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Gas From Trash: Waste Management's Big Biofuel Play

Waste Management (WM) has once again poured money, and its trash,into a rubbish-to-energy venture -- an investment that cements the garbage collectors' role in biofuels and highlights how the industry has evolved to include more companies outside of the traditional renewable energy realm.

This time, Waste Management and several venture capital firms have invested $51.5 million in Enerkem, a Quebec-based company that turns municipal solid waste, construction wood and agricultural residue into a gas that can be refined into ethanol. The funds will be used to build Enerkem's second waste-to-biofuels plant in Edmonton, which will convert 100,000 tons of waste a year from a nearby municipal composting facility. Enerkem also received a $50 million grant from the Department of Energy last December for its planned Mississippi plant.

The increasing role waste companies will play within the biofuels industry hasn't escaped the attention of Enerkem CEO Vincent Chornet. Instead of conventional petrochemical companies, future investors will look a lot like Waste Management, a company whose long-term plan is to save space in local landfills by turning the garbage it collects into something more useful, like renewable energy. By turning garbage into cash and saving landfill space, Waste Management could keep its operations running for a long time to come -- sustainability, growth and security all in one.

Since the 1970s, the company has built up recycling, waste-to-energy and landfill gas-to-energy segments of its business through its Wheelabrator subsidiary. In the past year it has ramped up its investment in an effort to double its renewable energy production and triple the amount of recyclables it processes by 2020.

And it's well on its way to meeting those goals. Waste Management operates 115 landfill gas-to-energy facilities that use methane from decomposing organic material to generate electricity, according to the company. It also has 16 waste-to-energy facilities that use mixed municipal sold waste to generate electricity and reduce its need for fossil fuels. In all, Waste Management generates enough electricity to power 700,000 homes every day.

The company also has partnered with a number of biofuel companies, including a venture with Terrabon and refiner Valero Energy (VLO) to commercialize green gasoline, a renewable fuel made from the organic waste found in your local landfill. And last month it invested in Harvest Power to develop next generation organic recycling facilities -- another deal that brought several venture capitalist firms and the trash collector together.

On a side note: Even if it's not an intentional strategy, cap-and-trade legislation could be a boon for companies like Waste Management that have reduced their carbon footprint through waste-to-energy projects. Businesses like Waste Management that reduce greenhouse gas emissions, would be allowed to sell permits or credits to polluters under cap-and-trade legislation passed in the House last summer. Photo of Enerkem's waste-to-energy plant in Westbury from Enerkem See additional BNET Energy coverage of waste-to-fuel projects: