The biofuel start-up KiOR hopes to lay to rest one of the most common criticisms of the bio-fuel industry: that it’s literally eating its way into the world’s food supply. KiOR’s technology turns Southern Yellow Pine chips and other organic non-food goodies into what they call “renewable crude,” and that’s got a lot of investors excited about the company’s S1 filing. As the KiOR IPO moves closer to reality, here are three reasons to consider adding the stock to your portfolio:

1) Don’t use food for biofuel, use wood chips. The entire biofuel industry has a black eye thanks to perceptions (partially true) that corn- and sugar-based ethanol production is driving up food prices. In the door steps KiOR: a company that uses non-food biomass – things like wood chips, grass and straw – to produce “blendstocks” of gasoline, diesel and jet fuel “in a matter of seconds.” These blendstocks can be delivered to consumers using the existing gasoline and diesel infrastructure. Best of all, they could be pumped into unmodified vehicle engines at your local gas station.

2) Crude that’s cheaper than crude. KiOR’s targeting unsubsidized production costs for its biofuel at somewhere around $1.80 per gallon of gasoline or diesel, Reuters reports. For every BDT (bone dry ton) of biomass it processes, KiOR claims it can spit out 67 gallons of renewable fuel products. The company also points out that its “blendstocks” are 80 percent less polluting than traditional fuels and 70 percent more efficient than ethanol.

3) From concept to reality. It’s important to note that KiOR’s technology has yet to be ramped up to scale. A small demonstration plant in Texas is processing 10 tons of biomass a day. KiOR won’t be able to get its “projected” production costs down to $1.80 a gallon until it’s operating plants with capacities that are 150 times larger than the demo plant. We all know theory and reality are two different things, but if KiOR can reach its goals, the company stands to generate a whole lot of greenbacks in the years to come.

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Tags: alternative energy, biofuel, green energy, green stocks, KiOR

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