Xethanol Now Defunct

This will be my last ever story on Xethanol. I have written a number of stories on them in the past. I wrote that their claims that they would be the first to produce commercial cellulosic ethanol were ludicrous. That was the gist of the interview I gave to Sharesleuth when they were writing their Xethanol exposé. I predicted that Xethanol would “offer up a litany of excuses and delaying tactics for why their cellulosic ethanol plant is not up and running.” I explained to several reporters that the technology agreements they touted to investors could be had for next to nothing, and in February of 2007 I predicted that Xethanol would eventually go bankrupt. I was sounding these warnings when the share price was $12. It eventually fell to well under $1.

You know where this is going, don’t you? I had failed to check in on Xethanol for a while, but today I did a search for the stock symbol, and got this: “No quote found for that symbol.” Hmm. So I searched Google News, and found this:

Xethanol changes name, energy focus

The self-proclaimed discredited cellulosic ethanol company Xethanol Corp. relaunched itself on Aug. 28 on the New York Stock Exchange as Global Energy Holdings Group Inc. and is ushering in what company executives hope will be new life for the company.

“We’re moving on from ethanol and the reason is – the business model doesn’t work,” Ames said. “With the price of corn and energy…we’ve lost a lot of money doing that. We’ve spent a lot of money in cellulosic research and nothing out there is really fruitful and will make a major economic impact on producing ethanol.”

And in another article, former Xethanol CEO David Ames made a very profound statement:

Ames is skeptical that cellulosic will change the U.S. energy system. He said difficulties associated with making the fuel will not be eased by making it in bigger batches.

You can scale widgets, but you can’t scale chemistry,” he said.

This is exactly what I keep trying to tell people who insist that cellulosic ethanol is going to proceed along a Moore’s Law path and scale up to displace significant quantities of gasoline. It’s not going to happen. The chemistry and physics are working against you.

I truly feel bad for Xethanol investors, but this is what can happen with overhyped technology. The investor who is out of their field of expertise can’t easily distinguish an overhyped company from a company with true potential. But that’s one reason I write this blog: To sniff out and expose the hypesters, while promoting the diamonds in the rough.

On a more positive note, their new direction (into methane) is a much more promising field. Biomass can be fermented to methane at a fraction of the expense and complexity that it takes to make cellulosic ethanol. This doesn’t mean they will be a commercial success, but their odds have gone from one in a million to one in a hundred.

8 thoughts on “Xethanol Now Defunct”

  1. Kudos to RR for his gimlet eye, when reviewing hyped enterprises.
    A quickie question from a layman: If it is easier to make methane from biomass (a process that happens naturally in landfills), then cannot we convert methane into methanol, and from there convert it into gasoline? Or is this set of steps even less worthy than biomass to ethanol?

  2. Benny,

    But why would you want to convert the methane to gasoline?

    Methane for all intents and purposes is natural gas. (Methane is the largest component of the hydrocarbon gases in NG.) Wouldn’t it be easier to convert more cars to run on natural gas (or methane)? We already know how to do that.

  3. Andrew:

    I guess the short answer is that we have something like 250 million cars/trucks in the US, and 200,000 gasoline stations, and hundreds of millions of conditioned consumers. A huge infrastructural investment.

    But hey, you raise a terrific issue, and surely fleets (UPS, beer trucks etc) could be converted to run on natural gas first.

    I don’t know. I am asking questions. If we can make natural gas from biomass, and run cars/trucks on it, and that is more efficient than ethanol, then by all means let’s forget the ethanol.

  4. But hey, you raise a terrific issue, and surely fleets (UPS, beer trucks etc) could be converted to run on natural gas first.

    Absolutely. Convert local fleets first. Convert long-haul trucks second — you only need to retrofit 2,000 truck stops instead of 200,000 gas stations. These steps reduce diesel demand while CAFE and plug-in hybrids reduce gasoline demand. We can initiate a permanent downtrend in oil consumption with minimal investment. This downtrend can hold oil prices low, keeping a few hundred billion per year in our own economy instead of shipping it to oil thugs. Massive bang for the buck on this front.

  5. Robert, you have mentioned Butanol in the past and Business Week just had an article today extolling its potential. Do you still see hope for Butanol?

    Also, I see a very odd disconnect in the forecasts for Algae. Some, including you, seem to have little, if any, hope for it, and that is understandable given the hype and the lack of tangible results. However, some coverage, albeit from sources aimed at the layman (e.g., the Renewable Energy podcast), have interviews with industry pundits who continually claim that, within short order, algae biofuels will be scaling up and at competitive costs to ethanol.

    Just wondering what your current thoughts are on butanol and algae?

    thanks in advance,

  6. “…interviews with industry pundits who continually claim that, within short order, algae biofuels will be scaling up and at competitive costs to ethanol.”

    Seeing how algae was the major bio-source for petroleum it should have great potential for bio-fuels.

    The only problem is figuring out a way to compress millions of years of free heat and intense pressure into a few weeks — and do it profitably.

    Unfortunately, it costs a lot in money and energy to compensate for the millions of years Mother Nature provided free.

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