greatpoint.jpgGreatPoint Energy, a company developing a way to turn polluting coal into less-dirty natural gas, has raised a whopping $100 million third round of financing.

The company will use the money to finish proving its technology works in large-scale production which, if successful, will be a significant step toward reducing the release of carbon emissions.

The new lead investors in the Cambridge, Mass. company are Citi Sustainable Development Investments and Dow Chemical, who were joined by AES Corp. and Suncor Energy. Chief Financial Officer Dan Goldman said the investors were chosen because they are leaders in the field can help bring GreatPoint to market. That should happen around 2011 or 2012.

The company previously raised $37 million from well-regarded Silicon Valley venture firms such as Kleiner Perkins Caufield & Byers, Khosla Ventures, Draper Fisher Jurvetson and Advanced Technology Ventures.

For GreatPoint, the technology is no longer in question. The various components of the coal gassification process are known, but the company is trying to make the process more affordable by speeding it up. Goldman said the main risk to the company is the tightness in the labor market for engineers and construction. Significant refining and power plant construction in China and India are sucking up much of the supply of skilled gas plant engineers.

Another venture-backed company treating coal is CoalTek, but it is focused on making coal cleaner, not turning it into gas.

Rather, GreatPoint’s competitors are conventional energy giants such as GE, Conoco Phillips and Shell. Those other companies also have gassification technologies to produces methane. However, their processes take several steps to get from an initial stage of Syngas (CO and Hydrogen) to methane, whereras GreatPoint has created a single-step conversion process. It can gassify a variety of materials, from coal to biomass.