Garbage-to-ethanol company files for $115 million I.P.O.

Biofuel startup Fulcrum BioEnergy, Inc. is planning to raise $115 million through an initial public offering to construct a refinery later this year that will turn garbage from homes and businesses into ethanol.

According to official filing with the United States Securities and Exchange Commission last week, the company will be listed under the symbol FLCM. But no further details were disclosed.

The $180 million facility named Sierra BioFuel, if it pushes through, will be the company's first commercial-scale ethanol plant, to be built near Reno, Nevada, the California-based company said in a statement.

At the new facility, Fulcrum plans to produce 10 million gallons of ethanol by the second half of 2013 and sell all of it to Tenaska Biofuels LLC under a three-year contract.

Waste Management of Nevada Inc. and Waste Connections Inc. have agreed to provide municipal waste for the first plant and for future projects under contracts spanning 15 to 20 years.

Waste feedstock from these companies should be enough to produce more than 700 million gallons of ethanol per year, according to Fulcrum. Waste Connections alone collects waste from around 130 municipalities across the country.

The company said Sierra BioFuel is able to operate unsubsidized at less than $1.30 per gallon, primarily because its fuel is virtually free.

According to the United States Environmental Production Agency, municipal waste in the United States has increased from 88 million tons in 1960 to 243 million tons in 2009. More than 85 percent of the total is said to be suitable for ethanol production.

In the long run, Fulcrum expects that unsubsidized operating costs can be lowered to less than $0.90 per gallon. Its current technology can produce 70 gallons of ethanol per ton of municipal waste.

The market

Fulcrum has generated no revenues to date and lost $18.22 million in 2010 and $14.11 million for the first six months of 2011.

However, the company is banking on demand from ethanol derived from landfills following an increased push in the United States to produce it and other biofuels from non-food plants in light of criticism over the use of food crops for fuel raising global food prices and using up land.

As the world's primary source of ethanol, the cost of corn feedstock for corn-based ethanol alone has shot up to around $2.53 per gallon last April, according to Michael Economides, editor-in-chief of the Energy Tribune.

Fulcrum said ethanol derived from food scraps and yard wastes qualify as an advanced biofuel under the U.S. Renewable Fuel Standard Program. Of the 36 billion gallons of biofuels the law requires to be blended into transportation fuels by 2022, at least 21 billion gallons are required to be under this category.

Fulcrum said Nevada will be its initial market, with a demand for ethanol of more than 50 million gallons per year and with no local ethanol producer. One of its largest markets could be California, which currently has a demand for more than 950 million gallons of ethanol per year. The state imports 80 percent of this amount from corn-based ethanol producers in the Midwest and sugarcane-based ethanol companies from Brazil.

Fulcrum is competing against other renewable biofuels derived from other feedstock such as woodchips and algae or products that seek to make ethanol from food crops more sustainable.

The I.P.O. to beat in the biofuels market is by Solazyme, Inc., which went public in May. The San Francisco, California-based algae biofuel company netted $227.18 million by selling 12,621,250 shares at a price of $18 apiece.

Last week, Mascoma Corporation filed for an I.P.O. to raise $100 million. The company makes genetically-enhanced yeasts and bacteria that combine the breakdown and fermentation of plant sugars to ethanol into a single step. The special yeasts will be initially sold to corn ethanol producers and eventually focus on wood as feedstock.

Many production and technology companies are producing, or working to develop, renewable biofuels, including Amyris, Inc.; BlueFire Renewables, Inc.; Codexis, Inc.; Coskata, Inc.; Enerkem, Inc.; Gevo, Inc.; KiOR, Inc.; Mascoma Corporation; Plasco Energy Group Inc.; PetroAlgae Inc.; and Solazyme.

source: ecoseed.org