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There’s a bad moon on the rise for Imperium Renewables. The biodiesel maker has lost a major contract that was one of the lynchpins holding the company together, according to the Seattle PI’s John Cook, who has been chronicling the company’s rise and fall.

Imperium, as you may recall, is a biofuel startup founded in 2004. It hit a growth streak in 2006 and secured a massive $113 million investment the following year, as hype grew around the biofuel market. Imperium’s investors fast-tracked it to an IPO, which was announced three months later, even as losses at the company mounted. Another half-year later, Imperium had lost its CEO and put its IPO plans on ice.

The company’s rocket-ride to fame and fortune — followed by the attendant explosion — draws an interesting contrast with A123 Systems, an early entrant on the cleantech scene. In fact, it’s debatable as to whether A123 could have been classified as “cleantech” at all when it started. As Rob Day recounts, the company was founded in 2001 at MIT with the idea of making superior lithium-ion batteries. Not for cars, but for power tools.

That’s not necessarily a small market, but compared to A123’s newer ambition, supplying cells for electric vehicles, it certainly held less potential. Regardless of the end market, it was essentially a technology play: Could the company produce a high power, safe battery, better than existing ones? The company’s valuation rose slow and steadily as it reached milestones. By 2006, its fundings valued it at $125 million.

Contrast that with Imperium Renewables, which was hyped from its very first outside investments. Investments came fast and furious, and within a year or two of its first funding, Imperium was saying it was worth $1 billion, through the planned IPO.

A cynical observer might call Imperium’s sharp upward trajectory, and the massive hype surrounding the company in its early days, a cash grab by VCs hungry to capitalize on a booming new market. Of course, there are plenty of possible explanations for Imperium’s failure to shine, like the volatile markets for both fuel and feedstocks, not to mention the uncertainty of any new technology. But it’s certainly a very different story from A123, which limited its initial ambitions, and thereafter plodded, over a period of seven years, to its own current $1 billion valuation (no word on the value of the IPO yet, but chances of it failing to happen look low).

Count on seeing some of the other hyped entrants flaming out sooner than most of the successes come through. For instance, consider the developing story of Solyndra, which Green Light is tracking. Despite filing multiple patents, the secretive (but very heavily funded) company’s key scientists and early employees seem to be fleeing.

And in another hyped area, cellulosic ethanol, Robert Rapier has run the numbers on Coskata, the cellulosic ethanol startup that came out of nowhere earlier this year with plans to take over the world, and pronounces it a “Dead Man Walking”, based on the costs of its pilot plant. Coskata’s founders and investors, one of whom I recently met with, would strongly disagree, but it certainly fits the profile of a high-flying, fast-moving startup making a very large bet.

Meanwhile, at the single giant refinery Imperium operates, staff have continued to show up for work, but shipments have not been arriving for refining, according to Cook. For the moment, it’s one to keep on deathwatch.

[Photo: Imperium's opening day, by Flickr user skidrd]

Drawing a sharp contrast with his Democratic rival, John McCain today assailed government subsidies for ethanol production and unveiled a set of proposals aimed at encouraging the development and mass adoption of electric vehicle technologies.

McCain would provide a $5,000 tax credit to consumers who buy zero-emissions vehicles and proportionately smaller tax credits for low-emissions vehicles, like hybrids. In addition, he said he would award a $300 million bounty for a car battery that can “leapfrog” existing technologies.

Turning to biofuel production, he said the federal government should eliminate subsidies for domestic corn-based ethanol and the tariffs placed on Brazilian sugarcane-based ethanol to level the playing field. Obama, who has surrounded himself with advisers with ties to the ethanol industry, supports the continuation of government subsidies and tariffs, arguing that both are necessary to help the U.S. become energy independent.

According to energy experts, sugarcane is a much more efficient source of ethanol. Not only does it create more than 8 units of energy for every unit used to produce it — corn ethanol, by contrast, creates less than 2 units for 1 unit of production — it is also grown in tropical countries where land prices are much cheaper. Like corn ethanol, however, it has also received its fair share of criticism for contributing to deforestation in the Amazon.

Obama is also a strong advocate of second generation biofuels, like cellulosic ethanol, and wants to invest $150 billion in clean energy R&D to develop advanced biofuels and other low-emissions technologies — including, presumably, electric cars. McCain’s energy plan is not nearly as ambitious in its scope and, unlike Obama’s, would not provide tax incentives for renewable energy.

While they may be more desirable than hybrids, electric cars are still much too expensive for most consumers and will likely remain so for a few years (we all wish we could afford Teslas). Also, the fact that most electric cars have a shorter range and low top speed could detract from their appeal. For now, plug-in hybrids seem like the more promising option, with major automakers like GM and Toyota set to roll out their own models within the next 2 years and firms like V2Green, Epyon and Delphi developing technologies to improve their performance.

