Biofuels Company Profiles

Bio-Ethanol Companies: Coskata, Range Fuels, POET, BlueFire Ethanol, DuPont-Danisco, Petrobras, ZeaChem,  Qteros, Verenium, Imbicon

Coskata, Inc.

Perhaps the best company “on the come” in the ethanol sector is Coskata.

Based in Warrenville Illinois, Coskata claims to be able to produce ethanol from just about any organic material, and to do so for less than $1 per gallon.  This claim, and generous backing from venture capitalists and the likes of General Motors, gave Coskata the top ranking from Biofuels Digest in its list of the 50 Hottest Companies in Bioenergy. Unlike most of its ethanol-focused competitors, the Coskata approach is not based on improved cellulosic conversion to fermentable sugars. Rather, Coskata uses already available chemical technology for converting mixed agricultural and municipal waste into synthesis gas, which consists mainly of carbon monoxide (CO) and hydrogen (H2). The second step is the biological one, relying on the microbial bioconversion of the synthesis gas to ethanol. Coskata claims “99.7% pure ethanol” through this approach, although of course, every other method can also produce 99.7% pure ethanol once the ethanol is refined and distilled. A distinct advantage of the Coskata technology is the use of non-food raw materials, avoiding the problem of diverting food crops to fuels or the crowding out of food crops with fuel crops. Another advantage is that Coskata’s method for producing ethanol avoids the “negative energy” comparisons that have been so glibly bandied about. Using already available waste means no energy cost for growing and harvesting energy crops, and therefore, Coskata calculates that its ethanol provides 7.7 times the energy required to produce it.

Revenues? Don’t even think about it for a while. The first pilot plant won’t be running until at best the end of 2009, and it will only produce about 40,000 gallons per year. At $1 per gallon, that is not much return on the approximately $100 million invested. But Coskata claims that the sky is the limit on the future potential, which is why all the money has flowed in from investors in the first place. The first commercial-scale plant producing 100 million gallons per year is scheduled for 2011, and if the company meets that milestone, the future for Coskata will be highly visible. 

 

Range Fuels, Inc.

With a tag-line of “Inventing the New Oil” you are bound to garner some attention.  Range Fuels says that its most important client is “our planet”—yep, good ole Mother Earth. An entire section of its web site is dedicated to awards that the company has won. And the web site quotes Albert Einstein and seeks to educate the masses about the virtues of ethanol with a tutorial called “Ethanol 101.” Broomfield, Colorado-based Range Fuels is certainly comfortable with hyperbole. The question is whether they will be able to back it up with results.

Range Fuels has been able to raise substantial sums of money: approximately $200 million combined from venture capitalists Khosla Ventures and loan guarantees from the USDA. So, what is all the excitement about? Range Fuels has a technology similar to that of fellow biofuels high-flyer Coskata. Cellulosic waste is converted into synthesis gas using existing technology involving heat, pressure and steam, and the resulting synthesis gas is then converted into ethanol using other chemical catalysts, not bioconversion. In other words, there is nothing biological about Range Fuel’s process for generating ethanol. In this case, “bio” just means the feedstock. Raw materials include wood, sawdust, corn stover, paper pulp, hog manure, switchgrass, eucalyptus—in short, most any agricultural waste product or even crops grown specifically for producing fuels.

We will have some idea about the potential for Range Fuels’ technology soon. The first pilot plant establishing feasibility of its fully integrated thermo-chemical conversion to ethanol has been operating at the Colorado-based development center since Quarter 1, 2008. The first demonstration plant is scheduled for completion in Soperton, GA later this year (2009), using cellulose as the feedstock, with production planned to begin in 2010. The company’s business model calls for designing, building, and operating its plants, so Range Fuels will need to capture a healthy percentage of the fuel ethanol market and be cost competitive to survive.

