Oil and gas giant BP has invested in biofuel startup CoolPlanet BioFuels through its venture arm, according to an announcement on Thursday. CoolPlanet BioFuels is the biofuel startup you have never heard of but that has unusually famous investors like GE (s GE), Google (s GOOG), NRG Energy (s NRG) and ConocoPhillips (s COP) (NRG, GE and ConocoPhillips have an investing group called Energy Technology Ventures). Venture firm Shea Partners led the Series C round.
CoolPlanet BioFuels makes what the company calls negative carbon fuels, using a technology it calls biomass fractionator. The technology essentially takes nonfood biomass (plant waste, energy crops, etc.) and turns it into a drop-in replacement for gas and diesel. That process sounds similar to what biofuel company KiOR is doing.
KiOR uses a catalyst to carbonize biomass (called its Biomass Catalytic Cracking Process), which was originally developed to help the oil industry break down heavy crude oil into more-easily refined products for the oil industry. Drop-in replacements for gas and diesel will be more attractive to the oil industry, because they can use the current infrastructure for transport and use.
BP has invested in a variety of biofuel companies including Verdezyne, which engineers yeast that eats plant sugars and excretes biofuel and biochemicals, and Synthetic Genomics, Craig Venter’s firm that is using genetics to tweak algae to produce fuel. BP also has a joint development agreement with Martek Biosciences to work on making microbial oils for biofuels, and earlier this year BP spent $98 million acquiring the biofuel arm of Verenium, a startup that makes enzymes that break down cellulosic biomass into sugars.
While there are dozens (likely hundreds) of next-gen biofuel companies, almost none of them have produced biofuels at any scale. The Environmental Protection Agency said this week that once again, only a tiny fraction of the biofuels required by the U.S. mandate will come from next-gen cellulosic biofuels: less than one-tenth of 1 percent, according to the Wall Street Journal. The mandate was for 3 percent.