Venture Capital Eyes Biomass Gasification to Make Ethanol

Khosla associate makes case for alternative to biochemical approach

PHOTO: Khosla Ventures

10 July 2008--For decades government-backed scientists have presumed that the best way to produce ethanol from biomass is a biochemical conversion--first enzymes turn the plant cellulose into sugars, and then the sugars ferment into alcohol. But lately a number of firms have been touting an alternative way to make ethanol: gasify the biomass first, and then convert the resulting syngas to liquid. In theory, at least, this thermochemical conversion isn't restricted to biomass; anything with carbon in it--coal, tires, plastic bags--could be processed into liquid fuels.

Significantly, several of the biomass gasification entrepreneurs are funded by Khosla Ventures, the clean-tech venture financing shop in Menlo Park, Calif. Khosla is in fact betting heavily on gasification: three of the four ethanol producers in the firm's publicly announced portfolio are proposing to convert biomass to liquid fuels in this manner. One Khosla-backed firm, Range Fuels, broke ground last year on a plant in Georgia, and when that plant opens in late 2009, it will produce some 80 million liters of liquid fuels from wood chips.

Samir Kaul, the Khosla Ventures general partner responsible for the firm's renewable portfolio, talked about this emerging technology with Robb Mandelbaum for IEEE Spectrum.

IEEE Spectrum: How would you make the case for gasifying biomass into ethanol?

Samir Kaul: Some of the advantages of the thermochemical process are that, one, you're not using enzymes. Right now, you can't just go and buy enzymes off the shelf. Only a couple of companies make them, and it's unclear what the costs are going to be per gallon. The second advantage is that the process is feedstock agnostic--you're basically just taking carbon and making it into a gas. Normally in biochemical processes, it's not trivial to go from one feedstock to the other.

On the other hand, traditionally gasification has been used at megascale--with coal, you're using 15 000 tons per day. So people ask if you can really scale it down to be economical for ethanol and biomass. We believe it can be.

Spectrum: How are your companies proposing to scale down gasification for biomass?

SK: I’m oversimplifying it, but there are effectively two types of gasifiers. You have the oxygen-blown gasifiers, which coal companies use. But injecting oxygen is extremely expensive, and that only pays working at a large scale. Then there are air-blown gasifiers. They're cheap and they're smaller scale--they're used in villages in India for power--but you'd have to pay a hell of lot of money to remove from the gas the nitrogen that is 78 percent of air.

So, the advance is either to figure out a way to clean up the gas or to not use oxygen. That's about the extent to what we can say before we start to get into proprietary technologies.

Spectrum: People talk about being able to turn anything with carbon in it into ethanol. Practically speaking, what are the most important feedstocks going to be?

SK: Those that are scalable. And whenever you're scaling a first-of-a-kind technology up to commercial levels of production, you don't want to add risk where you don't have to add risk. What's nice about wood chips is that they're pretty uniform, and in the Southeast alone there are enough wood chips to make over 40 billion liters of ethanol.

Spectrum: One of your companies, Coskata , in Warrenville, Ill., has announced plans to make ethanol at $1 a gallon--is that typical in the industry?

SK: I think everyone is figuring out the evolution of their process to get to those kinds of costs. What I focus on as an investor is, can these guys be commercially viable without subsidies or any kind of help? And right now the competition is corn-based ethanol, which, with corn at $7.50 a bushel, costs well over $2 a gallon. So to be commercially viable, you need to get below that cost.

Spectrum: Do you want to make any predictions about which of your companies is going to get there first?

SK: No, absolutely not.

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