Enerkem uses a thermochemical fluidized-bed process to gasify municipal solid waste (organics, wood waste, plastics), demolition wood, and agricultural/forest residues. The resulting syngas is cleaned and, using a proven catalyst, can be turned into a variety of end products, including methanol, ethanol and high-value olefins (plastics). The company is in the process of building a waste-to-ethanol facility in Mississippi (75 million litres a year) and an Edmonton plant (36 million litres a year) that will also turn sorted municipal solid waste into ethanol. The Edmonton facility is being done in partnership with Greenfield Ethanol, Canada’s largest independent ethanol producer. Meanwhile, in Westbury, Quebec, the company has a commercial-scale demonstration facility that currently turns old wooden hydro poles into ethanol.

Rho Ventures, Braemar Energy Ventures and BDR Capital, all existing investors, participated in the financing round with Waste Management, along with new investor Cycle Capital. “This financing round validates Enerkem’s business and advances our path towards leadership in the waste and advanced fuels markets,” said Chornet in a release. In an earlier story (July 2008) I wrote for Greentech Media, Chornet said that burning waste or burning the syngas created from waste is, well, a waste. Based on electricity and ethanol prices at the time, a company can make three times more revenue per tonne of processed waste compared to a plant that simply burns its syngas to generate electricity, he said. Chornet also said Enerkem’s process is profitable with oil at $50 a barrel and if the company can get a competitive tipping fee to take the garage.

On the acquisition front, two more promising Ontario cleantech ventures have been plucked up by U.S. firms. On Tuesday Toronto-based biogas maker Stormfisher Biogas announced it had been acquired by Virginia-based Greenhouse Gas Services. Despite having one of the most boring and uninspiring names, Greenhouse Gas Services is a venture of GE Energy Financial Services and AES Corp., so it has some serious backing. The company invests in and develops projects that reduce greenhouse-gas emissions, and it then sells the carbon credits. So here’s my question: If some of the biggest Stormfisher projects are expected to be in Ontario, and since the Ontario Power Authority doesn’t appear to be letting biogas projects keep carbon credits, then what’s in it for Greenhouse Gas Services? I can only speculate that the power authority has quietly decided to let developers keep credits from methane destruction. Something I’ll have to follow up on.

And just today, Sunnyvale, Calif.-based Calisolar announced it had acquired Vaughan, Ontario-based 6N Silicon, a maker of solar-grade silicon that will operate as a wholly owned subsidiary. “In addition, $22.5 million in funding was raised from existing Calisolar and 6N investors,” the companies said in a statement. “The new funds will be used to increase capacity at the Sunnyvale, California cell manufacturing facility and expand silicon purification operations in Vaughan, Ontario.” It’s sad to see 6N fall under foreign ownership so early in its life, but the good news is that Calisolar is likely to set up some module assembly in Ontario to take advantage of the feed-in-tariff program here. Given that its solar cells will contain 6N’s silicon, the company will be well positioned to meet Ontario’s local content requirements and even supply other cell/module makers.

Finally, I have a follow to my story about Vestas and the possibility it will lay roots in Ontario. I spoke Wednesday to the company’s head of global offshore markets, who spoke highly of the Trillium projects and called the opportunity to develop offshore wind in the Great Lakes “fantastic.” He wouldn’t say if Vestas plans to establish manufacturing in Ontario — which isn’t surprising — but given the potential in the Great Lakes, the liklihood of Trillium’s projects moving forward first, and the positive policy and regulatory environment in Ontario (including the feed-in-tariff program, which offers 19 cents per kilowatt-hour for offshore wind power), all the stars are aligned and it’s only a matter of time before Vestas makes its move.

My friend Tom Rand has a short but no less interesting video filmed during a presentation he gave recently in Toronto. Rand helped build a “green hotel” that emits a quarter of the emissions of a comparable hotel. The workhouse behind this approach is geothermal, and Rand said it can be done in a way where energy savings exceed the monthly payments on a long-term low-interest loan. Now, the key is to get that cheap loan. Rand said it’s up to the federal and provincial governments to backstop such loans and mandate the banks to lend the money. It would help, he added, if use of this technology was mandated where it was appropriate. This, as Rand says, is low-hanging fruit that we’re simply not picking. Instead, with each new building or home we build we’re letting this ripe-for-picking fruit fall on the ground. Rand, it should be pointed out, is behind another move to have the government sell green bonds that would help fund these kinds of projects, or backstop the low-interest loans required to do them. It’s all perfectly logical, but I guess politics is never as logical as it could be.

