Qteros News and Press Releases

Qteros, Inc., a leading developer of second-generation technology solutions for the biofuels industry based on its unique Q Microbe™ platform, announced today that Mick Sawka has joined the company as Vice President, Business Development, to help accelerate the company’s technology and commercial initiatives in the worldwide cellulosic ethanol marketplace.

Mr. Sawka’s 19-year experience in the specialty chemicals industry includes negotiating and leading numerous large-scale strategic partnerships, alliances, and acquisitions as well as complex product introductions throughout the world. Additionally, Sawka has been responsible for the development of numerous technology platforms and associated strategic business plans within both development-stage and large-scale specialty chemical organizations.

Mr. Sawka joins Qteros from Microbia, Inc. where he led business development efforts for this developer of unique bio-based specialty chemicals directed at large-scale industrial applications. Prior to Microbia, Mr. Sawka spent six years at Cabot Corporation, most recently serving as Director of New Business Development and R&D for Cabot’s Performance Products Business Group. Prior to Cabot, Sawka spent 11 years at 3M in various senior level business and product development positions throughout the company. Mr. Sawka holds a BS in Chemical Engineering from Stanford University, an MS in Chemical Engineering from MIT (including assignments in Dr. Robert Langer’s lab), and a Masters in International Management from The University of St. Thomas in St. Paul, Minnesota.

“Having worked closely with Mick at Microbia, I’m thrilled to have him join us to help at this important stage of our development and believe he brings the kind of energy, industry experience, and business creativity we need at Qteros to help catalyze our strategic corporate development efforts”, stated John McCarthy, President and CEO of Qteros.  “Mick’s experience and success helping lead innovative product development within large-scale industrial chemicals companies will bring a great complement to our team as we accelerate the development of important industrial partnerships for Qteros.”

“Qteros is a dynamic organization with a truly disruptive technology platform, and I am thrilled to have the opportunity to help build the partnerships that will transform Qteros’ scientific achievements into commercial reality within the emerging worldwide biofuels industry,” stated Sawka.

About Qteros, Inc.

Qteros is committed to delivering innovative process technologies for clean transportation fuels that reduce greenhouse gas emissions at a price competitive with gasoline. The company is currently in the process of scaling up a unique microbial solution for the highly efficient and cost-effective conversion of non-food biomass into clean transportation fuel. The company’s patented Q Microbe™ system converts a wide array of cellulosic biomass directly into ethanol in a single process, consolidating enzymatic hydrolysis and fermentation, largely eliminating costly exogenous enzymes and associated pretreatments, and greatly simplifying the entire production process. This process is commonly referred to as consolidated bioprocessing. Qteros’s scientists and business team are dedicated to producing liquid fuels to achieve a sustainable solution to the world’s growing energy needs. Qteros has been funded by some of the leading investors in the alternative energy industry including, among others, Venrock Associates, Battery Ventures, BP Technology Ventures, Soros Fund Management LLC, and Valero Energy Corporation. For more information, visit www.Qteros.com.

John A. McCarthy Jr., the new chief executive officer of biofuel firm Qteros, sees endless possibilities for the company.

“It’s a great business with great investors,” McCarthy said just days after the Marlboro-based company brought him in to replace Bill Frey. “And my mandate is to move things along as rapidly as we can.”

Qteros works to convert biomass into cellulosic ethanol with its patented Q Microbe.

The tiny organism was discovered near the Quabbin Reservoir in Western Massachusetts by University of Massachusetts microbiologist Dr. Susan Leschine and her lab assistant, Tom Warnick.

Since then, it has been hailed by the director of the National Renewable Energy Lab as the “Holy Grail of cellulosic ethanol.“

McCarthy said he arrived with very clear marching orders.

“We are working to increase the robustness of the organism and the system around it, so we can produce ethanol at the highest yield and the lowest cost,” he said.

At the same time, he added, he is trying to find partners who will establish pilot-scale facilities for the company’s product.

Expectations for the company and its cleaner fuel products are high.

Some even say the Massachusetts firm could help the world wean itself off fossil fuels.

McCarthy is a veteran biofuel company executive, who worked at Verenium Corp., a Cambridge-based cellulosic ethanol firm, and Microbia, a bio-based specialty chemical developer in Lexington.

