Several startups in the race to bring next-generation ethanol to market last week got shots of the financial world’s version of performance-enhancing drugs.
Cambridge, Massachusetts-based Mascoma, a cellulosic ethanol maker, raised $50 million in a third round of venture funding. And the U.S. Department of Energy announced its plans to invest more than $30 million in four other companies working on cellulosic ethanol.
These are just five of the dozens of companies working on a replacement for today’s corn or sugarcane-based ethanol. It’s a packed party, and with no clear leader in the field, the company to get to market first will have a significant advantage.
Several cellulosic ethanol companies, such as Cambridge, Massachusets-based Verenium, have already begun work on pilot or demonstration plants. Many more, such as Broomfield, Colorado-based Range Fuels, say they plan to make their next-generation ethanol commercially available before the end of the decade.
But besides speed to market, what will it take to be successful in this competitive industry? The simple and predictable answer is cost, say analysts, and that will be driven by two major factors. The first is the cost of processing the biomass, like wood chips, into ethanol, and the second is securing a steady stream of low-cost feedstock.
The importance of the latter helps explain why companies are locating their plants in rural parts of states like Michigan while their R&D takes place in metropolitan centers. If you want cheap and plentiful biomass, you have to go to it. So companies look to set up shop near the likes of pulp mills and cut deals for the feedstock, which to the pulp mill is just an industrial waste product.
Menlo Park, California-based ZeaChem, for example, plans to build its cellulosic ethanol pilot plant near the GreenWood Resources tree farm in Boardman, Oregon. GreenWood has agreed to supply ZeaChem with poplar wood chips.
Here’s a video clip of a recent trip to ZeaChem’s office and lab that includes an interview with CEO Jim Imbler.