The Winners' Circle

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, a “super bowl” of another sort was occurring. 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.

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

Unlike the teams in the NFL playoffs, most of the DOE competitors were not household names, and the locations of their proposed facilities were not in major population centers but in small communities or rural counties across the United States.

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

Taking a closer look at those 19 project sponsors, a few of the proposed projects in particular have continued to advance and offer an opportunity to provide a destination for “woody wastes” generated within their geographic ranges. 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, I should note 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 in funding and constructed waste processing plants that ranged in size from 200 tons 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.

However, in the spirit of the saying in Green Bay this year that “The Pack Is Back,” once again the federal 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 with 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, however, the key will still be the economic sustainability of the processes that are developed and the marketplace confidence that the “best of the best” can actually provide a solution in this competitive, bottom-line-focused environment. Thus, whether DOE funding or angel investors are involved, municipal tax-exempt funding or private equity pools, the end game is still to have a higher score than your opponent to win Super Bowl of solid waste to alternative energy.
 

FIVE WITH POTENTIAL
Based on Gershman, Brickner & Bratton’s (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, five projects are of greatest interest to processors of mixed C&D materials.

Three of these projects of interest are receiving DOE money, and two are not. The developers of these projects all say they plan to use MSW-based or potentially C&D-derived woody biomass as feedstock.

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 at more than $80 million (with $8 million to be spent in 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 facility includes a $100 million biomass power plant.

Bluefire indicates that the contract with Wanzek was negotiated so that it would be appealing for non-recourse project bank financing and, more importantly, serves as the final key project contract agreement to move forward with both the DOE and USDA loan guarantee programs.

In September of 2010, Bluefire announced an agreement with Tenaska Biofuels LLC (TBF), based in 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 U.S.-based affiliate Enerkem Corp.

The Three Rivers Solid Waste Management Authority in northeast Mississippi, near the Alabama border, has signed an agreement with Enerkem to supply the facility with 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. Additionally, according to Enerkem, this project also obtained a conditional commitment in January 2011 for another $80 million loan guarantee from the USDA 9003 Biorefinery Assistance Program. This plant is expected to break ground in 2011. 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 in Vero Beach, Fla., on the Atlantic coast.

To be known as the Indian River BioEnergy Center, Ineos Bio developed the technology to be used at the plant. The project broke ground 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 waste into cellulosic ethanol and electricity for sale as renewable power to the Vero Beach community.

As currently planned, the Indian River BioEnergy Center will receive and process 150,000 tons per year of these waste materials and will produce 8 million gallons of fuel-grade ethanol and 6 megawatts of electrical power.

Similar to the Enerkem project in Mississippi, this project also has received a conditional commitment for a $75 million loan guarantee from the USDA as part of the agency’s Biorefinery Assistance Program.

Another Enerkem project, this one  in Edmonton, Alberta, is, obviously, not getting U.S. DOE funds.

The Enerkem Biofuels facility, which broke ground in August 2010, is estimated cost CDN$80 million and is part of a larger initiative totaling $131 million. This initiative also includes an MSW feedstock preparation plant and an advanced energy research facility.

The initiative is being designed to divert more waste from landfill, reduce greenhouse gas emissions and produce a green transportation fuel.

The government of Alberta supported the Enerkem Biofuels initiative through Alberta Innovates – Energy and Environment Solutions (CDN$29 million) and Alberta Energy (CDN$3.35 million).

The city of Edmonton contributed $42 million to the total project. This is Enerkem’s first full-scale commercial facility and builds upon its experience with a pilot facility in Sherbrooke, Quebec, and a commercial demonstration plant in Westbury, Quebec. 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 and green power handling 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 that it had reached a 15-year waste supply agreement (with one five-year extension) with the Lake County (Indiana) Solid Waste Management District. The project includes using technology from Ineos Bio and is presented as a $254 million garbage-to-ethanol plant to be constructed in Schneider, Ind.

According to other published reports, tipping fees at the ethanol plant will start at $17.50 per ton.

The plan calls for construction of the project to be completed by mid-2013. This regional facility is expected to receive a nominal 2,000 tons per day of feedstock, with an input stream of 1,000 tons per day of processed materials fed into the gasifier.