Two bioenergy companies are getting a combined $161 million in federal loan guarantees or contracts that will help them develop biofuel refineries in Plaquemine and Alexandria.
Cool Planet Energy Systems is getting a $91 million federal loan guarantee to produce renewable biofuel in central Louisiana from trees, forestry waste and natural gas at a previously announced plant at the Port of Alexandria.
Emerald Biofuels will build a previously announced animal fats-to-diesel refinery in Plaquemine through a $70 million contract from the U.S. departments of the Navy, Energy and Agriculture.
U.S. Agriculture Department Secretary Roger Vilsack said the Energy Department will help Emerald Biofuels with construction, USDA will help buy down the cost of feedstock, and the Defense Department will buy the plant’s production for five years.
Vilsack was in Baton Rouge on Friday and discussed the Emerald Biofuels contract after holding a news conference to announce the Cool Planet loan guarantee.
The Emerald Biofuels facility will be able to produce 82 million gallons of fuel each year.
“The reason for this is it is starting an industry that does not exist: drop-in fuel aviation and marine fuel,” Vilsack said.
Those fuels could be “phenomenally important” to the country’s commercial aviation industry and defense, he said.
Emerald Biofuels has an agreement with UOP, a division of Honeywell, to use the UOP/Eni Ecofining process technology to turn used cooking oil and animal fat into renewable diesel. The technology already is being used by Diamond Green Diesel’s biorefinery in Norco, the largest such facility in the country with a production capacity of 150 million gallons of renewable diesel per year.
Vilsack said facilities like Emerald and Cool Planet are critical to both the country and rural communities.
Cool Planet CEO Howard Janzen said the loan guarantee his company is receiving gives it additional credibility with commercial banks and access to more private funding.
“This state is critically important to us,” Janzen said.
Cool Planet originally budgeted $56 million for the Alexandria facility. But the company is already planning an expansion and expects its total investment will top the $91 million guarantee.
Cool Planet will create 150 to 170 jobs directly and indirectly in the Alexandria area, as well as a number of construction jobs, Vilsack said.
Cool Planet broke ground on its first commercial facility at the Port of Alexandria earlier this year. The company already has spent millions on site preparation and detailed engineering design work. Construction is scheduled to begin this year and to be completed by the end of 2015, with commercial operations beginning in early 2016.
The plant will convert trees, forestry waste and natural gas into gasoline and jet fuel in a process that also produces biochar, which Cool Planet markets as CoolTerra. The high-tech charcoal helps soil hold more water and nutrients so less water and fertilizer is needed. It also improves crop production.
Last month, Cool Planet was awarded a state grant of $250,000 to kick-start its Red River refinery. Cool Planet can keep the $250,000 in state funds only if it first invests $56 million in the venture. It then must hire 24 employees with an annual payroll of $1.4 million.
The plant is expected to produce 27,000 gallons of fuel and 7.2 tons of biochar per day.
Identical state grants and Cool Planet Louisiana investment, production and employment numbers are expected for another plant planned on the Red River at the Natchitoches Parish Port and at a third site that has not yet been determined.
Each of those plants must be operated for a minimum of 10 years.
Cool Planet is specializing in small-scale biorefineries with annual production capacity of 10 million gallons of gasoline annually, about 1 percent of the typical refinery’s production. The facility’s price tag of $56 million is a fraction of other biofuels project costs.
As for the biochar that will be produced, Cool Planet officials have said customers have seen crop yields jump as much as 50 percent, which can be a staggering number for crops such as strawberries or bell peppers that produce two or three harvests a year.
California already has certified biochar for use in organic crops.
Meanwhile, the company’s low-cost process for making gasoline means it doesn’t need federal biofuel subsidies to turn a profit, Wes Bolsen, Cool Planet’s director of strategic partnerships, told The Advocate in March. Cool Planet didn’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 about 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.
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, the Cool Planet CEO, said previously. Thus far, the company has drawn financing from investors such as BP, Google Ventures, ConocoPhillips, GE, NRG Energy and the Constellation division of Exelon.
Follow Ted Griggs on Twitter, @tedgriggsbr.