Anaerobic Organisms Key to Coskata's Rapid Rise
Not many people were familiar with Coskata Inc. when General Motors Corp. announced its partnership with the Chicago-based ethanol technology company in January. Since then, Coskata's business has accelerated at a rapid pace, making thermochemical ethanol production from biomass a near-term reality.
A flood of questions and concerns ensued—many from the ethanol industry—because Coskata was relatively unknown at that time. Plus, the company says it can produce ethanol from ag and forestry waste, and municipal solid waste—even tires—for less than $1 per gallon, far cheaper than other technologies. "Some people get angry when we talk about the $1-per-gallon production cost," Bolsen tells EPM. "I don't know why except that it's such a provocative statement. Some of those people have been working so long in a different direction."
That "different direction" is an enzyme-based cellulosic ethanol conversion process, a direction Coskata didn't follow. Instead, the company avoids the expensive pretreatment of cellulose, uses no enzymes on the front end and doesn't deal with slurry, which varies depending on the quality of the feedstock.
Despite some doubters, others are taking notice of Coskata's technology. "We've had interest from the White House, various state governors and conference planners," Bolsen says. Since the GM announcement, he was invited to speak at the National Ethanol Conference, the Washington International Renewable Energy Conference, the World Congress on Industrial Biotechnology and Bioprocessing, and the International Fuel Ethanol Workshop & Expo.
In all of his speaking engagements, Bolsen finds himself answering this question a lot: How is this method of inexpensive ethanol production possible?
The key to Coskata's ethanol production process is anaerobic organisms that were found at the bottom of a lagoon on the campus of Oklahoma State University years ago. A man named Ralph Tanner not only discovered these "bugs," but also found that when they eat carbon monoxide and hydrogen, they secrete ethanol.
Around the same time, Aaron Mandell of Cambridge, Mass.-based GreatPoint Energy was developing a process to turn coal into synthetic natural gas through gasification. In 2005, he read a paper published by Tanner that detailed his discovery and syngas-to-ethanol idea. Mandell called his friend and fellow entrepreneur Todd Kimmel of Advanced Technology Ventures in Silicon Valley, Calif., and Kimmel and Rathin Datta, founder of technology, manufacturing and marketing company Vertic Biosolvents, went to Oklahoma in early 2006 to see the organisms first-hand. They liked what they saw. Mandell secured rights to license the technology, and the group quickly reached out to Vinod Khosla of Khosla Ventures for some financial help. "In one meeting, [Khosla] decided this [technology] could have a major impact," Bolsen says. "He looks for truly disruptive technologies. He saw Coskata's feedstock flexibility and knew it could be a worldwide, transformative technology."
With financial backing, the technology was moved from Oklahoma to Argonne National Laboratory, just outside of Chicago, where GreatPoint Energy incorporated Coskata in July 2006. Five staff members came on board, including Kimmel and Datta. Kimmel has since returned to Advanced Technology Ventures, and although Datta doesn't work at Coskata full-time, he remains the company's chief scientific officer.
Bolsen joined Coskata in February 2007, along with former Dow Chemical Site Manager Richard Tobey. When the contract with Argonne National Laboratory expired, Bolsen says Coskata chose to remain in the Chicago area because the Midwest has amazing talent at research companies such as Abbott Labs, Eli Lilly & Co., Dow Chemical Co. and Nalco Co. An office was opened in Warrenville, Ill., a Chicago suburb, in May 2007. In October 2007, the company hired its Chief Executive Officer William Roe, formerly chief operating officer of Nalco.
The company now has 40 people on staff, 30 of whom are microbiologists. "When you have a technology, you don't let money stop you from getting the best people," Bolsen says, adding the combined intellect at Coskata makes it a world-class research institute. "We think this is the only high-throughput screening facility. We can look at 150,000 different organisms per year. Some of those are mutations of the original organism because you want to breed for higher-value traits, higher production, more tolerance for oxygen and chemicals, and robustness." However, even without genetically modifying the organism found at the bottom of the Oklahoma lagoon, Bolsen says it has the capability to produce ethanol on a commercial scale.
