Tuesday, June 24, 2008

Bookmark This!

The last few posts have been focused on products that create efficiency in resource consumption. The crux of this investment theme is that there is as much growth and profit potential in creating efficiency as in creating alternative fuel sources. The next name in our series is a double play - recycling and alternative fuel!

GreenFuel Technologies Corp. is a development stage company focused on building algae farms to recycle carbon dioxide from flue gases. The algae are then harvested as feedstock for biofuel. You cannot get any more efficient than turning a toxic emission into a saleable product.

Sounds far fetched, but basic science supports the concept. Algae are fast growing plants that grow on sunlight and carbon dioxide. In the process of soaking up the carbon dioxide, algae produce lipids and carbohydrates. These are good things that can be used as proteins for animal feed or as feedstock for biodiesel or ethanol.

It makes sense to hitch up these little algae “workhorses” in places where there is plentiful carbon dioxide - at the exhaust end of combustion engines like those at coal fired utilities. GreenFuel has completed a couple feasibility studies at NRG’s Big Cajun II site in Louisiana, the APS Four Corners facility in New Mexico and the Sunflower Electric facility in Kansas. These studies have demonstrated that algae will thrive on flue gases. The challenge is to go into full-scale production at a utility site.

The APS Redhawk facility in Arizona has been successful in producing high rates of algal biomass for conversion into transportation-grade biofuel. Specially designed pipes captured and transported the carbon dioxide emissions from the smoke stack to containers holding algae. Under the ample southwestern sun, the algae consumed the carbon dioxide and flourished. The algae can be harvested and the algal starches turned into ethanol, the lipids into biodiesel and proteins into animal feed.

GreenFuel is looking for a commercial partner to go into business for real. A new chief executive officer, Simon Upfill-Brown, has been brought on-board to guide GreenFuel in this phase of development. Simon is the man for the job, with a lengthy history in the chemical industry and experience in growing small operations. He has also been handed a plumb coin purse. GreenFuel recently completed a private placement that brought in $13.9 million and won an R&D grant from the Iowa Power Fund for another $2.3 million.

GreenFuel calls it Emissions-to-Biofuels technology. If it can be demonstrated at commercial scale, it is likely to be a must-have for fossil-fuel powered electric utilities. All the coal-fired utilities around the country could start looking at their emissions reports from a whole new perspective. Instead of budgeting for capital expenditures to reduce or sequester carbon dioxide emissions, utilities could be estimating algae and biofuel production.

Talk about bang for the buck! Put a little coal the hopper and produce both electricity and biofuel - all the while keeping the skies clean and avoiding those costly EPA fines.

GreenFuel Technologies is private and has so far been financed by venture capital funds. However, investors should “bookmark” this name as it seems an initial public offering is likely if GreenFuel scientists are successful in finding a commercial partner.

Neither the author of the Small Cap Copy web log, Crystal Equity Research nor its affiliates have a beneficial interest in the companies mentioned herein.

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