Coskata ready to build plants and pumps
Companies typically operate in stealth mode when they want to vet their technology before having to explain it to the world. In ethanol producer Coskata’s case, the company wanted its process to be ready for the commercial market before it burst onto the scene. When the Warrenville-based company did let the world know it existed, it did so with the announcement of a major partnership with General Motors (NYSE: GM).
The auto giant had committed to converting half of its fleet to flex-fuel vehicles within the next five years and wanted to ensure that there would be enough ethanol to fuel those vehicles when it happened, according to Wes Bolsen, chief marketing officer at Coskata. After talking to several biofuels companies, GM invested an undisclosed amount of money in Coskata and became a part owner in the business, joining early investors Khosla Ventures, ATV, and Great Point Ventures. Now, GM is introducing Coskata to several Fortune 50 companies, hoping to set up the production capacity and distribution channels to make ethanol an easy choice at the pump.
Why Coskata over the dozens of other technologies out there? Primarily because the technology is here, working and scalable today, Bolsen says.
Coskata’s process revolves around a strain of proprietary microorganisms found in the early 2000s by University of Oklahoma professor Dr. Ralph Tanner. At the bottom of a lagoon on the university's campus, Tanner discovered a microorganism that essentially eats hydrogen and carbon monoxide and excretes ethanol.
Coskata scientists created a bioreactor that taps into the organism's biology: They feed a variety of feedstocks—old tires, trash, wood chips, switchgrass—into a gasifier to produce syngas, which is then pushed along a tube-like membrane. The microorganisms live on the outside it, and as gas moves down the middle, the microorganisms feed on the gas. It’s essentially a gas-to-liquid transfer: The microorganisms excrete ethanol into the watery environment around the membrane and Coskata captures the output.
The bioreactor is one of five patented designs with which the company is currently working. Bolsen says the company has increased its production capability 100-fold and is now at the point where it could mass produce ethanol at $1 per gallon. The company’s hopes to leverage its strategic partnership with design-and-build ethanol facility manufacturer ICM, which has built 70 percent of the ethanol plants in the United States, to find partners willing to build $300- to $400-million ethanol production facilities utilizing Coskata’s technology. “Instead of us raising money and trying to build one plant at a time, we’re trying to see how we can build 100 plants quickly to really have an impact,” Bolsen says.
Bolsen says the company is looking to partner with large pulp and paper companies that could co-locate a plant and use steam produced there to help fuel paper mills, as well as wood-chip and waste-management companies, both of which already have feedstock to fuel the system. Six companies are currently vying for the first 40 million-gallons-per-year commercial production facility.
After production, distribution is the next hurdle: “You need one out of every five stations offering ethanol, and you need to charge less for it,” Bolsen says. “Ethanol has less BTU than gasoline, so it burns cleaner but it also provides less energy. That’s fine, so long as you charge less for it,” he says. A GM dealership in Texas recently installed an E85 pump; others may follow suit. That could help, but Bolsen says the company will need to get larger distributors such as Chevron, Exxon and Shell on board, and ensure that ethanol blends are cheaper than gasoline.
In the near future, an as-yet-undisclosed state Governor will be announcing a commercial demonstration facility showcasing Coskata’s technology by the end of the month. Coskata will announce its partner in the next few months, and break ground on that facility by the end of the year, according to Bolsen.