Q&A: SunEthanol CEO William Frey

The new leader of a two-year-old company will be busy persuading investors that cellulosic ethanol is a good bet.

You won’t find SunEthanol’s new CEO spending his first day on the job in his office in Hadley, Mass. William Frey will hunting for $20 million by meeting with West Coast investors on June 23 instead. Frey, who brings with him 28 years of experience at DuPont, will be charged with pushing the two-year-old company to the next stage.

SunEthanol is looking to commercialize its cellulosic ethanol technology that relies on a bug found by two researchers from the University of Massachusetts at Amherst. The company says its Q Microbe technology would enable ethanol producers to skip the expensive step of using enzymes to breakdown biomass into sugars before fermenting them into fuels.

Turning corn and other sources of food into ethanol is nothing new, but SunEthanol is competing in a new market that is set to produce biofuels made with non-food sources, such as wood chips and switchgrass.

The growth of corn ethanol production in recent years has been blamed for rising food prices worldwide, though the correlation is under debate. But the controversy has touched the cellulosic ethanol sector, leading some companies to change or scrap plans to build plants, analyst say (see Plans for Two Cellulosic-Ethanol Plants Scrapped).

Frey, 57, isn’t fazed by the turmoil. He led the team that built the DuPont Biofuels business in 2002. In the late 1990s, he helped to set up what is now known as DuPont Applied BioSciences. Understandably, he’s bullish about cellulosic ethanol’s future.

Greentech Media caught up with Frey to get his perspectives.

Q: Why leave DuPont for SunEthanol

A: Having led DuPont’s biofuel business, I was familiar with the activities going on in the space. When I was approached for the job, it looked like SunEthanol was sitting on a history-making opportunity to feed the biofuel needs.

Q: You said you want to make SunEthanol “a world leader in a race to displace gasoline with home-grown biofuels.” How do you plan to do that?

A: It goes back to this technology based on the patented Q Microbe, which combines two processes into one. It can reduce the large capital and ingredient cost in the process. It also is potentially scalable. Most cellulosic processes would require new assets to be put in place. Q Microbe can potentially use existing equipment for grain-based feedstock. It could be a facility that produces both grain and cellulosic ethanol, depending on the price and supply.

Q: When do you expect to close the $20 million round?

A: Through the next quarter if not sooner.

Q: Where will the money go?

A: The money will be used to expand the research and development and to put in place the facility for prototyping and scaling up the process. We will be building a pilot plant in 2009, with VeraSun and ICM

Q: Does SunEthanol plan to make and sell ethanol to make a profit, or license the technology to biofuel producers?

A: It will be an evolving model. The focus of SunEthanol will be on the technology. There will be some partnerships to bring the technology into the marketplace. There is no current intent to be involved in a large-scale ethanol production.

Q: Are you concerned about the “food v. fuel” debate and whether that will hurt SunEthanol?

A: This is one of the short-term issues that are facing the industry. But the overall need for a solution is so critical for the economy, environment and national security that we will clearly see the industry prosper. For SunEthanol, since we are not in the market today making and selling ethanol, the biggest impact is what the investment community thinks about investing in this type of technology.

Q: What concerns do you think investors will have?

A: I can better answer that question after I start at SunEthanol.

Q: What is your pitch to investors?

A: Despite all the questions raised, there is clearly a need and inevitability that cellulosic companies will be part of the industry producing ethanol. As a greentech investor, you know the economy will grow and the need for more fuels will continue. Biofuels present the only option for reducing our dependence on oil.

Q: What would you like to see happen for SunEthanol a year from now?

A: I’d like to see an acknowledgement that SunEthanol is the leader in providing cost effective and commercially viable process for converting cellulosic ethanol.

Q: Will running a startup be very different than working for DuPont?

A: At DuPont, I moved from one industry to another, from one technology to another and from one customer base to another. Leading a venture-backed startup will be a unique challenge, but I have no concerns about making that transition.

Q: What kind of car do you drive?

A: Both of my cars are ultra-low emission vehicles. One is a Toyota Avalon and the other is Acura TL.