http://www.michigancapitolconfidential.com/22939
[links in on-line article]
State Gave Biofuel Company Millions for Unbuilt Plant
Taxpayers absorb losses, Ivy League professors reap windfall
By Tom Gantert | Nov. 8, 2016
A renewable energy company founded by a pair of Ivy League professors
took millions in state and federal dollars to deliver a biofuel plant in
the Upper Peninsula that was never built. The company’s intellectual
property rights were then sold for an undisclosed sum to a private
Canadian company.
Back in 2008, New Hampshire’s Mascoma Corporation was pegged by
then-Gov. Jennifer Granholm as the type of company that was going to
reinvent Michigan’s economy. President Barack Obama even mentioned the
company by name in a 2008 speech.
But instead, the company burned through its government subsidies before
its intellectual property was sold to private companies.
Mascoma Corporation raised $96 million in private financing and was
awarded as much as $120 million in state and federal funding to produce
a biofuel plant that would take wood and turn it into fuel. After years
of delays, the plant planned for Kinross Township in Chippewa County in
the Upper Peninsula was never built. The state of Michigan said just
$6.4 million of the $20 million it gave the company was recovered. The
U.S. Department of Energy would only say that not all of the money it
gave Mascoma was lost. When asked for specifics of the federal grants,
the department said it wouldn’t release that information until it was
requested in a Freedom of Information Act request.
“It really is outrageous,” said Rachel Smolker, co-director of
Biofuelwatch, a watchdog organization that covers bioenergy. “The whole
thing kind of stinks.”
University professors Lee Lynd and Charles Wyman, who co-founded Mascoma
in 2005, didn’t respond to emails seeking comment. Lynd is a professor
at Dartmouth College and Wyman is a professor at the University of
California-Riverside. Wyman formerly worked at Dartmouth.
Mascoma Corporation was founded in summer 2005 at a time when gas prices
were just starting what would be an unprecedented meteoric rise. For the
first time in U.S. history, gas prices averaged more than $2 a gallon in
that year.
In 2008, it was approved for millions in government grants and subsidies
to build a biodiesel plant in the Upper Peninsula. Media stories in 2008
and 2009 trumpeted the plant as a beginning to diversify Michigan's jobs
while curing the country's addiction to oil.
According to an investigation of Mascoma by Biofuelwatch, Mascoma’s
government grants were awarded to build a commercial-scale cellulosic
ethanol refinery.
“Mascoma announced and then abandoned a series of such plants in
Tennessee, Minnesota, Michigan and Alberta, but nonetheless spent grant
funding that had been earmarked for them,” Biofuelwatch’s 2016 report
stated.
Biofuelwatch claimed that Dartmouth Professor Lee Lynd used his contacts
at the college as well as his position with the BioEnergy Science Center
to make it easier to land federal grants for Mascoma. Lynd currently is
listed on the management team of the BioEnergy Science Center, which is
funded by the U.S. Department of Energy, which also gave money to Mascoma.
Biofuelwatch also claimed that the state of Michigan didn’t do its due
diligence in researching the company before awarding its $20 million
subsidy.
Almuth Ernsting, co-director of Biofuelwatch, pointed to the timeline of
the start of Mascoma’s biomass-to-ethanol pilot plant in Rome, New York,
and when Michigan awarded $20 million to Mascoma to start the Michigan
plant.
Mascoma opened its pilot plant in New York in June 2008. Just three
months later, the state of Michigan had already approved its $20 million
grant.
“The purpose of a demonstration (pilot) plant, as the name says, is to
demonstrate that a technology works (though laboratory-stage and pilot
plant-scale demonstrations often precede even that stage),” Ernsting
said in an email. “Granting public funds for commercially scaling up the
use a technology that has not actually been demonstrated seems highly
dubious.”
Emily Guerrant, spokeswoman for the Michigan Economic Development
Corporation, said the $20 million grant was used to “promote the
development, acceleration and sustainability of energy excellence
sectors in Michigan.”
“This wasn’t a traditional business development grant and wasn’t meant
to be a job-creating initiative,” Guerrant said in an email. “Rather,
the program was intended to be an innovative approach to growing
companies that engaged in renewable energy technologies and
implications. Specifically, Mascoma was developing cellulosic fuel
production facility that used non-food biomass to convert woodchips into
fuel.”
The plant was pitched to the media as a jobs producer by Granholm, however.
In fact, Granholm touted Mascoma’s ability to be a job-creator in a 2008
email she sent to John Podesta, a top aide to President-elect Barack
Obama, in her pitch to be selected for cabinet position of secretary of
energy.
“This company and their partners will create jobs in Michigan as they
develop the next generation of cellulosic ethanol that will reduce our
dependence on foreign oil and make fuel more affordable for our
families,” Granholm said in a news article she attached to her email to
Podesta.
Lynd did give an interview in 2014 with the Valley News, a local New
Hampshire newspaper, after he had sold off his company's intellectual
property.
“Businesses are a journey and they take unexpected turns,” Lynd was
quoted in the article. “Was this the end point that was in my mind at
the beginning? No. Mascoma’s business is somewhat different now than
what had been in my mind at the beginning. … Something of value was
created.”
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