Xethanol touts orange powered cars

New York-based corn ethanol producer Xethanol said this month that it has bagged a $500,000 grant to turn waste product from citrus fruits into ethanol fuel.

The company said its subsidiary Southeast Biofuels LLC received the grant from the Florida Department of Agriculture and Consumer Services. The money will go toward a $5.9m demonstration plant, the firm claimed, which it hopes will be able to produce batches of between 50,000 and 100,000 gallons of cellulosic bioethanol.

Advocates of cellulosic bioethanol, which is made from waste agricultural material, argue that not only is the fuel more energy intensive than conventional biofuels, but as it is not made using food crops it does not contribute to rising food prices.

However, the technology is yet to be commercialised on a large scale and the extra processes involved to break down tough waste material such as citrus waste or corn stalks mean that costs tend to be higher than for conventional biofuel plants.

However, Xethanol chief operating officer Tom Endres said that the company was confident its new plant could compete with conventional corn-based ethanol plants. "The energy used is about at par with sugar and corn ethanol," he explained, adding that the additional enzymes and heat needed for the two-day conversion process would be offset by lower raw material costs. "The difference is you're not paying a large amount for the feedstock, which gives you a competitive edge."

Should the plant yield results, the company may sign a deal with a large citrus processor to protect itself from any subsequent rises in the price of citrus waste products, said Endres.

Xethanol has a history of controversy surrounding its biomass-to-ethanol conversion efforts. It recently moved to settle a consolidated set of seven class action lawsuits from investors. The lawsuits claimed that the firm had misstated its ability to commercialise biomass to ethanol production, and had also failed to disclose dealings with third parties who had a history of stock fraud.

Xethanol said in its most recent 10Q filing that it had no timeline for profitability. It also released financial statements earlier this month announcing it was considering selling its plants in Augusta, Georgia, and Spring Hope, North Carolina, where the company had planned to make next-generation cellulosic ethanol.

Shares in the company, which hit a high of over $15 in April 2006 during the period detailed in the class action lawsuit, are now trading at sub-dollar prices.