Click here to watch the short video.

Sounds like something Ontario could use, because even though our new Green Energy and Green Economy Act is an ambitious and progressive piece of legislation, and even though a newly proposed feed-in tariff program offers a huge incentive for developers, I’m still not convinced there won’t be a capital constraint that will ultimately slow down development. This is particularly true if, as the Ontario government has said, it wants to encourage community co-op and First Nations projects. I would even argue the federal government should consider creating such an institution, but that is not likely to happen under our current Conservative government, so no point in asking.

The Center’s John Podesta and Karen Kornbluh argue that the creation of such a bank is critical if we are to transition to a clean-energy economy and create the green jobs that will drive growth in the coming years. “It would enable clean-energy technologies—in such areas as wind, solar, geothermal, advanced biomass, and energy efficiency—to be deployed on a large scale and become commercially viable at current electricity costs,” they write. “Currently, both Congress and the American public are focused on proposed caps on carbon emissions and requirements that utilities increase their use of renewable energy and invest in energy efficiency. But far less public attention has been paid to the specific policies that will drive new capital investment into clean-energy technology. A Green Bank would facilitate the flow of private capital into renewable energy and efficiency projects on the drawing boards today.”

Fact is, clean energy deployment is suffering under the recession, and even upon recovery there’s no guarantee credit markets will loosen up. A green bank would ease the credit crunch, allow for predictable financing for large-scale projects, help clean-energy developers develop a financing track record, and by spurring more deployment would justify the huge investments required in the transmission system.

Ontario, like the U.S., is focused heavily on investment in renewable (clean) energy and establishing a cap-and-trade system that would mesh with those being developed by other provinces and states and, ultimately, the national system that would emerge in the United States. And, like the U.S., there’s not a heck of a lot of attention on the difficulty of raising capital. In a recent interview with Ontario Premier Dalton McGuinty and his Energy and Infrastructure Minister, George Smitherman, I raised the capital issue as a potential concern. Smitherman more or less dismissed it as unnecessary. The recession was temporary, he said, and the program incentives that would emerge out of the Green Energy Act would be enough to encourage development.

I think he’s seriously underestimating the situation out there, especially if the province imposes domestic content rules. Most economists will tell you that even when the economy recovers it will be a different economic environment. Credit will still be tight, and small developers that don’t have healthy balance sheets or a track record simply won’t be able to raise the capital they need. In the end, this means community co-ops and aboriginal projects lose, small developers lose, and only premium projects backed by large multinationals move forward. It would be a shame to put all this enabling legislation in place only to see projects stymied by an overcautious banking community. By creating a green bank, and arming it with capital raised through the issuance of green bonds, the transition to a green-energy economy could be rapidly accelerated.

The Center for American Progress describes what a green bank should be designed to do: In addition to direct financing of certain projects, “the Green Bank should also facilitate private-sector investments, not crowd out private investors. The bank should work  closely with private banks to provide loan guarantees, credit enhancement, and other financing tools to stimulate private-sector lending and investment in projects that cannot access commercial financing on economically feasible rates and terms.”

The center proposes that the bank initially have $10 billion for funding, and up to $50 billion over five years. The capital would be leveraged at a 10-to-1 ratio to provide loans, guarantees, and credit enhancement to support up to $500 billion in private-sector investment in clean-energy and energy-efficiency projects.” Scaled down for Ontario’s purposes, I’d peg the initial number at $400 million and $2 billion over five years, perhaps partly supported by an auction of carbon allowances and money raised through a green bonds issue.

Any thoughts?

China was up 22 per cent on the year. Germany was up a staggering 217 per cent. Israel, not to be outdone, was up 224 per cent.

