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To clean coal, start-up GreatPoint makes gas

Reviving 1970s-era technology, an ambitious company says it can turn dirty coal into cleaner natural gas.

A group of environmentally oriented entrepreneurs has landed in an unlikely spot: the coal business.

Their company, GreatPoint Energy, is commercializing a technology to convert coal to natural gas--turning one of the dirtiest fuels into one of the cleanest.

The Cambridge, Mass.-based start-up is in the process of raising a large round of funding to finance its expansion, which will include construction of a demonstration plant next year, company executives told CNET

It has already raised two rounds of funding totaling $37 million from venture capital firms Kleiner Perkins Caufield & Byers, Khosla Ventures, Advanced Technology Ventures and Draper Fisher Jurvetson.

Like many recently formed clean tech companies, GreatPoint Energy is resurrecting a technology--in this case so-called catalytic gasification--that was never fully commercialized. Because of today's higher energy costs and concern over global warming, executives say that process is again worth pursuing.

The company recently completed a trial in a plant in Des Plaines, Ill. It now projects that it can create natural gas cheaper than current market prices--while minimizing the environmental impact of coal.

"Coal to a lot of environmentalists is a four-letter word," said company CEO and co-founder Andrew Perlman. "Our conclusion--and again, we came to this from an environmental perspective--is that coal is not going away. In fact, it's growing like crazy."

China and India are rapidly constructing coal-fired power plants to meet soaring energy demands. Coal is the fuel for more than half of the electricity production in the United States because it's abundant and relatively inexpensive.

Perlman, a high-tech entrepreneur, formed GreatPoint Energy with Aaron Mandell and childhood friend Avi Goldberg with the desire to break into the clean energy field. He assembled a team of engineers who originally worked on catalytic gasification in the late 1970s and 1980s to establish the company's core technology.

The company, having done its initial tests, says it can produce natural gas at about $4 per million BTUs (British thermal units), lower than the current market price of nearly $7 per million BTUs. The company calls its product "bluegas" and intends to brand it as a cleaner alternative.

"If you take the opinion that coal is not going away and there is very little you can do to change that, you have got to come up with an economic way to make it much, much cleaner," Perlman said.

Can coal be clean?
Coal creates the greenhouse gas carbon dioxide as well as other pollutants mercury and sulfur when burned. Per unit of energy, it is the most polluting fossil fuel and accounts for about one-third of carbon dioxide emissions in the United States (petroleum produces more carbon dioxide because more is burned), according to the United States Energy Information Administration.

Worldwide, emissions of carbon dioxide from burning coal were 10.5 billion metric tons in 2004--nearly double the amount from natural gas, according to the USEIA, which forecasts a steady increase in coal consumption in the coming decades.

In general, environmentalists oppose construction of new coal-fired power plants in favor of renewable energies or gas-fired plants, which burn cleaner. Even so-called clean coal technologies, which seek to reduce pollutants or to sequester carbon dioxide underground during power generation, are controversial.

GreatPoint Energy's technology uses gasification, the process of applying heat and pressure in a reactor tank. That technique is used by other clean coal approaches now being tried. But unlike other efforts, GreatPoint uses a catalyst that aids in the creation of methane, or natural gas.

"Most other gasification processes create gas that may contain little methane. (With GreatPoint's process), you already start with a significant amount."
--Tan-Ping Chen, senior vice president, Nexant

The company won't talk in detail about its catalyst or how it's used to treat coal, except to say that it's made of an earth metal and that it comes from the minerals industry.

The effect of using the catalyst is that a gasification process that typically takes four steps is reduced to one which lowers the cost of building and operating a plant, said GreatPoint Chief Financial Officer Daniel Goldman, who co-founded the advocacy group Environmental Entrepreneurs. The process is 65 percent efficient in converting coal to gas and the methane produced is 99.5 percent pure, the company says.

Energy consulting firm Nexant performed a feasibility study on behalf of GreatPoint to determine if its technology can produce gas cost-effectively. One of the primary advantages of doing catalyst-based gasification is that it can operate at lower temperatures, which makes it cheaper than other alternatives, and it produces more methane, said Tan-Ping Chen, senior vice president of energy technology at Nexant.

Chen said that GreatPoint Energy's technology is indeed different from other coal gasification processes and that it does work. The estimated cost of producing natural gas from coal hinges on a few assumptions, notably the ability to recover the catalyst after the gasification process, he added.

Gasification "is a very clean way to clean coal. That's universal and not unique (to GreatPoint Energy)," he said. "Most other gasification processes create gas that may contain little methane. (With GreatPoint's process), you already start with a significant amount."

Unlike hydrogen, which proponents argue is the optimal fuel, natural gas can be distributed through an existing infrastructure of pipelines and readily sold to power generators that use gas-fired turbines or natural gas distributors.

GreatPoint Energy's plans are to sequester the carbon dioxide that is produced during its process, either by capturing it underground or by selling it to oil drillers who can push the gas underground to aid extraction. It also expects to capture pollutants, including mercury and sulfur, and sell them to chemical companies.

"If we don't build more natural gas-fired combined cycle plants using natural gas, the only alternative is to burn coal," Goldman said. "So what we think we're displacing is coal-fired electricity. I don't care how many controls you put on it, we'll always be more environmentally benign."

The company is now designing a demonstration site set to go online next year, which will be larger than its test site. It intends to have a large-scale plant, which would cost more than $1 billion to construct, operating in 2011 or 2012.

It also will begin testing how effective its process is at converting petroleum coke, a byproduct of oil extraction, in the tar sands in Alberta, Canada.

Perlman said that the basic chemistry of the company's process has been proven. What remains is engineering a plant to produce bluegas economically. If successful, executives say, the company will be able to clean up coal and reduce imports of natural gas, which are poised to grow dramatically in the coming years.