And though corn ethanol is on its way to becoming universally loathed, in large part due to accusations that it raises food prices, the ethanol industry will continue to expand thanks to the raft of subsidies enacted by the 2008 farm bill and rising demand for flex-fuel vehicles.

Cellulosic ethanol and other second generation biofuels, which are being developed by a rapidly growing field of well-capitalized start-ups (Coskata, Range Fuels and Mascoma, to name a few), probably won’t become major players until a few years from now and, even then, likely won’t account for a significant share of the energy market.

No other energy crop has been as closely associated with second generation biofuels as switchgrass. The subject of much fawning coverage in the popular press — though it has yet to be successfully converted into cellulosic ethanol — switchgrass will soon have the chance to provide its renewably energy bonafides in Oklahoma.

The Oklahoma Bioenergy Center (OBC), a partnership between Oklahoma University, Oklahoma State University and the Samuel Roberts Noble Foundation of Ardmore, will plant the world’s first production-scale switchgrass demonstration field near Guymon within the next 45 days. The Center also plans on planting production-scale fields for sorghum, another cellulosic energy crop.

Switchgrass is a perennial, or year-long, grass that can be grown on marginal lands and that is naturally drought-resistant; it is also a self-seeding crop, which means it doesn’t need to be re-seeded or planted after being harvested, and requires little to no fertilizer. Most importantly, it won’t produce the backlash that other crops, such as corn and soybeans, have done by displacing valuable agrarian land.

Initial tests conducted by the Department of Energy have demonstrated that its energy output is 20 times better than that of corn. It also found that a metric ton of switchgrass could produce the equivalent of 100 gallons of ethanol. Research done by scientists at Auburn University largely corroborated the DOE’s results, showing that an acre of switchgrass could yield up to 1,500 gallons of ethanol every year. The crop was highlighted for its alternative energy potential in President George W. Bush’s 2006 State of the Union address.

The demonstration fields will allow companies and scientists to experiment with new production and harvesting techniques and to compare switchgrass’ properties as a renewable fuel to those of feedstock biofuels. Officials from the OBC hope the findings from this experiment directly carry over into commercial-scale production of the energy crop.

Abengoa Bioenergy, a Spanish renewable fuels company, will use switchgrass from these fields in its Hugoton, Kansas, biorefinery, which is expected to be up and running in 2010. Companies like Mascoma, Range Fuels and Coskata have been capitalizing on the enthusiasm for cellulosic ethanol, raising record sums and forming partnerships with some industry heavyweights, like GM.

Another hardy energy crop that has been making waves is jatropha, a wild plant whose seeds are being used by several countries in Asia, including the Philippines and India, and Africa to produce biodiesel. It’s not hard to see why: Like switchgrass, the plant is drought-resistant, requires little fertilizer and can be grown practically anywhere — in deserts, on rock piles and even on trash. Its seeds, which contain up to 40% oil, are crushed and processed to produce the biodiesel; the residue can be processed into a form of biomass suitable to power electricity plants.

Seed yield estimates range from 1,500 to 2,000 kilograms per hectare — the equivalent of 540 to 680 liters of extractable oil per hectare. A recent Goldman Sachs analysis cited the crop as one of the most promising candidates for future biodiesel production. Last June BP announced it would invest $90 million in a joint venture with D1 Oils, a British firm, that specializes in jatropha.

Some questions still remain about jatropha’s viability as a long-term source of biodiesel, however: Because none of the jatropha species have yet been successfully domesticated, their oil output tends to be very unpredictable and — more often than not — much lower than expected. And even though it can be grown without water, it typically does much better with it — potentially negating some of its cost benefits. The worry among some analysts and academics is that farms could lose a bundle on jatropha plantations if their crop yields turn out flat.

Furthermore, jatropha takes about 3 years to grow and, in countries like India, where land is scarce, has been difficult to find — even on marginal lands, which are typically inaccessible by vehicle and, therefore, unable to support commercial-scale production facilities. And, while not necessarily relevant to its production capacity, jatropha’s seeds and leaves are poisonous to humans. Australia’s government banned it in 2006, citing its health risks and invasive nature.

In spite of this, jatropha growth is expected to remain strong as more farmers in developing countries convert otherwise unusable land to plantation fields — a trend that is likely to persist as global food prices, fueled in part by the biofuel boom, continue their rise. Oklahoma’s switchgrass demonstration should help businesses and local governments determine whether their investments in cellulosic energy will be worth it.

