Posted: March 24, 2009
Jet stream in green
A Centennial Air Force vet is betting aviation fuels made from nonpolluting renewable sources will take flight. Front Range firms are among those developing them.By Allen Best
Talk about your audacity of hope. George Bye has nothing just yet to offer as a business. He has no goods, no services, not even a technology of his own. He does have a company name, Bye Energy, and a handful of company officers. What he has is an idea of the future. Transportation must change, he believes, with improved energy efficiency and a much greater role for fuels made from renewable, non-carbon feedstock. The niche he is aiming for is in general aviation, specifically that small but influential market of business travelers: companies with their own jets.
With that market in mind, he chose Denver’s south metro area for his startup company. He’s based in Englewood, along Interstate 25 and near Centennial Airport, which is perpetually among the top 10 airports in the nation for business travel. If there is a market for clean, renewable fuels, it’s business aviation, he says. “We’re making preparations,” he says while munching on French toast at a café near the airport. “We’re laying the groundwork for employing the next-generation technology.”
A Cessna XL business jet
Bye, 51, is a civil engineer by training who flew 20 years for the U.S. Air Force. He was in Desert Storm, the 1991 war against Iraq, and has 4,000 flying hours to his credit. As well, he has a patent for a light twin-engine jet called the Javelin. It is described by one posting at f-16.net as a “cross between an F-16 fighter plane and a corporate Lear jet” that can shoot to 49,000 feet in under four minutes. It’s a business jet, the website added, that is “not for the faint of heart.”
Neither are startup enterprises. As everywhere, money is becoming more difficult to find, says Tom Konrad, an investment analyst at AltEnergyStocks.com. Colorado-based, he specializes in publicly traded clean-energy technology and has made a couple of small investments in local startups. “This is one place where venture capital is still flowing, but it is flowing a lot more cautiously than it was a year ago,” Konrad says. “They are looking for much better valuations and much better formed business models.”
Konrad sees this emerging energy frontier as an exciting but difficult place. Profitability is still distant, which works against undercapitalized startup companies. “Only the companies with deep pockets can wait that long. Startups can’t wait,” he said. But there are fortunes to be made as worldwide transportation is reinvented. Driving this quest are grave doubts whether supplies of fossil fuels can keep up with rising demand. Within the United States there are concerns about reliance upon foreign sources. And not least, both the automotive and aviation sectors have gained a tarnished image because of the environmental impacts of burning fossil fuels. One consequence may be increased regulation or a tax on fossil fuels, the major source of greenhouse gases. These add up to price instability but a long-term likelihood of higher prices.
This shift may in the next several decades be as substantial as the one ushered in by Nickolaus Otto’s 1867 invention of the four-stroke internal combustion engine. In their 2009 book, “Two Billion Cars: Driving Toward Sustainability,” transportation analysts Daniel Sperling and Deborah Gordon lay out a compelling case for change.
“We need to admit that current global transportation trends aren’t sustainable and that today’s transportation system, particularly in America, is highly inefficient and expensive,” Sperling and Gordon say. One-fourth of all oil ever consumed by humans is being consumed in the current decade, from 2000 to 2010, they add. If we’re not running out of oil, by no means can that rate of consumption be sustained. They also insist that the planet’s atmosphere cannot safely absorb accelerating emissions of greenhouse gases.
Researchers at NREL are working on a way to use green algae to produce hydrogen directly from water and sunlight for use in fuel cells. Photo by Jack Dempsey. Courtesy of NREL.
Aviation’s problems stand out in sharp profile. Fuel in 2006 became the single largest expense for airlines. Aviation more broadly has been criticized for its high levels of consumption and emissions. Questions are being asked at shareholder meetings about the carbon footprints of executive travel. A 2004 study conducted by Aspen’s city government concluded that commercial and private air travel together were responsible for 41 percent of all greenhouse gas emissions.
Business jets are being seen as the ultimate narcissistic gas-guzzling Hummer in the sky. Consider the congressional ridicule heaped on the chief executives of Detroit’s three major auto manufacturers when they individually flew in corporate jets to Washington, D.C., to plead for financial assistance. The aviation industry is responding. Richard Branson, the flamboyant entrepreneur of Virgin Atlantic Airways, has staked $400 million in venture capital to seed renewable fuels and other efforts that reduce greenhouse gas emissions. The International Air Transport Association, which represents 93 percent of the world’s carriers, has set a goal of drawing 10 percent of its fuel from renewable sources by 2017. Continental Airlines in January flew a Boeing 737 partially using biofuels. Virgin flew a Boeing 747 from London to Amsterdam partially fueled by coconut oil.
Such efforts are viewed skeptically by some industry observers. Aviation critic Jeff Gazzard pointed out to Wired.com that 3 million coconuts would have been necessary to fully power Virgin’s short flight. Evergreen-based aviation consultant Mike Boyd dismisses much of aviation’s response, including a January conference devoted to “eco-aviation,” as little more than a publicity stunt to avoid government regulation.
Colorado companies clustered along the Front Range hope to be part of the answer to alternative fuels. ZeaChem is a company in Lakewood that claims a breakthrough in developing a cellulose-based biorefinery platform. Gevo Inc., a biofuels company based in Englewood, has received funding from major venture capital firms. Blue Sun Biodiesel is based in Golden. ConocoPhillips is setting up its research shop in Broomfield.
