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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.

Cellulosic ethanol producer Range Fuels has heaped more than $50 million extra onto a $100 million round we reported two months ago, picking up the support of Passport Capital, Morgan Stanley Capital Group and others.

While the company originally planned to keep the round to $100 million, it appears to have received intense interest in its project. While the round was at first over-subscribed to $130 million, according to Ethanol Producer Magazine, Range has now taken a total of $158 million, according to a regulatory filing obtained by VentureBeat. The cap on the round is currently $166 million.

The additional funding should give Range the edge it needs to speed ahead in the race to open the world’s first full-scale cellulosic ethanol refinery in Soperton, Georgia, which broke ground last November. At 100 million gallons per year of capacity, the plant will be larger than many existing facilities that make ethanol from corn. Importantly, it has trees from the surrounding forests on-hand for use, rather than counting on next-generation feedstocks like switchgrass that have yet to be planted at scale.

Size is important for Range, because the thermo-chemical process the company uses works better at large scale. Yet even with its size advantage, a number of onlookers have speculated that the company may suffer from the pitfalls of being first to try out a complex process. Just breaking down woody fibers into a product isn’t good enough — Range’s ethanol must also be cheap enough to compete with fossil fuels, albeit with the help of subsidies.

Its investors either don’t have the same expectation, or have been caught up in the drama of (maybe) leading a (possible) revolution.

Range’s competition for the distinction of being first is from two companies. One, Coskata, has a partnership with a plant construction company and plans for a 40 million gallon per year plant. The other, Mascoma, took on $50 million more in February and just today announced a partnership with General Motors, which also backs Coskata.

The round was led by Passport, with participation from a passel of others: PCG Clean Energy & Technology Fund, Khosla Ventures, Blue Mountain Venture Capital, Leaf Clean Energy, Pacific Capital Group, Morgan Stanley, and possibly some unlisted investors.

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.

Range Fuels, a company that is searching to become the first to bring a much cleaner kind of alternative fuel, cellulosic ethanol, to market commercially, has raised nearly $100 million in new financing.

Cellulosic ethanol is significant because it’s a much more environmentally friendly way to to produce ethanol. Instead of using corn or sugar, it uses portions of plants and grasses to make ethanol, and has been found by the US DOE to reduce greenhouse gas emissions by 85 percent, when compared to reformulated gasoline. Regular starch ethanol (from corn, for example), which uses natural gas in its creation, has not been found to lower emissions.

Cellulosic ethanol has also become attractive because traditional methods of making ethanol have become more controversial of late. Critics say the demand for corn ethanol is outmatching the supply of corn, and taking away from the world’s food source — creating higher food prices.

There are several pilot projects attempting to prove that cellulosic ethanol production is economically viable.

The Broomfield, Colo.-based Range Fuels started building a production facility near Soperton, Ga., which is expected to produce up to 100 million gallons of ethanol when in full production mode.

The funding, first reported by VentureWire this morning, came from previous investor Khosla Ventures (which committed $25 million) and another undisclosed energy investor (which committed a similar amount). Range Fuels previously got $76 million grant from the U.S. Department of Energy.

Range Fuels’ process produces synthetic gas that can be converted to ethanol, but that’s just one of several methods. Another method, used by competitor Mascoma, of Cambridge, Mass., uses an enzyme process to create ethanol.

There are several other players racing to produce ethanol from cellulosic material, including start-up Coskata, of Warrenville, Ill., which has backing from General Motors Corp. and others, and Iogen, which has backing from Royal Dutch/Shell. BP is working with Hayward, Calif.’s startup Mendel Biosciences. Chevron also has its own project, called Catchlight Energy.

Three significant developments today in alternative fuels:

–Range Fuels broke ground on one of the first cellulosic ethanol plants;
–Innovation Fuels took $15.5 million for a New Jersey biodiesel facility; and
–Codexis and Royal Dutch Shell decided to extend their research collaboration for another five years.

We reported in March on a $76 million Federal government grant that Range won preliminary approval for. That grant was part of a $385 million package set aside for six companies.

The Fed has now confirmed that Range qualifies for the grant. The company is using the funding for construction of a plant in Soperton, Georgia. Of the full amount, $50 million will go toward the first phase of construction, and the remainder to the second phase.

