GM, Coskata partnership hatches billion-dollar baby
January 10, 2008
BY Sarah Smith
Web exclusive posted Jan. 30, 2008, at 1:44 p.m. CST
The recent partnership between General Motors, the world's largest automaker, and Coskata Inc., an upstart cellulosic ethanol producer, may be worth billions–in money and gallons of fuel.
"With our current plans, we look to put as much as 10 billion gallons of ethanol on the market by 2022," said Wes Bolsen, Coskata vice president and chief marketing officer.
Illinois-based Coskata, a newcomer to the renewable fuels industry, hit the lottery earlier this month when GM announced it was financially backing the the company's efforts to produce biomass-based ethanol. The fuel, with estimated production costs of $1 per gallon, will be tested in GM cars later this year. The two companies announced the partnership at the North American International Auto Show in January.
A 40,000-gallon pilot plant will produce the first samples of ethanol in late 2008, Bolsen said. Around the same time, dirt work will begin on a 100 MMgy facility, estimated to cost $300 million to $400 million.
The companies estimate that "the capital costs for some of the first planned facilities will be in the $2 to $4 per gallon installed cost," Bolsen said. "To get to 10 billion gallons, we would be talking about $30 billion in capital infrastructure over the next 15 years. It sounds like a lot, but the profitability of the plants making ethanol for under $1 a gallon makes the payback very short." GM's actual investment hasn't been made public, but Bolsen said it was "substantial."
Coskata's feedstock-flexible technology involves gasifying any organic material or waste matter, then unleashing microorganisms that consume the gas and excrete ethanol, reported to be 99.7 percent pure. Because the plants can use any locally available waste, the production, environmental and transportation costs are lowered. It is politically appealing because the feedstock doesn't interfere with the food chain. Bolsen envisions locating Coskata refineries next to corn-based ethanol plants to capitalize on the agricultural waste that those plants generate, which will make them more efficient. Coskata also plans to partner with feedstock suppliers, gasification companies and large chemical companies that have the capital to adopt the technology.
Coskata was created in 2006 with help from Advanced Technology Ventures, GreatPoint Ventures and Khosla Ventures. Bolson admitted that financial backing was crucial to Coskata's rapid rise in the industry. "We're dealing with the Fortune 50 here," he said. "We're not trying to scrap together a project."
Bolsen said GM looked at all the top ethanol technologies, including "one of the better [research and development] teams and the six that won the U.S. DOE commercial-scale refineries, and selected Coskata as what they believed was the most commercially viable technology." Bolsen said GM was further convinced when Argonne National Laboratory verified the technology by confirming energy levels 7.7 times greater than those currently used to produce ethanol.
Coskata's firm financial footing was also attractive, Bolsen said. "We want rapid commercialization," he said. "We don't want to have to rely on pulling together small bits of financing."
The recent partnership between General Motors, the world's largest automaker, and Coskata Inc., an upstart cellulosic ethanol producer, may be worth billions–in money and gallons of fuel.
"With our current plans, we look to put as much as 10 billion gallons of ethanol on the market by 2022," said Wes Bolsen, Coskata vice president and chief marketing officer.
Illinois-based Coskata, a newcomer to the renewable fuels industry, hit the lottery earlier this month when GM announced it was financially backing the the company's efforts to produce biomass-based ethanol. The fuel, with estimated production costs of $1 per gallon, will be tested in GM cars later this year. The two companies announced the partnership at the North American International Auto Show in January.
A 40,000-gallon pilot plant will produce the first samples of ethanol in late 2008, Bolsen said. Around the same time, dirt work will begin on a 100 MMgy facility, estimated to cost $300 million to $400 million.
The companies estimate that "the capital costs for some of the first planned facilities will be in the $2 to $4 per gallon installed cost," Bolsen said. "To get to 10 billion gallons, we would be talking about $30 billion in capital infrastructure over the next 15 years. It sounds like a lot, but the profitability of the plants making ethanol for under $1 a gallon makes the payback very short." GM's actual investment hasn't been made public, but Bolsen said it was "substantial."
Coskata's feedstock-flexible technology involves gasifying any organic material or waste matter, then unleashing microorganisms that consume the gas and excrete ethanol, reported to be 99.7 percent pure. Because the plants can use any locally available waste, the production, environmental and transportation costs are lowered. It is politically appealing because the feedstock doesn't interfere with the food chain. Bolsen envisions locating Coskata refineries next to corn-based ethanol plants to capitalize on the agricultural waste that those plants generate, which will make them more efficient. Coskata also plans to partner with feedstock suppliers, gasification companies and large chemical companies that have the capital to adopt the technology.
Coskata was created in 2006 with help from Advanced Technology Ventures, GreatPoint Ventures and Khosla Ventures. Bolson admitted that financial backing was crucial to Coskata's rapid rise in the industry. "We're dealing with the Fortune 50 here," he said. "We're not trying to scrap together a project."
Bolsen said GM looked at all the top ethanol technologies, including "one of the better [research and development] teams and the six that won the U.S. DOE commercial-scale refineries, and selected Coskata as what they believed was the most commercially viable technology." Bolsen said GM was further convinced when Argonne National Laboratory verified the technology by confirming energy levels 7.7 times greater than those currently used to produce ethanol.
Coskata's firm financial footing was also attractive, Bolsen said. "We want rapid commercialization," he said. "We don't want to have to rely on pulling together small bits of financing."
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