Alder Fuels has reached a milestone in the development of its renewable crude oil production process as its founder and former CEO is charged with embezzling millions of dollars from the company.

The U.S. startup has commissioned a pilot-production unit, or skid, at the National Renewable Energy Laboratory (NREL) in Colorado. The skid, christened Pioneer, integrates all of the operations required to produce Alder’s renewable crude into a continued process capable of producing one barrel per day.

Alder’s technology upgrades bio-oil produced by fast pyrolysis of biomass into a low-carbon or carbon-negative crude oil that can be converted into renewable fuels, including sustainable aviation fuel (SAF), using existing commercial refinery infrastructure.

Development of the Pioneer skid follows 18 months of bench-scale and pilot development work by Alder in partnership with NREL and Honeywell fuel processing company UOP, with funding from the U.S. Energy Department and investors including Honeywell and United Airlines.

As a first step, the Pioneer skid is being commissioned using non-reactive water to test the automation hardware and software that allow the unit to be operated from a central control room as well as the automatic control schemes and safety shutdowns that will allow the skid to run unattended.

Commissioning with water is expected to be completed in mid-May after which the Pioneer will be commissioned with commercial fast pyrolysis oil. Once fully commissioned, Alder says it plans to operate the unit for extended campaigns of more than 500 hr.

These extended runs will generate data to refine process conditions with fast pyrolysis oil from a range of biomass feedstocks including miscanthus grass. The goal is to produce hundreds of gallons of renewable crude to further process into 100% SAF for fuel property testing and flight demonstrations with partners such as United Airlines and AvFuel.

Federal Indictment

Alder Fuels was founded in 2021 by Bryan Sherbacow, who previously founded Altair Fuels, the first commercial-scale producer of SAF in the U.S. In December 2022, Sherbacow was fired as CEO after Alder uncovered that he “engaged in questionable financial transactions that benefited him personally.”

On May 4, a federal grand jury in Washington returned an indictment charging Sherbacow with embezzling at least $5.9 million from Alder. If convicted, he faces a maximum penalty of 20 years in prison, the U.S. Justice Department says.

Court documents allege Sherbacow fraudulently transferred company funds to a personal bank account and made unauthorized personal expenditures from a company bank account. He allegedly used embezzled funds to buy a vintage sports car and Range Rover, to make payments on a condo and to an art auction operator, and made personal credit card, rent, beach club and other payments.

“As the indictment against Mr. Sherbacow indicates, Alder was the victim of a significant embezzlement of its funds by its former chief executive officer,” the company’s new CEO, Tim Obitts, says. “Alder cooperated with the Department of Justice throughout its investigation into Mr. Sherbacow’s misconduct. Alder has a strong executive team in place and, along with strong board leadership, we are taking the crucial step towards commercialization.”