 

POET

POET is somewhat more publicity-shy than its competitors, but it is aggressive when it comes to its ethanol business. You might not know it, but POET is far and away the largest US-based ethanol producer currently, operating 26 plants producing 1.5 billion gallons annually. The technology is surprisingly pedestrian, based on conversion of starch, entirely derived from corn, fermented by yeast. Based in Sioux Falls, South Dakota and with plants scattered throughout the corn belt, POET’s business model is built around partnerships with farmers and small communities, where there is a lot of available crop land. Although current production is corn-based, POET sees the writing on the wall as regards to the use of food crops for fuel ethanol production. The company has been busy developing a cellulose-based alternative feedstock: corn cobs. According to CEO Jeff Broin, enough corn cobs are available in the USA to produce 5 billion gallons of ethanol each year. A pilot plant in Scotland, SD is already operating to develop the process to accomplish this.

In addition to all the corn at POET, there is some apple pie as well. POET announced its selection by the DOE for Project LIBERTY, which came complete with American flags and, more importantly an $80 million grant to demonstrate the cellulose to ethanol conversion. POET does not talk about its methods for pre-treatment of cellulose to be able to convert it into fermentable sugars, but one can infer that it is some sort of already available steam explosion method. Plant construction is scheduled over the next 2 years. As far as costs, go, POET’s own blog says that the cost of its cellulosic ethanol is now about $1 per gallon more costly than ethanol produced from starch, and projects that the gap will be closed to about $0.50 by the time the first commercial plant commences operation in 2011. That is a surprisingly honest self-assessment!

 

BlueFire Ethanol, Inc.

BlueFire Ethanol Fuels, Inc. claims that its patented Concentrated Acid Hydrolysis technology positions the company to be the only viable world-wide cellulose to ethanol company able to use wood waste, urban trash, rice, wheat straws, and cellulosic waste materials. Tag-line: “The Future of Ethanol.”  Wow!  And that’s just for starters. BlueFIre even pays lip service to the notion that it can produce fuel materials other than ethanol as well. 

BlueFire is one of four ethanol companies awarded funding from the U.S. Department of Energy to construct a commercial scale cellulosic ethanol production facility. Its biorefineries are planned to be located in markets with the highest demand for renewable transportation fuels (read: ethanol-gasoline blends), thereby reducing delivery costs and hurdles and reducing the waste streams sent to landfills. BlueFire also made Biofuels Digest’s list of top Bioenergy companies, coming in at lucky number 13.

BlueFire is a public company headquartered in Irvine, CA, with a stock price of $0.60 as of this writing (March 2009). With 28 million shares outstanding, that amounts to a market cap of about $16 million, which seems a rather lowly valuation for a company with such lofty ambitions. Of course BlueFire projects valuations of $1.5—3 billion (yes, really!) over the next 5-10 years, but then adds the usual public disclaimer about Forward-Looking Statements being possibly (I’m shocked!) wrong. The first production plant is, surprisingly, in the small town of Izumi, Japan, where “warm, hardworking people are found.” There is no US plant so far, but one is apparently planned for California. We’ll see about that. BlueFire has a lo-o-o-ong way to go to crack that billion dollar barrier.

 

DuPont-Danisco

With well-established big-name companies collaborating, and deep pockets, the joint venture between Dupont and Danisco has to be given serious consideration as a major player n the fuel ethanol arena. So far, the two JV partners have committed funding of $140 million over 3 years to develop pre-treatment methods and then apply enzyme-based hydrolysis of cellulose to produce fermentable sugars, which would then be converted to ethanol by yeast fermentation. Danisco, the large Danish-based, international enzyme producer, has deep experience in low-cost industrial enzyme production, having recently acquired US-based Genencor.  An area of specialization is cellulases, of course. And DuPont is no slouch in the industrial biotech area, having developed and commercialized a 1,3-propanediol process that churns out at many millions of pounds of the stuff per year for its Sorona® polymer. From this multi-year development, DuPont brings enormous experience in the design, engineering and construction of an integrated biorefinery complex. Initial plans call for the use of corn stover (the unused stalk after corn is harvested) and corn cobs as the feedstock. And DuPont Danisco will offer licenses to the technology world-wide. Keep looking over your shoulder, Jeff Broin!

