USDA awards loan guarantee to Cool Planet

By Erin Voegele | October 03, 2014

The USDA has awarded a $91 million loan guarantee to Cool Planet Energy Systems to help finance the company’s advanced biofuel facility, which is under development in Rapides Parish, Louisiana. The award was made under the Biorefinery Assistance Program, a program established by the 2008 Farm Bill.

"This partnership is the latest example of the Obama Administration's continuing support for innovative, home-grown energy sources," said Agriculture Secretary Tom Vilsack. "USDA's support for renewable energy projects like this helps create jobs in rural areas, promotes U.S. energy independence, and leads to further expansion of the growing and increasingly significant bioeconomy."

Cool Planet broke ground on the Louisiana biorefinery in February 2013. Company spokesman Wesley Bolsen said the site work is currently being completed. Construction on the biorefinery is expected to begin by the end of the year. Blosen said the facility is scheduled to be operational by either late 2015 or early 2016.

Once complete, the facility, located at the Port of Alexandria, will have the capacity to produce between 8 MMgy and 10 MMgy of reformate, a drop-in ingredient in gasoline and jet fuel that can be added during the regular refinery process. The USDA noted that reformate enhances the energy content of gasoline, diesel and jet fuel. Pine chips will be the feedstock source for the plant. The company, however, can use almost any type of cellulosic material.

According to the USDA, it reached an agreement with Silicon Valley Bank to provide the $91 million loan guarantee to Cool Planet. In addition to the USDA’s contribution, the company has attracted private investments from numerous companies, including Google Ventures, BP, ConocoPhillips, GE, Exelon and NRG Energy. Cool Planet will contribute $50 million in equity of the project. The USDA said the agreement with Cool Planet represents a significant step forward in the government’s public-private partnerships to produce renewable energy. As evidenced by Cool Planet's private sector backers, these plants are attracting attention from some of the country's largest lenders, in part because USDA is streamlining the Biorefinery Assistance Program process.

In addition to helping to finance Cool Planet’s initial commercial-scale biofuel plant, Bolsen indicated the USDA’s loan guarantee could help the company expand its operations in the future. He called the USDA’s loan guarantee further validation of the company’s technology, noting that the due diligence process is even more intensive than it was even two or three years ago.

“I think that people look to this as additional validation of the technology readiness,” he said. “The National Renewable Energy Lab does a lot of the technical evaluation on behalf of the guarantee process. I think people outside look at the validation it brings from a government organization in addition to the due diligence that strategic investors make,” Bolsen continued, noting he thinks the loan guarantee award will help the company secure better financing for future project as well as strategic investment in Cool Planet itself, which will help the company more rapidly roll out its expansion plans.  

Cool Planet’s patented technology features three core components, including biomass pyrolysis, catalytic conversion of hydrocarbon components to fuels, and carbon capture via the production of a biochar coproduct. In addition to biofuel, the Louisiana biorefinery will also produce CoolTerra, the company’s biochar product.

CoolTerra is a highly porous soil enhancer engineered to retain water and fertilizer for improving soil health and productivity. One day prior to the USDA’s loan guarantee announcement, Cool Planet announced it has begun commercial production of Cool Terra at a manufacturing facility in Camarillo, California.

Cool Planet is the second advanced biofuel production to be awarded a USDA loan guarantee in recent weeks. In early September, the department awarded a $105 million loan guarantee to Fulcrum Sierra Biofuels LLC to support the development of a 11 MMgy facility to convert municipal solid waste into jet fuel. According to the USDA, additional commitments have been made for facilities in Florida, Iowa, Michigan, North Carolina and Oregon. Sapphire Energy has already paid of its USDA loan for a plant now operating in New Mexico. In September, the USDA indicated it was in the process of negotiating three loans for biorefineries in Iowa, North Carolina and Oregon. One of those ventures is expected to retrofit an existing corn ethanol plant to produce cellulosic ethanol.

The USDA noted its loan commitment to Cool Planet is being financed from the remainder of the Biorefinery Assistance Program funds authorized in the 2008 Farm Bill. An additional project financed from these funds will be announced later this month. Congress reauthorized and extended the program in the 2014 Farm Bill. It also expanded the program to include biobased renewable chemicals and biobased product manufacturing.