He sees a robust future for the business here in Massachusetts.

“We’ve got the academic institutions and the intellectual capital, and the governor and the state are pushing it, too,” McCarthy said.

The state’s Clean Energy Center recently lent the company $450,000 to set up a research and development plant in Chicopee.

But McCarthy also thinks Americans have a long way to go when it comes to embracing clean and alternative energies.

“When you travel in Europe, you see how far they have come when it comes to integrating clean technology and alternative energy in their lives,” he said. “I’m encouraged that we will be able to move things forward here in the state, but it will take some pretty significant political willpower.”

Qteros, Inc., a leading developer of second-generation technology solutions for the biofuels industry based on its unique Q Microbe ™ platform, announced today that John McCarthy has joined the company as President and Chief Executive Officer  to accelerate the company’s technology and commercial initiatives in the worldwide cellulosic ethanol marketplace.

Mr. McCarthy’s 18-year experience includes managing the transformational growth of numerous leading life science and bio-based chemical companies into high-value commercial entities. He has raised over $1 billion of capital in the private and public markets, and developed and executed numerous complex and large-scale strategic corporate partnerships.

Mr. McCarthy joins Qteros from Microbia, Inc. where he served as Chief Business Officer of this developer of unique bio-based specialty chemicals for large-scale industrial applications. Prior to Microbia, Mr. McCarthy was Executive Vice President for publicly-traded Verenium Corporation, a pioneering leader in the development and commercialization of cellulosic ethanol and specialty enzymes.  At Verenium, McCarthy served as the chief architect of the company’s growth from a small privately-held business into a publicly-traded leader in the industry through the successful merger and integration of Celunol and Diversa and the subsequent creation and execution of the industry’s precedent-setting strategic corporate partnership with BP plc.

“We are thrilled to have John join us at this important stage of Qteros’ development to lead and accelerate our technical, commercial and organizational growth plans,” stated Steve Goldby, Qteros board member and Partner at Venrock Associates. “John’s experience building pioneering companies in the biofuels industry such as Verenium, together with his proven track record of developing and managing complex strategic corporate partnerships, make him uniquely qualified to lead and position Qteros for significant growth.”

“I am very pleased and excited to be joining Qteros at this critical stage of its development, and look forward to accelerating our technical and commercial plans as we focus on making our Q-Microbe ™ platform a cellulosic ethanol industry standard,” stated McCarthy.

“The broad alternative energy industry represents one of the most important and high-growth opportunities for this generation,” McCarthy added. “I look forward to positioning Qteros and its partners as a leading technology solution to support the multi-billion gallon per year U.S. mandate and worldwide requirement for cellulosic ethanol production.”

Mr. McCarthy’s prior experience includes senior executive positions at Xanthus Pharmaceuticals, Synta Pharmaceuticals, Exact Sciences, Concentra Managed Care, and Morgan Stanley. Mr. McCarthy graduated with high honors from Lehigh University and received his MBA from the Harvard Business School.

For interviews with John McCarthy, please contact Qteros’ press contacts, Patricia Charles, at patricia@renewcomm.com or (202) 351-1757; or Peter Kelley at peter@renewcomm.com or (202) 270-8831.

About Qteros, Inc.
Qteros is a venture capital-backed company committed to delivering innovative process technologies for clean transportation fuels that reduce greenhouse gas emissions at a price competitive with gasoline. The company is currently in the process of scaling up a unique microbial solution for the highly efficient and cost effective conversion of non-food plants and waste into clean transportation fuel. The company’s patented Q Microbe™ system converts a wide array of cellulosic biomass directly into ethanol in a single step, consolidating enzymatic hydrolysis and fermentation, largely eliminating costly enzymes and associated pretreatments, and greatly simplifying the entire production process. Qteros’ scientists and business team are dedicated to producing liquid fuels to achieve a sustainable solution to the world’s growing energy needs. Qteros has been funded by some of the leading investors in the alternative energy industry, including among others, Venrock Associates, Battery Ventures, BP Technology Ventures, Soros Fund Management LLC and Valero Energy Corporation.

