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By Robert Rapier on Mar 13, 2009 with 6 responses

Update on CWT IPO

A couple of months ago, in response to a story that Changing World Technologies was going to file an IPO to help commercialize their TPD technology, I reposted my story:

TDP: The Next Big Thing

Turns out they decided against the IPO. Bankruptcy seemed the better option:

Renewable Environmental Solutions owner closes plant in Missouri, files for bankruptcy

Changing World Technologies Inc., based in West Hempstead, N.Y., filed for Chapter 11 protection Wednesday in the U.S. Bankruptcy Court for the Southern District of New York.

In a news release, the company, which owns the Renewable Environmental Solutions plant in Carthage, said it was trying to reorganize its business and find new financing “to fund its operations going forward and to move ahead with its expansion strategy.”

The company said in filings with the Securities and Exchange Commission that it had lost $18.8 million for the nine months ending Sept. 30 and had an accumulated deficit of $117.8 million.

They have had a long fall from the cover of Discover magazine, where they were going to be the solution to the world’s energy problems. Let’s review some of the quotes from that initial article, and then consider the fact that the company never made a dime:

“This is a solution to three of the biggest problems facing mankind,” says Brian Appel, chairman and CEO of Changing World Technologies, the company that built this pilot plant and has just completed its first industrial-size installation in Missouri. “This process can deal with the world’s waste. It can supplement our dwindling supplies of oil. And it can slow down global warming.”

Pardon me, says a reporter, shivering in the frigid dawn, but that sounds too good to be true. “Everybody says that,” says Appel. “The potential is unbelievable,” says Michael Roberts, a senior chemical engineer for the Gas Technology Institute, an energy research group. “You’re not only cleaning up waste; you’re talking about distributed generation of oil all over the world.”

“This is not an incremental change. This is a big, new step,” agrees Alf Andreassen, a venture capitalist with the Paladin Capital Group and a former Bell Laboratories director. “We will be able to make oil for $8 to $12 a barrel,” says Paul Baskis, the inventor of the process. “We are going to be able to switch to a carbohydrate economy.”

And it will be profitable, promises Appel. “We’ve done so much testing in Philadelphia, we already know the costs,” he says. “This is our first-out plant, and we estimate we’ll make oil at $15 a barrel. In three to five years, we’ll drop that to $10, the same as a medium-size oil exploration and production company. And it will get cheaper from there.”

CWT and their TDP promises are the poster child for the strategy of “overhype your technology to pull in investors, and hope the technological problems are resolved.” They had endorsements from lots of people, and a gushing article in Discover. But reporters and investors didn’t ask the right questions, and they didn’t do their due diligence, and the result was a lot of dollars flushed down the toilet.

The sad thing is, history is repeating itself right now with most of these cellulosic ethanol and algal biodiesel companies. They all have a great story to tell, they are all going to solve the world’s energy problems, and the majority of them will be bankrupt inside of 5 years.

  1. By russ jensen on October 16, 2012 at 2:33 am

    It is unfortunate that a technology that does in fact work, and is infact a solution to much of the waste management issues is once again determined by whether or not it generates a profit.  That is the downfall of this and every other civilization in history.  If we have no clean water, no clean air and no clean living space,( because we as humans “defecate where we sleep” making us the stupidiest species on the planet) it won’t really matter how many pile of useless paper or electronic digits you have stacked up, your still going to be F0%^&*ed.  That is the point of these technologies, not making a profit.  Look what that strategy has produced, a fouled, sickened, disgusting wasteland of our home.. You should be ashamed for promoting corporate greed and not promoting salvation.  You can call me a tree hugger environmental crazy, but I have a huge pile of your worthless fiat currency, and I also happen to use  a Thermal De-polymerization Reactor to convert solid biomass waste to liquid fuels to generate power for my facility, and guess what??? I  does add to my bottom line and is profitable to me from an accounting as well as an ACCOUNTABILITY standpoint.  Get your priorities straight boy. 

