Trash to Fuel: Enerkem Lands $51.5M Led by Waste Management

Cellulosic ethanol startup Enerkem needs trash and money. Massive trash company Waste Management has lots of both. The two said Wednesday that they’ve gotten together, with Waste Management making a strategic investment in the Montreal-based company as part of a 53.8 million Canadian dollars ($51.5 million) investment with fellow new investor Cycle Capital and previous investors Rho Ventures, Braemar Energy Ventures and BDR Capital. That’s on top of about 30 million Canadian dollars (about $24.48 million) in previous venture backing, according to the Cleantech Group.

Enerkem told us in January that it was looking for more money to build a second plant to turn trash into ethanol. Looks like they didn’t have to search very long — not bad, considering the gloomy climate for raising capital for big projects. The company’s core technology is centered on gasifying various forms of waste — everything from old telephone poles to mixed municipal garbage — and then turning the syngas into various fuels.

Its first facility, in Westbury, Quebec Ontario, has now operated for about 1,000 hours since it started up in late 2009, and expects to produce about 1.5 million gallons per year of methanol from old telephone poles, with ethanol next on the list of biofuels to produce. The company’s thermochemical trash-to-syngas process is only half of the equation — making the syngas into usable liquid fuel is another important test to pass. Other companies want to turn trash into syngas, using various methods and aimed at various end uses — examples include Coskata and Ze-Gen.

Enerkem’s Wednesday fundraising is aimed at a second plant, which is expected to cost $70 million and could crank out about 10 million gallons of ethanol per year. It’s being built with Greenfield Ethanol, Canada’s largest ethanol producer, right next to an Edmonton, Alberta municipal composting facility. The idea is to gasify municipal waste that can’t be composted — paper, textiles, plastics, fibers and the like — and turn that syngas into ethanol. Having deep-pocketed partners will be important for biofuel technology startups, analysts agree, given the hundreds of millions of dollars needed to build and operate fuel refineries.

Enerkem isn’t limiting its sights to Canada. In March it said it was eyeing a 20 million gallon per year, $200 million plant in Pontotoc, Miss., again adjacent to a municipal waste dump. In December it got news of a $50 million Department of Energy grant for its U.S. subsidiary, Enerkem Corp. to help those plans along.

Houston-based Waste Management, of course, would love to find more ways to turn trash into money. Its Wheelabrator Technologies subsidiary is burning about 7 million tons of waste per year into about 836 megawatts of electricity, and its other landfill gas-fired power projects now generate enough electricity to power about 160,000 homes.

Burning methane — natural gas by another name — to generate electricity is nice, but turning it into a shippable transportation fuel could expand the markets for the byproduct of rotting garbage that also happens to be a very potent greenhouse gas. Waste Management has also invested in Texas A&M spinout Terrabon, along with oil refining giant Valero (pdf), and is working with global gases company Linde to turn landfill gas into about 13,000 gallons of liquefied natural gas per year to fuel its trucks. The company wants to double its renewable energy production and triple the amount of recyclables processed by 2020.

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