Broomfield-based Range Fuels last year got $166 million in venture capital, among the largest investments in biofuels in the nation. Fort Collins-based Solix Biofuels got $10.5 million to build an algae farm on Southern Ute Indian land near Durango. The climate and mountains are an attraction. So is the proximity of the National Renewable Energy Laboratory, which evaluates emerging technology and is developing technology itself, and other federal laboratories. There is also synergy, and sometimes collaboration, with the several universities, particularly Colorado State University, the Colorado School of Mines and the University of Colorado.
Most of the newer companies are involved with biofuels. The largest recipient of venture capital last year, at $437 million, was cellulosic ethanol, which uses such plants as switchgrass. Microalgae was second, with $175.9 million, up from $32 million in venture capital the prior year. One of those local firms is a Boulder-based company called algae@work (A2BE Carbon Capture LLC). Jeff Mettais, the firm‘s vice president of strategic business development, says the U.S. Department of Defense, as the single largest consumer of jet fuel on the planet, and airlines both are driving the interest in algae.
“These airlines are extremely motivated to burn as little carbon fuel as they can, for a lot of reasons, and not just public relations,” Mettais says. “Unlike some plants used to create biofuels, algae does not require vast amounts of land. It also requires very little water. What algae does well is convert sunlight into energy.” Algae seems to lack any real technological showstoppers. What is absent is large-scale production and steady prices to justify that production. Oil prices have swung between $25 a barrel and $148 per barrel in the last year, but even at the higher price algae cannot yet compete. What algae@work hopes to do is sell algae for multiple purposes: for fuel, for bioprotein, and also as a means of absorbing carbon dioxide, a key greenhouse gas. It is produced by burning coal, natural gas and other fossil fuels.
“You have food, energy and climate change all converging over microalgae, and that’s an exciting place to be,” Mettais says. “The core technology of algae is well-proven. The question is, how do you engineer massive man-made systems to harness the power of algae? It is just getting started.” At the National Renewable Energy Laboratory in Golden, senior research engineer Andy Aden agrees that algae’s time has not yet arrived. “It has a long ways to go before it competes with petroleum and diesel, even at $147 a barrel,” he says. He suggests at least five years. But petroleum prices will increase over time, and regulation of greenhouse gas emissions could further increase prices, he adds.
The other central part of George Bye’s business plan is energy efficiency, specifically electrification of engines. Electric engines are far more efficient than internal-combustion engines at converting energy into motion. The challenge – and it’s a central one for electrifying cars, too – is in storing the energy. Existing batteries in cars, for example, store enough energy for only short commutes.
The challenges of airplanes is an order of magnitude greater. “It’s a long ways down the road,” says Ahmad Pesaran, a principal engineer at NREL who has been working on batteries for 16 years. Lithium-ion batteries are one of the hopes, but a distant one. “Right now, we are talking about lithium-ion batteries that have 120 to 140 kilowatt hours per gram. Jet fuels have probably 100 times that,” Pesaran says. “We are a number of breakthroughs away from having the technology.”
One of those companies seeking breakthroughs is a Lafayette-based firm, Porous Power Technologies. Founded in 2006, it owns patent-pending technology invented by Kirby Beard, a company co-founder and vice president of technology. The separator membranes within the battery are highly porous, allowing for faster cell charge and discharge, less waste heat and longer battery life.
Company president Tim Feaver said the firm’s original seed was $1.5 million in small-business innovative funding, to prove feasibility. It now has nine employees and is in the process of raising $7 million from individual investors. Strategic partner funding is likely. It also is doing research at a location near Philadelphia. “We are in the process of scaling up production, and we have a number of different customers that are evaluating the product for different applications,” he said.
Bye Energy is one of those potential customers, a relationship it prefers to call a partnership. “It’s a real opportunity for all of us,” Feaver said. Production of batteries will begin within six to nine months, he said. Sales are to start within a year or two. Lurking in the background, but not every far, is the question of what role governments should play in fostering innovation of these clean energy startups, including Bye Energy. “We have to be viable in the marketplace in and of itself,” George Bye says.
But success is accelerated by support from governments. Loss of Adam Aircraft Industries last year and its 500 jobs ironically made the south metro area eligible for $150,000 in federal funding to create a proposal for a business incubator. Fourteen different incubators are candidates, including a clean energy incubator proposed for 27 acres of land at the Centennial Airport. Centennial’s direct interest, says Robert Olislagers, the airport’s executive director, is to generate revenue for the airport. The broader interest, however, is to ensure the continued viability of general aviation by improving the environmental and economic sustainability of fuels and operations. This is achieved with “very minuscule, incremental steps,” he said.
“George and his company would make a perfect fit. This is just the type of company we have in mind,” Olislagers says. Still, the question lingers of what exactly Bye Energy brings to the table beyond George Bye’s passion as a pilot to clean up aviation’s energy act. Steve Murchie, from the angel investor group Keiretsu Forum, says he heard a short pitch from Bye but was not persuaded. “My reaction was that I wasn’t exactly sure what they were bringing to the table,” he says. “Effectively, they’re operating as a system integrator, but I’m not sure how in this particular space they can monetize that system integration and generate revenues. Possibly as a consulting company, but probably not as a products company, near as I can tell.”
Bye has a ready reply to such doubts. “The Wright Brothers didn’t become Boeing. Henry Ford didn’t invent the car. He created the process to get the car into the market on an economic basis. Each has a role to play.” So, don’t be surprised if Bye Energy in 20 years becomes a household name, at least in aviation circles. But also keep in mind that there were 3,000 automobile companies started between 1900 and 1925. How many of them can you name?