocks. Range Fuels shut its refinery in Georgia last year after building it only the year before, and that plant went to another biofuel developer, LanzaTech, in a liquidation sale earlier this month.

Companies such as KiOR and Coskata have sought funding through initial public offerings though they both have yet to reach mass production. KiOR went public last year while Coskata filed for an IPO last December but hasn’t made its public market debut (here is an in-depth look at KiOR’s IPO and why its pre-IPO investors are still waiting for the big payday).

The USDA says ZeaChem’s biorefinery in Oregon will be open for business by late 2014. The company raised a $19 million round from private investors last year. About 30 percent of the feedstock for the refinery will be agricultural waste such as wheat straw and corn stover, while the remainder will be woody biomass from a nearby poplar farm called the GreenWood Tree Farm Fund.

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The perils of cleantech investing: KiOR and the long-term, high-risk view

Katie Fehrenbacher — Wed, 18 Jan 2012 05:44:02 +0000

One of the difficulties with investing in cleantech startups is that investors sometimes need to take very long term views of the companies they back, despite that companies can be risky. Next-gen biofuel company KiOR is a prime example of this long term, high risk phenomenon. The reality is that the liquidity of KiOR’s IPO could be locked up for a long time, potentially many years down the road, until — and if — the company scales up and meets expectations. This research note examines KiOR’s place in the market and what it means for other early-stage companies when it comes to investment. Additional companies mentioned in this report include Amyris, BIOeCON and Range Fuels and Solazyme. For a full list of companies, and to read the full report, sign up for a free trial.

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Greentech struggles are business as usual for the Valley

Michael Kanellos — Mon, 05 Dec 2011 22:36:01 +0000

In the past two weeks, we’ve seen at least three green technology CEOs sent home to spend more time with their families, two companies implode, a trade war escalate between China and the U.S. over solar and Google cancel its program to develop technology that can producer power cheaper than coal. Only one bright spot of news has stood out recently: Siemens bought eMeter, a smart grid software company, for an undisclosed amount.

Do these struggles represent the beginning of the end for green technology?

Overall, it looks like business as usual for Silicon Valley, which, of course, is good. Only one in ten start-ups ever make it, VCs like to say. Failure makes you stronger. Some CEOs are visionaries and others are professional managers geared toward scaling up companies, etc. etc.

Remember all of those articles with journalists yammering about how green technology needs a Netscape moment? Well, this is it. But it’s not the moment when Netscape zoomed in its IPO. It’s the moment when it got absorbed into the gaping maw of AOL. Netscape became irrelevant, but life went on. The Internet, in fact, became even larger. Netscape’s demise simply proved that the so-called First Mover Advantage is vastly overrated.

Computing didn’t die with Sperry Rand either.

The analogy between green and computing isn’t perfect. Green technologies often require far more capital and time to get to market. Many also have to compete against existing technologies — like coal and incandescent light bulbs — that have spent decades winnowing out costs and building up manufacturing infrastructure. But VCs have thrown away large amounts of capital on companies serving the web, too. Anyone remember Akimbo? @Home? AltaVista?

Green technologies tend to get subjected to a higher level of scrutiny. Some critics seem emotionally dead set against the industry. Incumbents want to undermine it. Many entrepreneurs also grossly underestimated the technological challenges. Still, the reaction seems to go over the top. The founder of Friendster didn’t have to commit the public equivalent of self-immolation because Facebook succeeded and Friendster didn’t. But the public seems to want blood from every green company that fails to achieve corporate immortality.

Case Studies

Examine the two prominent collapses. Aptera wanted to make three-wheeled cars. Both Google and NRG Energy invested in it while Darrell Issa, the Republican Congressional Representative that championed investigations into Solyndra, sought to get federal loan guarantees for the company.

The Aptera 2e was a blast to drive. After emerging from the car during a test drive in San Francisco in 2009, individuals on the sidewalk stopped to take my picture and ask me questions. I felt like the Man of the Future: if only I had worn my silver skin suit.

But buy it? Three-wheeled cars have been nonstarters for years. Buckminster Fuller’s Dymaxion crashed during its public debut. Sidecars as a fashion statement went out with the Third Reich. The only truly successful three-wheeled vehicle has been the wheelbarrow. Aptera had one really interesting aspect to it: the body was made from a high-tech composite that is stronger than metal but far lighter.

