US auto group Chrysler has teamed with cleantech innovator ZeaChem in a strategic alliance that will see the pair work together on accelerating the development and market adoption of cellulosic ethanol.

The primary alliance goal identified under the memorandum of understanding is to strengthen the credibility among regulators and US consumers of cellulosic ethanol as a cost-effective green transportation alternative, the companies said in a statement.

The companies said they hope to move rhetoric away from the historic ‘food-for-fuel’ debate and provide a leadership role to bring cellulosic ethanol through the production value chain to the consumer market.

Reg Modlin, director of regulatory affairs at Chrysler, said, ‘Chrysler Group has long been committed to promoting the consumption of alternative fuels and to delivering flex-fuel vehicles to our customers.’

Together they also hope to build awareness of the potential environmental advantages of high yield, low carbon cellulosic ethanol.

‘ZeaChem is at the forefront of advanced cellulosic ethanol production,’ said Jim Imbler, president and CEO of ZeaChem. ‘Our process delivers a 40 per cent higher yield in ethanol from non-food cellulosic feedstocks. Through strategic alliances we can fast-track the large-scale production of cellulosic ethanol. We look forward to collaborating with Chrysler Group to achieve our mutual goals and bring sustainable advanced cellulosic ethanol to consumers’ vehicles.’

ZeaChem, which develops biorefineries for the conversion of renewable feedstocks into sustainable fuels and chemicals has gone from strength-to-strength in recent months.

In June, it signed an agreement with Proctor & Gamble for a multi-year development programme of ZeaChem’s product platform.

The company is based in Colorado and claims its patented process offers the highest yield, at the lowest cost, with the lowest fossil carbon footprint of any known biorefining method.

Meanwhile, car manufacturer Chrysler – which is controlled by Fiat – has worked hard to be a leader in the transition to low carbon transport.

It has recently carried out an electric vehicle competition to find a suitable battery supplier and has teamed with the Environmental Protection Agency to develop energy efficiency hydraulic hybrid technology for the light vehicle market.

Many in the US see biofuels as a key component to reducing the country’s dependence on oil. A recent report found that the cultivation of biomass-derived energy sources can be increased in a sustainable manner through the use of widely-accepted conservation practices but there are still many people opposed to using farmland to grow energy crops.

ZeaChem said a key benefit of its technology is that it effectively ends the food versus fuel debate as its process results in a high yield of ethanol per ton of feedstock because the process efficiently utilises all fractions of the feedstock.

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‘The recent quarter’s balanced distribution of sectors that attracted capital underscores cleantech’s breadth and diversity of opportunity, one of the key drivers behind why cleantech remains an enduring area,’ said Ira Ehrenpreis, general partner, Technology Partners.

Solar power was once again the leading investment segment at more than $330m. Unlike previous quarters – the second quarter saw a much more balanced distribution across the various sectors with a marked increase in automotive (more than $202m) and energy storage (more than $180m), acording to the report.

One of the drivers for steady second quarter venture investment was the promise of stimulus monies offering startup investors a non-dilutive funding source.

Meanwhile, early-stage and late-stage investments dominated, while mid-stage funding was harder to come by, and the average round sizes were slightly smaller. There were no giant $100m-plus solar or biofuel rounds as in 2008.

‘Despite the economic slump, VC investors remain optimistic about the greentech sector and eventual exits in this space,’ said Eric Wesoff, senior analyst at GTM Research and author of the report.

John Rockwell, founder and managing director of Element Partners added, ‘The growing belief that credit markets and the economy are on the road to recovery has investors back in the market. Greentech markets are massive and diverse and investors are starting to pour additional money into the next wave of greentech opportunities.’

‘2009 will be a year of consolidation and development while 2010 and 2011 will be the year greentech breaks. Expect to see IPOs and acquisitions of VC funded firms in solar, smart grid, green buildings and biofuels,’ Wesoff added.

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New York-based Eco-Drive (Capital) Partners, a European-American investment consortium, and US venture capital firm Kleiner Perkins Caufield and Byers, are to provide the capital.

‘The investment by Eco-Drive and Kleiner Perkins validates our vision of joining together the advances in technology for plug-in hybrid powertrains with the ecochic beauty and eco-conscious comfort of the Fisker Karma. We are proud to have Eco-Drive behind us, and to see Kleiner Perkins reaffirm its confidence in our future direction,’ said Henrik Fisker, Fisker Automotive CEO. ‘This investment is a strong endorsement of our business model and future product offerings in a challenging business environment.’

Fisker Automotive’s debut model, the 2010 Fisker Karma, is expected to be the first plug-in hybrid car to market when early production vehicles come off the assembly line late this year.

The company recently announced a network of more than 30 retailers that are expected to market and service the vehicles.

Fisker Automotive, founded in August 2007 by auto design house Fisker Coachbuild, and clean-powertrain developer Quantum Technologies, is a privately owned American car company producing premium green automobiles.

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