Biofuels Business A Roller Coaster, But Ford Signs Up

May 4, 2010

The United States now produces more ethanol than gasoline refined from Saudi Arabian and Iraqi oil.

This fact is a fitting reminder of the growing prominence of the nation’s biofuels industry. Last year, ethanol production hit a record in the U.S. and new refineries under construction will expand that capacity ten fold.

The Fusion is one of 11 flexible fuel vehicles Ford offers. The company will expand biofuels vehibles 50 percent in two years.

It is no surprise then that some carmakers are showing greater interest in alternative fuel internal combustion engines. On Tuesday, for instance, Ford announced it would to expand its production of flexible-fuel cars and trucks, with 50 percent of vehicles by 2012 able to burn ethanol and other biofuels.

Of course, the biofuels business has been an up and down ride. Biofuels companies plunged into the red during the first half of 2009 as the global recession cut demand for their products. But by the second half of the year, many of the nation’s 170 refineries recovered, with profits returning and production hitting a record.

However, this year will be a little more troublesome again. Expectations are for more modest growth, with production forecast to rise 12 percent to 11.9 million gallons, according to the Renewable Fuels Association, a trade group. The nation will have 189 refineries.

The roller coaster will continue. Refineries under construction will add 1.4 billion gallons of new capacity, with the first wave of cellulosic, or second-generation, producers coming up to commercial levels.

The nation’s biodiesel business has had an even more difficult fate. While the counry’s180 biodiesel plants produced 350 million gallons of biodiesel in 2009, production was down by 50 percent from a year earlier. Part of the explanation is the global recession, which squelched demand. But a European Community anti dumping tariff on U.S. imports added to the woes. Europe has been the largest importer of U.S. biodiesel..

Today U.S. plants are operating at only about 15 percent of capacity.

Still, companies such as Ford aren’t dismayed. The carmaker builds 11 flexible fuel vehicles and has doubled that number since 2006.

This will amount to 370,000 cars and trucks in 2010. “Flexible-fuel vehicles are a great alternative,” says Sue Cischke, a Ford group vice president. If only it could be a better business.

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Posted by Mark Boslet

Biofuel 3.0: A Third Wave Of Biofuels Emerges

May 3, 2010

First came the companies eager to turn corn, soybeans, sugar cane and other edible feedstock into ethanol and other fuels.

North Carolina State University wins $2.7 million federal grant to engineer superbug to create biofuel directly from microorganism

Then a second generation of start-ups began replacing the foodstuffs with cellulosic materials such as wood and grasses. Many are just now building large-scale plants to prove they can turn laboratory experiments into massive commercial production, including Amyris Biotechnologies, Codexis and ZeaChem.

Now a third-generation of biofuel makers is showing progress with novel laboratory work. This new wave is a sharp departure from the ways of the past and has interesting potential. It hopes to simplify manufacturing by avoiding the fermentation step of first and second generation companies and convert organisms directly into fuel using just carbon dioxide and sometimes sunlight.

It is an exciting prospect. Not only could these new ventures remake an industry, they could open the door to new ways to store solar energy (in a fuel!) and help remove CO2 from the atmosphere.

On the leading edge is Joule of Cambridge, MA. That company hopes a genetically engineered microorganism will directly produce fuel on large scale and hopes to demonstrate it with a Texas pilot project this summer. The process requires CO2 and sunlight.

Also pushing the dial is North Carolina State University, which received a Department of Energy ARPA-E grant of $2.7 million. The university’s experimental work makes use of microbial organisms called extremophiles that use CO2 and hydrogen (and no sunlight) to produce complex molecules that are building blocks for biofuels.

The primitive organisms live in hot fresh or salt water (167 to 212 degrees Fahrenheit) and evolved before photosynthesis developed. The lack of sunlight should make their growth cycle easier to manage.

