 Evan Chrapko stands in front of his new biorefinery near Vegreville. It uses manure from a nearby feedlot to produce biogas which is used to generate electricity. Later this year, when construction on the refinery is complete, the biogas will also be used to produce ethanol. |
On the outskirts of Vegreville, a county road heads north into an endless expanse of snow-covered fields beneath a flat, grey sky. Suddenly to the west, two huge tanks with rounded, mushroom lids loom above the snowdrifts, the first glimpse of Alberta's oddest-looking electricity plant and also its greenest. About one megawatt of power flows out on the wires -- enough power to run the next-door feedlot and turn on the lights in 700 homes in Vegreville and Two Hills. Two more gigantic tanks are under construction, and beside them, the site is cleared for the final installation, an ethanol plant, the greenest in Canada, thanks to home-grown, Alberta inventions. In the land of big oil, a fledgling alternative energy economy is taking shape down on the farm and it's based on that most plentiful of Alberta resources -- a smelly, endless supply of cattle poop. That and the inventiveness of two sets of farmer brothers and a scientist from China who made Edmonton her home. It is -29 C on this day, and Evan Chrapko pulls down his hat for protection against an aggravating wind. The manure-powered power plant is a short distance from the farm where he and his brother Shane grew up, and next to the feedlot owned by their longtime family friends, Mike and Bert Kotelko. The Chrapko brothers made their fame and first fortune at the cutting edge of the software business in the 1990s. Now, in partnership with the Kotelko brothers, they're at the leading edge again, this time with ambitious plans for the province's first green energy mega-project. Eventually, they expect to have a string of six ethanol plants across the Prairies at sites where manure is plentiful. Total cost for the six: $705 million. The project starts with new technology invented by their company, Highmark Renewables, to turn cattle manure into biogas, a product similar to natural gas from the ground. Highmark calls it "renewable natural gas" (since there's an endless supply of manure) and with a little cleaning up, it could heat your home. Right now, Highmark burns its biogas to make electricity. The company has developed 40 secret recipes to turn almost any kind of organic waste -- slaughterhouse waste, sugar beet waste, municipal sewage -- into biogas. It is seeking international patents in a California law office. With the new tanks, power production will quadruple. The company could sell more into the grid or use the power to run a greenhouse. Or an ethanol plant -- a very strategic combination, as it turns out. The knock on ethanol has always been that it uses valuable food crops for gasoline and that it requires more energy in the production process than comes out for the gas tank. Also, most ethanol plants take land out of food production for growing fuel crops from sugar cane to poplars, or they tear up the rainforest, as in Brazil. But the Highmark combination -- an ethanol plant powered by manure from an adjacent feedlot -- is a major improvement on all those fronts and finally gives ethanol a positive environmental footprint, says Chrapko. "Now it's a food-and-fuel process, not food-versus-fuel." It starts with low-grade wheat already grown to feed the cattle at the feedlot, so there's no additional demand on cropland to grow grain exclusively for ethanol. Moreover, this wheat will be used four times on the site. First, the starch is removed for ethanol production. Then wheat leftovers, still full of nutrients, are fed to cattle on the feedlot. The animals excrete the waste, which is then used to make electricity to power the ethanol plant. Any leftovers from the biogas plant can be used for fertilizer or fibrous material suitable for land reclamation by the oil industry. Chrapko calls it a "virtuous loop" -- producing power, cattle feed, fuel and fertilizer from wheat on site, an industrial site that powers itself and has some left over for the grid. While giving ethanol an acceptable environmental footprint, the Highmark process solves a looming pollution problem at industrial-scale feedlots. Consider that there are more than 30,000 cattle at this feedlot, each of them producing the manure equivalent of six humans. But there's no sewage treatment plant, and you can't spread those volumes on the land forever without negative consequences, explains Travis Nickel, assistant general manager of Growing Power, the electricity side of the operation, and a business graduate of the University of Alberta. "Soon there won't be a feedlot without one of these plants," he adds. Nickel sees a future in which the countryside is dotted with small bio-refineries producing power for nearby towns and ethanol for big refiners to mix with gasoline. On top of that, the ag-based industry provides a big benefit -- it removes greenhouse gases rather than adding to them, he explains. The thousands of tonnes of manure left on the land produce methane gas, which is 21 times more potent than carbon dioxide as a greenhouse gas. Highmark makes methane in its tanks and puts it to work. The key factor in ethanol production is the so-called "energy balance," which measures the amount of energy required to turn grain into vehicle fuel. In the oilsands, the energy balance isn't great; one unit of energy goes into extracting about 1.2 units of synthetic crude (for gasoline). Highmark Renewables achieves an impressive ratio of one to 4.4. The ratio for corn ethanol produced in Ontario or the U.S. is also very low, 1.2. to 1.6. The energy balance will get better, up to 3.7, when new technology allows