Coskata Hype

Several noteworthy energy stories in the past 24 hours, so a few quick posts.

First up is the Coskata news that has everyone talking:

GM Takes Stake in Small Biofuels Firm

Bill Roe, president and CEO of 18-month-old Coskata, said that at full production the company will be able to make ethanol for less than $1 a gallon. He said pump prices should dramatically reflect widespread production of the cheaper new ethanol by 2015 or 2016, when it expects to be building 20 to 25 fuel plants a year.

David Cole, chairman of the independent Center for Automotive Research, which receives a small part of its funding from auto companies, says GM’s move reinforces that U.S. carmakers are serious about developing alternative fuels. He calls the coming growth of cellulosic ethanol “a big deal.”

“Corn-based ethanol has never really been viable, it’s been driven by politics,” he said. “Once you’re into cellulosic or non-food biofuels, the resource base is very, very large and you’re talking about fuel at a buck a gallon. It changes the whole game.”

A growing number of biotechnology companies have been working to make cellulosic ethanol — long more costly than government-subsidized, corn-based ethanol — profitable.

Coskata’s three-step system — sending feedstock through gasification, a bioreactor and an ethanol recovery process — uses proprietary microorganisms and patented bioreactor designs that it is fine-tuning in its offices and laboratories in a Warrenville office park. It says the process is more energy-efficient than existing methods and will enable fuel to be made from a variety of non-food sources, even old tires.

The company says it can make more than 100 gallons of ethanol per ton of dry material, uses a third to a quarter the amount of fresh water for ethanol today and reduces greenhouse gas emissions by as much as 84 percent compared with conventional gasoline.

“We think that the Coskata process brings the first practical cellulosic opportunity to the market,” said GM’s Mark Maher, executive director of powertrain integration.

The first practical cellulosic opportunity? I thought that’s what Range Fuels was doing? Anyway, this story doesn’t mention it, but this is another Vinod Khosla backed venture. Is it legit? I have read through their web pages, and most of their technology has been done by others (like Range Fuels). If they can produce ethanol at high selectivity, that will be a breakthrough. But I will say again: Once you have syngas, I have no idea why you would put it in water and ferment it. Chemically convert it without the water, and avoid the wet purification step.

I will say that the process is over-hyped on their web page. They don’t even have a demonstration unit, and I can promise you the following statement from their Vision page is inaccurate:

Using its proprietary microorganisms and patented bioreactor designs, Coskata will produce ethanol for under US $1.00 a gallon anywhere in the world, from almost any input material.

Think about that. Anywhere in the world? My guess is that unless they found someone to pay a steep tipping fee to get them to take biomass, there is nowhere in the world that they will be able to make ethanol via gasification for under $1/gal.

I am not trying to be a naysayer – and I wish them all the luck in the world – but we heard all this before with TDP – and we know how that turned out. Often if you haven’t built a plant, you tend to underestimate your costs. My prediction is that this is what they will discover as they scale up. But even if they can produce ethanol from gasification at $2/gal, in the long run that will be pretty good.

Are they for real? Not enough information to say. Are there the classic signs of overhype? Definitely.

20 thoughts on “Coskata Hype”

  1. Oh, come on Robert, don’t you start to hyperventilate when you hear about proprietary microorganisms and patented bioreactor designs? What is wrong with you?

    PS: The proprietary microorganisms and patented bioreactor designs are great when you are making pharmaceuticals. They’re OK when you are producing food. When you talk about fuel, they are out of their league.

  2. RR said, “My guess is that unless they found someone to pay a steep tipping fee to get them to take biomass, there is nowhere in the world that they will be able to make ethanol via gasification for under $1/gal.”

    Robert, I think you are absolutely right. In fact, this underscores the difficulty of getting enough feedstock at a reasonable price to make large-scale biofuel operations viable. I doubt anyone else here agrees with me, but I stand by my prediction that the difficulty of getting feedstock will kill off the large-scale biofuel industry.

  3. I am confused by the combintion of gasification and bio-reaction. But if the bio reaction and separation were a cheaper way to turn syn gas into fuel, why would you engineer organisms to make ethanol, why not a better fuel? Butanol or an LS9 type fuel, better fuel, easier separation.

    Does Khosla ever get all the smart guys from his various alt-energy companies together in one room for a poster session. I bet they could come up with 5 or 6 ideas for new and improved bio-fuel companies.

  4. Some comments I just made via e-mail to a guy who is doing some alcohols work:

    Some of your comments are along the same line as my own thoughts. I knew the Arkansas guys when I was at A&M, and it never seemed to make sense to me to put syngas in water. Like you, I thought you should do a thermochemical reaction and keep the water away. Personally, I think they are doing some funny things with their economics. I can draw up on a board a scheme in which I get tipping fees to take biomass, use part of it to run a boiler so my steam is free, and then use the rest to gasify. However, I am overlooking a number of complexities, and ignoring very significant capital costs to pull that off. Plus, good tipping fees don’t grow on trees.

    I think these guys are way overpromising, and I hate to see them sucking up the funding that could go toward better processes. What’s going to happen is that a lot these folks won’t be able to deliver, and then it will be much more difficult for more promising technologies to get funded.

