Canada’s green fuel leaders: four companies that will shake up the way we fuel up
Canada might hold much of the world's oil supply, but that isn't stopping its entrepreneurial companies from being world leaders in second-generation bioenergy technologies. Over 100 companies are in the race to prove their technology can replace fossil fuels with affordable and planet-friendly biofuels to heat homes and schools and rev up industrial and transportation engines.
April 28, 2010 By Crystal Luxmore
Despite decades of work the majority of the next generation biofuels (which are made from materials that do not compete with food production) are still at the R&D stage. But a few Canadian companies are among the dozen that are commercial or near commercial—and each has the potential to change the way the world fuels up.
Enerkem: speeding to market
From a small research laboratory in Sherbrooke University in 1999 to a large commercial facility that will see Enerkem’s gasifier turn Edmonton’s garbage solid into 36 million litres of bioethanol a year, this Quebec company is pursuing aggressive growth. When the facility is operational in mid-2011, it will be the first commercial operation in the world to take municipal solid waste (about 100,000 tonnes annually) and turn it into a renewable ethanol that can be pumped into our gas tanks.
And that’s just the beginning. The privately held company claims its 25-year contract with the City of Edmonton is the only long-term feedstock supply agreement between a fuels and chemicals producer and a large municipality anywhere in the world. Enerkem is modelling its future developments on this partnership.
Speaking at the Canadian Bioenergy Association’s annual conference last October, Denis Arguin, VP Engineering and Project Implementation at Enerkem outlined a similar $250 million deal with a waste management company in Pontotoc, Mississippi for a 20 million gallon/year bioethanol from MSW plant, twice the capacity of the Edmonton facility.
Vincent Chornet, President and CEO of Enerkem, says Enerkem’s aggressive path to commercialization is one of the cornerstones of its success. With 3,500 hours of testing using over 20 different types of feedstock since 2000—first in a pilot then a demonstration plant—Enerkem quickly proved its technology works, lowering investor risk.
In this market, timing is critical. A recent report by Accenture, Betting on Science, Disruptive Technologies in Transport Fuels, identified 12 key technologies, from electric cars to algae, that could transform the way we gas up. But the report warns, “all of the technologies are “in play” now, and there is a race to commercialization. The success of one technology will impact the potential market of the others.”
Still new technology companies can risk everything by trying to commercialize too early. Chornet warns other emerging renewable energy companies “not to skip any steps. Having the long but necessary pilot step is an absolute need before your first industrial scale-up. Don’t try to rush into it, you’ll pay the price after.”
Chornet also urges new companies to be creative. For new companies, finding financing is always the barrier—and Enerkem’s ablity to court a mix of financial partners shows creative thinking. It’s money comes from equity funding, government support and long-term partnerships with industry or municipalities.
One final piece of advice Chornet has for emerging companies? Clear communication. “Make sure your business plan and technology development path are well articulated and that results are well explained to your shareholders.”
Confidence also goes a long way when you’re shopping around a revolutionary idea. Asked what he would have done differently on Enerkem’s route to commercialization, Chornet answered, “nothing.”
Ensyn: the joiner
This Ottawa company came up with its fast pyrolysis technology 25 years ago when oil prices were still in their teens. Ensyn stuck to its promising technology, which turns biomass like wood waste into a thick “pyrolysis oil” (or bio-oil), despite a tough energy market. Pyrolysis’ oil’s natural barbeque flavouring proved lucrative in 1989 when Ensyn commercialized its first application of its technology—for the food flavouring industry with Wisconsin-based Red Arrow.
Today its pyrolysis oil produces 30 different products. The company’s philosophy, to perfect its process and find the best partners possible to get its technology and liquid to market, never wavered. In 2005, it inked a $100 million deal to to licence the fossil fuel upgrading application of their technology to Ivanhoe Energy, which uses it to refine heavy oil from the tarsands. Ensyn’s portfolio also includes bio-based chemicals used in the construction materials manufacturing industry.
Ensyn’s pyrolysis oil is currently replacing fossil-fuels in heating and electricity applications, especially in the forest products sector where a ready supply of wood waste can seriously offset process power costs.
But what has most tongues wagging is using pyrolysis oil to produce renewable “drop-in” transportation fuels and thanks to a deal with UOP, a subsidiary of manufacturing giant, Honeywell, Ensyn just got a lot closer to the finish line. The idea here is to refine the pyrolysis oil to a state where it can be slotted into the existing oil refinery infrastructure and produce green gasoline, diesel and jel fuels.
