Fulcrum Saves Christmas: MSW-to-fuels production begins at Sierra Biofuels

From Nevada comes the long-awaited news that Fulcrum BioEnergy has successfully produced a low-carbon synthetic crude oil using landfill waste as a feedstock at its commercial-scale Sierra BioFuels Plant. Sierra is the first and at present the largest landfill waste-to-fuels plant. 

Whew. They made it by Christmas. In fact, they saved Christmas, for so many who have so hoped for so long.

In the dog days of summer, the voices of doubt were whispering. In July 2021, the plant was completed, mechanically. In May, the company had commenced syngas production, but no one by October had not yet heard that the intrepid Fulcrumites had reached the summit of their Everest, which was the commencement of fuel production at their Sierra Biofuels project near Reno, Nevada. We noted then, “the hour is late, the winds are fierce, oxygen bottles may be in short supply. Fears begin to grow, unvoiced, that our mountaineers are lost.”

Then in October, good news, a voice came crackling over the radio from Camp Four, not far from the Everest Summit, CEO Eric Pryor gave us an update , and stated, “We are in the process of commissioning and operating the many systems and pieces of equipment throughout our process and expect to be in a position to produce our first gallons of syncrude from landfill waste in the next month or so. As you know, this will be a tremendous milestone for Fulcrum as well as the renewable fuels industry.”

Fulcrum and the Grand Challenge

The White House recently established a SAF Grand Challenge with a goal of producing at least three billion gallons of SAF by 2030. 

With that goal, the Biden Administration prioritized the development of lower-carbon transportation methods and the aviation industry has set its sights on net-zero carbon emissions by 2050. By producing a synthetic crude oil product, which can then be further refined into sustainable aviation fuel, Fulcrum has demonstrated its process and is preparing to supply its strategic partners with SAF that it expects will be net-zero carbon. To that end, Fulcrum has entered into strategic partnerships with major airlines and other offtake partners to purchase its renewable fuel. 

What’s next?

Yes, they have made renewable fuel, it’s a tremendous milestone. Now come the hardest yards of commercialization, optimizing the rate and yield so that the company may continue to make renewable fuel, because it is profitable to do so. The work starts now.

Good news on the financing front, however. A year ago Fulcrum announced the completion of an interim financing to fund Fulcrum’s second waste-to-fuels project, culminating in the issuance by the Indiana Finance Authority of $375 million of Environmental Improvement Revenue Bonds through Fulcrum’s wholly owned subsidiary Fulcrum Centerpoint, LLC (Centerpoint). Proceeds from the offering will be held in escrow with the Bonds subject to a mandatory tender for purchase on November 15, 2022. Fulcrum expects to refinance the bonds on or before November 15, 2022. The transaction was led by Morgan Stanley and Goldman Sachs & Co. LLC.

And then there’s the third plant, think UK. In February 2021 we reported that  Essar Oil has  joined forces with Fulcrum BioEnergy Limited (Fulcrum) and Essar’s subsidiary company Stanlow Terminals Limited to create a new facility which will convert non-recyclable household waste into sustainable aviation fuel (SAF) for use by airlines operating at UK airports. The bio-refinery will convert several hundred thousand tonnes of pre-processed waste, which would have otherwise been destined for incineration or landfill, into approximately 100 million liters of low carbon SAF annually.

The Fulcrum backstory

One sign that things were proceeding, if not as fast as hoped, was the continued investment from SK Innovation. In July, SK completed a $20 million equity investment in Fulcrum Bioenergy. In addition, Fulcrum and SK Innovation said they would work together to enter into an exclusive licensing agreement providing the opportunity to explore the possibilities of bringing Fulcrum’s patented and proprietary waste-to-fuel process to South Korea and select countries in Asia. SK Innovation is not nothing, it’s an Asian heavyweight not widely known for wasting its money. It operates South Korea’s largest refinery as well as petrochemical, e-mobility battery and information electronic materials businesses. This was the second investment that SK Group has made in Fulcrum, following its participation in a $50 million equity round in December 2021 by SK Inc.

The Way Forward: Towards 400 Million gallons per year

The Company has identified and is making progress on its planned growth program, which Fulcrum expects will have the capacity to produce approximately 400 million gallons of net-zero carbon transportation fuel annually. The Company’s development program includes the Centerpoint BioFuels Plant in Gary, Indiana, the Trinity Fuels Plant in the Texas Gulf Coast region and the NorthPoint project in the United Kingdom.  

Reactions from the stakeholders

“This accomplishment is a watershed moment for Fulcrum and opens the door for our plans to transform landfill waste around the world into a low-carbon transportation fuel in a way that will have a profound environmental impact,” said Eric Pryor, Fulcrum’s President and Chief Executive Officer. “After more than a decade of dedication and perseverance, successfully creating a low-carbon fuel entirely from landfill waste validates the strength of our process and our partners’ unwavering belief in and support for our business model. As we continue to work to address global environmental challenges and advance our development program, we aim to replicate our success at Sierra with cost-efficient net-zero carbon plants nationally and ultimately around the globe.” 

 “This is a significant accomplishment for Fulcrum and the aviation industry,” said United Airlines Ventures Managing Director Andrew Chang. “United has led with bold action to fight climate change, including committing to net-zero carbon emissions by 2050 without relying on traditional carbon offsets, and investing in more sustainable fuel production than any other airline globally. We look forward to advancing our collaboration with Fulcrum to increase the supply of sustainable aviation fuel.” 

“Fulcrum has successfully demonstrated a groundbreaking technological achievement that will have far-reaching implications for clean energy around the globe. We are proud to not only be an investor but also a strategic partner as we explore bringing Fulcrum’s patented and proprietary waste-to-fuel process to the APAC region together,” said Dongsoo Kang, head of SK Innovation’s portfolio division.