The university plans to genetically engineer a “superbug” that will efficiently produce butanol. The work may take three years or more. But it is a promising side step around the large fermentation plants that define the industry today.

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Posted by Mark Boslet

Green Tech Will Reinvent The Infrastructure Of The World, Says Vinod Khosla

April 30, 2010

It is hard to predict when green energy technologies such as solar, wind and biofuel will be cheaper than oil and coal.

Khosla Ventures will make more money from the Amyris Biotechnologies IPO than it has invested so far, says VC Vinod Khosla

But when they are, watch out. “We will fundamentally reinvent the infrastructure of the world,” says top clean-tech venture capitalist Vinod Khosla. “This is about changing assumptions.”

Khosla, who was interviewed at the GreenNet conference in San Francisco, said that once the cost of green energy is competitive with fossil fuels, Wall Street financiers will pour money into projects, eager for big returns. The reinvention of the infrastructure will take place over 10 to 15 years, he said.

Khosla defended the investment portfolio he’s accumulated since turning his attention to green tech about five years ago. He admitted he hasn’t yet made money with clean-tech start-ups.

But he vowed, just like the Wall Street moneymen, he would eventually rake in big bucks – green from green, you might say. “I’m pretty confident we will,” he said.  Already the book value of the portfolio – an estimate of its market value – is higher than the amount of money his firm, Khosla Ventures, invested.

Earlier this month, Amyris Biotechnologies, one of his biofuels firms, filed to go public. It should be a success, Khosla said. “We will make more money with this than we invested so far.”

He’s equally confident about his other companies. Half will bring positive returns to Khosla Ventures, he predicted, a high hit rate for a venture fund.

So what technologies does Khosla see as ripe for investment? LED lighting is attractive with breakthroughs possible, he said. Clean coal is another area he is investigating.

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Posted by Mark Boslet

Disruptive Innovation Coming To Clean Tech, Says Steve Jurvetson

April 29, 2010

Steve Jurvetson’s Draper Fisher Jurvetson is the world’s largest clean-tech venture investor, with positions in 42 start-ups.

It is a portfolio this high-octane visionary would like to add to. The energy generation and fuels industries are “traditional businesses that haven’t been radically disrupted yet,” Jurvetson says, with an emphasis on “yet.”

Venture Capitalist Steve Jurvetson said he is excited by investment opportuniites in recycling and reuse as well as water purification

Jurvetson makes a point of looking for disruptive change from technological innovation. He was an initial investor the e-mail powerhouse Hotmail, eventually bought by Microsoft, and put money in the information-technology firms Interwoven and Kana.

His clean-tech holdings include equally exciting companies eager to break down walls in entrenched industries, including electric carmaker Tesla Motors and biofuels developer Synthetic Genomics.

Jurvetson is quick to point out he sees plenty of opportunity in clean-tech, despite the sagging economy. During an address at the Nordic Green II conference, he also had this to say:

*Many clean-tech start-ups are growing faster than information technology start-ups. Aggregate revenue from DFJ’s portfolio of companies was $450 million in 2008. It will be $1.4 billion this year.

*The most exciting investment opportunities in clean tech are recycling and reuse, and water purification. DFJ has not invested yet in geothermal energy. Jurvetson emphasizes “yet.”

*Electric scooters and bicycles are “very interesting,” he added. Sales volumes should be greater than all other electric vehicles combined. Presently they outsell electric cars in China.

*Jurvetson laments that he would love to make an investment in nuclear energy. “We keep meeting with these guys. There hasn’t been an obvious nuclear investment where we can help.”

*Included in the DFJ portfolio are: BrightSource Energy (booked $10 billion in revenue in two years) and EnerNOC (built a sustainable business model with $3.5 million and “this business is still in the early days of its potential”).

*Also on the list are: ScientificConservation (cuts commercial energy spending by 25 percent annually) and Genomatica (can build 4 billion microbes in a day.)

Expect to see more.

