Fuel Wars

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Hollywood should pay attention to what’s going on deep in the Georgia pines this summer. On the surface, the plot may not seem like much — a virtual company called Range Fuels with offices and operations in Northern California and Colorado. Armed with a $76 million government grant and $150 million in private venture capital, it is developing a new cellulosic ethanol plant in the Georgia hills.

However, underneath this straightforward scenario is a seething potboiler of a storyline that is part old-
fashioned soap opera and part James Bond-like thriller. It features big stars, from the Silicon Valley’s legendary venture capitalist Vinod Khosla and Microsoft’s Bill Gates to President Bush, Gov. Schwarzenegger and the boys at Big Oil. Like a Bond thriller, there are surprise twists, a few rooftop fistfights, some nifty subplots and nothing less at stake than changing, perhaps saving, the world.

Range Fuels is one of several that Khosla, the co-founder of Sun Microsystems, has bankrolled. The renewable-energy firm breaks ground this summer in Georgia for a plant that will produce ethanol from the wood scraps left behind by the Georgia timber industry. Ethanol, a non-polluting alternative to gasoline, is hardly a new idea; 5 percent to 10 percent of the gas you pump these days is ethanol, most of which is made from corn.

But, there are problems. Corn ethanol isn’t very energy- efficient to produce, it pollutes, and it consumes huge quantities of corn, driving prices up around the world. It’s actually being blamed for higher tortilla prices in Mexico.

Range Fuels, which has its test site near Denver, Colo., claims that its new manufacturing system called K2 and developed by its Colorado inventor and the company’s chief technical specialist Bud Klepper (see sidebar), is cheaper, cleaner and more efficient. It also uses scrap pieces from already cut timber rather than from a food source.

The modular system uses a two-step process to heat the tree scraps into a synthetic gas and then converts the gas to ethanol. Corn ethanol is made through a vastly different process involving fermentation and acid hydrolysis that can take days to occur, as opposed to the K2 system, which can produce ethanol in minutes. The process uses little energy to start, produces little waste product and emits only small amounts of greenhouse gas. Khosla says the process may yield ethanol for as little as $1 per gallon. If the claims from Range Fuels about K2 are accurate, it could mean a substantial shift in the fuel we use for our automobiles.

Here Comes Cellulosic

“We will be price-competitive with corn ethanol and with fossil fuels right away, and then we plan to drive our prices lower as our scale increases,” claims Range Fuels CEO Mitch Mandich, a Silicon Valley entrepreneur who had been in charge of worldwide sales at Apple Computer and is a long-time friend of Khosla’s. “We have a very large mission — to change the world for the better by reducing our dependence on fossil fuels.”
Continued...

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