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    • By MJ Raichyk on November 3, 2012 at 2:50 am

      The problem IS NOT ABOUT PROFITABILITY OF CWT and TDP… the problem is the criminal ABUSE of the animals in the CAFOs that feed the CWT feedstock to herbivores and similar perversions, because WE ALLOW ABUSE OF FARM ANIMALS and then stupidly pay the price when we eat the meat from those sick animals… as long as we allow that corrupted BIG GOVT FDA feeding to go on, the longer we will be deprived of the PROPER PROFITABLE USE of that animal waste…. the corrupt big govt allows the animal-feeding abusers to profit and thereby creates a human population of sickly people needing OBAMACARE… and on tttyl

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  2. By Nicholas Nelson on July 13, 2014 at 3:37 pm

    Profit in the context of energy production is basically just another way of saying “does it pull it’s own weight.” If it doesn’t produce energy at a profit, then the process is just using more energy than it produces, essentially. Profit is the gold standard of whether or not an energy product has any net value.

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  3. By Forrest on July 14, 2014 at 1:38 pm

    It is difficult to ascertain the future profitability of new technology. Successful
    “new” technology typically has enjoyed a long history list of
    supporting inventions or discoveries to make it possible. Product life cycles
    all start with high cost and low production. Unless the cost hurdle can be
    quickly overcome the product will be tossed to search for cheaper and quicker
    profits. If the product is truly of long term benefit to citizens, government
    should and does step in to support non profitable endeavors for eventual long
    term benefit. It would be nice if failing companies whom received taxpayer
    money would be required to file full report on state of their companies art of
    science, production, and monetary problems. This would be made public to
    educate business and science community of hurdles to overcome to future
    attempts in similar production.

    Reflecting on the alternative fuels state of non profitability. Agreed, their
    was much hype of company processes to attract taxpayer and investor money.
    Typically, company management enthused to dream of clever engineers and
    scientist quickly removing roadblocks to success. The companies technicians not
    allowed to communicate to public, other than through censorship of management.
    Their is a false economy set in place per naive or clueless political control
    of taxpayer investment. Also, naive investors in the hunt to foolishly take
    high risk investments per dreams of riches. Few journalist have even a smitten
    of technical or scientific ability to evaluate hype from reality. Politics
    can’t handle the truth per loss of popularity. Experts like Robert only
    consulted when things go wrong and upon the need to finger point blame.

    Nonetheless, some new technologies probably will be establish as viable
    alternatives to the mature products derived from crude oil. Cellulose ethanol
    is one such fuel that appears to have that capability. Note, it is extremely
    difficult to compete with “free” geological antiquity processes and
    monstrous supporting infrastructure of petrol. These processes of oil are well
    known, researched, proven, highly profitable, and engineered to maximum benefit
    and consumption efficiency. Most of the R&D and investment pain long ago
    payed for and depreciated. Cellulosic ethanol is entirely separate process. One
    that has just entered the product life cycle. The business boot strapped to
    position per success of corn ethanol. Frontier process of farm cellulose do
    appear capable of cost competitiveness. Will the first drop of cellulose be
    competitive with gasoline? Actually, the generation 1.5 corn cellulose is and
    expected to bolt up on all corn cellulose production facilities. Corn cobs,
    stalks, and leaf cellulose also looks good even with low chemical efficiency
    (as compared to corn) per the current rate of 100 gallons per ton feedstock.
    Chemical engineers are currently improving process efficiency and expect 170
    gallons per ton feedstock. Custom and newly invented process plants for
    cellulose suffer very high cost. However, as the process continues to improve
    and plants continue to invent and discover the cost will drop with high
    construction rates. Cellulosic ethanol has much headroom for improvement, but
    needs the artificial market stability per RFS and tax money support for initial
    offerings. Cellulose ethanol will not run petrol out of business, nor quickly
    ramp up. This is a good thing, as it’s better to make better cost effective
    solutions before multiplying mistakes.

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    • By Robert Rapier on July 14, 2014 at 3:23 pm

      “Experts like Robert only consulted when things go wrong and upon the need to finger point blame.”

      You don’t understand what I do then. My main job is working to make sure things don’t go wrong, but I have seen enough to be able to point to the flaws in many of these schemes. I have had to look at many of them in relation to my job, with a recommendation following to invest or not invest. I am the guy who anticipates whether things will go wrong, but also works to make sure they don’t.

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      • By Tom G. on July 15, 2014 at 11:56 pm

        You sound like a Quality Engineer. Looking for troubles in all the right places while hoping you don’t find any, LOL. I really miss working at times. Have a great day Robert.

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