If Range sticks to its plans, it could have the first commercial-scale cellulosic ethanol facility in the United States. Heretofore, only demonstration plants have been set up, some by larger companies who have avoided investing a great deal of money in cellulosic ethanol.

The hesitation by these companies is because making cellulosic ethanol is a more complicated process than making ethanol from plants like corn or sugarcane. The process requires breaking down the chemical structure of plants like trees and grasses.

Although there are several proven techniques for doing so, the associated costs and challenges in scaling such an operation aren’t well known, and there is uncertainty over which materials are best to use. Range plans on using locally available wood, while other companies have plans to work with faster-growing plants like switchgrass.

Innovation Fuels has made a somewhat safer bet with its plans to build a biodiesel facility in Newark, New Jersey. The news of its $15.5 million funding, the company’s first, was broken Monday by VentureWire (subscription required).

An unnamed bank and hedge fund contributed the funding for the plant, which VentureWire’s source said will have the capacity for about 40 million gallons annually. A separate plant the company is building in its hometown of Hampton, New York will reportedly have a 50 million gallon capacity.

Innovation doesn’t have a publicly available timeline for completing the facilities. The executive team has concentrated experience in trading and investment, which makes us wonder if the entire company isn’t a momentum play on the popularity of biodiesel, with the intention of ultimately selling the plants to larger companies. The company started life a year ago as a division of CEO John Fox’s company Homeland Energy Resources Development, which is essentially a consultancy for the cleantech projects of other companies.

Codexis is one of several companies exploring the use of biological processes to produce fuel; we recently wrote about a competitor called LS9.

The technology behind the process, which in Codexis’ case involves directly manipulating the DNA of microorganisms to produce different enzymes, can also be used for pharmaceuticals and other applications. In April, for instance, the company signed a large deal with Merck, a drug manufacturer.

The extension of Codexis’ research partnership with Shell also involves an investment by that company into Codexis, for an undisclosed amount. However, considering that the company’s last official funding was for $40 million and Shell is taking a seat on the board, we’d guess it was likely a substantial round.

Meanwhile, oil futures hit $97 per barrel today, while demand is expected to continue rising into next year. As rises in oil prices are usually accompanied by heightened interest in biofuel, we can expect plenty more news like this in the next few months.

A host of new alternative energy companies have emerged and raised funding.

Here’s a roundup of the latest action, including news at Zeachem, a cellulosic ethanol company; Catilin, a biodiesel company, Range Fuels, another cellulosic company; Sopogy, a solar thermal company; and finally, a note on Greenvolts, a solar company, and a setback at Greenfuel, an algae-biofuel company.

Zeachem — The company, of Menlo Park, Calif. has developed new way to create cellulosic ethanol, which is one of the more promising alternative fuels for reducing harmful greenhouse emissions. Its claim to fame is to process materials that are used for the cellulosic process in a way that reduces the amount of corn and other valuable sources needed for it. It is still in the lab, however each of the individual steps of the process have been adequately tested, so that the company will see a testing plant in 2008 and delivery to market in 2009, says Erik Straser, investor at Mohr Davidow. His firm led a $4 million investment into the company. Firelake Capital participated.

No company has reached full production phase. Iogen in Canada is furthest along; it is building a 40 million gallon plant. Next is Range Fuels, which we’ll get to below.

Zeachem claims it is more efficient, however, by combining two processes together that avoid any carbon being lost. (Other processes lose up to a third of the carbon in the conversion process.) The first step is to convert the sugars of biomass into a chemical intermediate called acetic acid. By taking the intermediate step, there’s no CO2 produced in the process — which saves greenhouse emissions being produced as a byproduct. It then takes the lignen left in the biomass, and uses gassification to covert it into hydrogen. This is combined with the acetic acid, and then converted into ethanol. Chief executive Dan Verser said he was “surprised but pleased” that no other company had come up with the idea. The process is patented. Wood chips other non-food sources of biomass can be used.

Catilin — The Ames, Iowa company, is a biodiesel company that also uses a more efficient method, which avoids some of the toxic processes used by other biodiesel companies that require substantial cleanup. It has raised $3 million in a first round of funding, also led by venture firm Mohr Davidow.