for the use of the entire corn stalk, not just the kernel. But that process, which produces cellulosic ethanol, won't be commercially viable for some years. "We can achieve better than that today," Chrapko says. Highmark avoids many other inefficiencies of stand-alone ethanol plants. For starters, the leftover cattle feed doesn't have to be dried and shipped away, a costly and energy-intensive process. The wet mess is just moved across the yard to the feedlot. Even better, Edmonton's refinery row is less than 100 kilometres away and the gasoline trucks roll right by on Highway 16. For soil scientist Xiaomei Li, it's been a long journey to reach this point. When Li came to Alberta in the 1990s, the Kotelko brothers had a serious problem. They run one of Alberta's bigger feedlots, and it was becoming clear that spreading manure from 30,000 head of cattle was overloading their land with phosphorous, among other things. There had to be a better way. They began working with Li and the Alberta Research Council centre in Vegreville. In recent years, European countries have developed technology to turn liquid hog and dairy waste from indoor operations into biogas. (In fact, Peace Pork, an 8,000-animal hog facility near Grande Prairie, is attempting to make biogas from its animal waste.) But that technology couldn't handle the solid waste from cattle feedlots, which is full of straw, gravel and dirt. It took about five years of experimenting to "break the code" and break down solid manure into biogas that could be burned to produce electricity. In the big tanks, called anaerobic digesters, enzymes chew up 100 tonnes of manure daily into methane gas which is burned to fire the generator. In 2005, the mini-power plant opened -- the largest of its kind in Canada using cattle manure. Using waste is a key building block of an alternative-energy economy that's looking for greener electricity and greener vehicle fuel. The City of Edmonton, for instance, is building a plant to turn residential garbage at Clover Bar landfill into "syngas" (synthetic gas), similar to Highmark's biogas from organic waste like manure. Eventually, the city wants to upgrade its syngas, also known as refuse- derived gas, into ethanol. Soil scientist Li says the Highmark process could turn city sewage sludge into electricity. It also presents opportunities for a thousand small towns in rural Alberta, she says. Most of them leave the sewage in evaporation ponds. Instead, with Highmark technology, they could use the sewage to make electricity on a small scale to sell to local residents. Alberta was slow to get into ethanol and other biofuels. In 2006, the province announced a $239-million grant program to kick-start the ethanol industry. A few studies were done, but there was little uptake.Unlike other provinces, Alberta didn't require five-per-cent ethanol content in gasoline. Meanwhile, three ethanol plants sprang up in Saskatchewan, and 10 more in Ontario, B.C. and Manitoba. In fact, Suncor, one of the biggest oilsands producers, built a 200-million-litre corn ethanol plant at its petrochemical operations in Sarnia, Ont. As Evan Chrapko soon discovered, trying to develop an alternative-energy industry in the middle of a booming oil province isn't easy. Highmark's plans for a string of manure-power utilities almost got sideswiped by the overheated economy, provincial government indifference and Alberta's worrisome and little-discussed penchant for catching "Dutch disease," a trend first spotted in Holland in the 1960s when a natural-gas boom squeezed out other industrial sectors, leaving a narrower economic base. "We ran right into the Alberta disadvantage," recalls Chrapko. Construction costs were inflated, engineers were hard to find and labour was short. For engineering work, they finally went to Manitoba, where companies "didn't have oil dollars in their eyes." Then, when Chrapko went to look for investors, he ran into Big Oil again. With business plans and new technology tucked into his briefcase, Chrapko landed in London, England, to pitch Highmark's plans to big investment houses in the city's old financial district. The financier in the elegant suit across the table listened closely, then pulled out a big binder and opened it at the Alberta tab. "He ran his finger down the page and noted the province had no green fuel standard (meaning no requirement for an ethanol mix in the gasoline), when almost every European country does. "Looking at the province's profile, he said: 'If you want money, how about I back you for an oilsands play?' " recalls Chrapko. "And yet I was sitting there with a greener technology and a better plan and asking for $705 million." In December 2008, the Stelmach government finally decided to play catch-up. The new provincial energy strategy requires five-per-cent ethanol content in all gasoline sold in Alberta by 2010 and two-per-cent biodiesel content in diesel fuel, the same as the federal goal. Alberta will need about 265 million litres of ethanol annually, but has only one producing plant, Permolex in Red Deer, which pumps out 40 million litres a year. Highmark will match that output at its Vegreville operation. Without more ethanol production, the province will be shipping out grain and jobs and importing the value-added ethanol, an eerie echo of the oilsands, where raw bitumen is shipped to the U.S. for upgrading into gasoline. "So hats off to the ministry of energy," says Chrapko, for agreeing to the five-per-cent standard. "And if they are serious about renewables, this project could become part of the $25-million plan," he said, referring to the massive public relations campaign launched by Ed Stelmach last year to counteract the "dirty oil" reputation the oilsands has gained in the U.S. and Europe. About 15 to 20 green-power projects using biomass (manure, wood waste etc.) are at various stages of approval in the province right now, says Matthew Machielse, executive director of alternative energy for Alberta Energy. Most are small, but some are large-scale, like a proposed 400-million-litre plant in Innisfail. Last month, U.S.