Nanostellar investment brings diesel engines closer to clean

Among the many parts of a car or truck is the catalytic converter, a part that minimizes the toxic emissions coming from the engine. Nanostellar, based in Redwood City, Calif., is a company that uses nanotechnology not only to improve the process but also to reduce costs.

Today’s catalytic converters make liberal use of platinum, an expensive rare metal. By using palladium and gold particles, both much cheaper than platinum, Nanostellar can cut its platinum use by about half and lower the amount of toxic chemicals released by almost as much.

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Particles of the three metals form the inside lining of the converter, which becomes active in the intense heat released during the engine’s operation. The converter changes the structure of harmful gases and oxidizes unburnt fuel into carbon dioxide and water.

The company’s technology focuses specifically on diesel engines, which are the subject of tightening environmental regulations internationally. In the United States a set of brand new standards have just gone into effect, with stricter rules rotating in by 2010.

New rules, along with the climbing price of platinum, should create a healthy market for Nanostellar’s products. Automotive usage accounts for about half of the world’s platinum supply, according to Nanostellar CEO Pankaj Dhingra.

Increasing demand for the metal has recently pushed prices to almost $1500 per ounce, and the global market for automotive platinum is nearing $6 billion, according to Johnson Matthey, a chemical company that sells it as a catalyst. Gold, by contrast, is around $800 per ounce, and palladium costs even less.

Nanostellar is currently selling some of its products on the consumer after-market but is focused on inking deals with the manufacturers who make parts for new vehicles. The company is nearing a deal with a European firm and is in talks with six others.

The new investment is for an undisclosed amount from the World Gold Council, an advocate organization for gold. The deal also includes a strategic partnership for marketing and business development. According to our records, the company has previously taken about $13 million from investors, including 3i Group, Khosla Ventures, AsiaTech Management, Monitor Ventures, Firelake Capital Management, Big Basin Partners and Modu Angel Fund.