Navigant Research Blog

Garbage Looks For Its Green Moment

Mackinnon Lawrence — March 14, 2013

Cheap, abundant, and replenishable – so long as societies continue to consume – garbage (or, as the industry refers to it, municipal solid waste, or MSW), is a rising star in the fast-emerging advanced biofuels landscape.  The MSW we toss into landfills by the hundreds of millions of tons each year is laced with carbon well-suited for conversion to power, heat, and fuels.

While generating power from trash is well-established in the European Union, in the United States and, increasingly, emerging markets like China and Brazil, conversion to liquid fuels is currently at the cusp of early commercialization.  Projects in development today aim to produce the spectrum of alternative fuels, but among them renewable jet fuel remains the biggest prize.  All told, Pike Research estimates the theoretical potential for biofuels production from global waste to be around 35 billion gallons per year today.  This would more than double current production of biofuels worldwide while extracting untapped value from nearly 1.5 billion tons of waste.

Despite this potential, just 12 named projects are in the pipeline today, worth an estimated 200 million gallons of new production capacity.  While high upfront capital costs and structural market barriers are partly to blame, the staggering complexity inherent in MSW-to-biofuel project development described by presenters at the Orlando conference was a revelation.

Anatomy of a Deal

Solena Fuels, a company developing the GreenSky London project with British Airways to turn trash into sustainable aviation fuel at Heathrow Airport in London, provides an illustrative example.  As the company’s President and CEO, Robert Do, outlined in his presentation at the MSW-to-Biofuels conference in Orlando the mash-up of diverse strategic interests on the deal meant creating an entirely new contract that amassed nearly $1 million in legal fees and took 1.5 years to finalize.

To reduce feedstock risk, Solena negotiated separate supply contracts with three waste processors, allowing it to hedge against price and supply continuity risk.  While Solena brings its proprietary plasma gasification platform to the 550,000 ton per year facility, it has partnered with three technology partners to provide everything from controls and instrumentation to expertise and equipment for Fischer-Tropsch synthesis of the syngas produced in Solena’s reactors.  On the back end, GE will provide equipment to produce 20 MW of power to run the plant while exporting an additional 20 MW to the U.K. grid.  Meanwhile, the project includes off-take contracts for 16 million gallons of jet fuel and diesel to British Airways as well as naphtha, composed of a mixture of hydrocarbons similar to high-octane gasoline.

Backed by three financing partners – principally British Airways and Barclays Capital – the project is expected to come online in 2015.  More than 10 separate companies are directly involved in the project.

If successful, the GreenSky London project could be a watershed moment for advanced biorefinery project development, providing a blueprint for galvanizing strategic interests and managing risk in order to capitalize on abundant waste feedstock opportunities worldwide.

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