It works on a broad range of feedstocks – from soybean oil to animal fats. The company is building a pilot production facility. It uses a nano-technology catalyst that essentially functions as a teabag, allowing undesirable products to be kept in the bag and avoiding them having to be washed out in a cleaning process, which wastes water. It is run by Larry Leinhart, a former “Entrepreneur in Residence” at Mohr Davidow. The company is a spin out of the Iowa State University, and needed an operator like Leinhart to run the business, said MDV’s Straser.

Sopogy — The Honolulu solar thermal concentrator company had already raised $3 million in financing. The company has now just received $10 million more in a revenue bond from Hawaii’s governor to help construct a thermal plant there.

Range Fuels — The Broomfield, Colo. company, says it has received a permit to construct the nation’s first commercial cellulosic ethanol plant, in Georgia – with groundbreaking to happen this summer. It received a $76 million grant from the U.S. Department of Energy. It will produce 100 million gallons per year of cellulosic ethanol — using wood waste from Georgia’s forests. A first phase will be completed next year with limited production.

http://venturebeat.com/2006/10/10/greenvolts-raises-250000-for-solar-concentration/

Greenvolts — The San Francisco company recently raised $1.5 million from undisclosed investors (we did not previously cover), said Wednesday it will build a 2-megawatt solar electric power plant for PG&E based on its “concentrator” photovoltaic technology. The facility’s ultimate purpose will be to deliver power to customers during peak energy times, but at a lower cost to PG&E.

According to GreenVolts, its “photovoltaic system concentrates 625 suns of energy onto a highly efficient solar cell and can deliver energy at a competitive cost. The size and flexibility of the company’s system allow it to be placed nearer to the demand than other alternatives, helping utility companies avoid constructing costly transmission lines or having to upgrade existing power grids.” GreenVolts’ facility will be on a farm outside Tracy, Calif., and will be finished in 2009. (PG&E signed another, larger deal with Cleantech America, also based in San Francisco. As part of their agreement, Cleantech America will build a 5-megawatt solar plant near Fresno, Calif. The company said that when the facility is finished in 2009, it will be California’s largest solar plant.) GreenVolts also recently signed a deal with Spokane, Wash.-based utility company Avista to build a prototype power plant.

Greenfuel — Unanticipated setbacks with GreenFuel Technologies, a bioreactor system company, has led to layoffs of half the Cambridge, Mass. company’s 50-person staff. Bob Buderi has the scoop at his new blog, Xconomy. The company seeks to use algae to convert carbon dioxide emissions into biofuel, but it turns out to be twice as expensive as expected. Bob Metcalfe has been appointed interim CEO, and he’s frantically raising some cash — to last six months, and from current investors.

Range Fuels, the Broomfield Colo., company racing to build the first commercial plant for producing a more efficient form of ethanol, got closer to that goal after being awarded a $76 million grant by the U.S. Department of Energy.

This is significant because cellulosic ethanol, made from crop waste, switchgrass, woodchips, and other bio refuse, is much more efficient and cleaner than regular corn ethanol, and could help the nation in its quest for alternative energy sources (click on image above for more info about cellulosic ethanol).

The grant was part of $385 million awarded by the DOE for biorefinery projects over the next four years. Details of the DOE’s grants are here, and it includes six companies, including Range, and a description of what they do.

Range’s chief executive Mitch Mandich told VentureBeat Wednesday morning that he still thinks Range will be first to build a commercial plant to make cellulosic ethanol. That’s because he’s using a “thermal conversion” method, which he says is more efficient than the “enzyme” methods being used by his competitors, such as Iogen and Broin.

Enzymes are tricker and more expensive to make, he said, and those other companies are giving a range of about 2009 or 2010 before they become available. Range hasn’t given a firm date, but plans to beat those timeline comfortably, he said. He was previously backed with $3.3 million from Silicon Valley’s Khosla Ventures

Range’s plant will be located in Soperton, Georgia, and will use pine tree waste and other material.

Other companies receiving grants were BlueFire Ethanol, Alico and Abengoa Bioenergy Biomass.

Iogen, of Ottawa, is also venture-backed, having received about $67 million from Goldman Sachs, Royal Dutch Shell and the Canadian government. It is building an 18 million gallon per year plant in Shelley, Idaho. The definition of a commercial facility is one that produces 10 million gallons per year.