Industry veteran John McCarthy to lead the company.
Qteros, the Marlborough, MA-based developer of cellulosic ethanol technology, has brought on industry veteran John McCarthy as CEO and bid adieu to former chief executive Bill Frey. The company announced McCarthy’s appointment this morning.

McCarthy, who joined the startup last week, was the executive vice president at Cambridge, MA-based cellulosic ethanol developer Verenium (NASDAQ:VRNM). He said he led Verenium’s landmark 2008 deal (worth $90 million) with energy giant BP to collaborate on the development of ethanol made from non-food sources, or cellulosic ethanol. This is the type of deal McCarthy is now working on bringing to Qteros, he said.

Qteros—which is developing microbes to reduce the normally multi-phased process of producing ethanol into a single step—has raised around $30 million in venture capital from deep-pocketed investors such as Battery Ventures, BP Ventures, Valero Energy, and Venrock Associates, to name several. Yet under the leadership of former CEO Frey, who joined Qteros in mid-2008 after serving as an executive for chemical industry juggernaut DuPont (NYSE:DD), a major corporate partnership on par with the Verenium-BP deal has eluded the startup.

“The company is at a stage of development where the board and the investors felt that we really needed to accelerate to the next level of development and felt that I was the right person for the job,” said McCarthy, who was previously the chief business officer at Lexington, MA-based biotech chemical firm Microbia.

Qteros (formerly SunEthanol) is among a number of startups such as Lebanon, NH-based Mascoma that are developing microorganisms that can help turn feedstocks such as corn stalks, switch grass, woodchips, and other cellulose-based materials into ethanol. McCarthy said that the Qteros technology is capable of producing ethanol at a price similar to traditional corn-derived ethanol. And as the price of gasoline rises, he said, the firm’s process could eventually yield ethanol that is priced competitively with petroleum-based fuels.

Dr. Susan Leschine, the University of Massachusetts, Amherst, professor whose research led to her cofound advanced-biofuels company Qteros, has been named one of the Top 25 Women in Tech by media trendsetter AlwaysOn.

Those named to the first-annual list were chosen for overall innovation, ability to identify new market opportunities, and creation of stakeholder value, among other criteria.

A decade ago, Dr. Leschine came across a unique anaerobic microbe, now known as the Q Microbe™, near the Quabbin Reservoir in western Massachusetts. Her discovery and subsequent research led to the founding of Qteros, which is using the microbe to make cellulosic ethanol quickly and cost effectively from plant waste.

In her UMass Amherst lab, Leschine continues to work diligently on the Q Microbe. “We’re finding novel steps in the pathway to ethanol production, which suggest some new biology,” she says.
Ethanol is a typical microbe byproduct, but for nearly all of the microbes Leschine had studied from around the world, ethanol production was negligible. Once she learned the potential of this microbe, she realized that it was no ordinary bug. “The Q Microbe wasn’t restricted to one or two of the very complex components that make up plants, but could break down all of them, and its main product was ethanol,” Leschine says.

And the more cellulose the microbe is fed, the more ethanol it produces. “That was a key discovery—that this microbe had potential for commercialization in a process to convert biomass into ethanol.”

Qteros, which she cofounded in 2006, was originally called SunEthanol. As the company has grown to 45 full-time employees, Leschine’s role has shifted to scientific consultant, while she holds down her teaching and advising positions at the university. But she remains committed to the superbug that started it all. “It gives me great satisfaction to see Qteros harnessing the power of the Q Microbe, discovered in my lab at UMass Amherst, to sustainably meet our country’s energy needs.”
“It has been an honor for us to work with Dr. Leschine to take this technology from the lab to market,” said Qteros CEO Bill Frey. “Susan is a leader in her field, and through our work together we will expand the future of bioenergy worldwide.”

Dr. Leschine joins leaders of such companies as Flickr, Google, Scribd, and Facebook in garnering this recognition. “It is such an honor to be part of this talented group of women who are passionate about realizing the full potential and benefit of their innovative technologies,” remarked Dr. Leschine.

Susan Leschine and other recipients of the award were celebrated at a special luncheon, presented by
Accenture, at “Venture Summit Silicon Valley” on December 8.

