Agriculture and industry produce huge amounts of leftover carbon -- hiding in the tips and branches of trees, stalks, husks and other plant material. If only there was a way to put it to good use.

Kior Inc. announced today the opening of its first commercial-scale plant designed to do just that. The facility, located in Columbus, Mississippi, at full capacity will take in 500 tons of biomass a day and transform it into what sounds like a contradiction in terms -- 40,000 gallons a day of gasoline and diesel that could help companies meet their renewable energy goals or mandates. Kior's next plants may be at least three times as large. The company’s technology uses catalysts to vaporize biomass, removing the oxygen and condensing the remainder to oil that can be refined into cellulosic gasoline, diesel and jet fuel. Silicon Valley powerhouse Khosla Ventures owns more than half of the five-year-old company, which is based in Pasadena, Texas.

I spoke with Kior CEO Fred Cannon by phone prior to the announcement. 

Q: How would you explain your technology, in layman's terms?

A: If you think about the way nature makes crude oil, we just accelerate that natural process. Nature does it thermally; we do it catalytically. We start with the same material nature started with. We compress that process from, let's say, a million years, or a very long period of time, into literally seconds. We take solid biomass through a single-step conversion to renewable crude oil. And then we upgrade that crude oil to cellulosic gasoline and diesel. 

Q: What’s Kior's long-term plan?

A: The transportation fuels market is over $2 trillion a year, so it's a very large market globally.

Our next plant is planned for Natchez, Mississippi. International Paper Co. shut down a paper mill there about 7 years ago. As the pulp and paper industry has continued to go down, we would imagine building these conversion units to convert [their unused] biomass. It's the tops of the trees, the limbs and the small trees from thinning the forest that have little or no market today, and [we] convert that to oil. 

Q: What do the refiners make of all this? Gasoline, presumably, but what changes for them? 

A: We sold out our plant in Columbus, Mississippi, before we ever broke ground. Our customers are Catchlight Energy LLC, which is a joint venture between Chevron Corp. and Weyerhaeuser Co., Hunt Refining Co. and FedEx Corp.

They see it as the most effective and least disruptive avenue for them to achieve their internal strategic renewable energy objectives as well as their near term Renewable Fuel Standard volumetric obligations [RFS2]. What they like about Kior is it's a thermo-chemical process. It's not a biological process. They like the fact that we produce fundamentally indistinguishable gasoline and diesel from what they do from petroleum. 

Q: What is the next low hanging fruit that you see out there in terms of potential customers?

A: Our significant customers will be both integrated oil companies as well as independents that are striving to satisfy their growing renewable fuel obligations under RFS2. In addition to that, there is a tremendous market of energy-conscious businesses, like FedEx, that are looking for cost-effective, non-disruptive, low-carbon, environmentally-friendly fuels solutions to continue to grow their business in a truly sustainable manner.

Q: What is the strategy, geographically, beyond Mississippi? 

A: There's no limit to the geographical area. If you're not in a desert there's biomass available in all regions of the country. 

What holds the most promise, to me, is the energy crops. If you look at the tons per acre that they're claiming for energy crops today, it's many times the growth of fast-growing wood. As technologies like Kior develop, who can take even different feedstocks like wood and energy crops -- miscanthus, switchgrass, whatever -- you can really make a difference. 

Q: Which regions internationally are most attractive to Kior?

A: It will be where you have biomass. A lot of the emerging countries have biomass. They may not have oil, but they have biomass. You could imagine Asia, South America, Africa. Most of the world's biomass is not in the U.S.

Q: How far away from what you’re doing is the jet-fuel market?

A: We have not made any announcements for supply to anyone. What we have done, and what I can tell you, we've engaged with the Pentagon and DOD. They've tested our product. 

Q: Kior's stock price also has fallen with those of other biofuel developers, such as Amyris Inc., Codexis Inc., Solazyme Inc., and Gevo Inc., even though your company hasn't failed to meet production targets or experienced technological setbacks. Why do you think that is?

A: I really don't know. The whole sector is down, some more than others. That's why I think we really need some success.

Q: What brought you to Kior?

A: I've been around energy my whole life. As a matter of fact, my father worked for Chevron his whole career. I worked for a company Akzo Nobel NV, a very large chemical company. I have 20 years in the refining catalyst business. 

After my career, many years working for very large companies, I wanted to do something for the industry.

Q: Despite the attention in recent years, we haven’t seen actual production scale up yet. What needs to happen before then?  

A: In any emerging technology, when you have someone who does it, and then someone else does it, then the industry can take off. It obviously takes time to develop potentially game changing technologies, and I think we're at that inflection.

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