Whiskey from Soda: Joule raises $70M, heads for commercialization

Senator John Kerry of Massachusetts inspects the Joule Unlimited system

Joule Unlimited raises $70 million in its latest round; heads for commercialization in New Mexico

In Massachusetts, Joule Unlimited announced the closing of a $70 million third round of funding, bringing its total to just over $110 million raised to date. The round included investments from both new and prior undisclosed institutional and private sources that joined Flagship Ventures, Joule’s founding venture capital investor.

It’s another milestone for a company that has personified innovation in the renewable fuels development business, by building out the first post-biomass technology scheduled to reach commercial scale over the next two years.

A post-biomass world?

To date, virtually all companies producing a biofuel have used biomass as an intermediate, which is to say that the processing involves refining biomass into a liquid fuel, either by separating out the oils, or fermenting sugars into alcohols or alkanes.

No matter how you do it, its a two step-process – to make a fuel, one first has to have a biomass-based source of oils or sugars. Which can tie up land, and ties the biomass processor into the tricky economics of making a commodity from another commodity. When the spread between the price of the biomass and the finished fuel is strong, the business can be a cash cow. But those economics can turn, and processors can be faced with making $3 worth of fuel from $4 worth of corn.

Enter Joule

So, along comes Joule. It’s a known fact that some microorganisms could be modified or evolved to ferment gaseous carbon monoxide or carbon dioxide. Combine that with some hydrogen taken from water, and voila, you have the beginnings of making a hydrocarbon.

Joule itself has developed a modified cyanobacteria that, housed in an ingenious feat of engineering known as a SolarConverter, uses solar energy to help it to produce ethanol, or hydrocarbon fuels such as diesel, using waste carbon dioxide, non-potable water, and a package of nutrients.

So when we titled this article “Whiskey from Soda,” we don’t mean to trivialize the technology, but simply to observe that alcohol is being made, primarily, from a combination of water and CO2, a/k/a seltzer or soda. Pretty neat trick, considering that it’s a going business just to affordably make plain seltzer, using CO2 and water. But ethanol? Diesel? We live in a magical time.

The entire system is known as a Helioculture platform, and the claim at Joule that it can produce renewable fuels at a rate of up to 100 times that of competing biomass-based system, will shortly be put to the scale-up test.

The economic impact

Bypassing biomass turns out, in Joule’s execution, to be a remarkable act of liberation from the feedstock costs and productivity rates that bedevil so many biofuels ventures.

The productivity rates are, in prospect, remarkable. 15,000 gallons of renewable diesel per acre of deployed systems, per year. 25,000 gallons of ethanol per acre per year. At such productivities, the entire non-corn ethanol portion of the 36 billion gallon Renewable Fuel Standard target for 2022 could be produced from 840,000 acres, about 1300 square miles.

The costs are even more interesting. $20/barrel for diesel, $0.60 per gallon for ethanol – a fraction of the costs from biomass-based systems today, and a fraction of the cost of fossil-based oil today.

Use of proceeds

What do you get for $70 million? You get, for now, the build-out and operation of a Joule facility located in Hobbs, New Mexico (just across the Texas border, northwest of Odessa, TX), slated for commissioning this summer.

The demonstration facility is designed to test and optimize Joule’s Helioculture process and SolarConverter system at incrementally larger scales, with the potential to expand to 1,000 acres for initial commercial production. so, up to 25 million gallons at full commercial scale.

Now, a Joule demonstration is quite unlike a demonstration of, say, a cellulosic ethanol facility. To some extent, since the SolarConverter is a single, self-contained, fuel-producing unit, and there’s no biomass collecting and pre-processing involved, the usual rules for pilot-scale and demonstration-scale, which are generally measured in tons of biomass processed per day, do not apply.

Instead, the goal of the demonstration is to show the “ease with which Joule’s process can scale from hundreds to thousands of acres.” Proceeds from the round will also support Joule’s global expansion plans and on-going technology development.

When will we know?

We’ll know a lot this year – 2012, the end of the world according to some. Perhaps the end of the fossil-fuel world, if the technology works as intended, and is scalable and affordable as advertised.

What could stop Joule from ruling the world?

It takes a whole lotta watta, even of the non-potable type, to make fuel, and sourcing that, sustainably, will be a challenge from the company at massive scale, even if it is a fairly trivial item at a few thousands or millions of gallons of production at site #1.

It takes a lot of carbon dioxide, too. Even if it is waste CO2, there are only so many sources and locations that work, at scale, until science comes up with an affordable means of aggregating atmospheric CO2.

We sure could use such a system and, for Joule’s sake as well as our own, the sooner the better. But for now, at the scales Joule will be for the next few years, waste CO2 will do nicely.

What’s next for Joule?

After completing the expansion of the Hobbs facility over a couple of years, it will be time to race for scale. Massive quantities of equity could be needed, and the public markets beckon.