Tag Archives: Enerkem

Enerkem gains momentum with IPO plans. Wither Iogen?

My latest Clean Break column in the Toronto Star:

By Tyler Hamilton

Remember Iogen? Five years ago the Ottawa-based company, praised at the time for leading the development of cellulosic ethanol technology, was the crown jewel of Canada’s fledgling cleantech sector.

Iogen had pioneered an enzyme-based process for breaking down the cellulose in wheat straw, corn stover (stalks and leaves) and other crop waste, making the sugars inside easy to access and convert into ethanol fuel.

This was the sustainable future of ethanol production. Instead of turning food (corn) into fuel, the world could move toward wood and agricultural waste as the preferred feedstock. Less energy would be used, and production and consumption of the resulting ethanol would emit fewer greenhouse gases. That was the vision, anyway.

Based on its solid reputation, Iogen attracted serious global attention. German automaker Volkswagen and Royal Dutch Shell jumped aboard as joint-development partners. Petro-Canada (Suncor), Shell and Goldman Sachs became major investors. Canadian and U.S. governments dangled the promise of financial support in hopes Iogen would build its first commercial plant on their respective soils.

But the technology proved too expensive and not ready for prime time, and the risk of proceeding was too high. Iogen, having raised more than $450 million in financing to date, remains largely in R&D mode as it tries to push down costs and perfect processes.

“There was a lot to learn from the Iogen experience,” says Bob Gallant, president and chief executive of Greenfield Ethanol, one of Canada’s largest ethanol producers. “The industry will take it as a good lesson.”

The story stands in stark contrast to that of Montreal-based Enerkem, which last week filed for an initial public offering with securities regulators in Canada and the United States. It plans to raise $125 million, representing one of the largest IPOs to come from a Canadian cleantech company.

Enerkem makes ethanol, too, but this is where similarities with Iogen disappear. Rather than rely on enzymes that must be tuned to break down specific forms of biomass, the 12-year-old company relies on heat and seeks out garbage – basically, a mix of residual municipal solid waste that can’t be recycled or composted. This can range from sneakers and soiled paper plates to shredded electricity poles and construction debris, which would otherwise be dumped in landfills.

At its most basic level, the company sorts, shreds and uses temperatures of around 700 degree C to gasify the waste materials. The resulting “syngas,” which must be cleaned and conditioned, then goes through a catalytic conversion process that eventually creates fuel-grade ethanol.

The company claims this ethanol, on a lifecycle basis, results in 60 per cent fewer greenhouse gas emissions when burned as a fuel compared to gasoline.

Enerkem is just as much a waste management play as an ethanol play, which is why municipalities are taking notice. Indeed, just as Iogen was pulling back from its grand commercialization plans, Enerkem was steadily moving ahead as it reached out to cities and strategic partners.

Its first commercial demonstration plant, in Westbury, Quebec, has been turning used hydro poles into ethanol since 2009. A full-on commercial plant in Edmonton, capable of producing 38 million litres of ethanol annually from mixed waste, is also close to operation. “It is expected to be completed at the end of the year,” according to Enerkem chief executive Vincent Chornet.

A plant of similar size is under development in Pontotoc, Mississippi, and earlier this week Enerkem announced it would be entering a joint-venture with independent ethanol producer Greenfield Ethanol to build a 38-million litre plant in Varennes, Quebec, adjacent to and integrated with Greenfield’s conventional corn ethanol refinery.

Meanwhile, it has two strategic partners and investors in trash king Waste Management and petroleum refiner Valero Energy, both based in Texas. It’s good company to keep.

Greenfield’s Gallant says there’s significant potential with the enzyme-based or “biochem” approach to producing cellulosic ethanol. Indeed, Greenfield is doing its own R&D in this area at its facility in Chatham, Ontario. But it remains costly, partly because different types of biomass must be matched with the appropriate cellulose-busting enzymes.

“It’s going to be a generation or two before you have a general enzyme that can work on a number of feedstocks at the same time,” adds.

Enerkem’s approach appears ready today. At a plant similar in size to the one being built in Edmonton, the company believes it can produce ethanol at a cost of $1.50 to $1.70 a gallon, before amortization and depreciation. At a plant that can process four times the volume, it claims in its regulatory filing it can get costs down to as low as $1.05 a gallon.

A decade ago it would have cost about $6 a gallon to produce cellulosic ethanol. Today it’s at best $2.50, and likely higher given the premium that comes with low volumes.

South Dakota’s Poet, the largest ethanol producer in the United States, says it can now make cellulosic ethanol for $2.35 a gallon using an enzyme-based process and is on path to $2 by 2013.

Enerkem seems well-positioned to outcompete on that front, with the caveat that past claims have let us down before.

Celebrity venture capitalist Vinod Khosla declared in 2007 that, in his educated view, cellulosic ethanol would be $1.25 a gallon or less within three years – that is, by 2010.

Two years later we’re still waiting.

Tyler Hamilton, author of Mad Like Tesla, writes weekly about green energy and clean technologies.