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Posted by Mark Boslet

Clean Tech Venture Investing Entering Fourth Stage, Says VC

April 27, 2010

The venture industry placed its first clean-tech bets on solar start-ups about five years ago. Then came the biofuels companies turning corn, edible feedstocks, and eventually grasses and wood to gasoline and diesel replacements.

The fourth wave could focus on energy storage and new-era lighting, says venture capitalist Erik Straser.

Smart-grid and smart-meter start-ups made up the third wave of investing by a venture capital industry increasingly excited by the monstrous alternative energy and green technology markets.

Now a fourth wave is approaching with a focus that appears to be on energy storage, new-era lighting and with smart-grid money being doled out a slower pace.

“I think people are looking for the candidates for the fourth wave,” says Erik Straser, a partner at the VC firm Mohr Davidow Ventures and the head of its clean-tech investment team. “I think people would like to believe it is energy storage.”

There is little question energy storage – along with lighting – are huge opportunities. Imagine the sales of lithium ion and other advanced batteries when a million or so electric cars are manufactured annually, a production target that could be reach in five to 10 years. Companies also are beginning to develop storage batteries and devices for the home. Residents might employ them to store solar energy for use at night.

But the granddaddy of the opportunities is likely electric-grid storage, says Straser. Expect venture firms to take chances on new technologies, he says – such as new materials and systems but not necessarily lithium or nickel hydride.

In the lighting space, LEDs are likely to command the most attention. The motivation will be to find business plans from start-ups that provide new ways of making light emitting diodes or which lower the costs of turning the LED chips into bulbs.

The quest is “how to drive to the next price points,” says Straser, And to make the bundle of money that has so far eluded the clean-tech venture business.

Straser has in the past invested in biofuel companies, such as Catilin, solar start-up Nanosolar and coal gasification company Laurus Energy, among others.

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Posted by Mark Boslet

Clean Tech IPOs Have Much To Prove, Says Top VC

April 26, 2010

Clean-tech IPOs have yet to prove themselves.

Sure, investor excitement is on the rise with Tesla Motors, Solyndra, Amyris and Ameresco preparing to sell shares to the public. Another potential blockbuster, Silver Spring Networks, is said to have chosen its investment bankers.

It appears the market for clean-tech IPOs is thawing, says Erik Straser, a venture capitalist at Mohr Davidow Ventures

But the track record of recent green IPOs is anything but encouraging. Lithium battery maker A123 Systems went public in September and its shares trade below their introductory price.

Sensata Technologies Holding, a sensor maker from the Netherlands, is hanging onto a gain over its initial price in March, but only a modest one. Biofuel maker Codexis, which debuted its shares last week, is suffering the same fate. And the fortunes of Jinko Solar Holding of China are worse. It canceled its coming out altogether.

“The clean-tech IPOs at this stage are still proving themselves,” says Erik Straser, a partner at the venture firm Mohr Davidow Ventures and leader of its cleantech investment team. Nevertheless, “it appears the markets today are thawing.”

Straser says it is likely there will be more clean-tech IPO filings this year and even a period when less mature companies will go public. That’s because the criteria for what a company needs to interest investors is unsettled.

Several years ago, a high-tech company might need $100 million in annual revenue and profits to attract investors. Clean-tech companies appear to have more latitude. Revenue can be in the neighborhood of $50 million, Straser said in an interview, and business models vary.

Some companies have high production costs and are working them down. Others have businesses that are more future than present. Silicon Valley electric car manufacturer Tesla is an example.

The company sells its Roadster sports car today, but IPO investors will bet on the success of the less expensive Model S sedan, he says. What the Roadster did is show there is a high-end market for high-end electric cars, says Straser, who has invested in green-tech firms such as ZeaChem, Nanosolar and OPX Biotechnologies.

Still, it is hard to predict how clean-tech IPOs will do this year. What is clear is that at some point, investors will become more discriminating and look for more mature companies rather than trendy ones, says Straser. When will this occur? No one knows.