Senior vice president, Randall Goodfellow, says Ensyn could have taken its technology to market itself but “it’s a super humongous task and there are already people who have those connections.” By sticking to its philosophy of hooking up with credible partners, Ensyn made a deal with UOP (the world’s major technology supplier to the oil refining sector), and a subsidiary of manufacturing giant, Honeywell. The two companies formed Envergent Technologies in October 2008 to increase the pace of the global deployment of Ensyn’s fast pyrolysis technology to produce pyrolysis oil for thermal and electrical applications, as well as, to commercialize the equipment to upgrade pyrolysis oil in to renewable liquid transport fuel.
Ensyn’s joint venture with UOP has gained Ensyn a worldwide sales force and a Honeywell backed guarantee on the performance of their technology.
Goodfellow says that the equipment to upgrade pyrolysis oil into green transportation fuel will be ready to be slotted into the existing fossil oil refining infrastructure by 2012.
Dynamotive: Adapting to a changing market
Another promising bio-oil producer is Vancouver’s Dynamotive Energy. Its inventive approach was recognized this summer when it received the 2009 Intergovernmental Renewable Energy Organization Innovation Award. Using leftover wood like construction waste, Dynamotive has been turning wood to bio-oil for years at its 130 tonnes per day West Lorne plant, fueling a 2.5 MW turbine to make power for the Ontario grid, and selling the oil to a U.S. customer for the heat market.
The economic downturn sparked a fresh approach from management. Instead of playing project developer, Dynamotive too, is seeking solid partners. In a conference call discussing the company’s fourth quarter results for 2009, CEO Andrew Kingston said the market is taking a “significant departure,” now large energy and oil companies want to develop projects themselves, “so it’s a question of a decision of whether the technology meets their requirements, rather than us having to raise the capital and put the project together.”
Dynamotive has a number of potential plants and deals ready, in China, Argentina, Australia and Europe. In 2010 it is concentrating on those that are at the financing stage and it’s focusing on third party licensing, said Kingston.
Like Ensyn, Dynamotive’s big goal is to perfect a process to upgrade its heavy bio-oil into a middle distillate that can be inserted into existing oil refineries to produce renewable transportation fuel, and like Ensyn, it’s racing to be the first.
Want to know how to court a corporate giant? Do your due diligence and make sure your technology is flawless. “Do what you do really well, understand what it is you do, and then connect with other parties in value chain that will get you to the market,” says Goodfellow.
Nexterra: Seeing the forest through the trees
This West Coast company initially developed their small gasification units for large pulp and paper or lumber facilities to take leftover wood and make heat and/or power to replace fossil fuel used in the plant or sell electricity to the grid. But when the forest industry took another turn for the worse, Nexterra turned to urban markets. It has sold its gasification systems not only to pulp and plywood mills but to environmentally-minded universities, communities, and municipalities that want to provide clean, low-cost renewable energy to their constituents. Soon Nexterra’s technology will heat and power the centre of energy research in America, the Department of Energy’s Oak Ridge National Laboratory in Tennessee.
The $89 million project is being led by Nexterra’s partner Johnson Controls — the two formed a “strategic alliance” to develop biomass gasification projects after working together on a similar project at the University of South Carolina.
By tapping into new markets Nexterra has been able to continually win new rounds of investment by Calgary private equity firm ARC Financial, which holds a majority stake in the company, to pursue an aggressive development path. What’s the next step for Nexterra? Using its gasification systems to generate heat and power from small-scale plants (2-10 MWe) by direct firing syngas into high efficiency gas engines.
Douglas Bradley, president of the Canadian Bioenergy Association, says Canada’s advanced bioenergy technologies are still unknown in some sectors—and that needs to change. If these companies want to win the race, they need to find strong investment or form strategic partnerships like Ensyn’s deal with Honeywell, he says. And with more promising advanced biofuel technologies from Canadian companies like Lignol and Iogen nearing commercialization, the Canadian Bioenergy Association is focusing on promoting these technologies to potential investors worldwide.
Partner with Canadian biofuel and biomass leaders
This year CanBio is leading a series of trade missions and study tours to promote Canada as an innovative leader in advanced biofuel, and as an ideal site to implement biomass heat, power and pellet technologies. CanBio is planning a Financing & Technology Mission to China in collaboration with Australia and the World Bioenergy Association from May 25-27, 2010 and a Bioenergy Study Tour to Italy and Austria from May 10-14, 2010.
To network with the Canadian bioenergy industry, don’t miss the industry’s Annual Conference in Vancouver this September. Visit canbio.ca for details.
Crystal Luxmore is a Toronto-based freelance writer and the public relations manager for the Canadian Bioenergy Association.
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