-based Otoka Energy announced plans to build a 25-megawatt electricity plant near Drayton Valley using wood waste from the forestry industry. That project is just beginning the approval process. Just how big can the renewable-energy sector become in Alberta? That's a tough question to answer, says Joseph Doucet, an energy economist at the University of Alberta. Much depends on two things: the price of oil and how far U.S. President Barack Obama goes in his climate change policies, Doucet says. The two sides of the green economy -- fuel production and electricity production -- have to be considered separately. Right now, renewables provide only a "drop in the bucket" of the provincial electricity supply, he says. That might change if the U.S. brings in some type of carbon legislation, such as a cap-and-trade system. Such measures would make it more expensive to produce coal-fired electricity. If coal plants, for instance, get into carbon capture and storage to reduce their greenhouse gas emissions, that will also affect their bottom line. That would leave more room for renewables such as electricity from manure, forestry waste or wind. As for the fuel side, Doucet notes that cars now can only handle about 10 per cent ethanol content, so there is a technology barrier. But the big advantage of local bio-refineries like Highmark is that they help diversify the provincial economy by building on what the province is already good at -- agriculture and handling and refining gas, Doucet says. The Pembina Institute, an environmental research centre, says renewable-power sources could play a significant role in electricity production if the province made it a priority to replace some polluting, coal-fired power plants. A recent Pembina report, Greening the Grid, says most of the new demand in the next 20 years could be met by green energy, and biomass is part of that mix. For instance, Germany had 3,700 agricultural bio-gas plants in 2007, producing 1,270 megawatts of electricity, most of them farmer owned and operated. While Germany has a much larger cattle population than Alberta, its progress shows that "when a country wants to take advantage of this resource, it can," says the report. Alberta's total electricity production is 8,000 megawatts, and the Pembina report says about 1,000 more megawatts could come from biomass, including biogas from manure. The government has put $2 billion into carbon capture to aid the conventional energy industry, so why not a similar amount for energy from biomass, it adds. Meanwhile, at the University of Alberta, microbiologist David Bressler says using biomass to make electricity and ethanol are just the first baby steps towards the new economy. He's looking at using plants to make more valuable compounds, like ethylene and other chemicals for the plastics industry, which now relies on fossil fuels. "The ethanol industry is changing rapidly. We're at the beginning of a storm," he says, and Alberta is well-situated, with a plentiful supply of biomass in forests and cropland, expertise in handling gas, and a local petrochemical industry looking for feedstock. "There's a small rural-development boom, with little guys willing to take risks," he says. But the big multinationals already have their eye on Alberta for large-scale biogas operations, he says. "In 10 years, the scene will look a lot different," he says. "There is no such thing as waste, just byproducts. Anything leftover is usable. "But it's highly competitive The province is aware and kind of deciding how big to go. We can't sit at the periphery and let it happen." Evan Chrapko recently sent an e-mail to his London investment contact to see if there was any interest in Highmark now that the province has an ethanol requirement. "But like everybody, he's caught in the meltdown." Highmark, however, has other options in the emerging green economy: the company can raise money by selling greenhouse gas credits to the oilpatch, he says. The biogas plant will eliminate 75,000 tons of emissions annually, and that's worth cash on the fledgling provincial carbon market, where big polluters are looking for carbon offsets. In Alberta, the ceiling on the price of carbon is about $15, set by the government's levy on large emitters who fail to reduce their emissions intensity by 12 per cent, as required under the province's climate change policy. But on the international market, the price of carbon is closer to $40 a tonne, says Chrapko. Barack Obama, however, might just give a boost to the green economy, he says. "The U.S. is looking at doubling renewable energy," says Chrapko. "We couldn't ask for a better timing. If you want to get beyond 'greenwashing,' this technology is it." Above all, Chrapko and Highmark are proud that the Highmark venture is totally homegrown. Inventing the new technology is "a pure Alberta story," he says, and a great example that building a knowledge economy can happen on the farm, not just in ivory towers. In his dream for Alberta, more "sons and daughters" would come back and set their minds to building a solid, diversified provincial economy. "The message we want to get out is that Alberta entrepreneurs should come home. "Alberta is too inward-looking. We need people to come back from New York and London so we can build a tangible insulator in the economy as protection from the fluctuations of oil." spratt@thejournal.canwest.com
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