A rubbish business model
Sep 21st 2006
From The Economist print edition
Energy: The dream of turning worthless waste into valuable fuel is as potent as ever. But is the whole idea too good to be true?
WHERE there is muck, goes the old saying, there is brass. Several firms have taken that idea to heart and are seeking profitable ways to turn rubbish into fuel. Startech Environmental, for instance, based in Wilton, Connecticut, uses plasma conversion, superheating rubbish to break down its molecular bonds and create a “synthesis gas� which is then converted into ethanol or biodiesel. “We get 3.7 gallons of ethanol per 20lb tyre. That's serious output,� says Joseph Longo, Startech's chief executive.
The idea might sound far-fetched, but there are several ways to convert organic waste into various grades of fuel, at least in the laboratory. You can gasify rubbish by heating it and turning it into synthesis fuel, which is then fed into a reaction called the Fischer-Tropsch process. This technique for converting carbon monoxide and hydrogen into liquid hydrocarbons using a catalyst was invented in Germany in the 1920s and was used by the Nazis to convert coal into fuel during the second world war. An alternative method involves breaking down cellulose using various catalysts to accelerate the decomposition of organic plant residues into ethanol.
Household rubbish presents special problems, since it is an unpredictable mishmash of all sorts of stuff. Allen Hershkowitz, director of the solid-waste programme at the Natural Resources Defence Council (NRDC), says that no technology can take large amounts of mixed household waste and profitably convert it into ethanol or any other kind of fuel. He also notes that, although the country's landfills seem to be overflowing, America in fact produces only about 230m tonnes of municipal solid waste a year, compared with more than 2 billion tonnes of farm waste. The NRDC reports that much of the solid waste in landfills is made up of recyclables like plastic, or food waste that could be used as compost. Burning such things for fuel may not count as a gain for the environment.
By contrast, Startech's Mr Longo says he can produce fuel with almost no emissions and using only 10% of the resulting energy to power the process. Mr Longo is primarily a rubbish man—Startech was formed in the 1990s as a low-emission alternative to landfills and incinerators. Now he is hoping the ethanol craze will convince cities to strike deals with him.
Theoretically, a plant using Startech's process to vaporise 25 tonnes of tyres a day could create more than 8,500 gallons of fuel (the number would be less if it processed other forms of waste). True, America alone consumes more than 20m gallons of fuel a day, but some lucky cities could run their fleets of dustcarts from such a plant with fuel to spare. However, all the 74-year-old Mr Longo has to show for his efforts so far is a small demonstration plant in Bristol, Connecticut. No backer has been prepared to provide the $6m for a Startech system that could convert 10 tonnes of waste a day.
At least Mr Longo has his demonstration plant, though. Not so Masada Resource Group, which in 2004 signed a contract with Middletown, New York, to build a $300m plant to convert waste to fuel. Although the scheme promised 90% efficiency using a vaguely defined “OxyNol� process, the firm has yet to lay the plant's foundations. In July Green Power, a start-up from Issaquah, Washington, showed off of a technology for converting waste to oil. The company says it can process any waste that is not glass, metal or radioactive and, using a catalyst, convert it to fuel, with an efficiency of 90%. But the firm's claims were met with scepticism, partly because of a past conviction of Michael Spitzauer, its chief executive, for fraud in his native Austria.
The one American company that has succeeded in building and running a commercial plant to convert waste to fuel is Changing World Technologies. Even then, the company says that, although it can convert solid waste to fuel, the process is not yet economical. “People's waste material is unpredictable,� says Brian Appel, who heads the company.
His firm's first plant processes waste from a turkey slaughterhouse and pig fats, using “thermal conversion�—heat and friction—to break down the chemical bonds, followed by heat and water to hydrolyse the material. This mainly yields liquid and solid fertiliser, but also makes gas that is used to power an industrial plant, but could be refined into biodiesel. One problem is that it costs Changing World about $80 a barrel to make the fuel. Another is that the company has had to spend heavily to reduce the smell from the plant, which was briefly shut down because of it.
With oil prices high, Mr Appel and his fellow entrepreneurs must hope that their timing is good. Nancy Floyd, co-founder and managing director of Nth Power, a pioneering energy investor, says that her firm is close to investing in a company that converts waste to ethanol—though she declined to name it. Although the industry has a record of failure, she says, “there is new technology now, and we are seeing it applied.� So although profits are hard to come by, optimism is in plentiful supply.
