50 million bucks says landfill is a viable energy source: Suncor doubles down on Enerkem

In Canada, news arrived late last week Enerkem closed a $50 million equity investment from Suncor.

What does it mean? Today’s let’s explore that.

As Canada’s leading integrated energy company, Suncor first participated in the ownership of Enerkem in April 2019 as part of a $76.3 million equity financing alongside Enerkem’s existing shareholders. With this new investment, Suncor becomes a significant, strategic shareholder of Enerkem.

In addition to its equity interest, Suncor also provides technical resources to support the operations of the Enerkem Alberta Biofuels (EAB) plant located in Edmonton, Alta. EAB is the first commercial-scale plant in the world to turn non-recyclable, non-compostable mixed municipal solid waste into cellulosic ethanol, a popular biofuel.

Profiling Enerkem

We looked at the company in detail recently, here in: “The mindset is there, we need the technologies and to integrate them: the time is now”: Looking at Enerkem’s evolution and the rise of the circular economy. 

The Enerkem Backstory

Enerkem produces advanced biofuels and renewable chemicals from waste. Its disruptive proprietary technology converts non-recyclable, non-compostable municipal solid waste into methanol, ethanol and other widely-used chemicals, and operates at full commercial scale in Alberta as well as an innovation centre in Quebec.

We reported in April that Enerkem closed a new round of financing totaling C$76.3 million. The financing comes from Enerkem’s existing investors, as well as a new investor, Suncor Energy Inc. This injection of additional capital will help foster the company’s growth by continuing the development of its other projects, including in Varennes, Quebec, and Rotterdam, Holland.

Suncor, one of Canada’s largest energy companies, is joining Enerkem’s shareholders, comprising Braemar Energy Ventures, Cycle Capital, Fondaction, Fonds de solidariteFTQ, Investissement Quebec, National Bank of Canada, Rho Ventures, Sunkem, the Westly Group and Waste Management of Canada. In addition to its equity interest, Suncor will share technical resources to support acceleration of Enerkem’s growth.

Similarly, as part of this financing, the Government of Quebec has increased its equity ownership in Enerkem by C$13.3 million through the Fonds du developpement economique.

Waste-to-chemicals project in Rotterdam: the complete story

It’s not just Enerkem and Nouryon: Shell and Air Liquide are in the mix. As we reported in March, the consortium, which has set up a dedicated joint venture company, has already undertaken extensive preparatory work, covering detailed engineering and the permitting process. It aims to take the final investment decision later in 2019 as it pursues the development work and finalizes the selection of an engineering and procurement contractor. The waste-to-chemicals project in Rotterdam will be the first of its kind in Europe to provide a sustainable solution for non-recyclable wastes, converting unrecoverable plastics and other mixed waste streams into new raw materials. The waste-to-chemicals project in Rotterdam is a prime example of how a true circular economy can be achieved by preventing the use of fossil sources for new materials, diversifying the energy mix and by making everyday products lower carbon while offering a smart, sustainable alternative to landfilling and incineration.

Reaction from the stakeholders

“Through this additional investment, the confidence Suncor is showing us sends a clear signal that they strongly support and believe in the Enerkem technology, confirming our leadership in the advanced biofuels market,” said Dominique Boies, chief executive officer and chief financial officer, Enerkem. “We are pleased to partner with a leading Canadian player in the energy industry and to benefit not only from their financial support but also from their profound operational, technical and engineering expertise.”

“This investment complements Suncor’s existing biofuels business, demonstrates our commitment to deliver low-carbon fuels to Canadian drivers and is another tangible example of the work we’re doing to help lower emissions and transform the energy system,” said Mark Little, president and chief executive officer, Suncor. “Together with other investments in clean technology, our relationship with Enerkem helps position Suncor to be a leader in the developing low-carbon economy.”

The Bottom Line

Enerkem’s landed more than $100 million this year, it’s like an PO without the reporting requirements, the short-sellers, and the options underwater for key people. Pretty brilliant, all around.