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Photo courtesy LanzaTech

Alternative reality

Another taxpayer-backed energy plant becomes a failed boondoggle

Taxpayers this month lost $87 million on another failed alternative energy company. Range Fuels, an ethanol plant in southeast Georgia that was supposed to turn wood chips into biofuel, sold at auction for $5 million on Jan. 3, just 2 percent of the $225 million it cost to build the facility in 2007-and $92 million of that came from federal and state loans and grants.

Vinod Khosla, who made billions as co-founder of Sun Microsystems, helped Range Fuels receive a $44 million grant from the U.S. Department of Energy and $42 million in loan guarantees from the U.S. Department of Agriculture. He also persuaded the state of Georgia to pitch in $6 million. Total: $92 million, but the $5 million recouped at auction will go toward repaying the USDA loan.

And guess which investor is backing LanzaTech, the New Zealand-based biofuels company that bought the ethanol plant for pennies on the dollar? Yes, Vinod Khosla. He told a San Francisco audience last October that the willingness to fail is the key ingredient in success.

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The cakes Khosla bakes are particularly tasty when the failure comes at someone else's expense and gives him a second chance to garner profits. Some of those profits could end up helping to fund reelection campaigns for Democratic candidates. Last year, Khosla gave the Democratic National Committee $30,800.

Range Fuels is just one of several alternative energy companies that declared bankruptcy in 2011 after taking taxpayer money. Solar panel producer Solyndra, whose failure triggered a congressional investigation, defaulted on more than half a billion dollars in federal loan guarantees.

When construction on the Range Fuels plant started in 2007, then Gov. Sonny Perdue hailed the facility as an economic boon for Treutlen County, one of Georgia's poorest. As part of its agreement with the state, Range Fuels promised to create 70 jobs, positions that never materialized before the company declared bankruptcy in early 2011. County officials gave the company 20 years of tax abatements and 97 acres to build the plant.

Range Fuels planned to use a new and unproven process to create ethanol, and the plant never produced a drop of fuel. LanzaTech will use the facility to make biochemicals.

Benita Dod, vice president of the Georgia Public Policy Foundation, said taxpayers lose when government tries to pick the winners and losers in business, particularly when it comes to renewable fuel companies: "We're not focusing on whether the sources are renewable and sustainable."

Leigh Jones
Leigh Jones

Leigh lives in Houston with her husband and daughter. She is the managing editor of WORLD's website.


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