Atlanta Business Chronicle

The nation’s first commercial plant producing ethanol from wood wastes is open for business in the timber country of southeastern Georgia.

More than a year and a half behind its original schedule, Colorado-based Range Fuels Inc. began operations in early August near Soperton, Ga.

At first, the plant will operate with an annual capacity of 4 million gallons, down from an original goal of 10 million gallons.

“We found little nuances between our demonstration plan and our commercial plan ... the kinds of things you learn going from small to commercial scale,” Range Fuels CEO David Aldous said. “Just learning how to operate a new plant like this takes awhile.”

The delays and lowered initial expectations for the Range Fuels project are a microcosm of troubles plaguing America’s fledgling cellulosic ethanol industry.

Politicians and investors are eager to support domestic production of alternative fuels as a way to reduce dependence on foreign oil. They particularly favor cellulosic ethanol because, unlike the more established corn-ethanol industry, it doesn’t rely on a food staple for raw material.

Congress set an ambitious goal in 2007 with the Energy Independence and Security Act, which called for replacing 30 percent of the nation’s gasoline and diesel consumption with ethanol and other biofuels by 2030.

But last winter, the Environmental Protection Agency was forced to back away from even the modest production goal of 100 million gallons the agency had set for this year, citing the industry’s inability to move beyond research into commercial production.

Art Ragauskas, a chemistry professor with Georgia Tech’s Institute of Paper Science and Technology, said the cellulosic ethanol industry faces a combination of technological and financial challenges.

The key technological hurdle is finding a cost-effective way to convert biomass into biofuels, according to the Bioenergy Science Center, a research facility run by the U.S. Department of Energy in Oak Ridge, Tenn.

Georgia Tech and The University of Georgia are among 19 academic institutions and energy companies participating in research projects under the center’s auspices.

“They’re looking to make the process more efficient and drop the cost structure,” said Ragauskas, the leader of Georgia Tech’s bioenergy research team.

But Jill Stuckey, director of the Georgia Environmental Finance Authority, said the recession is making it more difficult for cellulosic ethanol researchers to get the funding they need to move beyond demonstration projects into commercial production.

“It’s pretty easy to make something at bench scale,” she said. “But it’s very hard to scale these technologies up.”

That’s where Range Fuels’ early bird status gave it a leg up on competitors. When the company broke ground on the Soperton project in November 2007 — ahead of five other cellulosic ethanol projects selected for federal assistance — it was first in line for a $76 million grant from the Department of Energy.

After obtaining more than $100 million in private commitments in 2008, Range Fuels landed additional federal support last year in the form of an $80 million loan guarantee from the Department of Agriculture.

“They got in before the recession,” Ragauskas said.

Range Fuels’ initial run of the plant was short. After just a couple of weeks of operation, the plant has shut down until September.

Aldous said it will reopen after undergoing modifications aimed at eliminating bottlenecks in the process.

While the plant produced methanol during the brief startup, Aldous said it will start turning out ethanol in September. Methanol is a simpler form of alcohol than ethanol and, thus, is easier to produce, he said.