And Canada? Shamefully, cleantech companies from my home and native land only managed to raise $159 million from 14 disclosed financing rounds, down 58 per cent from 2007. Of the countries mentioned by the Cleantech Group that saw a fall in 2008 investments, Canada performed the worst — the others were the U.K., which fell by 11 per cent, and India with a 20-per-cent decline.

I’m bummed. I know there’s huge talent in this country, smart entrepreneurs, game-changing ideas and a solid stable of cleantech ventures — just look at the list of companies that have been funded by Sustainable Development Technology Canada over the years, and more seem to emerge by the day. Where are the champions from the financial community? Academia? Government? The high-profile talking heads ready to promote the best and brightest that Canadian, Ontario, or Toronto cleantech has to offer? Where’s the branding? The chest-thumping?

I need a glass of wine.

Maybe I’m going on a tangent here, but I can’t help but see this as an early sign of Dutch Disease, which happens when there is a reallocation of resources from high-tech service and manufacturing industries to the exploitation of natural resources, particularly as the prices of those resources rise. The Canadian government’s obsession with rapid oil sands development, the run-up last year in the price of oil, and the lack of serious attention to high-tech innovation, including cleantech, does fit that bill. It seems like the rest of the country is being gutted to support a one-trick pony, which is a blessing or a curse depending on whether you’re riding the pony or not.

I recall a speech by Mike Lazaridis, founder and co-chief executive of Research In Motion, back in March 2006 in Toronto. “Our oil resources can only carry us so far. What are we going to do after they run out?” asked Lazaridis. “What happens if there’s a major breakthrough and we’re no longer as dependent on oil as we have been in the past? What will we do? Will we have made the wise research investments, industrial investments, infrastructure investments to prepare Canada for a world without oil?”

In a word, no. These latest cleantech investment figures, IMO, are but one example of this neglect.

Clearly, the green bond idea has merit. So much so that the World Bank launched its first green bond back in November with Scandinavian bank SEB. “Tackling climate change is going to take immense resources that will only come from a well-orchestrated flow of public and private finance,” said Robert Zoellick, president of the World Bank Group. “This transaction is an important early effort to show one way in which this can be done. We hope it demonstrates that private citizens can safely and profitably invest their savings today while also helping provide a better world for their children.”

The original issue of the green bond was about $350 million (Canadian), or 2.325 Swedish kronor, but high investor interest led the World Bank to increase the issue to $400 million, or 2.7 SEK. The six-year bond earns 3.25 per cent annually.

I’m sure there are many Canadians and Americans who would be happy, during these turbulent economic times, to park their money in a green bond knowing that the funds generated are being used to put more green energy and infrastructure in place. Ontario, or the Canadian government, should follow the example of the World Bank and issue its own bonds for this purpose — the sooner the better.

NOTE: For a look at recent efforts to introduce a green bond in Canada, check out this previous post.

Despite having lived in Silicon Valley for more than 25 years, Salzman’s family still lives in Toronto. He has also retained his Canadian citizenship (I forgot to ask him if he still loves hockey).

Here’s a policy document put forward by five Action Canada Fellows who over the past year have actively promoted the idea to federal parties. So far, both the Liberals and the New Democratic Party have pledged to create a green bond if elected. Problem is they’re unlikely to get elected Oct. 14, and the Conservative government that will likely remain in power has rejected the idea (you can read why in the column). The proponents of the green bond plan to turn their attention to the provinces, specifically Ontario — and so they should. Now, more than ever, is the time to adopt such a financial instrument.

For my American readers, there is a precedent for selling green bonds. It’s certainly something that could be expanded.

One could argue it might help, because big-budget nuclear and clean coal projects will have more difficulty raising the money — i.e. debt financing — to push these megaprojects forward. In such a situation, renewables, conservation and combined heat and power projects could be viewed as the least risky and therefore most worth pursuing. On the other hand, the credit crunch could hit big wind and solar projects with equal impact, and force governments to make a greater commitment to backstopping nuclear and other conventional projects with taxpayers’ dollars.

And what do venture capitalists think about all this? Does the crunch affect how they allocation money, or their ability to raise it? Does it make life more difficult for cleantech startups in need of financing?

If you have any insights or opinions to share, I welcome it…