Qteros, whose breakthrough Q Microbe technology turns biomass into cellulosic ethanol, has welcomed Kevin F. McLaughlin and Ralph M. Lerner to the Qteros leadership team. McLaughlin brings 30 years of financial and operating management experience from the high tech, biotech, and education industries.

Lerner has over 20 years of industry experience in general management, business development, and strategy development and implementation in the global petrochemical and energy industry, with companies including BP and Amoco. Lerner brings to the company a global perspective, having spent six years in Asia; an in-depth understanding of global commodities markets, and extensive experience in developing innovative commercial arrangements.

“Kevin and Ralph arrive at Qteros at a critical time, and we’re confident that their backgrounds and skills will help guide our company through our next stages of development and growth,” said Qteros president and CEO Dr. William Frey. “As key members of our dynamic leadership team, they will help us build Qteros into an exceptional commercial success.”

McLaughlin most recently served as chief operating officer and member of the Board of Directors at Aptius Education, Inc., a company he helped cofound, which is focused on the acquisition of companies in the areas of career education, vocational and technical training and licensing, and certification programs. From 1996 through 2007, McLaughlin was with PRAECIS Pharmaceuticals, where as the company’s first chief financial officer he had responsibility for private financings, partnership financings, and the company’s IPO and secondary stock offerings. In 2004, McLaughlin became COO and then president and CEO and member of the Board of Directors of PRAECIS and was responsible for negotiations resulting in the sale of the company to GlaxoSmithKline. Earlier in his career he spent 16 years in senior financial roles at Prime Computer and Computervision Corporation.

“Qteros is a fast-moving company with a solid foundation and a great deal of promise in a next-generation industry,” said McLaughlin. “It’s very exciting to join the company as it prepares for significant growth.”

Lerner was most recently vice president of ventures and business support for BP’s chemicals business based in Shanghai, China, where he served on the Board of Directors and represented BP’s shareholder interests in a large joint venture located outside of Shanghai. Prior to that role, he was based in the Chicago area, as general manager of a $600 million global chemical business with manufacturing facilities in the U.S., Canada, and Europe. Earlier in his career, he served as vice president of ventures and development for BP Chemicals based in Hong Kong and venture development manager for Amoco Corporation, as well as holding positions in finance and engineering.

“Throughout my career, I’ve led multi-functional teams that were focused on creating value through developing and implementing new strategies, projects, and commercial arrangements — in businesses with a commodity focus and a global perspective,” Lerner said. “Bringing that experience to Qteros, a cutting-edge energy company with national and international ties, allows me to apply my skills in one of today’s most exciting industries.”

Employees to use root-enhanced, native species to enhance greenhouse gas reduction on the local level

Over forty employees at Qteros, a Marlborough, MA-based biofuels company, are expected to plant trees as part of the International Day of Climate Action, October 24, 2009. Climate Change awareness actions such as this will happen in over 170 countries around the world on that day.

“Planting individual trees is one small step towards reducing greenhouse gases (GHG) and that is part of Qteros’ overall mission,” says Jon Gorham, a Qteros co-founder who is planting a “super tree” on a 57 acre organic farm and Community Supported Agriculture (CSA) project. “We hope to make a much larger contribution to reducing GHG emissions once our clean fuel, cellulosic ethanol technology becomes commercial at a cost competitive with gasoline” said Gorham.

Other Qteros employees are planting trees in their backyards, at daycare centers and at schools. Some are memorializing loved ones and others are showing youngsters the importance of a long-term perspective towards climate change.

The transportation sector is responsible in America for producing around 25–30% of GHG emissions according to the U.S. EPA. In addition, DOE national labs calculate that cellulosic ethanol production is 85% less GHG polluting than petroleum. Qteros’ core technology is based on the Q-Microbe™, which converts biomass into ethanol in a single step.

The International Day of Climate Action is sponsored by 350.org. That organization is working to inspire the world to rise to the challenge of the climate crisis – to create a new sense of urgency and of possibility for the planet. It is an international campaign dedicated to building a movement to unite the world around solutions to the climate crisis.

Long after October 24th, the scientists and entrepreneurs at Qteros will be working hard to make the promise of cellulosic ethanol from trees and other biomass a reality. And the trees they plant on Oct. 24 are symbolic of the passion they have to change the world by combining small efforts like planting trees and large ones like developing a sustainable transportation fuel.

