Google-backed Cool Planet hopes to raise (a lot of) money for biofuel plant

Cool Planet Energy Systems has lined up some big-name investors (Google Ventures, BP, ConocoPhillips, NRG) and made some bold claims about its ability to produce cheap biofuels that can be a direct gasoline replacement. Now the company needs to raise money to build its first commercial processing plant to prove it can deliver on that promise.

The California company, founded in 2009, announced Wednesday that it’s projecting a biofuel production cost of $1.50 per gallon at a plant that can produce 10 million gallons per year. Cool Planet is looking to raise around $100 million for that first 10 million-gallon facility and for production and other corporate expenses. That first plant would have a capital cost of $50 million, said Howard Janzen, CEO of Cool Planet. At those estimates the biofuel could be produced for less than the price of crude oil.

The company hopes to complete the project and start delivering fuel in the first half of 2014. Janzen said some of the company’s investors will be the ones in line to get the first shipments from that plant, though he declined to disclose their names. The plant is planned for the U.S., but the location hasn’t been settled, said Janzen.

A plant of 10 million gallons seems small, given many biofuel makers want to build commercial plants at twice the size. But Cool Planet figures the way to reduce costs, such as transporting energy crops, is to build many smaller plants that are close to the feedstock source. They should be within a 30-mile radius, says Janzen.

All this sounds like a good plan, and almost too good to be true. Janzen said the company’s investors were very skeptical before they put up the money, too. Janzen declined to say how much Cool Planet has raised.

Google is completing a field trial at its Mountain View headquarters using gasoline with a 5 percent blend of Cool Planet’s biofuel. Google has used the blended fuel to log 2,490 miles in one car, which is just slightly less than 2,514 miles in a car that uses 100 percent conventional gasoline. The car with the biofuel passed 5 smog tests and its emissions were “virtually identical” to the gasoline-only car, Cool Planet said.

Cool Planet has come up with a technology that is quite different than the fermentation and other chemical processes that are under development. The company uses high heat and pressure to compress woodchips, crop wastes or other feedstock in an oxygen-free environment. The desired temperature is around 350 degrees Celsius and the pressure at 150 psi. This process creates vapor that is then converted to fuel. The process also generates biochar, which then goes through a gasifying process to get more vapor that can be converted into fuel.

The remaining biochar residue can then be sold as fertilizer, a component of water filters or even a wood pellet substitute, Janzen said. So the amount of biochar that can be produced can be adjusted depending on whether the company wants to sell more biochar or fuel. In general, a 10 million-gallon plant can produce about 10,000 tons of biochar. The company is working on finding buyers for its biochar.

Biochar production serves a way for Cool Planet to sequester carbon emissions. If biochar is used as fertilizer, then its carbon will stay in the soil instead of being released into the atmosphere. As a result, Cool Planet claims that its entire fuel production process in effect reduces carbon emissions by a significant amount.

The startup already has a pilot production line at its headquarters that can make 50,000 gallons of biofuel per year, and it’s building a larger plant nearby that will be able to yield 400,000 gallons per year.