Why hasn’t cellulosic ethanol taken over, like it was supposed to?

In January 2008, Wired magazine published a story about a company called Coskata under the headline: “Startup Says It Can Make Ethanol for $1 a Gallon, and Without Corn.”

The company, backed by the likes of General Motors and Silicon Valley’s Khosla Ventures, claimed it could produce ethanol from corn husks, municipal trash or other biomass. Its vice president for business development said, “It’s affordable, and it’s now.”

Now never came.

Coskata never did make commercial volumes of ethanol made from raw cellulosic material such as corn stalks, switch grass, wood chips, municipal waste and other biomass. Last year, Coskata changed strategy — to use natural gas instead. In July this year, it backed out of a planned $100 million initial public offering.

Coskata isn’t alone. Five years ago, about a dozen companies were racing to start up distilleries that would produce enough cellulosic ethanol to meet the congressionally mandated target of 16 billion gallons a year by 2022. Venture capitalists such as Vinod Khosla, one of the co-founders of Sun Microsystems, vowed to bring their high-tech savvy to the energy business. And the federal government was often ready with grants, loans or loan guarantees. The Agriculture Department provided a $250 million loan guarantee for the Coskata plant.

Today, most of the dozen contenders have gone out of business or shelved their plans. They have had trouble cutting the costs of enzymes, collecting the bulky raw materials and raising capital, especially in the economic slowdown. To oil executives, these firms’ woes show that the makers of cellulosic ethanol have no place in the massive motor-fuel business.

But some boosters of advanced biofuels remain undaunted. “One thing about technology is that there’s always a win, place and show, and everyone else goes under,” Khosla said. He said his firm has invested in half a dozen biofuel technologies. He has spread his bets, usually investing no more than $30 million at a time.

The concept isn’t complicated. Using enzymes, companies can convert cellulose in plants into ethanol. But coming up with a cocktail of enzymes that work quickly and efficiently and at large scale isn’t so easy. Some corporations — among them Poet and DSM, Dupont, Abengoa and Ineos — say they will start commercial production by early next year.

Other companies, however, have stumbled.

In 2008, the Web site GigaOM.com, which reports about emerging technologies, said 11 companies were racing to complete cellulosic plants.

Verenium was one. Later, strapped for cash, it was bought by BP, which by October 2012 scrapped plans for a cellulosic plant in Florida. A spokesman said BP would “redeploy the considerable capital required to build this facility into other more attractive projects.”

Range Fuels, another firm backed by Khosla, closed its Georgia wood-chip plant in late 2011, after getting $46.3 million of a $76 million Energy Department grant and half of an $80 million loan from the Agriculture Department, according to a Bloomberg News report.