LS9’s clean diesel meets U.S., Brazilian requirements

South San Francisco, Calif.-based LS9 said today its advanced biofuel product has exceeded both American and Brazilian testing specifications.

LS9’s CEO Bill Haywood told the Cleantech Group his company, which has a continuously operating pilot plant in South San Francisco, has been working to prove its technology and move into commercialization. Now the company has the third-party validation it needs from American Society for Testing and Materials and Brazilian National Agency of Petroleum to advance toward commercialization.

“We saw the characteristics of this fuel even when we were making it in the lab,” he said. “It was matching what we engineered it to do, but until you test it you don’t know.”

LS9’s UltraClean Diesel now meets regulatory requirements to be used in vehicles on American and Brazilian roads. The testing also proves that the product overcomes environmental and operational challenges associated with conventional diesel and biodiesel products, Haywood said.

LS9 has demonstrated the ability to modify the genetic makeup of its microorganisms and tailor its products to have improved fuel properties, such as cetane, volatility and cold flow. UltraClean Diesel offers an 85 percent reduction in greenhouse gas emissions over conventional fuel, according to LS9. It doesn’t contain carcinogens, such as benzene and only has trace amounts of sulfur.

Haywood said for a diesel engine to run effectively certain characteristics must be met such as stable oxidation levels and storing and transporting the product properly. The product also needs to have good anti-gumming capabilities. One of the more stringent criteria was meetings California’s strict emission levels, which includes having low sulfur levels below 15 parts per million, he said.

The company’s business plan also includes making its fuels in Brazil, where sugar cane is inexpensive and there’s good ethanol manufacturing capabilities, Haywood said. LS9’s process is feedstock agnostic, but cane juice keeps costs down since feedstock accounts for about 80 percent of the cost.

“We use sugars from feedstock and run them through engineered pathways—metabolic pathways,” he said. “We are doing what has been done for hundreds of years. But we take what nature does naturally and speed it up, exuding high-quality diesel.”

The company’s one-step fermentation process uses patent-pending microbes to convert renewable plant-based materials into fuels. Other companies working in metabolic pathways, using algae, include South San Francisco, Calif.-based Solazyme and Naples, Fla.-based Algenol Biofuels (see Solazyme joins algae elite with additional $45M and Turning algae into ethanol, and gold).

Others such as Emeryville, Calif.-based Amyris Biotechnologies are working on a method to produce biofuel using microbes and sugar by 2010 (see Microbes drive new Amyris biodiesel plant).

“We’re the only folks that have a one-step conversion,” Haywood said. “The more steps you have, the more it costs.”

Haywood said these other companies have similar time frames to LS9 in terms of commercializing their technologies. LS9 is looking to scale up in a way that’s cost effective, intending to be in a larger demonstration plant in early 2010. The company then plans to design a larger scale plant in 2011, breaking ground in 2013.

In 2008, Solazyme signed a biodiesel feedstock development and testing agreement with Chevron Technology Ventures, a division of San Ramon, Calif.'s Chevron (see Solazyme to work with Chevron on algae fuel).

And last week, Irving, Texas-based ExxonMobil said it plans to spend $600 million to develop biofuels from algae, including more than half to La Jolla, Calif.-based biotech firm Synthetic Genomics (see ExxonMobil devotes $600M to algal biofuel project with Synthetic Genomics).

In June, Midland, Mich.-based Dow Chemical and Algenol Biofuels said they are teaming up to build a pilot, algae-based integrated biorefinery (see Dow, Algenol to build pilot algae-based biorefinery).

LS9 has raised $20 million in two rounds from Lightspeed Venture Partners, Flagship Ventures and Khosla Ventures (see LS9, latest Khosla investment, gets $5M). Haywood said the pre-revenue company has a Series C round currently open, where LS9 is looking to add $10 million to the undisclosed amount raised so far and is contemplating a follow-on.

“It’s going very well,” Haywood said. “We’re going to get what we need.”

The company is also counting on government funding. It has applied for a U.S. Department of Energy grant for $22 million for its integrated biorefinery, to cover the demonstration retrofit and operations. The DOE would pay 80 percent of the costs, Haywood said.

In additional to making fuels, LS9’s fermentation process is capable of producing chemicals used in making industrial and consumer products. In May, LS9 teamed up with Cincinnati, Ohio-based Procter & Gamble to jointly develop and commercialize LS9’s technology to produce sustainable chemicals used within P&G’s portfolio of consumer products (see LS9, P&G team up for sustainable chemicals).

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