 

Petrobras

It is worth profiling at least one Brazilian ethanol producer, given that Brazil is the world’s largest producer of ethanol by far. In fact, Brazil has the closest thing to an ethanol-based transportation economy, having invested heavily as a country in fuel ethanol production for decades. The reason: sugar cane. Cane sugar is a far better, and cheaper, source of sugar for fermenting to ethanol than is corn, and Brazil has more sugar cane than any other country in the world.

Petrobras is one of the world’s largest ethanol producers currently, with a stated goal of exporting 4.75 billion gallons of ethanol annually. Japan is its major export market, although some of that Brazilian ethanol winds up in the good old US of A as well.  Growth is probably more limited for the Brazilian companies, as their market is more saturated and ethanol already more widely used for fuel than elsewhere in the world. Petrobras gave revenues in 2007 as 218 million from biofuels, which includes some biodiesel as well. The company is constructing 3 plants currently that will produce a stated 171 million liters (about 45 million gallons) of biodiesel, produced from vegetable oil and animal fats. 

 

Zeachem

Zeachem claims “an entirely new approach to cellulosic ethanol.” But there’s more.  “Zeachem’s patented process offers “the highest yield at the lowest cost, with the lowest fossil carbon footprint of any known biorefining method,” according to the company. And get this! Although the technology is “tightly protected by Intellectual Property (capital letters are the company’s way of emphasizing this point, although intellectual property is not a proper noun), it utilizes no new organisms or process.” How can that be, you may ask? Well, here is what the company has to say about that. Zeachem claims to be developing what they call “third generation” ethanol. Ever heard of third generation ethanol? Or do you still wonder where are the first and second generation?

The technology is a hybrid combination of biochemical and thermo-chemical processing, using biomass feedstocks that contain high levels of cellulose. What are those, you might ask. So might I. And the company isn’t being very clear about that either.

Zeachem has a lot of venture capital investors on the hook: Firelack Capital, Globespan Capital Partners, Davidow Ventures, Valero Energy Corporation, PrairieGold Venture Partners. Read that to mean there is a lot of investor money that could be lost. But it makes for a good pedigree. Zeachem was listed recently as a Red Herring Top 100 Global Company. And the company announced a $34 million investment to build its first demonstration plant “with unprecedented efficiency.” I am looking forward to the results from that first plant!

 

Qteros

The novel Q-microbe, a rare microorganisms isolated from a pond in Massachusetts that can convert cellulose to ethanol in high yield! A new, flexible, low-cost Consolidated Bioprocessing (CBO) method! Investors that include Venrock, Batttery Ventures, British Petroleum and even George Soros. All of this sounds great. This is the new Qteros, formerly SunEthanol, a venture-backed start-up focusing on cellulose to ethanol conversion. They have plenty of copany in this market. The company claims its technology can be applied to a wide range of biomass feedstocks and agricultural residues.

If all goes according to plan, the Q-microbe will degrade cellulose and hemi-cellulose and covert all of the component sugars into ethanol. No enzymatic hydrolysis, no nasty pre-treatment methodologies, just a simple, efficient fermentation. Does that sound great, or what?! Massachusetts Governor Deval Patrick hailed the company as one of the Bay State’s premier clean-tech companies. Founder Prof. Susan Leschine has been widely honored for her discoveries. Sounds too good to be true, doesn’t it? Is it? There has been a lot of promotion associated with Qteros. We will check back in 6-12 months and see what the latest round of funding has produced in the way of results.

