Skyrocketing prices for crude oil, natural gas and their associated products are having interesting side-affects on cleantech. Alongside a high level of excitement for investments like algal biofuel, some non-standard deals are appearing, including one for a company called American Biomass.

Based in the chilly state of New Hampshire, American Biomass is betting that high fuel prices for traditional heating fuels will inspire consumers to look elsewhere for warmth — in this case, back to the same trees their forefathers used.

The heating method in question uses wood pellets that vaguely resemble high-fiber breakfast cereal. The pellets, essentially refined wood that contains very little moisture, sap, bark and other messy bits associated with fresh-cut logs. are fed into special stoves, a more efficient and cleaner twist on the wood-burning fireplace.

There are multiple advantages to the scheme. Aside from being a better way to burn wood, pellet stoves don’t require a chimney, and include feeders and temperature controls for automatic operation.

Compared to a forced-air heater burning cheap methane or propane, wood pellets can’t compete. But that’s exactly the point — the heating fuels that have been used for the past few decades aren’t so cheap anymore. In response to that trend, wood pellet stoves were already starting to pick up in popularity a few years ago.

If anything the trend of switching to pellet stoves for price-conscious consumers is likely to pick up. That’s good for the environment, in the long run — at the very least, pellets are probably a better renewable fuel to make from wood than cellulosic ethanol, in terms of both price and efficiency.

But the design of the modern pellet stove is over 20 years old, so it might seem like a bad area for venture investment. The niche American Biomass is carving out for itself deals with another area: The logistics of moving all that wood around.

Wood pellets are already fairly cheap but aren’t always widely or easily available. There’s decades of built-up infrastructure behind the use of liquid and gaseous fossil fuels, but if growth in pellet use continues, a parallel distribution structure will be needed.

The $4 million funding, provided by .406 Ventures, is the first for American Biomass.