From the Dump to the Pump: Fulcrum BioEnergy Breaks Ground on Landmark Trash-to-Jet Fuel Project

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May 17, 2018

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by Jim Lane (Biofuels Digest) ... Near Reno, Nevada, Fulcrum BioEnergy broke ground today for its 10 million gallon per year first commercial plant that makes jet fuel from municipal solid waste.

For thousands of years we have had a love/hate relationship with waste. We love to make it, we hate to deal with it. For 10,000 years we buried it, dumped it, incinerated it, agonized over it, smelled it, and flushed it. Now we’re going to try something new. We’re going to fly on it.

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This is the Project That Refused to Die, despite all the roadblocks that have sidelined so many clean fuels projects.

Jim Macias credited the stakeholders around the project.

“First, our founding investors. A lot of boards have steered their renewable fuel companies into real trouble, but our board has provided just the right push, focus and guidance, and our differentiation begins there and we wouldn’t be here without them.

“And, our technology and contracting partners. Like United Airlines and Cathay Pacific here with us today. A lot of companies talk about sustainability, but these companies are doing something about it. Money has come in from as far away as Hong Kong to support this project. And partners like Air BP and Andeavor, companies leading us to a new generation of fuels. Our banks, and EPC and everyone else.

“And, our employees, many with us since day one.”

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The saga of Fulcrum BioEnergy from formation to today’s groundbreaking is proof positive that neither the technology nor the financing was a no-brainer. The path towards cleaner fuels has been obvious for some time, but the path towards affordable, cleaner fuels made in a way that sustains companies and rewards investors for running the risks — that’s been more difficult than untying a Gordion knot, until along comes Fulcrum in Alexandrine fashion to slash the knots within which we had fouled ourselves and our journey towards better tech.

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The Fulcrum Financing: How the financing got done

“For us, the financing goes back to the DOE loan guarantee program,” Macias told the Digest.. “We competed for one, and were selected and were proceeding. But that process was frustratingly slow. Then, after the Solyndra problem, things got really bogged down. So we switched to the USDA program we applied and were successful in that. It was not as lengthy and frustrating as DOE, but there were differences in the program which caused problems. For instance, the USDA program requires a bank as the lender of record, and that is somewhat challenging. We had Bank of America and we thought it was a pretty good deal for them. But as a bank they were slow and frustrating, and cautious. We were ready to close last December when the election came, and then all these political issues came up. Would the new administration continue with the program. We got all our confirmations from everyone we needed, but it was just so frustratingly slow.”

“We always talked to a lot of people about financing, and finally we said ‘let’s get out’ via the bond market, which was looking attractive for us. You see, all this time that its taken us to get the financing, we haven’t been standing still. We’ve still been adding pieces. And by this time, it was starting to look to the municipal bond market like an infrastructure project. We had secure fixed prices, the output is contracted is contracted and hedged, the process is guaranteed or highly reliable. So as we kept adding those pieces we found that we qualified for tax-free municipal bonds which are very attractive to investors. So we shifted, and we closed.”

Ratings? They’re not rated bonds. We wondered why.

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These are very sophisticated investors and they don’t rely on ratings, they do their own work.”

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The Fulcrum backstory: the investors

Air BP, BP Ventures invest $30M in biojet producer Fulcrum Bioenergy; ink 500M gallon, 10-year offtake deal

United Airlines invests $30M in Fulcrum BioEnergy; inks $1.5B+ in aviation biofuels contracts

See it Now: The Multi-Slide Guide to Fulcrum BioEnergy

The Digest’s 2017 Muti-Slide Guide to Fulcrum Bioenergy is here.

The expansion geography

“It is Chicago second,” Macias noted, “and that should be no surprise as it is major hub for United, BP and also Cathay is big there. Waste Management and and Waste Connections have big market shares there as well.

“The third one will be on the west coast because of how attractive the California market is, very attractive to sell fuel into, and it is also a tight fuel market and that makes it a high priority for our fuel partners. It could be in California, or we could transport into California. moving up and down the coast. READ MORE

Fulcrum BioEnergy breaks ground on Sierra BioFuels Plant (Biofuels International)

Trash to Treasure: First U.S. Commercial-Scale Waste-to-Fuels Project Underway (Environmental and Energy Study Institute)

Fulcrum Bioenergy breaks ground on Phase 2 of Sierra Biofuels plant; 1st garbage-to-fuels project (Green Car Congress)

Come fly with biofuels (Innovators Magazine)

BP/JM technology finds home in Fulcrum biojet fuel plant (Biofuels International)

Waste to jet fuel: using garbage to power planes (Airport Technology)