Qteros is a venture-backed company committed to delivering innovative process technologies for clean transportation fuels that reduce greenhouse gas emissions at a price competitive with gasoline. Qteros is scaling up a unique microbial solution for converting non-food plants and waste into clean transportation energy. Q Microbe™ converts a wide array of cellulosic biomass directly into ethanol in a single step, consolidating enzymatic hydrolysis and fermentation, largely eliminating costly enzymes and associated pretreatment, and simplifying the entire production process. The Qteros scientists and business team are dedicated to producing liquid fuels to achieve a sustainable solution to the world’s growing energy needs.

Company: Qteros
Year founded: 2006
Funding Raised:$30 million

Uses a unique type of microbe to convert biomass into ethanol in one step, potentially replacing a multistep process that uses expensive enzymes to break down cellulose.

Read the full article at Technologyreview.com.

Qteros breaks ground on new pilot plant to produce cellulosic ethanol.
Several months ago, amid reports that Qteros — a company working to use something called the ‘Q microbe’ to revolutionize ethanol production — would be leaving the Pioneer Valley to continue its progression in Worcester, its CEO, Bill Frey, announced a commitment to maintain a strong presence in the 413 area code. It has taken some time, and some maneuvering, but he’s now making good on that pledge.

On Oct. 9, Frey and a host of other dignitaries officially broke ground, if you will, on a $3.2 million pilot plant that will be located in a 16,000-square-foot building off Padgett Road in Chicopee that was built on spec by Agawam-based Development Associates.

Qteros, which Frey boldly describes as the “Microsoft of energy,” will soon commence work to ‘scale up’ its production of ethanol from common biomass, rather than corn. “We believe that this technology is transforming the way we produce fuel,” said Frey, “and the work we are doing at this pilot plant is a critical step in scaling up our process.”

The location of the plant in Chicopee was hailed by attendees as not simply matching a company with available square footage, but as part of a commitment on the part of Qteros to have a presence in the region, and for Chicopee officials to continue to bring new jobs — and new technology — to their city.

And for that, Mayor Michael Bissonnette praised all those on hand for the ceremony and, a few days later, someone who wasn’t — Robert Redford.

The Natural

Bissonnette told BusinessWest that, in 2007, he was one of 41 mayors from across the nation invited to the ‘Sundance Summit,’ an annual mayors’ gathering on climate protection, sponsored by Redford, the National Resources Defense Council, and the Clinton Foundation.

While he is unsure of exactly why he was specifically chosen as one of the guests that year, Bissonnette speculates that his commitment to energy conservation within his city brought him to the attention of the actor who played the Sundance Kid.

“We had done some piloting with energy efficiency in Chicopee,” he explained, “and within the school systems, we’ve saved $2 million in three years by going green. We’re saving $40,000 a year with efficient fixtures in municipal buildings.”

At the summit, Bissonnette said, he learned a lot about alternative energy and technologies, and upon returning to the corner office, the wheels were set in motion for those ideas to come to his city, which he calls the ‘crossroads of New England.’

“When I came back, my attention was drawn to an article in Boston magazine about what was then called Sun Ethanol and Dr. Susan Leschine’s work at UMass,” he said, referring to Qteros. “I was fascinated with the process, and I was very intrigued to read that they were looking to establish a pilot plant in Western Mass. So Chris Nolan, my chief of staff, made contact with them to let them know that Chicopee was very interested in this.”

But the path from that article to the groundbreaking was circuitous. As reported in these pages earlier this year, Qteros had plans to lease space within the massive Solutia complex in Indian Orchard. Due to decisions in out-of-state corporate management for the latter company, the deal fell through. What was a loss for that site became good news for the courtiers in Chicopee.

Bissonnette gives a great deal of credit to a development team in city hall for the permitting process for Qteros. From beginning to end, the permits were secured in two weeks. The team is comprised of department heads from infrastructure and zoning to Chicopee Electric Light and municipal utilities. The mayor expressed how committed the city is to fostering new business growth.

“Say you came to me tomorrow,” Bissonnette said, “and told me, ‘mayor, I want to do this in your city.’ Well, it’s not just what I think. Our team knows all that needs to be done, to expedite the process. Let’s sit down, we’ll tell you what might need to be tweaked to make it fit, we’ll tell you what problems might be foreseen, and we’ll go ahead and get those permits to you.”

