NxtGen Raises $15.4M to Clean Diesel Engines

A lot of startups are working on new, cleaner engines, but what about the huge legacy fleet of dirty, old engines in trains, trucks and boats that will take decades to retire? Burnaby, British Columbia-based startup NxtGen Emission Controls said today it has raised $15.4 million to commercialize its first products for retrofitting diesel engines, which they say reduce emissions and fuel consumption. To date, the company has raised $21 million.

Founded in 2004 by former employees of Ballard Power Systems (s BLDP) and QuestAir Technologies, NxtGen has developed technology that converts diesel fuel and exhaust into syngas before entering the engine. Syngas burns cleaner than diesel and at a lower temperature, resulting in cleaner emissions and lower fuel consumption. With stricter emissions regulations coming into effect all over the world over the next several years, NxtGen expects to see demand for its product rise steadily with the growth of the carbon-constrained economy. The company’s first product, an aftertreatment system for commercial trucks, is slated to go on sale in the fourth quarter of 2009. The company is also developing emissions and combustion optimization systems for OEMs.

The Series B round was led by U.S.-based Altira and included Yaletown Venture Partners, GrowthWorks Capital, BC Advantage Funds and Polygon Financial Investments. This round also brought on new Japanese investors, including an undisclosed Japanese auto company and international trading company ITOCHU Corp., which will distribute NxtGen’s products in Japanese and Asian markets.

Cleaning up combustion engines is a big opportunity and several startups are working on solutions. Khosla Ventures has at least two investments in startups working on better engines. Vinod Khosla himself sits on Transonic Combustion’s board and has invested in EcoMotors, a startup that says it can create a diesel engine that gets 100 mpg by 2011. Stealthy Achates Power has been quiet about its cleaner diesel engine but has big-name cleantech backers including Sequoia Capital, Rockport Capital Partners, Interwest Partners and Madrone Capital.

Image courtesy of NxtGen Emission Controls.