Greenline's waterless biodiesel pulls in funding

Amid a rocky time for biofuel companies, San Francisco-based Greenline Industries has received a boost from Leaf Clean Energy (AIM: LEAF), which poured $20 million into Greenline's technology.

Greenline makes modular, waterless systems that produce biodiesel.

This first round of funding puts Greenline in the company of Baton Rouge, La.'s Shaw Group (NYSE: SGR), one of the largest engineering and construction contractors for the power generation market.

Shaw Capital, a subsidiary of Shaw, and EEA Fund Management formed Leaf Clean Energy last year.

Greenline's technology could have an advantage over companies like Ralston, Iowa-based Renewable Energy Group which recently withdrew plans to raise some cash of its own on the public market.

"We make small, modular, upgradeable systems," Peter Brown, spokesman for Greenline, told the Cleantech Group.

Take a look at Greenline's reactor's here >> 

He said said companies like Renewable Energy Group "make huge, monolithic, non-upgradeable systems."

"Because the biodiesel market is so volatile right now, the guys who are making it have to be extremely flexible. And some of those big plants just aren't."

Renewable Energy Group dropped its $150 million share sale just last month (see Renewable Energy Group cancels IPO).

In January, Seattle's Imperium Renewables also canceled a planned offering. Imperium was hoping to raise $345 million (see Imperium Renewables puts IPO on hold).

Greenline's financing from Leaf Clean Energy, which came through late last month, marked the fund's first investment.

Leaf has since shown up in a funding for Range Fuels, a Broomfield, Colo.-based developer of cellulosic ethanol production technology (see Smart tech for energy pulls in funding).

Leaf's share of the more than $100 million series B funding for Range Fuels was not disclosed, but Leaf has said it typically targets majority or controlling positions in development or operating assets.

There are a lot more investments from Leaf on the way, according a regulatory filing from the fund.

Just before the Range Fuels announcement, Leaf said its investment pipeline stood at over 24 opportunities representing over $740 million of equity investment.

The fund said it's looking at hydro power, solar, landfill gas, and cellulosic ethanol, as well as geothermal, waste to energy, wind, biofuels and clean technology, and expects to be substantially fully invested by the end of this year.

Greenline, which has 30 of its systems in use, including 10 in the U.S.,said the investment it received from Leaf would allow it to accelerate research and development and add new products.

"We do not have to do water treatment, and that is a huge savings. When you wash fuel with water, it picks up all the impurities, which means you that you have to flash a lot of that stuff out, and that is energy intensive."

Greenline uses a Rohm and Haas ion-exchange resin to purify the biodiesel.

The company said its system can take in multiple feedstocks through a computer controlled continuous flow control technology that optimizes the mix of catalyst, methanol and oils.

Greenline recently introduced a free fatty acid stripper pre-treatment module, also waterless, which it said is non-polluting and non-chemical, and enables producers to process less expensive feedstock, including virtually any quality of animal fat.

Brown said they're also working on a waterless, non-chemical glycerin purifier.

In addition to R&D and new products, he said the cash infusion could also help keep "the wolf from the door."

"People order these plants — it's a huge outlay for us in the beginning. You're talking about a $30, $40 million project. We have to buy all the stuff to build the plant and then eventually we get paid."

But even in these tumultuous times for biofuels, Brown is confident that Greenline will keep ahead of the pack.

"There is a window of opportunity here," he said. "But 2008, 2009 is going to be fascinating. And the survivors are going to be the ones who are nimble and quick."