Power Plays

The latest on alternative-energy deals from Dow Jones Clean Technology Investor
By YULIYA CHERNOVA and JONATHAN SHIEBERJune 30, 2008; Page R12
Moving Beyond Corn
Investors are pouring new money into companies developing alternative ethanol-production technologies.
Sources like paper pulp and barley are gaining attention as the merits of corn-based ethanol as an alternative fuel source is being questioned by environmentalists and politicians because of the fuel's link to rising food prices.
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In May, oil-and-gas giant Marathon Oil Corp. led an $81 million debt-and-equity funding round for Mascoma Corp., a Boston-based company making ethanol from cellulosic plant material. General Motors Corp. is among the investors in that round and it also has partnered with Mascoma to test biofuels. It was the second investment this year by the auto maker in a cellulosic-ethanol company.
Mascoma uses various feedstocks such as woody biomass, corn stover, and paper pulp to make ethanol.
Cliff Cook, Marathon's senior vice president of supply and distribution planning, says the investment stemmed from the need to comply with a federal mandate requiring the use of ethanol, biodiesel, cellulosic ethanol, and advanced biofuels in fuels. Mr. Cook will take a seat on Mascoma's board as a result of the investment.
All major U.S. refiners are required to blend about 78% of their gasoline with ethanol at the E10 level, which has 10% ethanol blended into gasoline, by 2008. That proportion is set to increase to 91% in 2009.
Bruce Jamerson, Mascoma's chief executive, says the new funds would support a demonstration plant under construction in Rome, N.Y., scheduled to begin production by year end. Future plans include a small commercial facility near Knoxville, Tenn., that will produce less than 10 million gallons of ethanol from cellulosic feedstock. The firm also is developing a larger project in Michigan, he says.
Meanwhile, Osage Bio Energy LLC is using barley as the feedstock to produce ethanol. The Glenn Allen, Va.-based company recently received a $300 million investment from First Reserve Corp., the first ethanol investment by the private-equity firm. Using barley means Osage Bio Energy can sidestep the cost pressures of rising corn prices and the food vs. fuel debate, says Glenn Payne, a director at First Reserve.
WHAT ELSE IS NEW

Here's a look at other recent deals reported by Clean Technology Investor:
• Sapphire Energy, San Diego, Calif., landed $50 million of investment for its "green crude," a direct gasoline replacement produced using genetically altered algae.
• Lehigh Technologies Inc., Naples, Fla., closed a round of financing to build its second rubber-recycling plant. The company aims to capitalize on rising rubber prices by turning old tires into a powder that can be reused in rubber manufacturing.
• Icynene Group Ltd., Mississauga, Ontario, raised $15 million to develop its business making water-blown foam insulation, which it says is more environmentally friendly than traditional fiberglass insulation materials.
Osage plans to use the funding to build four ethanol and protein-feed production facilities in Virginia, North Carolina and South Carolina, he says.