From The Economist print edition
Energy: The dream of turning worthless waste into valuable fuel is as potent as ever. But is the whole idea too good to be true?
WHERE there is muck, goes the old saying, there is brass. Several firms have taken that idea to heart and are seeking profitable ways to turn rubbish into fuel. Startech Environmental, for instance, based in Wilton, Connecticut, uses plasma conversion, superheating rubbish to break down its molecular bonds and create a “synthesis gas� which is then converted into ethanol or biodiesel. “We get 3.7 gallons of ethanol per 20lb tyre. That's serious output,� says Joseph Longo, Startech's chief executive.
The idea might sound far-fetched, but there are several ways to convert organic waste into various grades of fuel, at least in the laboratory. You can gasify rubbish by heating it and turning it into synthesis fuel, which is then fed into a reaction called the Fischer-Tropsch process. This technique for converting carbon monoxide and hydrogen into liquid hydrocarbons using a catalyst was invented in Germany in the 1920s and was used by the Nazis to convert coal into fuel during the second world war. An alternative method involves breaking down cellulose using various catalysts to accelerate the decomposition of organic plant residues into ethanol.
Household rubbish presents special problems, since it is an unpredictable mishmash of all sorts of stuff. Allen Hershkowitz, director of the solid-waste programme at the Natural Resources Defence Council (NRDC), says that no technology can take large amounts of mixed household waste and profitably convert it into ethanol or any other kind of fuel. He also notes that, although the country's landfills seem to be overflowing, America in fact produces only about 230m tonnes of municipal solid waste a year, compared with more than 2 billion tonnes of farm waste. The NRDC reports that much of the solid waste in landfills is made up of recyclables like plastic, or food waste that could be used as compost. Burning such things for fuel may not count as a gain for the environment.
By contrast, Startech's Mr Longo says he can produce fuel with almost no emissions and using only 10% of the resulting energy to power the process. Mr Longo is primarily a rubbish man—Startech was formed in the 1990s as a low-emission alternative to landfills and incinerators. Now he is hoping the ethanol craze will convince cities to strike deals with him.
Theoretically, a plant using Startech's process to vaporise 25 tonnes of tyres a day could create more than 8,500 gallons of fuel (the number would be less if it processed other forms of waste). True, America alone consumes more than 20m gallons of fuel a day, but some lucky cities could run their fleets of dustcarts from such a plant with fuel to spare. However, all the 74-year-old Mr Longo has to show for his efforts so far is a small demonstration plant in Bristol, Connecticut. No backer has been prepared to provide the $6m for a Startech system that could convert 10 tonnes of waste a day.
At least Mr Longo has his demonstration plant, though. Not so Masada Resource Group, which in 2004 signed a contract with Middletown, New York, to build a $300m plant to convert waste to fuel. Although the scheme promised 90% efficiency using a vaguely defined “OxyNol� process, the firm has yet to lay the plant's foundations. In July Green Power, a start-up from Issaquah, Washington, showed off of a technology for converting waste to oil. The company says it can process any waste that is not glass, metal or radioactive and, using a catalyst, convert it to fuel, with an efficiency of 90%. But the firm's claims were met with scepticism, partly because of a past conviction of Michael Spitzauer, its chief executive, for fraud in his native Austria.
The one American company that has succeeded in building and running a commercial plant to convert waste to fuel is Changing World Technologies. Even then, the company says that, although it can convert solid waste to fuel, the process is not yet economical. “People's waste material is unpredictable,� says Brian Appel, who heads the company.
His firm's first plant processes waste from a turkey slaughterhouse and pig fats, using “thermal conversion�—heat and friction—to break down the chemical bonds, followed by heat and water to hydrolyse the material. This mainly yields liquid and solid fertiliser, but also makes gas that is used to power an industrial plant, but could be refined into biodiesel. One problem is that it costs Changing World about $80 a barrel to make the fuel. Another is that the company has had to spend heavily to reduce the smell from the plant, which was briefly shut down because of it.
With oil prices high, Mr Appel and his fellow entrepreneurs must hope that their timing is good. Nancy Floyd, co-founder and managing director of Nth Power, a pioneering energy investor, says that her firm is close to investing in a company that converts waste to ethanol—though she declined to name it. Although the industry has a record of failure, she says, “there is new technology now, and we are seeing it applied.� So although profits are hard to come by, optimism is in plentiful supply.
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