News that doesn't receive the necessary attention.

Wednesday, February 16, 2011

$162 million green job bust in Georgia, Range billionaire Khosla skates, taxpayers sucker-punched

George Bush pushed insufficiently vetted ethanol scams too, as this one: One of Georgia's poorest counties "offered 20 years worth of tax abatements and 97 acres in its industrial park."...Fake "science" led to bankruptcy of ethanol plant in Alabama, another poor state, in which the same billionaire, Khosla, was also involved.

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2/15/11, "Plant closure bursts Ga.’s biomass bubble," Atlanta Journal Constitution, Dan Chapman

"The premise, and the promise, were brilliant in their simplicity: Turn tree waste into fuel, help break the Middle Eastern choke hold on America’s economy and
  • bring hundreds of jobs to rural Georgia.

What wasn’t there to like?

Plenty, starting with the closing last month of the Range Fuels cellulosic ethanol factory that promised to help make Georgia a national leader in alternative energy production. Then there’s the money — more than

  • $162 million in local, state and federal grants, loans and other subsidies committed to the venture.

Much of that has been spent; recovery would be difficult. Officials at Colorado-based

  • Range Fuels,

who didn’t return calls for this story, have said they plan to eventually re-open the Soperton plant.

But critics — ranging from budget hawks to renewable energy experts to dispirited locals — say the shutdown is a case of

  • good money thrown at unproven science and lofty promises.

We gave those subsidies in hopes of getting something in return — jobs,” said Wallace Little, a laid-off special ed teacher from Soperton who applied for a Range job. “And we hope they come back, as far-fetched as that sounds.

  • We need jobs. We need them bad.”

Over the last six years, Georgia has successfully wooed a variety of companies specializing in biomass — cellulosic ethanol, corn ethanol, biodiesel, wood pellet, wood-to-electricity — with the goal of becoming a renewable energy leader.

  • Many of the companies, though, are no longer in business.

Vinod Khosla, the dot-com billionaire behind Range Fuels,

  • vowed in 2007 to
  • “declare a war on oil” and said “cellulosic ethanol is the weapon we need.”

State and national officials were giddy when ground was broken later that year for the $225 million ethanol distillery outside Soperton, 155 miles southeast of Atlanta.

Range Fuels represents a new future for our country,” proclaimed then-Gov. Sonny Perdue,

  • flanked by dignitaries and beauty queens.

“With Georgia’s vast, sustainable and renewable forests, we will lead the nation.”

U.S. Energy Secretary Samuel Bodman, who steered a $76 million federal grant to Range, said that “by relying on American ingenuity

  • and economic security.”

The U.S. Department of Agriculture followed up with an $80 million loan guarantee.

  • Georgia officials pledged $6.2 million.

Treutlen County, one of the state’s poorest, offered 20 years worth of tax abatements and 97 acres in its industrial park.

Private investors reportedly put up $158 million. In all, the project raised more than $320 million.

  • It hasn’t been enough.

By now, Range had expected to produce 20 million gallons of ethanol. Seventy Georgians would have jobs, denting Treutlen’s

  • Range shut down in early January. Only a few employees in Soperton remain.

Bud Klepper, plant manager for Range Fuels, told The Soperton News that the shutdown is “not permanent,” adding that

  • the company seeks additional financing.

“We’re just taking him at his word that it’s just a temporary shut down,” said John Lee, executive director of Treutlen’s development authority. “There’s nothing else we can do.”

Ryan Alexander, president of Taxpayers for Common Sense in Washington, said the government

  • should seek to get its money back.

“Cellulosic ethanol might be a better alternative for the environment, but the government needs to act with fiduciary responsibility and

  • “Recouping that money should be on the table.”

State saw gold in plan

Range and Georgia seemed a perfect match. Georgia has 24 million acres of forests, and Range said

to build the nation’s first commercially successful cellulosic ethanol factory.

Tree limbs, grasses, cornstalks, hog manure, municipal garbage and other limitless supplies would be transformed into fuel to be blended with gasoline. Less oil would mean fewer greenhouse gases. Because the process doesn’t use corn,

  • food prices wouldn’t be affected.

Range said the factory would open in 2008 and eventually brew 100 million gallons a year. Company officials talked of a dozen plants across Georgia, producing a billion gallons of ethanol and

  • filling local and state treasuries.

Georgia officials were smitten. A University of Georgia economic impact study concluded that Treutlen County alone would gain 194 direct (factory-related) and indirect (restaurant, hardware store, etc.) jobs with an annual $5.8 million payroll. UGA pegged

  • the statewide economic impact at $150 million.

In October 2007, Georgia awarded Range $6.2 million from the OneGeorgia fund, which uses tobacco settlement money

  • for rural development.

The Range subsidy is one of the largest grants ever given by OneGeorgia.

Range told Georgia officials that other states were also in the running for the cellulosic factory. OneGeorgia’s governing board, which included Perdue, Lt. Gov. Casey Cagle and the directors of the state’s economic development, community affairs and revenue departments, decided the $6.2 million grant would help seal the deal....

Range used the grant to buy a catalytic converter, feedstock distributor and an auger. All but $200,000 has been spent, Cobb said, adding that Georgia isn’t likely to receive any money back. Under terms of the contract, Range has until 2015 to invest at least $150 million into the factory and create at least 50 jobs

  • before the state would consider any penalties....

Washington, too, believed in Range and Khosla, who co-founded Sun Microsystems. In return for the federal grant and loan guarantee, the government expected progress toward an alternative energy future. The Environmental Protection Agency pegged cellulosic ethanol production at 100 million gallons in 2010, of which Range was supposed to produce one-fifth.

  • Production fell short

That was wishful thinking.

EPA, citing technical and financial difficulties bedeviling the nation’s six cellulosic ethanol producers, slashed the mandate to 6.5 million gallons for 2010.

  • Critics doubt even that amount was manufactured.

Alabama’s Cello Energy, for example, also expected to produce 20 million gallons, never made a drop and closed after its owner was found guilty of

and the company went bankrupt. Khosla Ventures, Vinod Khosla’s private equity firm,

The EPA eventually lowered Range’s cellulosic ethanol output to 100,000 gallons, which Range said it produced, according to Klepper, before shutting down.

David Aldous, president of Range Fuels, told a Colorado newspaper last month he was seeking more money to ramp-up production in Soperton to a commercially feasible level. He also said the factory had trouble processing its raw material, mainly pine scrap.

Their technology did not work,” said Sam Shelton, research director for Georgia Tech’s Strategic Energy Institute who has long

  • questioned Range’s scientific claims.

“It was a high-risk technological development program. Chemical processing plants just don’t scale-up that fast. They were promising too much too quick.”

  • The Energy Department largely concurred.

“The final step — catalytic conversion of the gasifier products to ethanol — could not be successfully demonstrated with the time and funding available in this project,” the agency recently wrote.

The Energy Department suspended payments to Range last month thereby “reducing future financial risk for the American taxpayers.” In an e-mail to The Atlanta Journal-Constitution, the agency said it had given Range

  • $43.6 million so far with another $5 million obligated.

It did not return calls seeking clarification.

Folks in Soperton can only hope Range re-opens.

“You see what it’s like around here. Businesses are closing. Storefronts are empty,” said Little, the former school teacher.

For now, though, Soperton’s future sits mirage-like on the edge of town — shiny, but silent and unused.

“If nothing else,” quipped Lee, the economic developer, “it would make a

  • nice Jack Daniels distillery.”"

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It's not just Obama, George Bush pushed ethanol too. The more the left learns about George Bush the more they will like him. Who cares if people from Southern states are ripped off, right? ed.


via American Thinker

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