A very interesting week has passed. First we had the elections, then the news of the Iranians firing on a US drone, and then the resignation of the general who heads the CIA. I simply have no comment on these current events as the big news for the week was about a small company called Ceres and another small company called Kior.
Ceres trades on the NASDAQ as CERE. CERE had its IPO earlier this year and traded at $18 shortly after its debut in March. Yesterday it traded at $4.15. Ceres is in the business of selling genetically modified seeds. The stock did not drop because Whole Foods decided against stocking GMO foods. Ceres was touting their GMO seeds to grow switchgrass and other fast growing biomass crops as sources for cellulosic ethanol and other advanced biofuels. We all now know the advanced bio fuels industry is in disarray and most of the biofuels companies like Amyris, Gevo, Codexis, and Solazyme have seen their stocks hit rock bottom.
In the USA the advanced bio fuel industry is about in as bad a shape as the lithium ion battery industry, and the solar industry. The advanced bio fuel companies do not have Chinese competition to blame, they simply tried to do the impossible from a chemical engineering point of view. The cost of production of advanced bio fuels is approximately $4 per liter and the fuels have a wholesale value of $3 per gallon. Perhaps the chemical engineers at Amyris, Solazyme, Codexys, and Gevo were doing their cost calculations in the metric systems and forgot to make the conversion to US gallons. I kind of remember in 1999 NASA made a similar mistake of mixing up metric and imperial units with a failed Climate Orbiter probe to the planet Mars.
But now the story of the biggest bio fool of all. That is Kior (KIOR on the NASDAQ) the Vinod Khosla creation that hopes to bio mimic in seconds what mother-nature took several hundred million years to perform. Kior claims to turn wood into diesel in an instant in their famous fluidized bed reactor with their proprietary catalyst. I think Kior turns wood in mostly soot, carbon monoxide, and carbon dioxide in their reactor and their claims that at commercial scale they will produce 72 to 80 gallons of liquid fuels per ton of bone dry wood are vastly over inflated. Kior will be lucky to have a full production cost of $4 per liter of diesel. Vinod Kholsla had a hand in bringing us the defunct Range Fuels, the carbon sequestration fake out Calera, and the almost defunct Amyris. Vinod is still regarded by some blind followers as the green guru of Sand Hill Road. I think Vinod will soon be forgotten.
You may ask who buys diesel at $4 per liter? Actually the US Department of Defense and the newly greened navy, army, and air force are quite happy to defend us by buying diesel at $19 a gallon or just about $5 per liter. Yes in the times of budget cuts and austerity the defense forces are quite willing to pay six times the market value of diesel to save a few tons of carbon emissions. Maybe the four star generals who are the joint chiefs have the same problem as NASA has back in 1999 and are still mixed up between liters and gallons?
Incidentally California voters turned down the opportunity to label GMO foods. Now California voters have to also tell the Governor to turn down overpaying for GMO fuels and to start developing the shale hydrocarbons that are sitting right underneath us in the once Golden State.