What led to Qteros coming to Chicopee was a series of right moves, said the mayor. “Ken Vincunas, president of Development Associates, had incredible foresight to build at the location,” he explained, “so the structure was there. And the expedited permits allowed Qteros to secure Department of Energy grants for the project.

“The most important factors,” he continued, “were that we were familiar with the scientific research, and we were prepared to move very quickly when we learned that they wanted to seek an alternative site from Solutia.”

Open Arms

Leschine’s research forms the backbone of Qteros. While the nuts and bolts of the business venture are handled by her associates and partners within the company, she said that driving to the Westover site for the first time, she realized what an ideal location had been found.

Leschine gives credit to Frey, working with the other founders of the company, to achieve a continued presence in this area. She also has high praise for the two Congressmen for the area, calling Richard Neal and John Olver “diehard supporters.” Echoing her colleague’s praise for their host city, Leschine found Chicopee to be a happy end to the search process.

“Chicopee is just such a great place for it,” she told BusinessWest. “It’s already zoned for commercial development, and it’s close to major highways; all the obvious things are there. Also, it was very encouraging to hear from the local people and officials in Chicopee — there was no hesitation, and we were welcomed. The more we go forward, it just becomes more and more clear that it’s the perfect location.”

This pilot plant represents an important step for the company to move from the lab to the market, she said. When the pilot plant is completed in the next several months, the facility will be figuring out such complex functions as transport of the feedstock, the raw materials necessary for the process, to the plant.

Qteros also recently announced a collaboration with Israel-based Applied Clean Tech to utilize its technology dealing with wastewater sludge as a feedstock for the Qteros process. In an interview with an ethanol trade journal, Frey said, “there was not a technology that anyone had available to actually convert that material into ethanol. What we’ve done is develop our process so that it can use this particular source of cellulosic material.”

But while the breaking of ground (in a figurative sense) was considered significant for Qteros, it was also described as another big step forward for Chicopee, a former mill city trying to replace jobs lost decades ago, and, in some ways, reinvent itself.

At the ceremonies, Robert Culver, president and CEO of MassDevelopment, talked about the historic importance of an emerging technology in the 21st century taking place in the city where another generation’s technology took hold. He should know; MassDevelopment signed an agreement earlier this year to manage demolition and development of the old Uniroyal complex off Grove Street, which has been an eyesore for decades.

Bissonnette sees the Qteros pilot plant as a springboard with implications for both his city and beyond. Addressing the age-old topic of jobs and livelihoods for young people in Western Mass, he said, “in my city it used to be tire makers and textile workers that built families and futures along the banks of the Chicopee River. But it’s a new technology, and a new generation. It is absolutely imperative that we keep looking for these opportunities.”

And he said more of them could come via the state university and the research being conducted in Amherst.

“There’s a lot of talent at UMass,” he said. “People are doing a variety of things in the lab, and we’d love to partner with them in creating a campus, as it were, not unlike what Microsoft has done in Redmond, Wash.

“Keeping it here in Western Mass is key,” he continued. “If this is going to continue to be the Knowledge Corridor, you can’t just have academics in an ivory vacuum. There’s got to be real-world meaning. And that’s what these spinoffs are beginning to accomplish, and we are beyond excited to be included.”

Chicopee might well find itself on the cusp of a role in biofuels and the so-called innovation economy. Bissonnette said he’d like to see the future 115-acre Westover West business park turn into a green-technology center. He mentioned that he has been talking to the scientists at UMass behind ‘grassoline,’ another venture currently in the process of commercializing of an alternative fuel, and what he called a hydro plant scheduled to come online for the city in 2011. He said that his hopes are for the eventual larger Qteros plant to be located in his city as well, adding, “that’s when you’re going to see hundreds of jobs created.

“Wind, solar, alternative fuel … we’re open to all the green technologies that are out there to succeed in the new economy,” he continued, noting that the city has seen progress across the board. “We’ve had $80 million in new business growth in the last two years in Chicopee, in probably the worst economy in my lifetime,” Bissonnette said. “And it’s because we know how to be business-friendly.”

