Enerkem, Shell, Suncor, Proman’s new $669 million biofuels baby

In Quebec, Enerkem, Shell, Suncor and Proman have proposed the construction of an $669 million biofuel plant in Varennes, Québec, in partnership with the Québec and Canadian governments. 

The project would use more than 200,000 tonnes of non-recyclable waste and wood waste to produce nearly 125 million litres of biofuels, and would include construction of one of the world’s largest renewable hydrogen and oxygen production facilities with an 87-megawatt electrolyzer leveraging Quebec’s green electricity. Overall, investment of $60 million since August 2019 has been made by the partners develop the project, prepare the site and obtain the required permits. The proposed partnership is subject to finalization of commercial agreements.

The project

Varennes Carbon Recycling (VCR) will produce biofuels and renewable chemicals made from non-recyclable residual materials as well as wood waste. The plant will leverage green hydrogen and oxygen produced through electrolysis, transforming Quebec’s excess hydroelectricity capacity into value-added biofuels and renewable chemicals. VCR will be a major creator of quality local direct and indirect jobs.

Enerkem’s technology

Enerkem’s technology enables the recycling of the carbon and hydrogen contained in non-recyclable waste and wood waste currently landfilled and burned. Enerkem’s proprietary thermochemical process enables the conversion of this carbon into biofuels and renewable chemicals, made from methanol, which is the project’s intermediary product. These products enable society to reduce consumption of traditional hydrocarbons used for transportation and in everyday products (paint, windshield washer fluid, plastics and chemicals of all kinds).

Reaction from the stakeholders

Dominique Boies, CEO and CFO, Enerkem: “We are proud to partner with leading international energy and chemical industry players and to benefit from the support of our federal and provincial governments and the City of Varennes.  This strong support validates the uniqueness of our gasification technology to enable the production of circular synthesis gas.  It is a major achievement for Enerkem to have its second full-scale commercial plant become a reality, showcasing our unique clean disruptive technology that transforms waste to biofuels and renewable chemicals. We have learned a great deal from our initial pilot project in Westbury, Québec and our first commercial demonstration plant in Edmonton, Alberta.”

Michael Crothers, Shell Canada President and Country Chair: “Shell Canada is delighted with the proposed partnership with Enerkem, a leading Canadian cleantech company, and we see this as a step forward towards a net-zero emissions future. By converting non-recyclable waste and wood waste to low-carbon fuels, we can reduce the carbon footprint of energy used by Canadians every day.  We are grateful for the collaboration with the Government of Québec, the Government of Canada and our prospective partners, and hope to develop other projects with Enerkem in the future.”

Martha Hall Findlay, Chief Sustainability Officer, Suncor: “We’re excited to continue our journey with Enerkem, another example of our ongoing commitment to sustainability. Over the last few years we’ve worked together to help ramp up the Enerkem Alberta Biofuels plant and now looking to Varennes, we’re excited to progress the production of biofuels domestically and internationally. Suncor has a long history in the Montréal area dating back to 1919 and this kind of innovative technology will help us play a role in the future low-carbon economy for many more years to come.”

David Cassidy, Chief Executive, Proman: “As the world’s second largest methanol producer, Proman is excited at the prospect to team up with such distinguished partners on this proposed waste-to-methanol and biofuels project. The further implementation of Enerkem’s unique waste gasification technology will be a significant step towards enabling the wider availability of highly sustainable bio-methanol, as part of the global low-carbon energy transition. We are thankful to Enerkem and the other potential partners for giving us the opportunity to bring Proman’s extensive industry experience and marketing expertise in support of this flagship circular economy project, and especially want to thank the Québec and Canadian governments for their commitment to this innovative project.”

The Project backstory

The details when Enerkem closed a $50 million equity investment from Suncor, as reported in The Digest in October 2019.

When Enerkem closed another C$76.3 million in equity financing including Suncor, as reported in The Digest in April 2019.

And unstashing the trash and a look at the early days, as reported in The Digest in April 2017 when Enerkem received the lowest carbon intensity value ever issued by the British Columbia Ministry of Energy and Mines for its ethanol product under the Renewable and Low Carbon Fuel Requirements Regulation.

The Bottom Line

$5+ per liter is an awful lot of capex, we’re just north of $20 per installed gallon. On the other hand, there’s an awful lot of good stuff here — including what appears to be an extravagantly attractive 165 gallon per ton ethanol yield, way higher than one would see in a cellulosic ethanol project. 

We haven’t yet seen what the “biofuels” exactly are. Given Proman’s participation, it looks like a methanol project. Enerkem’s core technology converts waste to methanol, and Enerkem developed a means of upgrading methanol to ethanol.

Another note here — the focus on wood waste. That’s a shift from some of the MSW-based projects we’ve heard previously discussed.