Range Fuels, meanwhile, wanted to produce cellulosic biofuel with a variant of the Fischer-Tropsch process. FT, however, has only been popular with countries and regimes — Apartheid-era South Africa and again the Third Reich — cut off from oil imports. Companies with arguably more advanced processes leveraging biology — Solazyme, Gevo, and Amyris — all pulled off IPOs.

Range Fuel’s success in landing VC fund and government loans was to some degree due to its fortunate timing. It emerged at the dawn of green tech investing, when VCs and others were optimistic and desperate for new ideas to fund. At the time, many also mistakenly believed that the same skills required to succeed in computers would directly map to green. Mitch Mandich, a former Apple exec, served as CEO. Few people would now think, “Fuel additives, all-in-one desktops that come in five designer colors. It’s all just sales. Hire him.”

Now look at Google terminating the RE, an initiative to develop technologies that could produce electricity at cheaper prices than coal. A noble ambition, but not one for a software company. Google was building heliostats, or mirrors, for solar thermal power plants. Imagine being an engineer on that project. You’re in the company cafeteria where everyone is talking about deep linking and you’re trying to steer the conversation to reflective surfaces. All of your closest peers are at Brightsource Energy, 3M and DuPont. You might as well have a hairy mole on your upper lip.

Google, however, is not giving up on green energy. It desperately needs to get a handle on its energy consumption. It will continue to invest in solar farms, as well as use Google Ventures to get an early look at technologies like the AC-DC converters from Transphorm. In other words, it will begin to act more like Intel Capital than a nonprofit.

China’s trade war? Things will get cheaper and the case will drag out until everyone has forgotten it.

Only a few hit it big

And now for the positive news: Siemens will buy eMeter. For years, eMeter has been one of the most promising and successful start-ups in smart grid. If eMeter were a cloud company, it might have been able to stay independent for a longer time.

But the smart grid is an unusual market with a very, circumscribed client base. Only around 3,000 utilities exist in North America versus the hundreds of thousands of customers that want cloud services. Utilities also tend to be quite conservative. An acquisition was the logical, inevitable outcome.

Expect more to follow. Conglomerates like Siemens, Areva, Schneider, Toshiba and ABB have been on an extended shopping spree in the U.S.

So cheer up. This is par for the course.

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Despite IPOs, Next-Gen Biofuels Still Creeping Forward in 2011

Katie Fehrenbacher — Fri, 06 May 2011 21:35:52 +0000

Despite a series of successful biofuel IPOs and more biofuel IPOs in the pipeline, along with U.S. government support and attention from incumbent oil makers, the production of next-gen biofuels, in any kind of volumes that would make a dent in the transportation sector, seems to be creeping very slowly forward. I know these things don’t happen all that quickly, but they also seem to happen more slowly than some of these companies, government groups and investors initially anticipated (also see my Next-Gen Biofuels: Where Are They Now article from earlier this year).

Amyris and Gevo, which both went public within the past year and a half, reported first quarter financials on Friday, and both are still in the early stages of production for biofuels. Amyris, which is a genetic engineering company that got its start developing bugs to turn sugar into anti-malarial drugs, reported first quarter revenue of $37.18 million, up from $13.66 million for the quarter the year earlier. Amyris’ net loss for the quarter was $33.15 million, up significantly from $16.34 million for the year prior quarter.

Amyris’ financials could look like this for some time until it produces large volumes of biofuels at its planned plant with Brazilian sugarcane producer Grupo São Martinho, intended to open in the second quarter of 2012. The company makes a good chunk of its revenues by selling other company’s ethanol, and as of the end of 2010, Amyris had accumulated a deficit of $202.3 million.

At the same time, Amyris announced last week that it had opened up its first industrial scale facility to turn sugarcane syrup into Biofene, a form of the industrial chemical Farnesene, which is a fragrant hydrocarbon that’s used to make cosmetics, lubricants and other materials. Farnesene now goes for about $1,000 a gallon, which makes it a lot more profitable than a gallon of fuel substitute, though for a much smaller market.

A good deal of the next-gen biofuel makers are now turning to this strategy of creating non-biofuel products, like food additives and cosmetics. Algae fuel maker Solazyme — which filed to go public in March — was one of the first to start to produce these non-biofuel goods. Back in 2009 when I visited Solazyme’s factory, the team showed me some of their prototype algae milk, oils and lotions. In March, Solazyme announced a large non-biofuel deal to produce up to 60 million gallons of algae-based insulation fluid for transformers for Dow Chemical. Solazyme has also long said that it won’t be commercializing its biofuel until the 2012/2013 time frame or later.

