Waste Management takes stake in waste-to-fuel startup Terrabon

Houston, Texas-based Terrabon said today that it received an undisclosed amount of investment from another Houston-based firm, Waste Management (NYSE:WMI).

It's the second major investor this year for the startup, which told the Cleantech Group in March that it was seeking $5 million, with a portion expected to close a few weeks later (see New low-energy desal process could be used to make biofuels).

In April, San Antonio, Texas-based refiner Valero Energy (NYSE:VLO) announced that it invested an undisclosed amount of equity in Terrabon, which developed a technology to turn municipal solid waste into two products in high demand: potable water and transportation fuel. The technology can also be used as new method of desalination using highly efficient heat exchangers.

Valero says it recently increased its investment.

The money from Valero and Waste Management is expected to help Terrabon scale its technology. Waste Management also agreed to help Terrabon secure organic waste streams.

Terrabon's fuel technology, dubbed MixAlco, originated at Texas A&M University, which sold the exclusive worldwide license to Terrabon in 1995. In MixAlco, biomass—such as municipal solid waste or energy crops—is fermented. Water is then removed to produce organic salts, which are treated with chemicals to be made into fuels such as gasoline, diesel or jet fuel.

MixAlco, a biomass-to-fuel conversion process developed by Holtzapple to produce mixed alcohols. In MixAlco, biomass—such as municipal solid waste or energy crops—is fermented. Water is then removed to produce organic salts, which are treated with chemicals to be made into fuels such as gasoline, diesel or jet fuel.

That MixAlco technology alone has been the focus of Terrabon’s activity to-date, and the company is in talks to deploy it. The company spent $3 million to build its SemiWorks plant in Bryant, Texas. Terrabon is working with the city of Port Arthur, Texas, to build a small plant designed to turn 50 tons of waste per day into organic salts, which would then be sent to a local refinery. The plant is estimated to cost $34 million and expected to produce 1.5 million to 1.8 million gallons of gasoline per year.

Waste Management's involvement doesn't come as much of a surprise. In 2007, Waste Management, the No. 1 waste services company in the U.S., said it planned to double its waste-to-energy plants by 2020 (see Waste Management to boost recycling, waste to energy).

Just last month, a waste-to-energy subsidiary of Waste Management announced plans to pay $142 million for a 40-percent stake of China’s Shanghai Environment Group in order to pursue waste-to-energy opportunities throughout China (see Investors get messy with bugs, worms and nuclear fusion).