Coskata, a next-generation ethanol startup, has come back up in the news again with an announcement that it’s partnering with ICM to design and build a commercial-scale ethanol plant.

We covered Coskata less than a month ago when it received a strategic investment from General Motors. Reaching another major partnership so quickly is remarkable, and indicates that large, established companies see promise in Coskata’s technology as a more efficient competitor to cellulosic ethanol companies like Range Fuels (coverage here).

For those not familiar with ICM, it’s a company that has its hand in the development of the majority of the ethanol plants around the country, providing equipment like dryers and bio-methanators as well as engineering services. It does well even when ethanol doesn’t because it’s focused more on construction, which is typically booming.

However, to keep ahead of the curve, ICM needs to make itself central to the next generation of ethanol production, including cellulosic ethanol technologies and others like Coskata. It also recently received some Federal funding toward building a small cellulosic ethanol plant in Missouri.

Coskata itself relies on a gasification technique that produces a syngas later converted by bacteria to ethanol (see diagram at bottom). The aim is to produce For more on different methods, see our recent post on Zeachem.

Based on the company’s previous announcements, the plant is intended to produce between 50 and 100 million gallons per year, which is about the average range for current corn ethanol plants. It remains to be seen whether the project can be financed entirely from existing funds and partnerships or if Coskata will tap into the usual mix of private equity and debt. We doubt it will have much trouble convincing more investors, though.

Update: Coskata’s VP of business development has gotten back to us. He says the company may go with traditional fundraising, but doesn’t see that as the best solution. Instead, they’re considering working through partnerships to let larger companies build the plants and simply provide the technology — in effect, a licensing scheme. That, he says, is a better approach to “rapid commercialization”.

The company is shooting for a late 2010 completion date for construction.

American automakers have finally learned that fuel efficiency and environmental friendliness count, turning the yearly Detroit Auto Show, which started Sunday, into a lineup of cleantech exhibitions.

Among big-company prototypes like the Chevy Volt and Cadillac Provoq are a handful of smaller firms making significant headway. Following is a brief lineup of the ones we thought were most interesting:

Coskata
A mere two years old, ethanol producer Coskata has managed to attract an investment from General Motors, which it announced at the event.

This isn’t your run-of-the-mill ethanol company. Like cellulosic ethanol companies, Coskata can convert wood and random organic debris into fuel. However, it uses its own proprietary gasification technology to turn this raw material into a synthesis gas, which is then cooled for “fermentation,” during which microorganisms convert the gas to ethanol.

The company says it can run this process very cheaply — for less than a dollar per gallon. The materials it can use include both regular biomass (such as wood chips) and municipal waste streams. To prove the concept, Coskata will initially build a 40,000 gallon per year pilot plant.

The specific amount of GM’s investment was not disclosed. Coskata’s previous investors include Khosla Ventures, GreatPoint Ventures, and Advanced Technology Ventures, who put $17 million into the company. It’s based in Warrenville, Illinois.

EcoMotors
A team with engineering experience at European automakers Volkswagen and Audi is working on a diesel engine that could be efficient enough to be competitive, on a miles-per-gallon basis, with plug-in hybrid technologies.

EcoMotors says its engines, due on the market in 2011, will get about 100 miles per gallon on fuel alone. It’s also planning its own hybrid adaptations that will be even more fuel-efficient.

Diesel engines are often overlooked in the clean-fuel furor. However, they deserve more attention: Not only are they used in virtually all trucks, they’ve also been growing in popularity in consumer vehicles over the last few years.

As with Coskata, Khosla Ventures is an investor in this company, which is based in Menlo Park, Calif. As it happens, Khosla is also an investor in another diesel-cleantech company we recently reported on, called Nanostellar.

Fisker Automotive
When we recently mentioned Fisker Automotive, we had no idea that star VC firm Kleiner Perkins Caufield & Byers had plowed more than $10 million into the company, an investment just disclosed at the auto show. The exact amount wasn’t revealed. Palo Alto Ventures has also invested in the company.

Fisker plans to significantly undercut potential rival Tesla Motors’ $98,000 all-electric Roadster by charging only $80,000 for its luxury plug-in hybrid. (For the overly rich: That’s sarcasm. $80,000 is a lot of money.)

The remaining details: A 0-60 mph acceleration time of 5.8 seconds (slow for an electric vehicle, but comparable to most combustion-engine sports cars), a sustainable speed of 125 miles per hour, and a 50-mile range if using only battery power. Perhaps most importantly, the car is gorgeous, as seen below.

Unfortunately, the car won’t be available until late in 2009. Fisker, which is based in Irvine, Calif., plans on manufacturing about 15,000 a year.