Joint development project pairs Qteros’ cellulose-eating microbes with Applied CleanTech’s technology to recycle liquid municipal waste.

Amherst, Mass.-based startup Qteros announced details today of a new partnership that is expected to broaden its range of potential feedstocks and reduce production costs for cellulosic ethanol.

Qteros and Israeli commodities recycler Applied CleanTech (ACT) entered a joint development project that the companies claim is the first to demonstrate the commercial viability of making ethanol from liquid municipal waste.

Qteros CEO Bill Frey said the agreement is not exclusive, and the pair doesn’t plan to build ethanol plants. Instead, Qteros and ACT could agree to license the technologies to municipal wastewater treatment plants, or to third-party developers.

“We’ve been able to show the flexibility that the technology has in adapting to multiple types of feedstocks,” Frey said. “The real value of the technology is that it’s the lowest cost, non-food technology available.”

Length and financial terms of the project weren’t disclosed, but the companies received a grant for an undisclosed amount from the Binational Industrial Research and Development (BIRD) Foundation, which funds joint efforts between Israel and the United States.

The liquid-waste treatment process at municipal wastewater plants typically has leftover material that must be disposed of. ACT’s technology extracts certain materials from the waste, including cellulose and oil, and creates solid pellets. ACT says those pellets could potentially be combusted to produce electricity, used as pulp to produce paper, and used as feedstock for ethanol.

However, Frey said, ACT lacked a process to use those pellets to produce ethanol.

“There was not a technology that anyone had available to actually convert that material into ethanol,” Frey said. “What we’ve done is develop our process so that it can use this particular source of cellulosic material.”

Qteros, formerly known as SunEthanol, uses microbes to convert cellulosic material into ethanol in a single-step process that takes about four days (see Manufacturing microbes). Qteros’ process has used fast-growing grasses, corn stover, sugarcane bagasse, wheat straw, and woody biomass such as poplar, Frey said.

“We wanted to challenge our technology with as many feedstocks as possible,” he said. 

ACT said each ton of its solids-based material, trademarked as Recyllose, can produce 120 to 135 gallons of ethanol. ACT didn’t disclose the amount of wastewater needed to make a ton of Recyllose but said a wastewater treatment plant that handles 150 million gallons a day, equivalent to a population of about 2 million, would produce enough Recyllose to supply a small-scale ethanol plant of about 5 million to 10 million gallons per year.

Qteros said Recyllose is low in lingin, which can improve the efficiency of the conversion to ethanol. 

In addition to ethanol production, ACT said the technology reduces the amount of wastewater that must be treated, which lowers costs and increases capacity. The companies plan to market the sludge-to-ethanol systems to municipalities as a cost-saving and money-making opportunity.

“Most have a cost associated with getting rid of the remaining material, so this would help them alleviate the costs they currently incur,” Frey said. “A lot of ethanol is made in a part of the [United States] that’s less populated, and it has to be transported to centers of population, which is where most liquid waste treatment centers are as well.”

The U.S. Congress has mandated that, by 2022, 36 billion gallons of biofuel be blended into the fuel supply, including 16 billion of cellulosic ethanol and no more than 15 billion of corn ethanol (see Ethanol blend increases while oil reaches new low). 

Qteros has raised about $30 million, including $25 million last year from Venrock, BP, Soros Fund Management, Battery Ventures, Long River Ventures and Camros Capital (see Qteros claims 15-fold improvements in cellulosic ethanol yield). In May, San Antonio, Texas-based Valero Energy (NYSE:VLO) paid an undisclosed amount for a stake in Qteros that was previously held by VeraSun Energy (see Valero gobbles up VeraSun’s stake in Qteros).

Frey said the company will likely be looking for new funds in 2010, when the company hopes to be in the pilot stage. The company plans to have a demonstration plant in 2011, depending on the speed of recovery in the capital markets, he said.

Qteros shares Valero as an investor with Houston, Texas-based Terrabon, which developed a technology to turn municipal solid waste into potable water and transportation fuel (see New low-energy desal process could be used to make biofuels). Valero has made two undisclosed investments in Qteros this year (see Waste Management takes stake in waste-to-fuel startup Terrabon).