Small is better for Cool Planet

Cool Planet Energy’s biofuels refinery in Alexandria is radically different than other renewable fuels projects, and the company likes it that way.

It’s small. Annual production capacity is 10 million gallons of gasoline, about 1 percent of the typical refinery’s production. The facility’s pricetag of $56 million is a fraction of other biofuels project costs. And its most valuable product isn’t a biofuel.

It’s a high-tech charcoal called biochar. Biochar helps soil hold more water and nutrients so plants grow larger, faster and healthier, said Wes Bolsen, Cool Planet’s director of strategic partnerships. Customers have seen yields jump as much as 50 percent, a staggering number for crops such as strawberries or bell peppers that produce two or three harvests a year.

“Funnily enough, the markets we are selling into, biochar sales could be greater and more profitable than fuel sales,” Bolsen said. “We are seeing significant interest from the agricultural industry because of the increase in crop yield, reduction in water usage and reduction in fertilizer usage for growing these crops.”

California has already certified biochar for use in organic crops.

Meanwhile, the company’s low-cost process for making gasoline from organic materials — trees and forestry waste in Louisiana — means it doesn’t need federal biofuel subsidies to turn a profit.

Cool Planet won’t disclose its production costs. But Bolsen said they are well below the cost of conventionally produced gasoline.

Cool Planet’s major cost is the feedstock, Bolsen said. Cool Planet can produce around 80 gallons of gas per dry ton of biomass, so the plant will need 150,000 dry tons of trees per year. That’s roughly 10 percent to 20 percent of the amount a paper mill requires.

“Part of our strategy as a company is to build small and build local so you’re putting as little demand on the feedstock resource as possible and you’re keeping your transportation costs low,” Bolsen said.

The Alexandria area has enough wood that Cool Planet won’t have a supply problem unless several biofuel plants and wood pellet plants pop up at some point, Bolsen said. The company wants its first refinery producing by the end of the year, an admittedly aggressive schedule that will require everything to go perfectly, he said.

Once the Alexandria plant is running, Cool Planet will build a refinery at Natchitoches. By late 2015 or early 2016, the company hopes to begin a third refinery in Louisiana, although that site has yet to be chosen.

Chief Executive Officer Howard Janzen, who flew his own plane to Alexandria for the Feb. 26 groundbreaking ceremony, said he’s proud of how far the company has come and what it’s already accomplished.

Getting the first plant right will give Cool Planet a “proof point” that will help the company finance an aggressive plan to build out a large number of the small refineries, Janzen said. Thus far, the company has drawn financing from investors such as BP, Google Ventures, ConocoPhillips, GE, NRG Energy and the Constellation division of Exelon

Cool Planet’s next step will involve taking on more conventional debt, Janzen said. Ultimately the company will position itself to go public, possibly as early as 2015.

The money an initial public offering would generate would really accelerate growth, he said. Eventually, Cool Planet would move to project financing, where each new refinery’s revenue would be used to pay off the loan used to build the facility.