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Local company harvests fuel from seed pods

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The jatropha shrub grows in tropical climates all over the world, and the seeds inside its crab apple shaped pods yield a greasy oil, like peanuts or soybeans.

SG Biofuels wants to use this oil to power the world.

“Here is an oil, basically a triglyceride, and we have the technology and the infrastructure to process triglycerides,” said Kirk Haney, the president and chief executive officer of SG Biofuels.

A veteran of environmentally focused companies, Haney said the “holy grail” for sustainable fuel companies is to find a fuel source that can use existing infrastructure like refineries and pumps, and is also cost effective. He said he thinks SG Biofuels has that in jatropha oil.

“It’s well known to make a great diesel replacement; it makes a great jet fuel,” Haney said.

Nearly two years ago, Air New Zealand and Boeing (NYSE: BA) did a flight test comparing jatropha fuel to regular oil, and found the biofuel faired better, particularly at a high altitude. Haney said Airbus has found similar results.

Proving the fuel works is the first step, Haney said. Next is bringing down the cost. Right now, jatropha oil sells for about the same price per barrel as soybean oil or heating oil. This is more expensive than regular crude, but the gap is closing.

In order to further close that gap, SG Biofuels is working with partners like the Carlsbad-based Life Technologies (Nasdaq: LIFE) to get more fuel out of jatropha plants. The companies are working to genetically alter the seeds to bear more oil.

“The tomato, before it was domesticated, was about the size of a marble,” Haney said. “Corn was the size of your pinky. Through years of breeding and understanding genetics, they have found ways to make them bigger. We’re taking those same well thought out, proven methodologies and applying them to jatropha.”

Jatropha can’t be eaten, so harvesting it for fuel doesn’t cut into the world’s food supply, Haney explained. It also grows in land that’s not suitable for agriculture. The company owns some jatropha groves in Central America, but it also contracts independent farmers. The company sells those farmers their patented seeds, and promises to buy whatever crop they yield.

Haney said this arrangement is good for both parties involved.

“In these emerging markets, they don’t want to swing for the fences. These are smart people who don’t always have access to resources,” Haney said. We eliminate the market risk for them.”

Haney made contacts in Central America when working for his previous company, Green Millennium, an institutionally backed sustainable forestry company.

SG Biofuels has a mixture of institutional funding and funding from strategic partners, but Haney said much of the seed funding came from the founders themselves, including him. He said they wanted to locate the company in San Diego because this has become the place to be when it comes to green energy.

“I was talking to someone recently who told me that San Diego feels like Silicon Valley in the late ‘80s, early ‘90s,” he said. “What a great time to be in San Diego and talking about green technology.”

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