But biofuels in volumes to rival oil for transportation? Not so much — from any companies. The Environmental Protection Agency scaled back its estimates for how much cellulosic ethanol could be produced in 2010 (originally it was 100 million, but basically it turned out to be zero), and projected that for 2011, five companies will be able to produce about 6 million cellulosic ethanol-equivalent gallons. Those companies include Range Fuels, DuPont Danisco, Fiberight, KL Energy, and KiOR.

Will the EPA even be able to make that 6 million forecast for cellulosic ethanol production in 2011? Well, one company on that list seemed to struggle as soon as the calendar flipped over to 2011. Range Fuels reportedly plans to shut down its plant in Georgia after making just one batch of cellulosic ethanol, laid off a bunch of workers and is trying to raise money. Range Fuels company spokesman Patrick Wright told us in January the company planned to still meet the EPA’s production goal.

Another firm on the EPA projection 2011 list is KiOR, which is planning a $100 million IPO this year and seeking a $1 billion federal loan guarantee. KiOR has never reported any revenues (which is unusual for an S-1) and plans to produce its biofuel product at a commercial production facility in the second half of 2012. To date, KiOR has produced over 32,000 gallons of renewable crude, according to its S-1.

The EPA will be updating the latest projection figures for cellulosic ethanol by the spring, an EPA spokesperson told me on Friday. The EPA maintained late last year that many more companies, including 20 plants, could produce potentially 300 million gallons of cellulosic ethanol in 2012.

MIT Tech Review published an interesting article on Friday looking at whether or not unprofitable biofuel companies like Gevo, Amyris, and soon, KiOR, should be going public. I guess it’s up to Wall Street to read the S-1 very clearly. A prominent CEO of a biodiesel company once told me, several years after he left the company, that he would never do a biofuel startup again, because it was just too capital-intensive and took too long to scale.

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Codexis CEO: Note to U.S. Govt., Don’t Act Like a VC

Katie Fehrenbacher — Mon, 07 Mar 2011 04:47:44 +0000

The CEO of biocatalyst company Codexis — Alan Shaw — has a message for the U.S. government, and more specifically, the Department of Energy: Don’t act like a venture capitalist. In Shaw’s view, the government has rushed into supporting some early stage renewable energy companies “that clearly haven’t made it,” he told me in an interview at the ARPA-E Summit in Washington DC last week, adding, “I’m not so sure that’s a good use of taxpayers’ money.”

While Shaw didn’t name any specific companies, there’s a decent-sized list that could fit that government-backed, lack of success, bill. For example, biofuels company Range Fuels reportedly is shutting down its plant in Georgia after making just one batch of ethanol, and after having received a DOE grant and a USDA loan guarantee.

Shaw thinks the best endorsement of whether an early stage green technology is real or not is if a real company has endorsed that technology. ” If I was running DOE, I would wait until I could see some significant interaction with industry,” before he supported a company, said Shaw.

It’s no surprise Shaw thinks as much; Codexis has been working with oil giant Shell for years. As this article reports, Shell has invested $350 to $400 million in Codexis, and Shell is essentially outsourcing its biofuels R&D to Codexis. Shaw says:

It’s not for a VC to tell Royal Dutch Shell, ‘you should buy this fuel molecule.’ What the hell does a VC know about fuel molecules?

The difference between the VC approach and what Shaw says Codexis has done, is pretty simple. Codexis has taken strategic investors (Shell), and used what Shaw calls “big brother,” to grow the company. VCs, in comparison, largely opt to “go it alone,” explained Shaw, and can easily get burned in the process.

To be sure, Codexis won’t be commercializing its technology for another 4 to 5 years. The company, which had its IPO almost a year ago, is focusing on both providing its enzymes for cellulosic biomass production (breaking down biomass into sugar, that a company can then make into ethanol), and also bio-based chemicals, like more sustainable chemicals for products like shampoo. Shaw says that by the end of the year, Codexis will announce a major partner for its bio-based chemicals production.

Codexis’ stock is down a bit from its IPO debut of a year ago. The company set final pricing for its IPO on the low end, at just $13 per share for a total of $78 million, and is trading at close to $11 most recently. Shaw says that’s because he’s not actively pumping up the stock.

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Next-Gen Biofuel Cheat Sheet: Where Are They Now?