Behind its immaculate lobby, offices and conference rooms in Warrenville, a laboratory allows the company to test its technology on a pilot scale. Since the first quarter of 2008, the company has been growing organisms in various fermentors. It isn't using biomass as a feedstock, but it's running the equivalent of stranded natural gas, industrial waste gases and methane from landfills through a commercially available catalyst to produce synthesis gas. The syngas is then directed through membranes resembling hundreds of straws inside a four-foot plastic tube, called a bioreactor, a piece of equipment that allows the company to avoid high stainless steel costs. The organisms are placed outside the membranes, but because they seek out the carbon monoxide and hydrogen in the syngas, they affix themselves to the outside of the membranes. They secrete ethanol, which is then rinsed out of the tube with water. A distillation process separates the ethanol from the water, which is recycled.
This set-up allows for a continuous-flow process as opposed to a batch process. Bolsen wouldn't reveal the specific capacity of each bioreactor, but he did say on a 100 MMgy scale, a large number of membranes could produce thousands of gallons of ethanol per day.
The company continues to tweak the organisms and the process in which the organisms come into contact with the syngas, all with the intent of increasing production and lowering costs. For example, Bolsen says the company has patented a process called vapor permeation, which would replace the distillation process. Distillation is necessary in the corn-based ethanol process because the ethanol has to be separated from the remaining solids. However, in a gas-based ethanol/water mixture, there are no solids, making distillation unnecessary.
With this technology, Roe points out that Coskata initially intended to build, own and operate its own ethanol production plants. However, a 100 MMgy commercial-scale plant would mean $3- to $4-per-gallon in capital costs. Roe says Coskata has now decided to license its technology to large companies "with large balance sheets" to increase its own cash flow before owning and operating plants. "So now we have to go out and get partners, such as large feedstock players who want to make ethanol but don't have the technology," Roe says.
Coskata found a biomass feedstock partner for its commercial demonstration plant in Madison, Pa., which is approximately 30 miles southeast of Pittsburgh. On April 25 at the Pittsburgh Convention Center, Pennsylvania Gov. Edward Rendell announced Coskata's relationship with Westinghouse Plasma Corp., which owns and operates a pilot-scale plasma gasifier. "Corn-based ethanol and biodiesel made from soybeans is a readily available, established technology that can bridge the transition from foreign oil to advanced fuels like cellulosic ethanol," Rendell told a group of state legislators, government officials and company representatives, including Beth Lowery, vice president of energy and environment for GM. "By reducing our dependence on conventional fossil fuels in favor of more cost-effective biofuels like Coskata's product, we can help mitigate the effects of higher fuel prices on the food market, while strengthening our economy and our national security."
This commercial demonstration facility will produce approximately 40,000 gallons of ethanol per year. Construction of the modular design is already underway by Zeton Inc. in Burlington, Ontario. It will be installed in Madison in early 2009 with production slated to begin in March or April. Roe says the modular design makes it easy to decommission and relocate the facility in the future. Adjacent to Westinghouse, it will convert various biomass sources such as wood waste, ag waste (including sugarcane bagasse) and municipal solid waste into syngas using Westinghouse's gasifier. Roe says the wood chips will come from the Southeast, the bagasse will come from Louisiana or Brazil, corn stover will come from the Midwest, and switchgrass will be provided by leading energy crop companies such as Ceres Corp. The plasma gasifier, which was developed in collaboration with NASA in the 1960s to simulate a space shuttle re-entering the Earth's atmosphere, generates temperatures equal to the surface of the sun (as high as 20,000 degrees Fahrenheit). It will heat the various biomass sources to 1,800 degrees Fahrenheit, creating syngas. The gas is cooled to approximately 100 degrees before it's fed to the ethanol-producing organisms.
Bolsen points out that Coskata technically isn't producing "cellulosic ethanol," a term that would suggest extracting cellulose from plant material instead of gasification. He says if you extract cellulose from plants, you still have a percentage of plant matter left over. With gasification, Coskata converts the entire plant into syngas. The process can also convert used tires, which don't contain any cellulose at all.
The fuel produced at the Pennsylvania facility will be tested by GM in its flexible-fuel vehicles (FFVs) at its proving grounds in Milford, Mich. The auto manufacturer aims to ramp up the number of FFVs it produces in the coming years, but before it does, it wanted to solidify a fuel technology that would sustainably produce renewable fuels for years to come. This is how GM found Coskata.
