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Fractured plan | Scott Christiansen leaves Rumford's Fractionation Development Center without funding, without direction and struggling to survive
Scott Christiansen, the ideas man from Rumford who once planned to make western Maine the quinoa capitol of the world, has lately created something he doesn't like - a failing effort.
As this issue went to press, Christiansen, 46, planned to leave his post as executive director of the Fractionation Development Center, a Rumford nonprofit and Christiansen brainchild that just months ago was poised to lead western Maine to the forefront of the country's emerging biomass industry. Christiansen planned to build biorefineries to turn abundant Maine wood into electricity and, he believed, pull western Maine out of an economic rut, establish the state as an energy exporter and create thousands of jobs.
But dreams did not translate into dollars. On June 22, the day after the state appropriations committee denied legislation to fund FDC in the 2008/2009 budget, leaving the struggling nonprofit all but penniless, Christiansen mailed a letter to FDC's seven board members announcing that on June 29, just about when the last of the nonprofit's roughly $400,000 in state funding would run out, he would resign.
The scene is drastically different from the heights FDC enjoyed a year ago, when the new nonprofit seemed to be in the right place at the right time. With oil prices inching up, scientists around the country began creating fuel from everything from plankton to coffee grounds. And since discovering a marketable oil substitute could be one of the investment coups of the century, millions of dollars in private and federal money poured into the race for the next big biofuel thing.
Enter, it appeared, Maine. In February 2006, FDC released a 129-page "River Valley Biomass Refinery Market Study" funded by a grant of approximately $300,000 from the U.S. Department of Energy. The report attracted immediate national and local attention, and for good reason. It said that in 20 years Maine could host up to 74 biofuel refineries employing 7,000 people and supplying 50% of the state's fuel needs.
A year later, this past February, Christiansen visited towns around the state — Lincoln, Millinocket, Old Town, Presque Isle and more — in a well-publicized to ur to find a place for what he said would be the world's largest biorefinery, a $45 million facility that would bake wood into biofuel and provide good jobs to the communities in Maine that need it most. All FDC required, Christiansen told Mainebiz, was about $5 billion in private investment over the next two decades.
Fast-forward to June, the month FDC had originally planned to announce the biorefinery site, and the nonprofit was without investors, minus its prominent executive director and considering dissolving altogether.
What happened?
Ahead of the curve
The FDC spent the past year and a half focusing on a biofuel conversion technique called pyrolysis, in which wood is converted to bio-oil through a heating process devoid of oxygen. The problem is pyrolysis is years away from being as commercially viable as, for example, ethanol, according to John Scahill, project manager for the U.S. Department of Energy's Biomass Program.
Indeed, ethanol fuel created from crops like corn is receiving the most commercial attention these days, in part because the current administration supports this method. In February, the DOE announced it would spend up to $385 million to fund six ethanol biorefineries around the country (none of which are in the northeast). The DOE cut much of its pyrolysis funding in the mid-1990s in favor of more immediately commercial techniques, Scahill says. "[Pyrolysis] hasn't been brought far enough down the development path," he explains.
This year, the FDC awakened to the harsh realities of a speculative biofuels market some investors compare to the hyperactive dawn of the Internet. After months of failed attempts to attract private inventors, Christiansen announced in April plans for FDC's $45 million biorefinery had stalled.
"We are putting our project on hold for about two months while we reassess our market opportunities," Christiansen told the Bangor Daily News.
And the hits kept coming. In May, Christiansen and his associate director, Todd Polanowicz, discovered the figures they relied on to shop FDC pyrolysis to investors were flawed. FDC's technology partner, a Canadian company Christiansen declined to name, pegged the biorefineries' return-on-investment at 30%, but Christiansen and Polanowicz realized in May that figure is actually closer to three percent because of high wood prices and American processing and permitting costs — including a multi-million-dollar turbine upgrade to make the pyrolysis process meet U.S. Clean Air Act standards. Christiansen says investors would require at least a 25% ROI for an experimental start-up and wouldn't touch a risk at three percent.
"We worked out the operating parameters of the technology itself, not as it's done necessarily in Canada," says Christiansen of the recalculation. "We challenged all of the assumptions that the manufacturer was making."
As former executive director of the nonprofit River Valley Growth Council in Rumford, Christiansen studied the western Maine economy in 2001 and urged the council to pursue biomass, in part because he predicted the price of oil would skyrocket to $50 per barrel by 2005 (oil prices hit $68 per barrel in mid-June this year). Christiansen launched FDC in October 2005 as a growth council spin-off to explore energy alternatives in anticipation of this coming oil crunch. Christiansen hoped to make Maine a leader in what he still believes will be a booming biofuels market.
But the new ROI figures shook up that pyrolysis love affair. "The more money we put into the model and the more detail we put into the model, the worse it began to look," Christiansen explains. To make ends meet, FDC would need to develop "co-products," or offerings other than biofuel, that could bolster revenue. But time was running out.
A "bitter pill"
Days after the ROI reckoning, FDC and its Canadian technology partner mutually dissolved their contract because FDC would not have been able to meet the agreement's benchmark schedule. In early June, the nonprofit moved into a smaller office space with a month-by-month lease in the River Valley Growth Council building in Rumford.
And then the bottom officially dropped out.
On June 21, the Legislature's appropriations committee killed FDC's request for $700,000 in state funding in part because, according to chief of the Senate Majority Office Peggy Schafer, the nonprofit had been unable to find private investors to supplement state support.
The following day, Christiansen mailed his resignation letter to the FDC board, announcing that he would leave at the end of June to pursue a master's degree in ecology and environmental sciences full-time at the University of Maine. Christiansen insists he made his intentions to one day leave FDC known "when I sat down with my board for the first time" and that his departure was not contingent on funding.
"I always tried to figure out if we were ahead of the curve or behind it," says FDC board chair Bruce Bornstein. "I think we were very forward-thinking and had a great vision but we may have been a little ahead of the curve."
According to Christiansen, the board of directors will meet sometime in mid-July to decide the fate of the FDC.
Christiansen says industry peers encouraged him to hang on to FDC's contacts and piles of research and seek refinery investors again in a couple of years when pyrolysis technology has advanced further. But waiting doesn't come naturally to Christiansen, who after graduate school plans to return to the international economic development work he was doing before coming to Maine in 2001.
"The tech people I talk to tend to smack me around and say 'Look at all the work you did, this is far along, all you need to do is wait,' and then I walk around town and look at people in Maine who hoped this would turn into jobs overnight," says Christiansen. "How you view this depends on your perspective. That said, to leave without it having gotten to an end point that a person on the street perceives as a success, that is a bitter pill."
Despite FDC's boom and bust, Christiansen still believes Maine should capitalize on biofuel.
"This is tough stuff, Maine isn't following anybody else in this, we're blazing a path and figuring it out," he says. "But we've gotten to the point where we know what we want to do and how we want to do it and where we want to do it. If the FDC doesn't have the resources to go forward it doesn't mean we failed. It just means we didn't stick it out."
Whatever happens to FDC, Christiansen will leave town with at least one certainty.
"We know 50 ways not to do a biorefinery," he says.
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