Mascoma: The biggest misspending of public funds for cellulosic biofuels ever?

USDA photo by Bob Nichols via Flickr

This is an investigation of Mascoma Corporation, a start-up biofuels company which may have misspent more public funds intended for building advanced biofuels refineries than any other company in North America.

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Mascoma took at least $100m and possibly over $155m in public funding intended for building integrated biorefineries. Their biggest donor was the US Department of Energy (DoE), including the DoE funded BioenergyScience Center. They also received $14.8 million from New York State, at least $20 million from the State of Michigan, around $1 million from the State of Minnesota, and over C$1m in total from Alberta Province and the National Research Council of Canada.

The $14.8 million from New York State was for a cellulosic ethanol plant that Mascoma did build, but which has never sold any ethanol. The plant has since been closed down and sold to a biotech company that intends to use it for a different purpose.

The vast majority of the grants received by Mascoma were intended for commercial-scale cellulosic ethanol refineries which were never built at all. 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 investigation shows that:

  • Links between Mascoma and their academic ‘partners’, namely Dartmouth College, went well beyond ordinary collaboration: Mascoma was co-founded by leading synthetic biologists at Dartmouth College and co-founder Lee Lynd used his simultaneous positions in the company and at Dartmouth College to attract millions of dollars of public funds, which were paid to Mascoma but transferred to Dartmouth’s synthetic biology laboratory. Financial agreements between the company and Dartmouth College extended to Mascoma obtaining a licence not just for Dartmouth’s existing intellectual property rights, but ones which the university might obtain in future. Dartmouth College, in exchange, obtained an equity interest as a co-founder of Mascoma;
  • Mascoma’s co-founder Lee Lynd continues to occupy a position on the management team of the BioenergyScience Center (BESC), set up and funded by the DoE, which would have put him in a prime position to attract funding via the BESC itself and, likely, for persuading the DoE to make the much larger grants for Mascoma’s proposed biofuel refineries available;
  • Mascoma’s failure to build any commercial cellulosic refineries cannot be explained by economic problems. According to the figures published by Mascoma, they had sufficient finance to build at least one if not two of their proposed commercial plants;
  • Mascoma’s business model relied on a proposed cellulosic ethanol technology called Consolidated Bioprocessing (CBP). Mascoma co-founder and director Lee Lynd acknowledged in a scientific review he co-authored in 2011 that there were major hurdles to be overcome and that years of fundamental research into CBP were still needed. This strongly indicates that Lee Lynd at least was well aware that the technology was not commercially viable at the time;
  • There is a serious lack of transparency on the part of the grant-giving authorities, especially the DoE. This makes it impossible to ascertain whether Mascoma broke any terms of the grant agreements, or whether those terms were worded so weakly that they could not be used to force Mascoma to either build the proposed plants or repay the money. It is clear however that there was a serious lack of due diligence on the part of all of the public authorities that gave grants to Mascoma, with the possible exception of New York State.

Biofuelwatch believes that a full investigation, with disclosure of all relevant public documents, is vital to understand how such large sums of money could have been misspent on biofuels plants that were never built, and what the implications for the DoE’s overall funding programme for industrial biorefineries are. Biofuelwatch believes that such funds should instead be spent on measures proven to reduce greenhouse gas emissions, such as sustainable solar energy or home insulation.

Download the investigation