As a general rule, the most successful man in life is the man who has the best information
August 2, 2017 (Investorideas.com Newswire) Despite decades of educating North Americans on the benefits of recycling, plus cutting-edge technologies that sort and recycle everything from tires to table scraps, billions of tonnes of garbage continue to be dumped into landfills and into our oceans every year.
According to Natural Resources Canada, in a lifetime the average North American will throw away 600 times his or her weight in garbage, meaning a 150-pound adult will toss 40,900 Kg (90,000 Lb) of trash into the dumpster from birth to death.
It's estimated that globally, solid-waste generation will triple to 11 million tons a day by the end of this century – in spite of the fact that we are running out of landfill space, especially in land-constrained places like Japan and Europe.
The need to do away with garbage dumps has over the years spawned new technologies to deal with garbage, among them incineration, anaerobic digestion and waste to energy solutions that capture and convert landfill gases - mostly methane and CO2 - into alternative fuels that can be used for electricity.
There are also technologies to change cellulose materials into biofuels which, helped along with government subsidies - reduce the amount of fossil fuels that go into vehicle engines, thereby reducing tailpipe emissions.
In Canada the Renewable Fuels Regulations, in place since 2010, require fuel producers and importers to have an average renewable fuel content of at least 5% based on the volume of gasoline that they produce or import into Canada and of at least 2% based on the volume of diesel fuel and heating distillate oil that they produce or import into Canada with the goal of reducing Canada's greenhouse gas emissions by 17 percent from 2005 levels by 2020. Many Provinces have also added their own mandated blending ratios.
While the effectiveness of biofuels is hotly debated - particularly the use of corn to produce ethanol, soy beans and canola to produce bio-diesel, which could otherwise be used to grow food - what is abundantly clear is that the trifecta of problems - ever increasing fossil fuel emissions, less room for landfills and more and more waste being generated on a global scale - is currently an insurmountable problem. But what if a solution could be invented that turns landfill waste into clean fuel, thereby solving all three problems at once?
That is the idea behind a brand-new proprietary technology being commercialized by Cielo Waste Solutions Corp., (CSE:CMC) a Canadian public company that is aiming to revolutionize the biodiesel industry through the creation of scale-able mini-refineries that can turn any fibrous material into renewable diesel. That diesel can then be sold to diesel refineries to enable them to produce blended diesel fuel that meets Canadian renewable fuel regulations.
Cielo is the brainchild of President and CEO Don Allan who embarked on a journey to produce renewable diesel several years ago when he was asked to figure out a way to make an ammonia plant in High Prairie, Alberta, economical. At the time the plant was buying feedstock gas at around triple its break-even point.
Allan hit upon the idea of retrofitting the existing ammonia plant using the hydrogen reformer to produce around 5,000 barrels of 18 API oil per day, thereby allowing the region's heavy oil to move via a nearby pipeline. But after 2 years of due-diligence the ROI were predicted to be very low and the capex was climbing and no longer made since, so Allan decided to try something else. He and a group of engineers looked at about 200 different refining technologies, and eventually pared those down to 20. Among them was a technology that used a catalyst to turn landfill garbage into diesel fuel.
For the past four and a half years Cielo and their licence provider have been running their 50 liter an hour batch process demonstration plant in Red Deer as a test facility. The demonstration plant is now being disassembled and relocated to the Company's recently acquired 2.5 acre site in High River, AB. Once there it will be retrofitted into a 350 liter an hour continuous flow refinery that will be the Company's first commercially viable plant, with another to follow. The second plant will be designed to produce renewable diesel at a rate of 1,800 liters per hour, a 500% increase from the Company's proof of concept retrofitted demonstration plant.
The next stage will be an expansion to an identified property next to the Edmonton Waste Management Centre, where up to 20 additional mini-refineries can be built.
So what exactly is renewable diesel, and what is the market for it?
According to Allan, who gave an extensive interview with Ahead of the Herd, Cielo's renewable or "green" diesel can be made by running any fibrous material through a catalyst, whose ingredients are proprietary. Eligible materials include landfill waste, plastics, organics like table scraps or lawn clippings, cardboard, sawdust and tires.
"We can walk into a landfill, and we work with somebody that's got a recycling component in front. And they'll take out the stuff that they can make money with, so all the ferrous metals, the copper, the glass and they also remove the rocks and the dirt. And we can use everything else. So we can actually quantify that we can get rid of 95 to 100 percent of the landfill," says Allan.
For sawdust or hog fuel, the material just needs to be chipped down to a 2-inch-sized particle, then it's ground into a fine powder.
"The catalyst is the key to this whole thing. Our competition, their technology can take 6 to 12 hours to turn their waste into diesel. Ours is instantaneous. It can happen within 12 to 18 seconds, so it happens right in front of your eyes."
