Winners & Losers

There are times when life just doesn’t seem fair, such as when the Green Bay Packers beat “my Steelers” in the Super Bowl this year.

While that was taking place, another “super bowl” was going on that the NFL was not even hosting. This event, in part, was created by the U.S. Department of Energy (DOE) grant round as part of its Section 932 Integrated Biorefinery program, another national competition not conducted on the gridiron.
 

The scrap wood collected by C&D recyclers in some market regions will soon have additional fuel markets thanks to a round of Department of Energy funding.

Once completed, instead of the Lombardi trophy, the biorefinery program ultimately awarded in December 2009 approximately $564 million worth of DOE grants for a series of biorefinery projects, and the competition then was as strong as this year’s NFL playoffs.

Unlike the NFL playoffs, most of the names of the DOE competitors are not household names and the locations of their proposed facilities are not in major population centers, but in small communities and/or rural counties across the United States. The funding is being tied to energy independence from foreign oil rather than to landfill diversion.
 

STAYING POWER
With that major DOE grant funding announced on Dec. 4 2009, there were 19 project sponsors who listed either municipal solid waste (MSW) or woody biomass as their feedstock of choice, per their submittals to DOE.

Taking a closer look at those 19, a few of the proposed projects in particular have continued to advance and offer an opportunity for providing a destination for “woody wastes” generated within their geographic range.

These options are of particular importance as market opportunities for mixed C&D sorting and processing plants, where recovered wood scrap continues to be one of the highest percentages of the stream being processed.

To add some historical perspective to the current government funding situation, it should be noted that this form of large scale federal funding is not new. Under President Jimmy Carter, a series of federal grants for several innovative large-scale technologies, including pyrolysis and gasification processes, were awarded to assist in advancing commercialization.

The likes of Union Carbide (the PUROX partial oxidation process), Monsanto (large rotary kiln pyrolysis), Occidental Petroleum and Andco-Torrax (a slagging pyrolysis technology), received millions of dollars of funding and constructed waste processing plants that ranged in size from 200 to 1,000 tons per day.

This effort to help fund the construction of scaled-up plants and their hoped-for commercialization was welcome news to those offering the new technology. With the benefit of hindsight, though, we now know not one of these four major projects ultimately provided a sustainable technical or economic solution.

Much of the processing equipment of wood recyclers (and mixed C&D recyclers who find scrap wood comprising a large percentage of their materials stream) is geared toward producing fuel products.

However, in the spirit of this year’s saying in Green Bay that “The Pack Is Back,” once again the government is poised to fund the latest round of innovative technologies designed to change the way waste streams are handled.

With these Section 932 DOE grant funds as well as loan guarantee support from the USDA (United States Department of Agriculture), once again the waste industry can watch as would-be pioneers are provided with a substantial economic opportunity to unleash their pent-up innovative R&D juices, technical expertise and even some substantial equity funds from their investor resources.

The North American marketplace is buzzing with discussions of the value of renewable portfolios and carbon credits. Ultimately, though, the key will still be the economic sustainability of the processes developed, and the marketplace confidence that the “best of the best” can actually provide a solution in a competitive, bottom-line-focused environment.

Thus, whether there is DOE funding or angel investors involved, municipal tax-exempt funding or private equity pools, the end game is still to have a higher score than your opponent to win the solid waste-to-alternative energy Super Bowl.
 

FIVE WITH POTENTIAL
Based on GBB’s review of the announced feedstocks intended to be consumed in these DOE-funded projects, as well as a few other “non-DOE” projects working their way through the current development process, there are five projects of greatest interest to mixed C&D materials processors.

Three of these projects are receiving DOE money and two are not. The developers of these projects all say they plan to use MSW-based feedstocks and/or potentially C&D-derived woody biomass. The author is not endorsing any of these technologies or projects, but merely presenting a short list to watch, without expensive and loud commercial interruption, as the industry and these entities proceed through their own version of the playoffs and Super Bowl.

With the services sector of the total solid waste industry estimated to generate more than $55 billion in annual revenue, the stakes are high, even if the odds from Las Vegas are currently not published.

