Remember my story Coskata: Dead Man Walking? As I wrote in that essay six months ago:
I predict that Coskata’s suggestions that they will produce ethanol for less than $1/gal will look ridiculous in hindsight. The next few years will see a record amount of back-pedaling from most of the companies trying to establish a foothold in this space – and overpromising on their technology to do so.
Well, at the Wall Street Journal ECO:nomics Conference last week, Coskata CEO Bill Roe indicated that the company is having (recession-induced) troubles. Marc Gunther has the story:
GM’s woes: Bad news for clean energy
Talk to a banker and “all you get is a smile and a pat on the head,” Roe says. “There is no project finance today.”
Interestingly, Coskata, which is based outside Chicago, raised money as recently as December, reportedly getting a $40 million infusion from the Blackstone Group, the big private equity firm.
But GM, teetering on the verge of bankruptcy, didn’t pony up any dough. GM had announced its original investment in Coskata back in January, 2008, with some fanfare. Roe said then that the financing coming in from the auto giant is enough to make Coskata “a speed-to-market play.”
Now he’s waiting for a loan from the U.S. Department of Energy.
“That’s my only alternative at this particular point in time,” Roe says. “Absent getting that loan, we are stalled.”
This is exactly why you don’t overhype your technology. If you overhype, the expectations are high – so there can’t be any excuses for not delivering. As I said last year after the investment by GM was announced “GM can’t be wrong, can they?” (Checking GM stock; now trading at $1.76 which is slightly off its 52-week high of $24.24). If Coskata could really produce ethanol for under $1/gallon from biomass – as they claimed – they would be printing money. Yet they have now raised at least $76 million, and still no prospects for a commercial plant. Here is what Vinod Khosla had to say when he announced his investment in Coskata:
“As a nation, we’ve been dependent on oil for so long, we continue to think we will be dependent on oil to meet our future energy needs,” said Vinod Khosla of Khosla Ventures. “Scientists, technologists and entrepreneurs like Coskata are here to prove it doesn’t have to be this way. With the development of an economically-viable ethanol solution, Coskata has the propensity to change the types of fuel consumers find at the pump – providing fuel derived from widely-available national resources, rather than foreign imports.”
Coskata had estimated that a 100 million gallon plant would cost them $300 million, and later updated that to $400 million. I say that if Vinod Khosla is so confident of success, have him pony up the rest of the money. That’s a pretty big bet, but he has made some pretty bold claims about next generation biofuels.
While all that hype might help you pull in some investor (and taxpayer) money, it is going to make it a lot tougher for the next guy – who might have a better technology. But so many investors are going to get burned on second generations biofuels that in a few years nobody will want to touch this sector. Except for us taxpayers, of course.
CNN just published a related story:
It was thought these companies would transition from corn-based ethanol – which drew fire for being inefficient and driving up food prices – to “second-generation” ethanol made from cheaper non-food crops and trash. Now that seems dead in the water.
“I think they might not be around to see the second generation,” said Cristoph Berg, an ethanol analyst with commodity research firm F.O. Licht in Germany.
But for years the commercialization of these biofuels has been “just around the corner.” It appears it still is. While it is certainly possible to make second-generation ethanol today, it remains too costly to make it commercially viable.
“All the risk capital has disappeared,” said Nick Gogerty, a portfolio manager at the hedge fund Fertilemind Capital. According to Gogerty, people are no longer chasing risky projects hoping to make a lot of money, they’re looking to invest in projects where they hope their money will be safe. “If anything, we’re further away,” he said.
Is anyone surprised by any of this? When I point this out, some accuse me of being a naysayer, of lacking the vision of some of these second generation pioneers, or just not understanding the breakthroughs these companies are making. Maybe someday these people might figure out that I wasn’t so clueless about this after all.
19 thoughts on “Coskata on Life Support?”
RR any thoughts on this:
Fuelled by coffee
Mar 5th 2009
From The Economist print edition
Biofuels: A novel form of biodiesel is derived from an unusual feedstock that is more commonly used to fuel mental activities: coffee
Illustration by Pelle Mellor
RUNNING a diesel engine on a plant-based fuel is hardly a new idea. One of the early demonstrations carried out by Rudolph Diesel, the German engineer who invented the engines at the end of the 19th century, operated on pure peanut oil. Diesel fuel made from crude oil eventually won the day because it was easier to use and cheaper to produce. But new forms of biodiesel are now starting to change the picture again. One of them is derived from the remains of a drink enjoyed the world over: coffee.