Katie Fehrenbacher — Thu, 10 Feb 2011 13:00:07 +0000

Over three years ago I put together this charticle on 10 of Khosla Venture’s biofuel bets. Given a couple of these companies have gone public, been sold off, or have stalled, I decided to take a look back at the bulk of these firms and update this cheat sheet with what I know of their recent status.

Company	Founded	Technology	Investors	Where are they now?
Gevo	2005	Gevo retrofits ethanol plants to produce isobutanol using biocatalysts and fermentation	Khosla Ventures, Virgin Green Funds, Total Energy Ventures International, Burrill, and Malaysian Capital	Gevo went public this week, raising $95.7 million after offering expenses. The company wont be producing isobutanol until mid 2012, and generates any revenue to date from selling ethanol.
Range Fuels	2004 as Kergy	The company uses heat and steam to convert biomass into syngas, which is then processed into alcohols that can be separated and refined to produce different types of biofuels.	Khosla Ventures, Passport Capital, BlueMountain, Leaf Clean Energy Company and Pacific Capital Group (with participation by the CalPERs), as well as an $80 million loan guarantee from the USDA, and a $76 million grant from the DOE	Range Fuels broke ground on its Georgia plant in 2007, started producing methanol first and then small amounts of cellulosic ethanol, but earlier this year laid off workers and is reportedly shuttering its plant soon.
Coskata	2006	Coskata uses a hybrid of thermochemical and biological steps, gasifying the feedgas to syngas and using bacteria to make ethanol	Khosla Ventures, Advanced Technology Ventures, Great Point Ventures, GM	Coskata came out of stealth in 2008, and then stalled in the mid-2009 financing crunch. But recently Coskata was awarded a $250 million loan guarantee from the USDA.
Amyris	2003	Amyris genetically modifies microorganisms, primarily yeast, and uses them as living factories to convert plant-sourced sugars into target molecules, including biofuel.	Kleiner Perkins, Khosla Ventures, and French oil giant Total.	The company went public in April 2010, plans to produce biofuel commercially this year, and is trading at over $30 per share.
Cilion	2006	The plan was to convert corn into ethanol to power cars and trucks more cheaply and more sustainably than traditional corn ethanol.	Khosla Ventures, Western Milling, Virgin Fuels, Ron Burkle, The Yucaipa Companies	The last trace I can find of Cilion is that its plant was reportedly idle in late 2009, and was being restarted by AE Biofuels in 2010.
Mascoma	2006	Producer of biofuels from lignocellulosic biomass using microorganisms and enzymes.	Valero, Khosla Ventures, Flagship Ventures, General Catalyst Partners, Kleiner Perkins Caufield & Byers, Vantage Point Venture Partners, Atlas Venture, Pinnacle Ventures.	Mascoma’s delayed its commercial-scale cellulosic ethanol plant, but last month received $50 million from oil refiner Valero to build the plant, plus an equity investment, and an off take agreement.
LS9	2005	Developed a genetically modified version of e.coli bacteria to make diesel.	BlackRock, Khosla Ventures, Flagship Ventures, Lightspeed Venture Partners	LS9 raised a round of funding in Dec. 2010, which it says will go towards fulfilling deals with partners Procter and Gamble and building out its demonstration facility in Florida
AltraBiofuels	2004	Leveraged various kinds of biofuel manufacturing processes.	Khosla Ventures, Kleiner Perkins Caulfield & Byers, Angeleno Group, Omninet Private Equity, Sage Capital Partners	AltraBiofuels spun out a new company called EdeniQ in mid-2008, and later that year reportedly closed its plants. EdeniQ has more recently raised funds from Draper Fisher Jurvetson, the Westly Group, Kleiner, Morgan Stanley, Advanced Equities, and others.
Verenium	1994 as Diversa	Produces enzyme based cellulosic ethanol.	Khosla Ventures, Braemar Energy Ventures, Charles River, Rho Ventures	Diversa, which went public in 2000, bought Celunol for $150M, and rebranded as Verenium in 2007. In mid-2010 BP bought up Verenium’s cellulosic ethanol business for $98.3 million.
KiOR	2007, spun out of BIOeCON	Uses a catalyst originally developed to help the oil industry break down heavy crude oil and uses it to aid the process of pyrolysis, or super-heating organic matter in the absence of oxygen to break it down into a substitute for crude oil.	Khosla Ventures	KiOR raised $110 million last year and received a term sheet for a $1 billion loan guarantee from the DOE.