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Three Top Green Technologies From MIT

April 20, 2010

Every year MIT compiles a list of the top 10 technologies it believes will change the world. This year, three are green.

Biofuel, solar innovation and cement make MIT's top 2010 technologies list

At the top of the list is Noubar Afeyan’s Joule Biotechnologies, a company using genetically engineered organisms to convert sunlight directly into biofuels. The new process should enable biofuels to compete with fossil fuels on price and scale – both of which are necessary if the world is to wean itself from gasoline and oil.

Joule says its goal is to conduct a pilot project this year and enter commercial production by 2012. It hopes to generate 25,000 gallons of ethanol and 15,000 gallons of biodiesel an acre, making the fuels cost competitive with oil.

The company calls its process Helioculture. Using genome engineering and synthetic biology, it creates an organism that converts waste CO2 directly to fuel. The process doesn’t require feedstocks, such as corn, or wood chips, fresh water and agricultural land. The company is based in Cambridge.

Also on the MIT list is Australian National University researcher Kylie Catchpole, who found a way to boost the efficiency of solar cells by depositing nanoparticles of silver on thin film solar cells. The innovation could lead solar to be more competitive with coal- and gas-fired power plants

Catchpole has long been working in the field. One published scientific paper of hers dating to 2007 claims 30 percent efficiency improvements are possible. The silver particles trap light that is otherwise scattered across the cell and reflected. They also should enable manufacturers to cut costs by relying on less pure silicon.

Other researcher in California and the Netherlands are working on similar technology.

Green cement is a third focus of the MIT report. Cement creates 5 percent of global carbon emissions and Novacem has created cement that incorporates carbon rather than releases it.

The advance could revolutionize construction.

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Electricity From Algae: Researchers Collect Electrons From Living Cells

April 14, 2010

Algae cultivation (and lipid extraction) has been the holy grail of the biofuels industry. Now these aquatic organisms – specifically their ability to give off tiny bursts of electrical current – could become the savior of dirty utilities as well.

The vision of huge tubs of algae consuming CO2 and nutrients from wastewater to produce biodiesel and bio-gasoline has drawn scores of scientists to experiment with the notoriously capricious plant.

The fact that algae are difficult to farm hasn’t kept the money from flowing. ExxonMobil last year poured $300 million into joint research with scientist Craig Venter’s Synthetic Genomics. Several months later, Sapphire Energy won $104.5 million in federal loan guarantees and grants from the Agricultural and Energy departments for a demonstration refinery in New Mexico. The Department of Energy earmarked another $44 million a month later in January for nationwide university and other research.

The current harvested so far is tiny, but the potential for bioelectricity from algae is compelling

Now a team of Stanford University researchers is exploring an alternative to the biofuels route. Their work is at an early stage. But its concept is startling: plant-based energy generated without the release of carbon.

The researchers, led by WonHyoung Ryu, now a professor in Korea, pierced each algae cell with a sharp nano-electrode probe made of gold. The probe collected electrons produced during photosynthesis, channeling a small current.

So far, the current from each cell is tiny, just one picoampere. (A trillion cells would be needed to equal the energy stored in a AA battery.) Still, the breakthrough is compelling.

“We believe we are the first to extract electrons out of a living plant cell,” Ryu said in a Stanford release. “This is potentially one of the cleanest energy sources for energy production.”

But it is not without difficulties. Most importantly, the cells died within one hour. Ryu theorizes they may have developed leaks where the probe punctured their membranes. They alternately may have run out of gas after their energy was stolen. The electrons transfer energy from the sun to protein inside the cells.

The research team, which published its work in the journal Nano Letters and included two members from the Carnegie Institution, hopes to change the design of the electrode to lengthen the life of the cells. It also conceives of using larger electrodes and bigger plants with larger chloroplasts, the area of the cell where photosynthesis takes place and water is split into oxygen, protons and electrons. That way, more electrons might be captured.