Biodiesels are becoming increasingly popular. In America, Minnesota has decreed that all diesel sold in the state must contain 2% biodiesel (much of it from the crops grown by the state’s soya farmers). Biodiesel can also be found blended into the fuel used by public and commercial vehicles and by trains in a number of countries. Aircraft-engine makers are testing biofuel blends. As with other biofuels, the idea is that making fuel from plants, which absorb carbon dioxide as they grow, will produce fewer emissions than burning fossil fuels.
In the case of coffee, the biodiesel is made from the leftover grounds, which would otherwise be thrown away or used as compost. Narasimharao Kondamudi, Susanta Mohapatra and Manoranjan Misra of the University of Nevada at Reno have found that coffee grounds can yield 10-15% of biodiesel by weight relatively easily. And when burned in an engine the fuel does not have an offensive smell—just a whiff of coffee. (Some biodiesels made from used cooking-oil produce exhaust that smells like a fast-food joint.) And after the diesel has been extracted, the coffee grounds can still be used for compost.
The researchers’ work began two years ago when Dr Misra, a heavy coffee drinker, left a cup unfinished and noticed the next day that the coffee was covered by a film of oil. Since he was investigating biofuels, he enlisted his colleagues to look at coffee’s potential. The nearby Starbucks was happy to oblige by supplying grounds. The researchers found that coffee biodiesel is comparable to the best biodiesels on the market. But unlike biodiesels based on soya or other plants, it does not divert crops or land from food production into fuel production.
A further advantage is that unmodified oils from plants, like the peanut oil used by Diesel in the 19th century, have high viscosity and require engine alterations. Diesel derived from coffee is less thick and can usually be burned in an engine with little or no tinkering.
The diesel-extraction method for coffee grounds is similar to that used for other vegetable oils. It employs a process called transesterification, in which the grounds react with an alcohol in the presence of a catalyst. The coffee grounds are dried overnight and common chemical solvents, such as hexane, ether and dichloromethane, are added to dissolve the oils. The grounds are then filtered out and the solvents separated (to be reused with the next batch of coffee grounds). The remaining oil is treated with an alkali to remove free fatty acids (which form a soap). Then the crude biodiesel is heated to about 100ºC to remove any water, and treated with methanol and a catalyst, so that transesterification takes place. When cooled to room temperature and left to stand, the biodiesel floats up, leaving a layer of glycerine at the bottom. These layers are separated and the biodiesel is cleaned to remove any residues.
Although some people make their own diesel at home from leftovers and recycled cooking oil, coffee-based biodiesel seems better suited to larger-scale processes. Dr Misra says that a litre of biodiesel requires 5-7kg of coffee grounds, depending on the oil content of the coffee in question. In their laboratory his team has set up a one-gallon-a-day production facility, which uses between 19kg and 26kg of coffee grounds. The biofuel should cost about $1 per gallon to make in a medium-sized installation, the researchers estimate.
Commercial production could be carried out by a company that collected coffee grounds from big coffee-chains and cafeterias. There is plenty available: according to a report by the United States Department of Agriculture, more than 7m tonnes of coffee are consumed every year, which the researchers estimate could produce some 340m gallons of biodiesel. Time, perhaps, to pour another cup before refilling the car.
Except for us taxpayers, of course.
Not to worry. Your local prostitutian only has your best interests in mind. As if.
And then the money quote: GM can’t be wrong, can they?
Hey, prostitutians, save us all some money! Put them in Chapter 11 already!
RR has done yeoman work exposing the flaws of ethanol. It seems crazy the US is proposing ethanol as a serious sub for crude oil.
Obviously, we should be advancing much higher mpg cars/trucks, and mass transit/urban planning instead.
Except for palm oil, which is profitable even when not used as biofuel, there seems little real commercial future in biofuels.
However, the US farm lobby has suckled at the multiple Washington teats now for generations, and they will not give up ethanol.
Farmers have given up a subsidy since the Dust Bowl.
Ironically, our farms are the most heavily regulated and subsidized sector of our economy, probably topping even health care and finance. It is socialism in action. Yet people always praise our farmers as the world’s most productive. Go figure.
That’s a great scheme: It’s based on a waste product, so no additional resources are required to produce it (as the article implies).
It also demonstrates a larger principle: we need to look at recovering both the energy and nutrients from waste biomass. As the article states, you can still make compost from the post-lipid-extraction residue. Why be satisfied with compost, when you can get both fuel and compost?
One minor quible I would have is the choice of technology: why make biodiesel, if you can produce hydrocarbons? The most efficient scheme may be to simply sell the coffee grinds to Exxon…
What I bet RR would point out (if I may be so brave) is that 340 mga is roughly 0.1% of this country’s oil consumption.
So while it is a great scheme environmentally speaking, we are going to need several hundred of these before we make a dent.
I put coffee grinds from work in my vegetable garden. When I carry the grinds in a plastic bag, it looks I did doggie duty.
