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Quebec’s Enerkem lands two deals to build biofuel plants in China

Vincent Chornet, president and CEO of Enerkem, poses in their offices in Montreal, July 15, 2013. Mr. Chornet has finalized agreements with two Shanghai organizations to build two plants that turn non-recyclable municipal garbage into biofuel, while on a trade mission to China.

Christinne Muschi/The Globe and Mail

Montreal-based Enerkem Inc., the company that built Edmonton's state-of-the-art plant that turns non-recyclable municipal garbage into biofuel, has signed two deals to build similar plants in China.

Enerkem chief executive officer Vincent Chornet finalized agreements with two Shanghai organizations while on a trade mission to China accompanied by Quebec Premier Philippe Couillard. One of the deals, with waste management firm Shanghai Environmental Group Co. Ltd., will see Enerkem license its technology to be used to build waste-to-biofuels plants in China.

The other agreement is with Shanghai Marine Diesel Engine Research Institute, an organization with expertise in equipment manufacturing and ethanol distribution. It could also result in the construction of similar facility.

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Tim Cesarek, Enerkem's senior vice-president of business development, said the two partnerships are at early stages, so it is not clear where or when plants will be built. But he said the fact that Enerkem has a plant up and running in Edmonton was a key factor in getting the Chinese business to sign on.

Enerkem's Edmonton plant had its official opening this past summer, although it is still being commissioned and is not functioning at full capacity yet. It takes huge masses of non-recyclable garbage from the city's waste stream and converts it through a chemical process into methanol. Eventually, the methanol will be processed on site to produce ethanol, the fuel that is now blended with all gasoline across Canada. The plant could generate as much as 38-million litres of ethanol a year.

Enerkem also operates two small-scale demonstration plants in Quebec, and has plans for a large operation in the province that will use industrial waste to make biofuel. It is also planning a large scale plant in Pontotoc, Miss., that will be built through its U.S. affiliate.

Mr. Cesarek said China is a huge potential market for Enerkem, because of the intense economic growth and increasing urbanization in the country. That has resulted in substantial "infrastructural needs," he said, including the management of waste, as well the production of more low-carbon fuel. Enerkem's technology can do both of those things at the same time, he said. "We are creating a really interesting sustainable solution in China," at a time when the country is making key decision about how to handle its solid waste and how to generate fuel.

The China deal could be an international breakthrough for Enerkem, which is also looking for other deals in large North American cities, as well as in Britain, Europe, the Middle East and South America. The company will either license its technology or sign joint venture deals, Mr. Cesarek said.

Enerkem is a private company partly owned by giant garbage handler Waste Management Inc., fuel marketer Valero Energy Corp., and Quebec's labour-sponsored investment funds. It planned to go public in 2012, but cancelled the offering and decided to stick with private investors instead.

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About the Author
Reporter, Report on Business

Richard Blackwell has reported on Canadian business for more than three decades. At the Financial Post and the Globe and Mail he has covered technology, transportation, investing, banking, securities and media, among many other subjects. Currently, his focus is on green technology and the economy. More

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