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Cleantech Experienced Growing Pains

by Marc S. Reisch
December 24, 2012 | A version of this story appeared in Volume 90, Issue 52

Credit: A123 Systems
Equipment owned by A123 Systems will go to new buyer Wanxiang.
Facilities owned by A123 Systems such as this plant in Romulus, Mich. (shown in photo), will go to new buyer Wanxiang in a bankruptcy sale.
Credit: A123 Systems
Equipment owned by A123 Systems will go to new buyer Wanxiang.

While a number of cleantech projects advanced, others in the crowded field failed outright. Some cleantech firms formed alliances to survive and to speed new technology to the market.

One notable failure was that of battery maker A123 Systems, which filed for bankruptcy in October because the large market it had envisioned for electric vehicles never materialized. The firm, which earlier benefited from a $249 million grant from the Department of Energy, was sold at a court auction in December to Chinese automotive parts maker Wanxiang Group for $257 million. The U.S. government still has to approve the sale.

The sad condition of the U.S. battery business presented an opportunity for BASF to consolidate its position as a supplier of materials for next-generation automotive batteries. In February, BASF bought Ovonic Battery, the inventor and worldwide licensor of nickel-metal hydride rechargeable battery technology. A week later, the firm bought the lithium electrolytes and additives business of Merck KGaA. In April, BASF bought Novolyte Technologies, a Cleveland-based maker of electrolytes for lithium-ion batteries.

Others with a long-term perspective on the battery market continued to invest. Rockwood Holdings said it would spend $140 million to build a lithium carbonate plant in Chile to meet expected demand for compounds used in lithium-ion batteries. Teijin said it was building a plant in Asan, South Korea, to make separator films for lithium-ion batteries.

Chemical and fuel ventures based on agricultural products also experienced difficulties. In February, Archer Daniels Midland ditched partner Metabolix and ended the two firms’ joint venture to produce Mirel, a biodegradable polyhydroxyalkanoate plastic. ADM said the financial returns from the five-year-old venture were too uncertain.

In May, Iogen Energy, a cellulosic ethanol joint venture between Iogen and Shell, pulled back on a plan to build a large biomass-to-ethanol plant in Manitoba. The firm also said it would lay off 150 ­employees.

Gevo hit a setback in October when it temporarily halted production of corn-sugar-derived isobutyl alcohol at its facility in Luverne, Minn. The firm’s stock price fell almost by half in the two days after the news was released.

Difficulty raising money from investors meant start-up cleantech firms continued to rely on government largess. For instance, the U.S. Department of Agriculture said it would guarantee a $233 million loan to ZeaChem, which was building a cellulosic chemicals and fuels plant in Boardman, Ore.

However, Poet turned down a $105 million loan guarantee from the Department of Energy to build a cellulosic ethanol plant. Poet determined it didn’t need the guarantee after it formed a joint venture with enzyme maker DSM.

The slow economic outlook did not perturb others as the year ended. DuPont broke ground on its first large cellulosic ethanol plant, in Nevada, Iowa; LanzaTech and China’s Baosteel planned a full-scale ethanol facility in China based on waste gas from steel manufacturing; and Fulcrum BioEnergy slated a plant making ethanol from municipal solid waste in Reno, Nev.


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