Seriously, collecting the grinds might eat more energy than produced. Maybe if the trucks that delivered coffee to Starbucks etc also collected grounds…
The only energy problems in the US are political myths. There is no better problem for a president to have than one with no ramifications for failure.
Starting with my area if expertize. Making electricity safely, economically, and environmentally friendly is not a problem. For those that are confused about this I give you Duke, PP&L, AEP, Exelon, TVA, FP&L, ENTERGY, Progress ans so forth.
For those who want to exclude fossil fuels, nuclear, and hydroelectric; you have a problem. Al Gore the energy pig will have to wind a better engineer than me to make wind and solar work. I am a good enough engineer to make wind and solar work to meet my needs, it the energy pigs like Al Gore that make the task impossible. Give me a screw driver and I will be able to teach Al Gore conservation. If I pop enough breakers out of his panel and he will only have a frig and two rooms supplied with electricity. That would be enough power to make about 5 billion folks think they were lucky.
Now for transportation fuel. I have read the NATIONAL ENERGY POLCY, May 2001. Clearly the US has the natural resources to be energy independent. As a result of political choices, we import increasing amounts. Clearly, if we do not want to drill domestically but want to import less , biofuels is oen of the solutions.
So RR, I have listed some of the companies that are good at making electricity. Please list who is good in the US at making ethanol and why.
Focus on the positive and what works.
We reported on this too over at Earth2Tech.com:
Check it out.
We reported on this too over at Earth2Tech.com:
Thanks Katie. That’s a well-written story you put together. I know I am few days behind on this. I have had it in my queue for several days, but there were several other stories I wanted to get out there first.
Al Gore the energy pig will have to wind a better engineer than me to make wind and solar work.
This is where you have a blind spot. It is the same for ethanol. Wind and solar works, just like ethanol works. It’s just that they don’t work in the free market. You see this for wind and solar, but seem to think the same doesn’t apply to ethanol.
Please list who is good in the US at making ethanol and why.
You asked me to be precise in my language yesterday, so I am going to ask for the same. What does “good” mean? As far as I am concerned, lots of companies are quite adept at making ethanol. None of them would survive if the mandates and subsidies were taken away. Before we had mandates and subsidies, we didn’t make our ethanol out of corn (except for maybe small, localized operations with special circumstances).
Now Brazil doesn’t need mandates and subsidies to make ethanol out of sugarcane, because it is a lot more efficient to do so (and they have dirt cheap labor).
Please list who is good in the US at making ethanol and why.
Here is your complete list:
[The list will automatically update every 24 hours]
Ethanol is a terrible fuel, Kit, and as an engineer you should be one of the first to figure that out. If biofuels ever take off, it will be either Fischer-Tropsch hydrocarbons, or higher alcohols (C4 and up) produced by similar technology.
“You asked me to be precise in my language yesterday, so I am going to ask for the same. What does “good” mean? As far as I am concerned, lots of companies are quite adept at making ethanol.”
So please be so kind RR as to tell me about a few of the best in the US and what performance indicators this based on.
So please be so kind RR as to tell me about a few of the best in the US and what performance indicators this based on.
If you are asking in the context of who performs well inside the system of mandates and subsidies we have in place, I would say that Poet sets the standard. They have demonstrated great growth, and have mostly avoided the financial troubles that have so many producers flirting with bankruptcy. They have enough additional cash that they are investing in research on 2nd generation ethanol.
Would they survive if the mandates and subsidies were pulled? No, I don’t think so.
It’s sort of like if I asked you which solar firms are some of the best in the U.S. While I know that you have been critical of the viability of solar, you would have to acknowledge that with the support systems we have in place, some are doing well. Pull that support, and they go bankrupt. So the answer to the question is seriously dependent on the context.
Thanks for the information Poet ethanol
Making and distributing electricity is fundamentally different than producing a liquid transportation fuel that can be stored.
I also frequently point out those that do a good job of generating electricity with solar like.
Tucson Electric Power (Springerville Generating Station): http://www.greenwatts.com/pages/SolarOutput.asp )
“While I know that you have been critical of the viability of solar, “
No, I am a supporter of state RPS to promote renewable energy generation. However, I am critical of those like who make irresponsible statements about the viability of wind and solar. How many times do I have to state that we should keep building wind, solar, and other renewable energy projects as fast as we can.
However, I am critical of those like who make irresponsible statements about the viability of wind and solar. How many times do I have to state that we should keep building wind, solar, and other renewable energy projects as fast as we can.
I need some clarification here. If you don't think wind and solar are viable, why would you support building wind and solar projects?
