Xethanol exits cellulosic, moves into methane

NEW YORK, Oct 28 (Reuters) - Xethanol Corp XNL.A said on Tuesday it has changed its name and shifted the focus of its business from cellulosic ethanol to tapping energy from rotting garbage.

The new company, Global Energy Holdings Group GNH.N, will now focus on tapping methane from landfills. Rotting garbage gives off methane, a greenhouse gas about 21 times stronger than carbon dioxide, that can be purified and burned in the home or to generate electricity.

“It’s like the most abundant feedstock and it’s just sitting there,” said David Ames, the company’s president and CEO, said about the abundance of untapped landfills.

Ames said the company shifted to methane because the cellulosic ethanol market is too difficult amid falling prices for the alternative motor fuel.

“You can make cellulosic at a price but it’s not going to be economical when there are depressed prices for ethanol,” said Ames.

Cash ethanol prices in the Midwest have fallen about $1.20, to about $1.70 a gallon, since June as oil prices have plummeted amid the economic downturn.

Several companies aim to make cellulosic ethanol from the tough woody bits of non-food crop plants such as switchgrass and poplar trees. Cellulosic is seen as a way to boost domestic low-carbon fuel output that would not be blamed for helping to boost food prices.

Ames is skeptical that cellulosic will change the U.S. energy system. He said difficulties associated with making the fuel will not be eased by making it in bigger batches.

“You can scale widgets, but you can’t scale chemistry,” he said.

At one point, Ames, who had retired after making his money in the cable modem business, was an activist investor in Xethanol. The company’s board appointed him as chief executive of the old company.

Xethanol announced plans in January to scrap two cellulosic ethanol plants. Global Energy Holdings will continue to operate a smaller plant that aims to make cellulosic from orange peels. (Reporting by Timothy Gardner; Editing by Christian Wiessner)