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

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 (s AMRS) and Gevo (s 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 (s dow). 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.