Verenium

Formed through a merger of San Diego-based Diversa Corporation and Cambridge, MA-based Cellunol a couple of years ago, Verenium has set cellulose-derived ethanol production as its major goal. The company still maintains a small but growing industrial enzyme business operated out of San Diego and has extensive technology and state-of-the-art know-how in the genetic engineering and optimization of enzymes, but for today’s Verenium, future success appears firmly hitched to the fuel ethanol wagon.  Having British Petroleum as a major funding partner doesn’t hurt. BP made a 90 million investment last year to help Verenium finance its development and commissioning of its Jennings, LA demonstration plant.  Just last month (Feb. 2009), Verenium and BP formed a 50-50 joint venture to commercialize cellulosic ethanol from no-food feedstocks. The first commercial plant is planned for Highlands County, Florida, with groundbreaking set for 2010. As for technology, Verenium uses classical pre-treatment technology along with enzyme treatment for converting cellulosic waste such as bagasse to fermentable sugars, which are then converted to ethanol.

The Jennings and Florida plants better just be a start. Revenues from those plants will not even come close to bringing the company to breakeven, let alone profitability. As long as BP supports the company, Verenium will have some staying power. And since the industrial enzymes business is not a good fit with an ethanol producer, look for enzyme business to be spun off or separated at some point.

Imbicon

Spun out of DONG, Denmark’s largest energy company with annual revenues equivalent to about $7.5 billion, Imbicon has ambitions to launch, in its words, “The New Ethanol.” (caps are Imbicon’s). Just what is The New Ethanol? According to the company, it is a “new engineering and business model that incorporates its proprietary technology into a new pathway for converting biomass to ethanol.” Well, that clears everything up!

Imbicon is partnering with US-based G-Team. Apparently, the Imbicon technology processes waste cellulosics like wheat straw and corn stover into ethanol while also producing electricity and steam that cut the plant’s overall power needs. As an add-on to grain ethanol plants, the efficiency boost comes from processing the waste materials that are not processed now. For nearly six years, Imbicon claims to have been testing, perfecting, and patenting its biomass conversion process at its pilot plant in Denmark. One measure of Imbicon’s cellulosic commitment: building a $50 million demonstration-scale Imbicon Biomass Refinery to showcase the company’s technology. Just how new is this New Ethanol? Sounds like the same old ethanol everyone else makes to me, although the efficiency of the engineering in recapturing lost heat during the process may be top notch. I’ll wait for the pilot plant results to become a believer.

 

 

Amyris Biotechnologies

The offspring of Jay Keasling’s synthetic biology research and vision, Emeryville, CA-based Amyris Biotechnologies has made a double impact. First, the company, with more than $40 million of backing from the Bill Gates’ Institute for One World Health charity, developed a microbial route to the anti-malarial compound artemisinin.  In and of itself this work was a stunningly successful scientific achievement, and the resulting process has been licensed to Sanofi-Aventis for low-cost manufacturing and distribution in the third world.

But how does that relate to biofuels? Well, the basic pathway to the anti-malarial drug relied on the engineering of the mevalonate pathway to produce a key terpene intermediate. Terpenes are hydrocarbons, and therefore the same basic science, with appropriate tweaking, can be applied to produce fuel compounds. And according to the company, a desired fuel compound can be selected based on its properties (flash point, cloud point, boiling point, density, fuels value, etc), and then the pathway to produce it can be designed. Voila! You have a designer fuel. And terpenes are natural fuel compounds: they are hydrocarbons, like gasoline and diesel, and do not suffer from the limitations that alcohols (particularly ethanol) have as fuels. If you want to put something into your gas tank or jet engine, a designer hydrocarbon is likely to be superior to any alcohol. At least that is what Amyris argues.

Amyris has the backing of a well-heeled group of VCs: Kleiner Perkins, TPG Biotech, and DAG Ventures. In my humble opinion, Amyris is at the head of the class when it comes to biofuels work. Economics remain to be proven, but Amyris has formed a joint venture with the second largest Brazilian sugar producer, Crystalsev, to get access to inexpensive sugar feedstock, and the first demonstration plant is scheduled to be built right on the sugar plantation in Brazil by 2010.  It will produce a biodiesel (with the interesting name of “No Compromise^TM”), currently being piloted at Amyris’ Emerville facility. Amyris promises that a bio-gasoline and a bio-aviation fuel are not far behind. If any company can make terpene-based fuels successfully, Amyris appears to be that company.