"The failed Range Fuels wood-to-ethanol factory in southeastern Georgia that sucked up $65 million in federal and state tax dollars was sold Tuesday for pennies on the dollar to another bio-fuel maker with equally grand plans to transform the alternative energy world," writes Dan Chapman of The Atlanta Journal-Constitution.
The Courier Herald of Dublin reports the Range Fuels facility in Soperton, GA, was sold to the New Zealand-based LanzaTech for $5.1 million.
Wait a minute—that means the same billionaire was involved on both ends.
LanzaTech's main financial backer is the California entrepreneur Vinod Khosla. Also the co-founder of Sun Microsystems, Khosla threw in his lot with alternative energies and decided to not only bankroll the now-defunct Range Fuels, but also secure its government loans.
The Atlanta Journal-Constitution reports that Range Fuels cost U.S. taxpayers $64 million and Georgia taxpayers another $6.2 million. Authorities are trying to do damage control by claiming that the $5.1 million from this weeks' sale will at least help offset losses suffered by the U.S. Department of Agriculture. That's not very consoling.
But wait! There's more.
Although LanzaTech hasn't been given the same type of loans Range Fuels received, the company is still getting $7 million from the U.S. departments of Energy and Transportation to "assist in the development of alternative fuels," Chapman writes.
Sam Shelton, director of research programs at Georgia Tech's Strategic Energy Institute, was unimpressed with Range Fuels' plans and technology. And now it looks as if he was correct.
"It was too damn big a risk for an apparently unproven technology and the due diligence I personally performed on Range would not entice me to invest in it," Shelton told The Atlanta Journal-Constitution.
"Government should not be in the venture capital business selecting technologies," he added.
There were high hopes for Range Fuels when it first started. Dan Chapman reports:
Range was the alternative energy rage in 2007 when then-Gov. Sonny Perdue held a press conference to announce dot-com billionaire Khosla would help finance the $225 million wood-to-ethanol plant in economically depressed Treutlen County, 155 miles southeast of Atlanta.
Later that year, at a groundbreaking in Soperton's industrial park, Perdue boasted that "Range Fuels represents a new future for our country." And Georgia, with its 24 million forested acres, would become world renowned for cellulosic ethanol which, conceivably, turns pine trees and scrap into fuel.
The Bush administration's Energy Department steered a $76 million federal grant to Range. The 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 allegedly supplied the effort with $158 million in startup cash, which means, when you add it all up, Range Fuels raised more than $320 million. Yet, somehow, despite all of its financial backing, the company was unable to accomplish its mission of converting wood into ethanol. Having been met with failure, the company therefore decided to close its doors.
And they didn’t even come close to creating 70 jobs.
Alison Tyrer, spokeswoman for the Georgia Department of Economic Development, said parts of the original deal with Range may remain in place with LanzaTech, according to The Atlanta Journal-Constitution.
Range Fuels had until 2015 to invest at least $150 million, and create at least 50 jobs, before the state would consider "clawing back" the investment. This means that -- to no one’s surprise -- the taxpayer-funded investments will most likely never be seen again.
"The accountability is still there," Tyrer assured. "Technology is almost by definition innovative and with innovation there's a certain amount of risk. But the state is as prudent as it can possibly be with taxpayer money."
Georgians may beg to differ.
"We are disappointed that this company did not succeed," said USDA spokesman Justin DeJong. "It’s important to remember that USDA has a long history of successful lending that supports rural homeowners, business owners, utilities and cooperatives, and over 90 percent of USDA’s loans are successfully repaid."
“Successful” track record or not, it's safe to say that those who spearheaded the Range Fuels investment made a severe miscalculation. Not to worry: they should be able to console themselves with the fact that it wasn’t their own money they gambled.