April 18, 2006 1:48 PM PDT

Ethanol company gets backing from Gates firm

Cascade Investment, a venture and investment firm funded by Microsoft Chairman Bill Gates, has finalized an $84 million investment in Pacific Ethanol, as the momentum for clean technology grows.

Fresno, Calif.-based Pacific manufactures a corn-derived ethanol that can be mixed with gas to power cars or, potentially, in hydrogen fuel cells. The company also sells chemical byproducts created in ethanol production, a key sideline for the profitability of ethanol companies.

The investment will help Pacific fund the construction of a plant in Madera County, which is slated to open in the fourth quarter of this year, and subsequent plants. By the end of 2008, Pacific expects to be operating five plants in the Western U.S. capable of producing 200 million gallons of ethanol.

Two years ago, only a few venture investors were dabbling in alternative energy, but high oil prices and fears about global warming have prompted a rush of investors. Two of the more popular areas for investment are solar technology and biofuels, which derive energy from animal or vegetable matter.

The ideas for biofuels range all over the map. Microgy says it will harvest natural gas out of cow manure, while others plan to create it from algae.

Further out, it may become possible to develop microbes that produce natural gas or hydrogen.

Many investors, however, warn that it could prove tough to make money on these investments. Start-ups may get trampled by industrial conglomerates like Shell and General Electric.

A lot of alternative energy ideas may also turn out to be uneconomical. Some researchers have noted that producing ethanol is expensive and not very efficient, prompting some companies to look at different plants that can be used to produce the stuff. Demand for solar technology exists in part because the governments of Japan, Germany, California and other places subsidize the cost of buying and installing solar panels.

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6 comments

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Good to see
I hope to see some alternative in near future. Gas prices are already scarring me.

Anyway, pretty soon we will see some Apple Fanboys here ******** about Windows and Bill Gates (eventhough it's nothing related to software or OS).
Posted by totalconfirm (12 comments )
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less than zero sum
when it appears that it takes more energy to produce ethanol than that amount of ethanol delivers, this seems like a waste of time - except to the farm aid lobby. Can investments in cold fusion be far behind? (Oh - Adobe already baught them) Rather have lower cost MS software.
Posted by gggg sssss (2285 comments )
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Not True!
A recent study was done to re-evaluate the equations that found that ethanol production consumed more energy than it provided. The researcher (UC Berkeley I think) found numerous flaws in the original equations. A re-examination of the data concluded that there was a net energy INCREASE when producing ethanol. When ethanol was produced from cellulose, the gain was even greater. So much like the comet dirty snowball theory, the original finding on ethanol was faulty. Now, I could say that the original finding was flawed intentionally, due to pressure from BIG OIL, but that would be sheer speculation on my part.
Posted by maxwis (141 comments )
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Billy no dummy...
You guys are failing to see the genius of this move--reports on this week's crude oil price spike are attributing it to short-term pressures caused by some unwise legislation that phased out mbte and required ethanol as the substitute without building in lead time. This means that refiners are scrambling for sources of supply to meet the new requirements. This is a way to access some big profits in the short term and some steady profits in the foreseeable future, where the use of ethanol will be driven by politics rather than the market. As Jake Gettes pointed out in the sequel to Chinatown, following the money will get you to the facts...
Posted by Razzl (1318 comments )
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Producing ethanol expensive and not very efficient? Think again USA...
Producing ethanol from corn may be expensive and unefficient, but in Brazil (where ethanol has been a major fuel alternative for over 30 years) we get it from sugar-cane. It is a highly economical and efficient source of ethanol reaching yields of up to 4x over corn.

Want to get serious about ethanol? Look at Brazilian experience as being the largest producer and exporter of ethanol and its related automotive technologies; such as bi-fuel engines running both ethanol AND petrol in any mixture.
Posted by macmsb (1 comment )
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Brazil vs U.S ethanol
Sugar cost per MT is approx $375/MT, corn, for Ethanol, is approximately $95/MT. The U.S will be the largest ethanol producer by end of 2006 and by 2008 or 2009 double Brazilian capacity. MTBE is a big deal for the ethanol industry and makes industry profit proof for the next 3-4 years, there are no alternatives and our govt has not invested 'big' dollars in 'non' fossil fuels. High gas prices are here to stay until the U.S can figure out a non fossil fuel alternative.
Posted by Pgrady (1 comment )
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