Image courtesy of NREL.

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Fulcrum Raises $75M, Inches Toward First Waste-to-Fuel Plant

Ucilia Wang — Tue, 25 Jan 2011 19:10:03 +0000

Trash-to-fuel technology could be the quiet front-runner in the next-generation of biofuels. Fulcrum BioEnergy, for one, is paving its way to reaching that goal: the company said Tuesday it has lined up $75 million and plans to start building its first commercial refinery this summer.

The Pleasanton, Calif.-based company said the funding is the final equity financing it needs to start building a $120 million processing plant, called Sierra BioFuels Plant, just outside of Reno in Nevada. Fulrum vice president of administration Rick Barraza declined to disclose the investors in the round. Not all $75 million will be used to build the plant; some will be used for day-to-day corporate operations.

The company is still waiting for a loan guarantee from the U.S. Department of Energy, however. Fulcrum expects to complete negotiations of the loan guarantee in the next few months, said Barraza.

The DOE recently announced its first biofuel loan guarantee offer, and that $241 million guarantee went to Diamond Green Diesel. The U.S. Department of Agriculture (USDA), meanwhile, announced three loan guarantees recently totaling $405 million to three biofuel producers, including trash-to-fuel maker Enerkem.

Fulcrum says it expects to complete construction of its plant, which will have the capacity to produce 10.5 million gallons of ethanol per year, in late 2012. The company says the plant will also be equipped to make propanol, a solvent commonly used in the plastics industry, and Fulcrum plans to produce 16 MW of electricity onsite to run its operation.

We should pause here and note that Fulcrum’s deadline for completing its plant is rather aggressive, particularly if it’s factoring in a swift awarding of a DOE loan guarantee into the timeline. We’ve seen enough missed deadlines by numerous next-gen biofuel makers that have struggled with technical problems and raising money. When I first spoke with Fulcrum in the summer of 2008, the company had bullishly predicted that it would start building the Sierra BioFuels plant that same year.

When it does get built, the plant will operate by turning garbage into ethanol using a gasification process that bakes shredded pieces of trash at high temperatures to produce synthesis gas. The syngas then goes through a purification process to get rid of particles before going through a catalytic process to convert the gas into ethanol.

Fulcrum has licensed the gasification technology from InEnTech, and is using a catalyst that was jointly developed by Nipawin Biomass Ethanol New Generation Co-operative and Saskatchewan Research Council in Canada. Syngas will run through the catalyst that turns the carbon molecules from the syngas into fuel.Earlier this month, Fulcrum said it had signed a 15-year agreement with Waste Management of Nevada to buy municipal trash for the refinery.

Will Fulcrum turn out to be just another next-gen biofuel maker that lines up deadlines, only to struggle to reach commercialization? Startup Range Fuels managed to get private equity and federal financial aid to build its first commercial plant last year, but it’s still not mass producing ethanol. In fact, the company confirmed earlier this month that it was laying off workers, and its technical adviser (and founder), Bud Klepper, told Georgia Public Broadcasting that the company was shutting down its plan to tackle technical issues and find more money.

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Image courtesy of Fulcrum BioEnergy

Feds Promise $571 Million in Biofuel Loan Guarantees

Ucilia Wang — Thu, 20 Jan 2011 22:31:07 +0000

Biofuel production nationwide has been woefully behind schedule as would-be producers struggle to just get their first commercial plants rolling. The U.S. government wants to help, and on Thursday, announced loan guarantee commitments totaling $571 million for cellulosic ethanol startup Coskata, waste-to-energy company Enerkem and Diamond Green Diesel, a joint venture from oil giant Valero and Darling International.

Coskata has gotten a letter of intent from the U.S. Department of Agriculture for a $250 million loan guarantee to build a plant to make ethanol from woody biomass. The plant will have the capacity to make 55 million gallons per year. Coskata’s plant plans seriously stalled during the recession, and Coskata has been waiting for this loan guarantee to come through. The company is well-known for touting a $1 per gallon production price and its backers including Khosla Ventures, General Motors, and Advanced Technology Ventures.

The USDA also awarded Enerkem a conditional commitment for an $80 million loan guarantee to build a 10 million-gallon-per-year refinery for making ethanol out of municipal solid waste. Enerkem, which uses a thermochemical trash-to-syngas process, was already awarded a $50 million Department of Energy grant, and also raised funding from trash giant Waste Management, Cycle Capital, Rho Ventures, Braemar Energy Ventures and BDR Capital.