Bluefire Ethanol, based in Irvine, Calif., received the largest DOE grant of more than $80 million (with $8 million for Phase 1 and $81 million to be spent during Phase 2). Bluefire intends to construct a waste-to-ethanol plant in Fulton, Miss. The company says it holds the exclusive North American license to use a concentrated acid hydrolysis technology originally patented by Arkenol, formerly based in Irvine, in 1997.

The Fulton facility is projected to handle 770 dry tons per day of cellulosic/wood wastes with an estimated ethanol capacity of 19 million gallons per year. In October 2010, it was announced that the Fulton facility will be engineered and built by Wanzek Construction Inc., Fargo, N.D., at a cost of $296 million. This includes an approximately $100 million biomass power plant as part of the facility.

In September of 2010, Bluefire announced an agreement with Tenaska Biofuels LLC (TBF), Omaha, Neb., for the purchase and sale of all ethanol produced at the planned facility. As for feedstock supply, Bluefire was able to secure a 15-year feedstock supply contract with Cooper Marine & Timberlands Corp., a Mobile, Ala.-based wood chip producer.

Enerkem, based in Montreal, has received $50 million from the 2009 DOE grant awards for a 300 tons-per-day biorefinery project to be built in Pontotoc, Miss. The biorefinery is being designed to initially produce 10 million gallons per year of ethanol. It will take in a feedstock of MSW and wood residues through its wholly-owned United States-based affiliate Enerkem Corp.

The Three Rivers Solid Waste Management Authority, which is located in northeast Mississippi near the Alabama border, has signed an agreement with Enerkem to supply 190,000 tons of unsorted MSW each year.

The facility will convert about 60 percent of that material into a feedstock for this waste-to-biofuels plant. Among the investors in a recent round of financing for Enerkem is Waste Management Inc.

Ineos New Planet BioEnergy LLC, is being developed as a joint venture between Ineos Bio, Lisle, Ill., and New Planet Energy LLC (NPE), League City, Texas. The joint venture has received $50 million from the December 2009 DOE grant round for a plant to be located in Vero Beach, Fla., on the Atlantic coast of the Sunshine State.

The project recently conducted its groundbreaking in early February of 2011. The plant’s backers say it is expected to reach startup in the spring of 2012. Ineos New Planet BioEnergy has operated a pilot plant in Fayetteville, Ark., since 2003. The new Indian River BioEnergy Center, estimated to cost $130 million, will convert vegetative, woody waste, yard waste and household wastes into cellulosic ethanol and electricity for sale as renewable power to the local community.

As currently planned, the project will receive and process 150,000 tons per year of the waste materials and produce 8 million gallons of fuel-grade ethanol and 6 megawatts of electrical power. Another Enerkem project in Edmonton, Alberta, Canada, is, obviously, not getting U.S. DOE funds. The Enerkem Biofuels Facility, which broke ground in August 2010, is estimated to be an $80 million (Canadian) part of a larger initiative totaling $131 million. This initiative also includes an MSW feedstock preparation facility and an advanced energy research facility.

The Government of Alberta supported this initiative through Alberta Innovates – Energy and Environment Solutions ($29 million Canadian) and Alberta Energy ($3.35 million Canadian).

The City of Edmonton contributed $42 million to the total project. For the feedstock for this facility, Enerkem Alberta Biofuels and the City of Edmonton have signed a 25-year agreement to convert approximately 110,000 tons of the City’s MSW into biofuels annually.

The Powers Energy of America/Ineos project is being managed by Powers Energy, Evansville, Ind. The plant is being established to produce advanced biofuels with feedstocks that could include MSW, wood waste, agricultural waste and yard waste that will be converted into bio-ethanol and electricity.

In November 2008, the company announced a 15-year supply agreement (with one 5-year extension) with the Lake County (Ind.) Solid Waste Management District. The project includes using Ineos Bio technology within a $254 million garbage-to-ethanol plant to be constructed in Schneider, Ind.