Allan said the key challenge that Cielo's technology addresses is getting rid of the water content, which makes it competitive against traditional biodiesel, where the water content is a problem in northern climates because it freezes as well as storage life is short. That means that Cielo's renewable diesel can be used year-round in Canada, or other cold weather countries, versus biodiesel which can typically only be used during months when the temperature is above zero.
A couple of other advantages are key. The feedstock for biodiesel - like canola, soybeans, animal tallow or discarded cooking grease from restaurants - costs anywhere from 65 cents to $1.35 a liter versus around 4 cents ($0.04) a liter for Cielo's waste stream. In fact, Allan says the input cost could even be a negative number. "We could charge the client to bring it to our place. So that's a huge advantage for us." He notes that it's practically impossible to run a profitable biodiesel plant without government subsidies. There are no subsidies available today from the federal government and only small producer credits if the renewable/bio-diesel is produced and sold in that province. Cielo forecasts it will be able to charge around 25 percent more for its renewable diesel than traditional biodiesel, due to it being higher grade, usable year round, and having a longer shelf life due to its zero water content.
Also, unlike competing technologies that use plastics to make biodiesel, Cielo's technology is able to use "dirty" plastics whereas other technologies reject contaminated plastics which could be as benign as a cigarette butt in a plastic drinking bottle. Most of those technologies can only use 2 types of plastics out of the 7 types manufactured today, Cielo can use all 7 plastics.
Cielo appears to have a captive market for biodiesel in Canada, where it estimates demand to be at 650 million liters a year, almost all of which is imported - mostly from Singapore, Finland and Brazil. For its product Cielo is targeting Alberta gasoline and diesel refiners, of which there are currently about half a dozen. Cielo's product has an advantage over importers because of its zero water content - ergo longer shelf life - plus the company has much lower transportation costs in getting the product to refineries.
For now the target market is local, but Allan said that could change if market conditions are right in the United States. There, U.S. renewable energy credits are currently up for discussion, and the Trump Administration could either decide to renew them or discontinue them. Either way, it's good news for Cielo, says Allan:
"If Trump eliminates the subsidies, the opportunity for us is going to go through the roof because we'll be able to buy and retrofit the ethanol and biodiesel plants that go belly up with our technology. If he turns around and increases those RENs, we'll make even more moneyselling into the states. So either way, whatever happens we're in really good shape."
For now the only challenge for Cielo appears to be the ability to ramp up from the current 50 liters an hour batch process to 350 l/h - 1,800 l/h or beyond. If the company is able to do that, it will become a true cash-generating machine, as long as it gets enough feedstock to keep the refineries running 24/7. Allan said the company has already shown it's able to run the plant in Red Deer continuously for four days straight, and he sees no potential bottlenecks. He has signed agreements in place for feedstock supply that could feed all of the High River requirements as well as offtake agreements in place for every liter of renewable diesel produced.
"We use a number of combinations of different catalysts in our proprietary process. These catalysts are modified to optimize our renewable diesel output depending on our feedstock input. For example if we're running 100% sawdust one day, and the next day we're running 100% waste, all we have to do is change the formulation of the blended catalyst so as to achieve the highest grade of renewable diesel possible. The magic to what we are doing lies in what we've learned over the past four years as to how to blend the catalysts together. We will be maintaining this information as a trade secret going forward."
Cielo is not a speculative play with an uproven technology. It's spent four years testing its proprietary renewable diesel catalyst with it licensor, and it's all systems go for commercialization. On July 10 Cielo received a development permit to relocate its Red Deer demonstration plant to High River. Ten days later, it hired a company to dismantle the plant and are now moving it between the two cities; once retrofitted for about $2 million, the first plant, which will only run sawdust, will operate at 356 litres an hour, on a continuous flow basis. The second plant will be ramped up to include other fibrous feedstocks and is projected to run at 1,800 l/h.
On July 27 Cielo announced an offtake agreement with Mountainview Eco Products, which will supply the first High River plant with sawdust and wood shavings.
"The quality of Mountainview's sawdust and wood shavings exceeds our requirements and will allow for our feedstock costs to be significantly lower than the costs being paid by conventional biodiesel facilities for their feedstocks, which includes food-derived materials, animal tallow and or yellow/brown grease. We look forward to working with Mountainview in Alberta as we expand our refinery footprint beyond our first refinery," Allan said in a press release.
Because Cielo is a clean-tech company with a proven technology for producing renewable diesel, because the product is cost-competitive with biodiesel and appears to have strong demand in Canada and possibly the United States, and because the company has the potential to have a recurring revenue stream with a seemingly endless supply of feedstock, Cielo Waste Solutions should be on all our radar screens.
Cielo, and the demise of landfills, are definitely on my screen. Are they on yours?
If not, they should be.
Richard (Rick) Mills
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This document is not and should not be construed as an offer to sell or the solicitation of an offer to purchase or subscribe for any investment.
Richard owns shares of Cielo Waste Systems Corp (CSE:CMC) and CMC is an advertiser on his site.
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