I think ethanol is a false solution – and I think statements about ethanol's contribution have been frequently irresponsible. Thus, I don't support building ethanol plants as fast as we can. Instead of using natural gas to make ethanol, just use the natural gas directly. AT&T just announced the largest ever investment into CNG vehicles, which is a much more efficient usage of our natural gas:
AT&T to invest up to $565M in natural gas, hybrid vehicles
“If you don't think wind and solar are viable, why would you support building wind and solar projects?”
RR is putting words in my mouth. Every MWh produced with wind and solar is a MWh not produced with natural gas. That is a good thing. Wind and solar can not replace base load generation.
I checked out the Poet ethanol website. I did not catch any false statements or irresponsible statements. Ethanol is a real solution that I particularity like because of my background in corn country. Furthermore, it takes no action on my part to particapate.
Using natural gas as a transportation fuel works too. As long as we increase domestic production to meet the need instead of importing LNG.
I can get my head around many solutions. I see not reason to reject a solution based on weak criteria. I have quested many times RR use of criteria like efficiency.
“AT&T would initially focus its effort on a limited number of states, including California, Oklahoma and Texas, where there are more natural-gas fueling stations.”
Sounds like a good idea to me. Just like it sounds like a good idea for Minnesota to focus on wind and corn.
“A company spokeswoman said the company would probably benefit from a tax credit of $8,000 per vehicle.
Pickens has lobbied for $28 billion in federal funds to help convert 380,000 18-wheel trucks to run on compressed natural gas.”
That is $75k per truck. Can we say Pickens scam.
It just amazes me that RR is okay with huge subsidies for Texas and Oklahoma, BTW where is RR from? I do not have a problem with this at all. I think promoting what you do where you live is okay. There is nothing dishonest about it.
RR is putting words in my mouth.
No, I asked for clarification. If your position is, “I support wind and solar, but just think the potential is often overstated”, then that’s clear enough.
I checked out the Poet ethanol website. I did not catch any false statements or irresponsible statements.
Nor did I suggest false/irresponsible statements had come from them. But some very influential people have grossly exaggerated ethanol’s potential, which has led to throwing a lot of taxpayer money down black holes.
It just amazes me that RR is okay with huge subsidies for Texas and Oklahoma, BTW where is RR from?
Now who is putting words in someone's mouth? I haven't endorsed Pickens' plan, so your accusation has no merit. I pointed out that AT&T was making a big investment in CNG, something I have advocated for a long time as a better usage of our natural gas.
Second, presuming I had advocated it, that $75,000 is for 18-wheelers, which are big-ticket items that are currently running on imported oil. But again, I never endorsed it, so your charges are misdirected.
Finally, where am I from? I haven't been in 1 place for more than 3 years in more than 20 years. I have spent the better portion of the last dozen years in Europe. So I really don't feel like I am from anywhere anymore. And I certainly have never advocated subsidies for Texas and Oklahoma.
Now take a step back and note the tone that you set is beginning to degenerate. Here you have accused me of putting words in your mouth when I asked for a clarification. Then you turned around and actually did put words in my mouth. So think a bit more carefully about what you write if you want to maintain a civil discourse.
Kit P said…
No, I am a supporter of state RPS to promote renewable energy generation.
However, I am critical of those like who make irresponsible statements about the viability of wind and solar.
How many times do I have to state that we should keep building wind, solar, and other renewable energy projects as fast as we can.
The fact that wind and solar don’t get built without subsidies or mandates makes it clear that they are not viable.
They are also regressive policies that have a larger financial impact on the poor.
Renewable portfolio standards are nothing more than corporate rent seekers like GE gaming the system to force utility customers to give GE more money.
Bad policy from economic justice standard and engineering standards.
If you are right about the engineering of renewable energy you will not have to worry about the cost. Renewable energy is a small fraction of mix. Therefore the cost is not significant to the price of electricity as a whole.
Ethanol is a real solution that I particularity like because of my background in corn country.
Can you be a bit more precise? Why is ethanol a real solution? Seems like a fake to me. Consider:
1. Producing ethanol by fermentation will always have low efficiency, due to the energy requirements for distillation.
2. Ethanol absorps water. Problems in storage, transportation and use. Problems everywhere.
3. Due to its low energy density, you need 1.5 gallons of ethanol for every gal of crude oil-based fuel you seek to replace. That adds up quickly.
4. Evaporative losses cause pollution and reduces efficiency (further).
And, further to #1, if you go an alternative route (like gasification) to can produce a better fuel, like butanol (and higher alcohols) or hydrocarbons.
I see not reason to reject a solution based on weak criteria. I have quested many times RR use of criteria like efficiency.
Or do you prefer to ignore efficiency, because it makes ethanol look bad?
You can’t seriously be suggesting that efficiency is ignored, can you?
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