    Cheers, Robert

  5. Does syngas contain CO? Wouldn’t that pretty much poison anything that came in contact with it.

    No. While CO is very toxic to humans and many catalysts, some organisms can process it, and some catalysts can handle it. The problem though is that the syngas is water-free, and then they dump it into water and have to remove the water. But you can convert syngas directly into alcohol or diesel.

    RR

  6. I don’t think that given the next best alternative fuel being $2.50-$3.00/gal, that anyone would actually offer fuel at a 60-70% discount. I would expect that it is offered at just slightly below (ay 5-10%) current market prices for gasoline. The thing about investors is they usually like to get returns on investment.

    However you raise a valid point – why produce syngas, just to add another unit operation?

    I think that it’s just still too cheap to drill a hole in the ground, get hydrocarbons, crack and distill/fractionate. It makes all the shenanigans surrounding this whole biofuels thing look kind of silly.

  7. There is plenty of municipal yard waste being generated in close proximity to Coskata headquarters in Warrenville, Il. How this waste is disposed of and if Coskata can divert a portion of it is unknown.

    Of course, Warrenville is already built up and landlocked so I doubt any large scale production will be happening there.

  8. Don’t put the cart in front of the horse yet (unless you are the stock traders).

    If they can just turn saw dust/dead leaves into fuel at the price they claimed, it is quite an engineering feast.

  9. Re: feedstock problem. What about algae? Or some GM-algae creation? Would the ability to farm in three dimensions help create the appropriate feedstock density to solve the feedstock availability problem?

  10. I think the important thing to remember is that we are entering a period of alternative energy brainstorming that will leave some ideas by the wayside and others as true alternatives to the oil-military-industrial-pharmacetical-insurance complex. I have faith in American ingenuity; I am slightly concerned that the oil industry will try and kill this initiative by flooding the market with “suddenly” cheap oil. And lest we forget, energy self-sufficency was just a crazy hippy idea that became a casualty as a result of the intense war on liberalism still being waged to this day by the right wing morons currently in power.

  11. This sounds exciting!
    I think burning coal to generate ethanol should be ok if the pollution is less compared to Oil.
    Also it can keep the oil prices in check.

    Can Coskata process use raw crushed Oil Shale ? If somehow this is made possible , US Could be 100% independent of Oil.
    Everyone knows that US has World largest reserves of Oil shale, even greater than the Oil reserves in the middle east.

  12. Oil is more plentiful and cheaper than cellusic ethanol. IT is also less destructive to the environment. A little oil rig is less intrusive than a major stripping of the land of biomass. Liberlas don’t understand economics. Energy policy is fundamentally an economics issue. Liberals are unqualified to set energy policy. The failures of liberal energy policy have a real-world effect:poverty.

  13. Louisiana Enacts the Most Comprehensive Advanced Biofuel Legislation in the Nation
    __________________

    Advanced Biofuel Industry Development Initiative Benefits Consumers, Farmers and Gas Station Owners with Localized “Field-to-Pump” Strategy

    Baton Rouge, LA (September 25, 2008) – Governor Bobby Jindal has signed into law the Advanced Biofuel Industry Development Initiative, the most comprehensive and far-reaching state legislation in the nation enacted to develop a statewide advanced biofuel industry. Louisiana is the first state to enact alternative transportation fuel legislation that includes a variable blending pump pilot program and a hydrous ethanol pilot program.

    Field-to-Pump Strategy
    The legislature found that the proper development of an advanced biofuel industry in Louisiana requires implementation of the following comprehensive “field-to-pump” strategy developed by Renergie, Inc.:

    (1) Feedstock Other Than Corn
    (a) derived solely from Louisiana harvested crops;
    (b) capable of an annual yield of at least 600 gallons of ethanol per acre;
    (c) requiring no more than one-half of the water required to grow corn;
    (d) tolerant to high temperature and waterlogging;
    (e) resistant to drought and saline-alkaline soils;
    (f) capable of being grown in marginal soils, ranging from heavy clay to light sand;
    (g) requiring no more than one-third of the nitrogen required to grow corn, thereby reducing the risk of contamination of the waters of the state; and
    (h) requiring no more than one-half of the energy necessary to convert corn into ethanol.

    (2) Decentralized Network of Small Advanced Biofuel Manufacturing Facilities
    Smaller is better. The distributed nature of a small advanced biofuel manufacturing facility network reduces feedstock supply risk, does not burden local water supplies and provides for broader based economic development. Each advanced biofuel manufacturing facility operating in Louisiana will produce no less than 5 million gallons of advanced biofuel per year and no more than 15 million gallons of advanced biofuel per year.

    (3) Market Expansion
    Advanced biofuel supply and demand shall be expanded beyond the 10% blend market by blending fuel-grade anhydrous ethanol with gasoline at the gas station pump. Variable blending pumps, directly installed and operated at local gas stations by a qualified small advanced biofuel manufacturing facility, shall offer the consumer a less expensive substitute for unleaded gasoline in the form of E10, E20, E30 and E85.

