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Waste-to-Ethanol Startup Enerkem Seeks Financing

Montreal-based Enerkem, which just last week announced it would soon start up its first commercial scale cellulosic ethanol factory, is looking to secure financing to begin building its second such plant this year, CEO Vincent Chornet told us.

Enerkem is teaming up with GreenField Ethanol, Canada’s largest ethanol producer, on the factory in Edmonton, Canada, and expects to begin operations by the end of 2010. Enerkem says its plant will produce up to 10 million gallons of cellulosic ethanol annually from garbage.

The engineering is already “well advanced,” Chornet said, and Enerkem is now “finalizing the processing” to obtain an environmental permit from Alberta for the plant. In terms of funding, Chornet says discussions are still preliminary.  “Right now, we’re debating with the board what form that will take,” he said.

The $70 million factory will use shredded municipal waste, including fibers, paper, plastic and textiles. The factory will be attached to a compost facility, and will make use of the 40 percent of the garbage that comes into the facility that isn’t compostable, Chornet says.

As the ethanol industry works to expand from starches, such as corn and sugarcane, to nonfood materials, such as switchgrass, corn cobs and wood chips, the difficulty of how to obtain the less energy-rich materials cheaply and in large-enough volumes has been a significant challenge. Some companies are working on new ways of growing or harvesting those feedstocks, while others – such as Enerkem – are looking at waste materials that are already collected, but thrown away, today.

The advantage of that strategy is that the materials are already gathered in one place and, in the case of municipal waste, customers will often pay companies to take it. The amount of waste available to a factory limits its size, and cellulosic-ethanol factories already cost more to build than starch-based ethanol factories today. But the “negative cost” of the feedstocks can defray some of those higher costs. Aside from Enerkem, companies such as BlueFire Ethanol are also targeting municipal waste.

Last week, Enerkem announced it had finished building its first commercial-scale plant, which is expected to make up to 1.5 million gallons of cellulosic ethanol from discarded telephone poles annually. The company is ramping up the factory in Westbury, Canada, now and expects to be producing methanol from it soon, but says that ethanol could be further away.

Enerkem also is developing a number of as-yet-unannounced projects, Chornet said. While he is keeping the projects confidential for now, Chornet said the company probably will announce another project in Canada “in the coming months” — although the plans are uncertain, as they are still being firmed up – and is also looking at the possibility of a project in the United States.

But the company will have to overcome a few challenges to get to that point. First of all, it still has to prove that it can make everything work properly at the Westbury scale. “You haven’t really proved that it’s good enough syngas until you’ve made a liquid fuel from it,” said Jim McMillan, a manager at the National Renewable Energy Laboratory’s National Bioenergy Center. “What is the quality spec you need, and can you show me that you’re meeting that quality spec right now? That’s the kind of thing I’d want to see.”

Money could prove another challenge, and not a minor one at a time when capital has become far more difficult to raise.  So far, Enerkem already has raised a total of about 30 million Canadian dollars (about $24.48 million) in venture backing, according to the Cleantech Group.

Overall, Chornet is optimistic, despite the difficult economic climate. “There is still room for companies like ours, but we do have to operate in a different environment,” he said. “We’re not hiring as much as we’d like, or as we planned, but we’re still hiring and our momentum is still very good.”

6 Responses to “Waste-to-Ethanol Startup Enerkem Seeks Financing”

  1. Enerkem Multi-Product and Feedstock-Flexible Technology Platform

    Dan, thanks for your question on Enerkem’s process which can be a little difficult to decipher. Enerkem has developed a multi-product technology capable of using multiple feedstocks which means that our technology platform is flexible both in the inputs it can use (municipal solid waste, used telephone poles, agricultural and forest residues, etc) and its output. Enerkem is currently and primarily focusing on ethanol as the end product given the high demand for this product in North America (RFS mandate). However, along the way (during the sequential catalysis conversion process from syngas to ethanol) it also produces other intermediate alcohols such as methanol, acetates and acetic acid. Any one of these green products can be set as the “end product” if warranted by market demand. It is also possible to build on Enerkem’s technology platform to produce other fuels such as green gasoline and synthetic diesel for examples. Ultimately, Enerkem’s insight is to have developed a technology platform that can adapt to both environmental (eg. waste reduction) and market conditions and giving it a significant competitive advantage.

  2. Daniel Fitzsimmons

    I’ve been back-tracking lots of previous news releases on Enerkem and cannot for the life of me determine exactly what biofuel this group intends to be producing from gasified creosote utility poles or from MSW. They say “ligno-cellulosic ethanol, and then methanol and then other advanced biofuels.

    Please Marie-Helene Labrie, be more specific regarding just what comes out the back end pipe from Enerkem’s gas-to-liquids project using some sort of copper-based catalyst to convert the synthesis gas. The world of next-generation biofuels is really complex when investors try to interpret the technologies being employed or the feedstocks to be converted or lastly to understand just what fuel(s) are going to be introduced into the transportation fueling system. Thank you.

    Thank you.

    Dan Fitzsimmons

  3. To address Mr. McMillan’s concern about the spec of the syngas, I would like to mention that Enerkem has already produced syngas, methanol, and second-generation ethanol at its pilot plant in Sherbrooke, Québec. This plant has run for more than 3,500 hours since it began operation in 2003 and has successfully used (to date) approximately 20 different feedstocks to test and validate Enerkem’s technology. These feedstocks include sorted municipal solid waste, forest residues, construction and demolition wood, wheat straw and treated wood, to name a few. The Westbury plant will now demonstrate it at a commercial scale.

  4. Great article – the world needs more companies like Enerkem focusing on these kinds of technologies. Great for the environment and good for Canada, too, helping us develop alternative sources of fuel to more environmentally and financially expensive and ultimately unrenewable petro-resources. Cheers!