The most challenging yet potentially most profitable part of alternative energy –- making fuel for cars and trucks -– is attracting attention from a mainstream fuel supplier and a trash hauler.

Enerkem, a Montreal company that makes ethanol from old utility poles and household garbage, will announce Wednesday that a major independent oil refiner, Valero, has made its first investment in the company, and Waste Management, a trash-hauling company is raising its stake. With $60 million in new financing, total investment in Enerkem will reach $130 million.

Enerkem is starting up a plant near Sherbrooke, Quebec, that it says is commercial in scale, with a capacity of 1.3 million gallons a year, and it is building another in Edmonton, Alberta, that could produce 10 million gallons. And it recently received a $50 million grant and loan guarantee from the United States Department of Energy for a third plant, near Tupelo, Miss., that would be a twin of the Edmonton plant. Those two plants would each consume 100,000 tons of garbage a year, company executives say.

Vincent Chornet, the president and chief executive of Enerkem, would not say when the Edmonton plant would open, but added, “We’re on site, and things are moving ahead very well.’’

In Edmonton, the company has a 25-year contract to accept municipal solid waste, which means anything a household throws out. After separating out recyclable materials, it shreds the waste and heats it to around 400 degrees Celsius, or about 750 degrees Fahrenheit.

At that temperature, the waste gives off a gas that includes hydrogen and carbon monoxide. Enerkem scrubs out the impurities, including carbon dioxide, and runs the gas over a catalyst, which converts it to methanol. The methanol can be turned into ethanol or a variety of other chemical feedstocks.

Starting up requires burning some natural gas or propane, but once running, the gasification process produces excess heat that can be used to boil water and make electricity.

Many companies are trying to use waste materials to make ethanol. Almost all of them pay for the raw materials, but Enerkem is paid to dispose of the garbage, making its feedstock “cost-negative,” in the company’s phrase.

Another help, at least for the time being, is the increase in gasoline prices to nearly $4 a gallon. And the product meets the federal definition of an advanced cellulosic biofuel, meaning a fuel that comes from plant material but not from food. That makes it eligible for a quota that fuel distributors must meet.

And making ethanol from garbage entails sharply lower carbon dioxide emissions than making it from corn does. Corn ethanol needs large amounts of natural gas, but the Enerkem process relies on the heat given off by the process itself so that no fossil fuels are burned except during the start-up. What is more, trash turned into fuel is trash that is not buried in a landfill, where it can give off methane, itself a potent global warming gas.

But the road to renewable motor fuels is not without potholes. Range Fuels of Broomfield, Colo., opened a pilot plant near Denver for converting wood chips to alcohols and then started building a commercial-scale plant near Soperton, Ga. But early this year it shut down the Soperton plant because it was unable to make it work right. Range, like Enerkem, uses heat and catalysts.

Iogen of Ottawa, Canada, has been running a pilot plant for years that makes ethanol from wheat straw. The company, which makes enzymes for various industrial uses and which was trying to expand into the fuels business, has a joint venture with Royal Dutch Shell to make motor fuel.

But even with that backing, it announced in September that it was exploring “strategic alternatives for enhancing shareholder value and funding the deployment of its world leading renewable energy technology,’’ which is business-speak for looking for a buyer or at least a major new partner.

Valero, meanwhile, has already put money into companies that want to make gasoline components from algae, and diesel fuel substitutes from animal fat.

Enerkem has chosen a low-risk route, using a “conventional off-the-shelf catalyst,’’ said Mr. Chornet, the company president. While the catalyst, made of copper and zinc, turns out methanol, not ethanol, it can be converted, he said, and the company has mastered the trick of turning the trash into very pure gas with precisely the right ratio of carbon monoxide to hydrogen, two to one.

An earlier version of this post mischaracterized Valero’s investment history with Enerkem. Valero is not raising its investment; this is its first investment in Enerkem.
[nytimes]

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