Valero Energy extends ethanol portfolio to Montreal’s Enerkem as part of $60M investment round

Enerkem, the Montreal-based waste-to-ethanol company, continues to raise money and extend its reach through new partnerships. The company announced today it has secured another $60 million in financing and that Valero Energy has joined existing investors Waste Management, Rho Ventures, Braemar Energy Ventures and Cycle Capital in the round. Valero and Enerkem have also agreed to jointly explore future commercial opportunities.

Enerkem is proving to be a Canadian waste-to-energy success story. It has several projects under construction and in the pipeline and it has managed to attract top-tier strategic investors and VCs. Valero is a good catch. It has 10 ethanol refineries across the United States, making it the largest supplier of ethanol in the country. It also has made several investments in next-gen ethanol technology companies, including Mascoma, Zeachem, Terrabon, Solix Biofuels — and now Enerkem. “With Valero joining Waste Management as a strategic investor, Enerkem becomes one of the very few renewable products companies that is aligned with industry leaders from both upstream and downstream parts of the business,” said Vincent Chornet, president and chief executive officer of Enerkem, in a press release.

Toronto needs to take a serious look at turning its hard-to-recycle trash into energy

My Clean Break column today in the Toronto Star talks about why the city, which under previous Mayor David Miller practically banned discussion of energy-from-waste, should open its mind and have an honest dialogue about options for turning the city’s hard-to-recycle solid waste into useful products, such as electricity, ethanol or green chemicals.

They’re doing it in Edmonton with Enerkem, which is turning sorted municipal solid waste into ethanol. They’re doing it in Ottawa with Plasco Energy, which is turning residual municipal waste into syngas that’s used for generating electricity. Trash giant Waste Management, an investor in Enerkem, has been investing heavily in technologies that can cleanly convert waste into useful chemicals and fuels in a safe way that releases virtually no emissions into the atmosphere — at least not, obviously, until any end fuel product is burned. But this fuel product would be displacing a fossil fuel using materials that might otherwise degrade in a landfill and release methane or contaminate groundwater.

This is an area where I part with many of my friends in the environmental community, and believe me, I’ve had my share of debates over a beer. But the landfill option is not better, in my view, and while I fully support waste diversion programs I don’t believe we can ever get to 100 per cent diversion. There’s a lot of wood waste, clothing, unrecyclable plastics, and even certain paper and plastic products can only be recycled so many times. What happens with this garbage? Advanced energy-from-waste technologies, like those being built by Enerkem and Plasco, can help municipalities manage their waste in their own back yard and get a source of energy in return.

I’m not saying we should drink the Kool-Aid, no questions asked. But at the same time, I’m a believer that the technology has changed over the years, the economics have improved, and some systems being piloted and built for commercial use today are dramatically different than the dirty incinerators built in the 1970s. Skepticism is fine, and encouraged, but not when it’s accompanied by outright dismissal or repeated attempts to compare today’s technology with what stirred up controversy 20 years ago.

It’s a conversation Toronto needs to have.

Enerkem gets $80 million loan guarantee from U.S. Department of Agriculture

Enerkem being a Canadian company doesn’t seem to impact its ability to get financial support from the U.S. government. Montreal-based Enerkem, on top of an earlier $50 million loan guarantee from the U.S. Department of Energy, has just received another $80 million in loan guarantees, this time from the U.S. Department of Agriculture. It was one of only three biofuel companies to get this support — the others were Coskata and INEOS New Planet Bioenergy.

The loan guarantees will back Enerkem’s construction of its landmark waste-to-biofuels project in Pontotoc, Mississippi, which will transform Northeast Mississippi’s municipal solid waste into ethanol. “Enerkem’s biorefinery operation in Mississippi — a 300 ton-per-day facility located on the Three Rivers landfill site – will initially produce 10 million gallons/36 million litres of ethanol annually from sorted municipal solid waste and will reduce the pressure to landfill,” according to the company, which expects to create more than 70 permanent jobs.

It would be nice if our federal government offered more loan guarantees of this sort…

Plasco raises another $110 million to fund “commercial delivery” of energy-from-waste system

Ottawa-based Plasco Energy Group says its energy-from-waste technology is now proven and it’s time to move to commercial delivery. To help in that effort, it announced today a $110 million private equity placement led largely by Ares Management LLC of Los Angeles. Since 2005 Plasco had already managed to raise $135 million in equity, so this latest haul bring the total to $245 million — not bad in today’s markets. Another $25 million in government grants rounds out the total to $270 million.

Plasco chairman and CEO Rod Bryden called the latest investment in the company “a remarkable expression of confidence.” The company is targeting its efforts at North America, Europe and China. It has two pilot facilities already — a 100-tonne-per-day plant in Ottawa and a much smaller plant in Spain — but a 300 tonne-per-day facility is in the works in Red Deer, Alberta, and is expected to be completed in 2012. One can only assume that the Ottawa facility has worked out its kinks, otherwise I can’t see any responsible investor throwing down $100 million to pursue commercial projects.

This is good news for Plasco and another shot of confidence in the emerging market for new energy-from-waste technologies. Montreal-based Enerkem is another Canadian company riding this wave with its ethanol-from-waste systems, having recently raised nearly $54 million from Waste Management and a number of venture capital firms. Don Roberts, vice-chair of CIBC World Market’s clean technology and green energy team, recently told me that energy-from-waste was one of three main areas to watch over the coming years, along with energy efficiency and water. He may be right.