The biofuels bust continues. The latest failure: Range Fuels.
Last week, the company defaulted on a government-guaranteed $80 million loan that it had used to build an ethanol plant in Georgia. AgSouth Farm Credit, the servicer of the loan, will begin a foreclosure sale on the plant in January. The foreclosure provides yet another indictment of the Obama administration’s energy policies.
Twenty-one months ago, the Department of Agriculture trumpeted its $80 million loan guarantee to Range — which claimed it could produce millions of gallons of ethanol from wood chips — by saying it demonstrates the administration’s “goal to make the United States a leader in renewable energy production.” That loan guarantee followed a $76 million grant given to Range by the Department of Energy in 2007.
Last Thursday, David Aldous, the CEO of Range, responded to a request for comment with an e-mail that said the company “has no immediate plans to declare bankruptcy.” He also claimed that Range was “working towards a new business model which would spin off” the Georgia plant. But he refused to elaborate on how the company could spin off a plant that will soon belong to someone else.
Aldous said that Range has spent $38 million of the $80 million loan and “about half the grant” from the Department of Energy, but refused to be more specific. Fine. Using Aldous’s numbers, federal taxpayers are now on the hook for something like $76 million. How many employees are still on the company’s payroll? Aldous refused to say. In fact, he refused to answer any specific questions.
Spokesmen at the departments of Agriculture and Energy did not respond to e-mailed questions about Range.
The key financial backer and political mover behind Range: Vinod Khosla, a wealthy California venture capitalist who has been among America’s biggest biofuel boosters. In 2006, Khosla claimed that making ethanol from cellulosic material was “brain-dead simple to do” and that commercial production of cellulosic ethanol was “just around the corner.” A few months later, Kholsa was again hyping cellulosic ethanol, saying that biofuels could completely replace oil for transportation and that cellulosic ethanol would be cost-competitive with corn ethanol by 2009. Khosla — who says on his website that he is “passionate about alternative energy, petroleum independence, and the environment” — did not respond to repeated requests for comment.
There’s ample reason for outrage here. Range had claimed it could make ethanol at efficiencies far greater than those being achieved by corn-based ethanol producers. Tad Patzek, chair of the petroleum and geosystems engineering department at the University of Texas at Austin and a veteran critic of the biofuel craze, told me that Range’s failure “was easily predictable based on the thermodynamic inefficiencies of the refineries. But no one in the Department of Energy paid any attention.”
Instead, federal bureaucrats were once again gulled by extravagant claims from people like Khosla and a cadre of high-profile national-security types, who continue to claim that ethanol and other biofuels will somehow save America from the evils of foreign oil. And the federal bureaucrats were convinced even though a small dose of sixth-grade math would have shown that large-scale development of wood-based biofuels was little more than a pipe dream.