Enbridge Inc. ENB-T is paying US$80-million for a 10-per-cent stake in a U.S. food waste recovery and renewable natural gas company, and said it could expand the business with up to US$1-billion worth of new anaerobic digester projects.
Calgary-based Enbridge said it bought into Divert Inc., a 16-year-old company that focuses on reducing waste and turning food scraps into low-carbon fuel that can be injected into any natural gas pipeline network.
The deal represents an expansion of Enbridge’s strategy that has so far focused on providing biogas upgrading and renewable natural gas injection services for producers in Ontario. Its gas distribution arm set a target to increase RNG supply in the province tenfold to 5 petajoules by 2025. The company, best known for its pipeline and gas distribution businesses, calls RNG a “key pillar of its energy transition strategy.”
Divert, based in West Concord, Mass., said Enbridge’s equity investment is in addition to US$20-million from a fundraising round led by its current investor, Ara Partners.
The company said it plans to expand its operations in the United States to be within 160 kilometres of four-fifths of the U.S. population over the next eight years. The cash injections will accelerate its potential to offset almost 400,000 tonnes of carbon dioxide annually. The partners will also consider new wasted-food to renewable gas projects in Canada, it said.
“Divert has emerged as a leader in creatively managing wasted food and our partnership aligns with Enbridge’s priorities in pioneering RNG as an effective solution to achieve net-zero greenhouse gas emissions,” Caitlin Tessin, Enbridge’s vice-president, strategy and market innovation, said in a statement.
It recently signed an RNG offtake agreement with oil major BP PLC worth US$175-million, which is one of the largest-ever such deals in the United States.
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Utilities across the continent are increasingly buying RNG from independent producers to meet regulations and bolster their sustainability programs. For customers, once the biogas is upgraded to RNG it is indistinguishable from the fossil fuel gas burned in furnaces and stoves. That means there is no need for new and specialized infrastructure. It can also be used as a transport fuel.
It is one way to deal with the problem of food waste, more than 100 million tonnes of which is generated each year in the United States alone, with half of that going to landfills and incinerators, Divert said.
Jeffrey Jones