“We’re still in the scientific stage of the research,” says Ryu. But the potential is great. Electron harvesting has a 20 percent energy efficiency. Plants burned for fuel store only 3 to 6 percent of the sun’s solar energy.

While the work is at an early stage, perhaps it is time to coin the term “bioelectricity.”

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Posted by Mark Boslet

Cellulosic Ethanol Gains Environmentalist Support But Researchers Find First Parasites

April 2, 2010

Ethanol-based biofuel still faces plenty of hurdles.

Most of the fuel continues to be derived from corn in the United States and sugar cane in Brazil. This concentration is sparking concerns that U.S. agricultural land is shifting from food to fuel production at a time when developing countries still struggle to feed themselves. The problem will only worsen as ethanol plants expand to generate the vast volumes needed to make a dent in gasoline demand.

University of Illinois researchers found contamination in 85 samples of switchgrass and Miscanthus taken in six states

Adding to the travails are fears that developing countries will clear cut forests to replace the corp-bearing land lost in the U.S. and Europe to biofuel agriculture.

This is motivating groups such as the National Wildlife Federation to oppose corn-based biofuels. This week the federation urged Congress to favor second-generation cellulosic ethanol and asked for the elimination of tax incentives supporting corn farmers.

Not so fast! Cellulosic ethanol development is proceeding at a fast pace. Numerous companies are building pilot plants to ferment fuel from popular trees, switchgrass and other non-edible plants. But what they haven’t counted on is an explosion of plant parasite and other tiny organisms interested in feeding on these potentially lucrative fuel sources.

Late last month, the University of Illinois researchers reported they discovered the first parasite to appear in biofuel crops – in this case switchgrass and Miscanthus.

“Diseases and pests have the potential to cause significant constraints on biomass production, putting the crops at risk for reductions in biomass yield and quality,” said lead researcher and post-doctoral associate Tesfamariam Mekete.

The researchers looked at 37 samples of Miscanthus and 48 samples of switchgrass from Illinois, Iowa, Georgia, Kentucky, South Dakota and Tennessee. All the samples were contaminated.

“The high levels of nematodes found in our survey and the damage symptoms observed in infected roots suggest parasitism may contribute to the decline of biomass production,” Mekete said in a university publication.

Corn farmers, After decades of modern agriculture, know what to expect from pests and parasite. Cellulosic cultivation is still new. Time will tell whether farmers are prepared for the unexpected.

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Posted by Mark Boslet

GM And Energy Department Team Up On Jatropha Farming In India

March 31, 2010

General Motors has already invested in ethanol start-ups Coskata and Mascoma. Now it is throwing more effort behind biodiesel.

The formerly bankrupt automaker teamed up with the Department of Energy and will develop two new experimental jatropha farms in India. The five-year partnership will reply on funding from both organizations.

Goal is to find strains of jatropha that will grow on marginal lands in the U.S. and elsewhere

The aim is to identify new strains of the drought-resistant plant that can grow on marginal land in the U.S. and elsewhere to produce significant quantities of oil to convert to biodiesel. The oil comes from the seed of the weed-like plant, which is known for its ability to grow in sandy, gravelly soils. Strains of jatropha for the experiment have been developed through selective breeding and laboratory optimization.

Energy Secretary Steven Chu said he hopes the partnership will speed up efforts to turn jatropha into a commercially viable alternative to petroleum-based fuel. It will cultivate 408 acres of land in three locations, including in Kalol near GM’s India manufacturing plant.

GM has already begun testing jatropha-based biodiesel in its vehicles. The carmaker’s European division has a fleet of six cars running on jatropha blends. The company also used a 10 to 20 percent mixture to run vehicles in India several thousand miles.

GM’s biodiesel work began in India several years ago but on a much smaller scale than its development of ethanol.

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