Roe credits Bolsen for getting GM's attention. "In April 2007, Wes thought it would be a good idea to let major automakers know about [our technology]," Roe says. "Most said ‘no thanks.'" GM was an exception. Behind closed doors, the auto manufacturer was planning to increase its FFV offering to 50 percent of its fleet by 2012. However, it wanted to make sure ethanol would be readily and sustainably available for years to come. Recognizing corn-based ethanol might not be the fuel of the future, it compiled a list of 18 cellulosic ethanol companies to explore. When Bolsen called GM, Coskata wasn't on the list.
GM conducted due diligence on those 18 companies for approximately eight months, and as if fate planned it, the auto manufacturer decided to invest an undisclosed amount in Coskata in late 2007. It was the first time GM had invested in a nonautomotive company in nearly 20 years. "Its process seemed to make sense to us," says Mary Beth Stanek, GM's director of environment, energy and safety policy. "We think all of those companies will have success, but we had to work with efficient processes that are affordable and ready to go."
In October 2007, Coskata wanted to publicly announce its technology, but GM had a better idea. Why not announce GM's ownership stake in Coskata at the North American International Auto Show, an event attended by 700,000 people? Coskata agreed, and on Jan. 13, GM Chairman and Chief Executive Officer Rick Wagoner introduced the world to Coskata. "We came out of stealth mode with GM's announcement," Bolsen says, adding it was one of GM's most media-covered announcements. Stanek agrees. "We did receive a very positive response from a company-image standpoint," she says. "It made sense to align with a leading-edge company that could bring about ethanol from waste. It is a good decision."
GM sold approximately 400,000 FFVs last year and aims to ramp up to 800,000 by 2010. By 2012, it will be producing approximately 1 million FFVs. In addition to manufacturing, GM works on policy-related issues on Capitol Hill and distribution concerns with gas retailers to ensure a fuel supply for its consumers. "GM has had good success with retailers across the country, such as Meijer and Kroger, to market E85," Stanek says. "We're looking to promote the fuel. When Coskata opens, we'll make sure retailers will merchandise its fuel."
With that said, Stanek adds that GM isn't in the fuel business. "We have to focus on our products, but there are things we'd like to enable, such as this technology," she says. She points out that because Coskata is making ethanol so cheaply and is located closer to the end market, consumers will be getting quite a deal compared with gasoline.
On May 1, GM announced a similar investment in Mascoma Corp., another company on its list of cellulosic ethanol technologies. "[Mascoma's technology] is a different approach but with a lot of good science," Roe says. "I think of GM's [investments] as bookends. One is a fast strike (Coskata) and one is more long term (Mascoma)."
With its first demonstration plant sited and a key partnership with GM solidified, Coskata aims to announce a full-scale commercial plant site, alongside a new partner, by the end of this year. Bolsen says the company's next goal will be to enter the commercial-scale market through various partnerships, one of which is Colwich, Kan.-based ICM Inc., Bolsen's former employer. "We're ready to commercialize," Bolsen says. "We want to open a 50 MMgy to 100 MMgy plant, which will take two years to build, and we're working on the engineering right now." To reach that end, he says ICM was an obvious choice. "I knew the quality of ICM and respected Dave Vander Griend, and it is the best [company] at commercializing," he says. A strategic alliance was announced by GM Vice President Troy Clark at the Chicago Auto Show in February. Construction of the commercial-scale plant is slated to begin in 2009 and end in 2011.
Financially, Coskata will be conducting its third round of equity funding, which Bolsen says will hopefully be the last before the company starts collecting revenue. "When you're a small company, you're a takeover target, but right now, we may plan a potential public offering," he says.
There are also plans to add more staff members. Earlier this year, Coskata added a chief financial officer, and it also plans to hire a vice president of manufacturing to rapidly commercialize the company's technology.
With all the business being conducted in Coskata's front offices, Bolsen reiterates that the company isn't getting ahead of itself either. "We were put in the public light very quickly, but we're still focused on research," he says.
Jessica Sobolik is Ethanol Producer Magazine managing editor. Reach her at email@example.com or (701) 373-0636.