A joint Israeli-American venture developing alternative fuels from cellulosic feedstocks has scored a $9 million investment by the U.S. Department of Energy.
HCL Cleantech is joining forces with the American biofuels startup LS9. Meanwhile, HCL has appointed an American manager in the stead of its founder, Eran Baniel, and has set out to raise more than $20 million.
The investment by the Energy Department is part of the Obama administration's plan to reduce America's dependence on oil. The department says on its website that it is investing $36 million in six small-scale projects in the United States, each developing processes to produce energy either from biofuel - originating from organic sources - or forms of renewable energy.
HCL's solution makes use of technology used in Germany decades ago, under the Nazis, to produce sugars from nonfood organic sources, mainly acidic cellulosic sources. The U.S. government grant will be used to improve the production technique, said Baniel. LS9's role in the joint venture will be to process the sugars produced by HCL into fuel. The two startups will be building a joint plant, either in Virginia or North Carolina, Baniel said.
HCL was founded in 2007 based on research and development by Dr. Avraham Baniel, Eran's father, and Prof. Aharon Eyal. Baniel the elder is now 93, probably making him Israel's oldest high-tech entrepreneur. Avraham Baniel has spent 69 years doing industrial chemical research and developing its application. Eyal is a professor of applied chemistry at the Hebrew University of Jerusalem. Their company conducted feasibility tests of the technology in 2008 and proved that it works.
Further proof is an investment by Vinod Khosla, founder of Sun Microsystems and a serial venture capital investor. Khosla's venture capital fund Khosla Ventures has invested in a number of Israeli startups, including iSkoot and eASIC. From the fund and other sources, the startup has raised $15.5 million, Baniel says.
"We are currently conducting an internal financing round, to raise something over $20 million," Baniel said yesterday. "We will be making the formal announcement soon."
Fuel from straw
HCL aims to produce fuel from the detritus of agriculture and the woodworking industry. Some 27% of the solid mass weight of plant material is lignin, a chemical compound found in the interior cell walls of trees, plants and some algae. Another 68% is sugars, and the rest is oils.
The startup HCL derived its name by using hydrochloric acid (HCl ) to extract the sugars from the cellulosic biomass. The main technical problem, from an economic perspective, was to regain for reuse critical mass of concentrated acid extracted from the production process.
"We take agricultural waste and turn it into food for man and beast," said Baniel. "It can also serve as a fuel alternative." The agricultural waste can come from industrial processing of corn, sugar cane, grain and much more, he added.
One snag the Israeli startup had to overcome was that Israel doesn't produce enough agricultural waste for effective processing into sugars. "We need hundreds of tons a day, and that's for a small plant," said Baniel. Its first industrial plant should be ready to roll in 2013, in the United States, but the startup is already planning 13 more.
The company's basic process was invented by a German scientist, Friedrich Bergius, in 1913. Nearly two decades later, in 1931, Bergius was awarded the Nobel Prize in Chemistry for his developments in high-pressure chemistry. His invention was a way to produce synthetic fuel from the hydrogenation of lignite, known as brown coal. The German government abandoned its use during World War II because of its costliness.