At the same time, the U.S. Department of Energy (DOE) is awarding a $241 million loan guarantee — its first for a biofuel plant — to Diamond Green Diesel. The guarantee will help Valero build a plant in Louisiana that will make 137 million gallons of biofuel per year primarily from animal fats and used cooking oil.

The USDA said it’s not done doling out financial help to biofuel producers. It plans to announce new rules “soon” that will make more money available from the loan guarantee program, which originated from a 2008 Farm Bill.

Lining up money to build refineries has been a huge hurdle for a slew of biofuel companies in the past two years. The recession is only partly to blame. Many of these companies have encountered technical problems for converting plants and wastes into fuel. Investors once flocked to these startup companies, especially when the federal government announced goals to gradually increase the nation’s supply of renewable fuel until it hits 36 billion in 2022.

Well, hitting the goals has proven a lot more difficult. Congress initially set 100 million gallons as the 2010 target for cellulosic biofuel, but the Environmental Protection Agency cut that to 6.5 million gallons. It appears the industry might have produced less than 1 million gallons last year, reported ClimateWire, citing an estimate by a government analyst.

Just last week, reports emerged that Range Fuels, backed by venture capital firms such as Khosla Ventures, was laying off workers and shutting down its refinery in Georgia in order to tackle technical problems and raise more money. Colorado-based Range Fuels received an $80 million loan guarantee from the USDA to help fund its refinery, which began production by making methanol instead of ethanol last year.

Perhaps the USDA will see quicker success from its latest bets. Aside from Coskata and Enerkem, the agency also touted a loan guarantee conditional commitment for a $75 million loan guarantee to INEOS Bio and its partner New Planet Energy, which it first announced a few weeks ago.

INEOS Bio (which is the biofuel arm of petrochemical giant INEOS) and developer New Planet Energy say they will use the loan guarantee to build the “INEOS BioEnergy Center,” near Vero Beach, Florida, that will produce 8 million gallons of advanced biofuels and 6 MW of biomass power from plant waste and trash per year. The companies say the center will begin producing biofuels and bioenergy in 2012, and will create 175 jobs during the construction process and 50 jobs when the center is completed.

Loan guarantees are important awards for companies looking to build plants for these next-gen biofuel projects. A loan guarantee essentially is a promise by the government to back a loan if the company can’t pay it, and it enables companies to finance projects with a better interest rate and at a lower cost.

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Report: Range Fuels to Shut Down Plant

Ucilia Wang — Fri, 14 Jan 2011 18:46:12 +0000

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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Range Fuels Lays Off Workers, Plans to Meet 2011 Target

Ucilia Wang — Wed, 12 Jan 2011 14:39:56 +0000

Here’s the bad news from next-gen biofuel producer Range Fuels: The company has let some workers go. But the good news the company wants you to know, is that Range Fuels is still planning to produce enough cellulosic ethanol to meet a government estimate for 2011.

News about the layoffs emerged Monday, and company spokesman Patrick Wright confirmed it with us. Wright said the company laid off “a handful of people in Colorado and Georgia,” but declined to disclose the number or reasons. In the same email reply, Wright said that the company could possibly start producing ethanol this week at its plant near Soperton, Ga.

“The Soperton plant is running and is producing methanol and we expect to produce ethanol this week,” Wright wrote Tuesday. In a phone conversation, Wright said the company plans to meet a 2011 production goal set by the U.S. Environmental Protection Agency. He declined to answer more questions about the company’s ethanol production plan. We’ll update the story if we hear more.

Range Fuels is one of the five companies the EPA projected will be able to produce 6.6 million gallons of cellulosic biofuel in 2011. A 2007 law required the EPA to 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. But meeting those goals has proven 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 the 2010 target for cellulosic biofuel at 100 million gallons, but the EPA cut that to 6.5 million gallons. It appears the industry might have produced less than 1 million gallons last year, reported ClimateWire Tuesday, citing an estimate by a government analyst. EPA’s estimates are partly based on input from biofuel producers.

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 the projected methanol production for Range Fuels in its 2011 goal. The company is using wood wastes as the primary feedstock.

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

Aldous told 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 critical issue is really that there’s no mechanism to price carbon today,” he told the newspaper. The newspaper also reported that there was a “problem with the feed system at its plant.”

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Photo courtesy of Nancy Qian