    Pilot Programs
    (1) Advanced Biofuel Variable Blending Pumps – The blending of fuels with advanced biofuel percentages between 10 percent and 85 percent will be permitted on a trial basis until January 1, 2012. During this period the Louisiana Department of Agriculture and Forestry Division of Weights & Measures will monitor the equipment used to dispense the ethanol blends to ascertain that the equipment is suitable and capable of producing an accurate measurement.

    (2) Hydrous Ethanol – The use of hydrous ethanol blends of E10, E20, E30 and E85 in motor vehicles specifically selected for test purposes will be permitted on a trial basis until January 1, 2012. During this period the Louisiana Department of Agriculture and Forestry Division of Weights & Measures will monitor the performance of the motor vehicles. The hydrous blends will be tested for blend optimization with respect to fuel consumption and engine emissions. Preliminary tests conducted in Europe have proven that the use of hydrous ethanol, which eliminates the need for the hydrous-to-anhydrous dehydration processing step, results in an energy savings of between ten percent and forty-five percent during processing, a four percent product volume increase, higher mileage per gallon, a cleaner engine interior, and a reduction in greenhouse gas emissions.

    Act No. 382, entitled “The Advanced Biofuel Industry Development Initiative,” was co-authored by 27 members of the Legislature. The original bill was drafted by Renergie, Inc. Representative Jonathan W. Perry (R – District 47), with the support of Senator Nick Gautreaux (D – District 26), was the primary author of the bill. Reflecting on the signing of Act No. 382 into law, Brian J. Donovan, CEO of Renergie, Inc. said, “I am pleased that the legislature and governor of the great State of Louisiana have chosen to lead the nation in moving ethanol beyond being just a blending component in gasoline to a fuel that is more economical, cleaner, renewable, and more efficient than unleaded gasoline. The two pilot programs, providing for an advanced biofuel variable blending pump trial and a hydrous ethanol trial, established by the State of Louisiana should be adopted by each and every state in our country.”

    State Agencies Must Purchase or Lease Vehicles That Use Alternative Fuels
    Louisiana’s Advanced Biofuel Industry Development Initiative further states, “The commissioner of administration shall not purchase or lease any motor vehicle for use by any state agency unless that vehicle is capable of and equipped for using an alternative fuel that results in lower emissions of oxides of nitrogen, volatile organic compounds, carbon monoxide, or particulates or any combination thereof that meet or exceed federal Clean Air Act standards.”

    Advanced Biofuel Price Preference for State Agencies
    Louisiana’s Advanced Biofuel Industry Development Initiative provides that a governmental body, state educational institution, or instrumentality of the state that performs essential governmental functions on a statewide or local basis is entitled to purchase E20, E30 or E85 advanced biofuel at a price equal to fifteen percent (15%) less per gallon than the price of unleaded gasoline for use in any motor vehicle.

    Economic Benefits
    The development of an advanced biofuel industry will help rebuild the local and regional economies devastated as a result of hurricanes Katrina and Rita by providing:
    (1) increased value to the feedstock crops which will benefit local farmers and provide more revenue to the local community;
    (2) increased investments in plants and equipment which will stimulate the local economy by providing construction jobs initially and the chance for full-time employment after the plant is completed;
    (3) secondary employment as associated industries develop due to plant co-products becoming available at a competitive price; and
    (4) increased local and state revenues collected from plant operations will stimulate local and state tax revenues and provide funds for improvements to the community and to the region.

    “Representative Perry and Senator Gautreaux have worked tirelessly to craft comprehensive advanced biofuel legislation which will maximize rural development, benefit consumers, farmers and gas station owners while also protecting the environment and reducing the burden on local water supplies,” said Donovan. “Representative Perry, Senator Gautreaux, and Dr. Strain, Commissioner of the Louisiana Department of Agriculture and Forestry, should be praised for their leadership on this issue.”

    About Renergie
    Renergie was formed on March 22, 2006 for the purpose of raising capital to develop, construct, own and operate a network of ten ethanol plants in the parishes of the State of Louisiana which were devastated by hurricanes Katrina and Rita. Each ethanol plant will have a production capacity of five million gallons per year (5 MGY) of fuel-grade ethanol. Renergie’s “field-to-pump” strategy is to produce non-corn ethanol locally and directly market non-corn ethanol locally. On February 26, 2008, Renergie was one of 8 recipients, selected from 139 grant applicants, to share $12.5 million from the Florida Department of Environmental Protection’s Renewable Energy Technologies Grants Program. Renergie received $1,500,483 (partial funding) in grant money to design and build Florida’s first ethanol plant capable of producing fuel-grade ethanol solely from sweet sorghum juice. On April 2, 2008, Enterprise Florida, Inc., the state’s economic development organization, selected Renergie as one of Florida’s most innovative technology companies in the alternative energy sector. By blending fuel-grade ethanol with gasoline at the gas station pump, Renergie will offer the consumer a fuel that is more economical, cleaner, renewable, and more efficient than unleaded gasoline. Moreover, the Renergie project will mark the first time that Louisiana farmers will share in the profits realized from the sale of value-added products made from their crops.

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