Feb. 23, 2008, Calgary- Feeding food leftovers into an “industrial-sized stomach'' can create a profitable and environmentally friendly source of energy, 27-year-old entrepreneur Ryan Little says.
StormFisher Biogas, the company Little founded with two of hisMBA classmates a year and a half ago, has since grown into whatcould possibly be one of the biggest operations of its kind in the world.
Earlier this month, the Toronto-based company received $350 million in investment from U.S. firm Denham Capital.
The money will be put toward building 30 power plants across North America that run on methane. The clean-burning gas is a byproduct of decomposing organic refuse, which StormFisher gets in steady supply from food processing companies.
“If you think about bakeries and imagine the wheat and flower that comes into the plant, not all of that is going to come out on the other end in loaves of bread. The remainder of that material a lot of times is going to landfills,'' Little explained.
“It's actually got a lot of energy value and that's what we're using as a fuel for these plants. We can use that to power engines, or we can plug that directly into the natural gas pipeline.''
In his last year at the University of Western Ontario's Richard Ivey School of Business in London, Ont., Little decided he wanted to get into the green business.
The wind energy industry had become too saturated and start-up costs in the order of $500 million were too much for a small start-up to handle.
“At the same time biogas was just sort of peeking its head around the corner here and the first people from Europe were starting to come over and set up a presence here,'' he said.
“It seemed that there were about 5,000 of these installations in Europe and only a handful here. It really seemed to make sense that biogas industry could take place here.''
While there are a ton of interesting green-power technologies out there, “it's not a real business yet,'' said Sam Billard, a financial services expert and a lawyer at Toronto firm Aird & Berlis.
Digester technology, like the one that StormFisher uses, is “pretty funky,'' Billard said.
“But the economics of it don't work unless you've got some sort
of cap and trade system, some kind of incentive for people to do things that are clean.''
Under a “cap and trade'' system, governments impose a penalty on companies for each tonne of carbon dioxide they emit over a set limit.
Companies that cut their emissions to below the cap would be rewarded financially -providing more incentive for them to use innovative green technologies.
“The beauty of a cap and trade system is that engages the entrepreneurial spirit of Canadians,'' Billard said.
There is also a lot of money to be made from plant-derived fuels like ethanol and biodiesel, said Gordon Quaiattini, president of the Canadian Renewable Fuels Association.
A government mandate says that by 2010, regular gasoline must be blended with cleaner-burning fuels like ethanol, made from corn or wheat, and biodiesel, made from canola.
That's pushing some companies to get started on those types of projects now.
“The last thing we want to have happen, particularly given the growth of the biofuels sector in the United States, that you would simply end up importing that biofuel to meet the mandate,'' Quaiattini said.
“And then what you don't get is the economic spin-off that takes place, particularly in rural communities across this country which for quite some time have not seen a lot of positive economic development opportunity.''
Eventually there will be no choice but to turn to biofuels as reserves of oil continue to decline, Quaittini said.
“Oil is finite. It's not renewable. Once it's gone what are you going to replace it with? So we better have those alternatives in place when you think about where world demand is going,'' he said.
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