This week, California biofuels maker Fulcrum BioEnergy announced that it has received a $50 million strategic investment from SK Inc., the venture capital arm of South Korean industrial conglomerate SK Group. SK Inc. was joined in the investment by an unnamed Korean private equity fund.
Fulcrum is the first company in the U.S. to produce biofuel on a commercial scale by chemically converting municipal solid waste (MSW) into transportation fuels.
In an official statement, SK Inc. said the investment would enhance its corporate Environmental, Social and Governance (ESG) portfolio, part of a broader campaign to grow its investments in green businesses and technologies in pursuit of net-zero greenhouse gas emission goals. SK plans to bring Fulcrum’s commercially scaled, proprietary process into the Korean bioenergy market, possibly in partnership with with SK Ecoplant, another SK Group company. SK Ecoplant is a global engineering and construction firm that is active in sustainable energy and infrastructure projects.
Fulcrum’s business is built around a proprietary process that converts the organic materials found in MSW to low-carbon drop-in fuels, which can be distributed in the same pipelines as traditional petroleum products. Fulcrum’s bio jet fuel was approved and certified as an alternative drop-in fuel for the aviation sector. Fulcrum completed the construction of the world’s first commercial-scale MSW-based biofuels refinery in Nevada in July 2021.
Starting in 2022, Fulcrum’s Nevada plant is set to begin producing approximately 11 million gallons of syncrude annually, which will then be upgraded to transportation fuels, such as sustainable aviation fuel. Fulcrum anticipates increased production, as the firm has secured a consistent supply of MSW feedstock through long-term agreements with major waste services companies in the U.S. and has secured offtake agreements with major energy companies and airline companies.
Notably, Fulcrum has a patented process from feed engineering to biofuel production in the U.S., and its biofuel has been certified under California’s Low Carbon Fuels Standard (LCFS), which was implemented to reduce the carbon intensity of transport fuel.
Fulcrum also makes direct contribution to reducing MSW volumes by using non-recyclable, landfill-bound MSW as feedstock to produce energy. Fulcrum’s business model could help address various social issues associated with conventional waste disposal, such as a shortage of landfill space and environmental pollution. Fulcrum’s major shareholders include US Renewables Group and Rustic Canyon Partners, the company’s two founding investment firms, BP, United Airlines and Waste Management.
According to estimates from the International Energy Agency (IEA) and supplied by SK Inc., global biofuel production was 38 billion gallons in 2020, with the U.S. accounting for 45 percent of global biofuel production. Even with the proliferation of electric vehicles (EVs), biofuel is likely to continue solid growth, driven by robust demand from conventional internal combustion engine vehicles (ICEVs) and jet fuel.
“Fulcrum’s novel process of biofuel production can make a meaningful contribution to tackling environmental challenges by significantly reducing GHG emissions and addressing landfill capacity shortages,” said SK Inc. Executive Vice President Moohwan Kim. “Leveraging Fulcrum’s innovative process, SK Inc. will explore further opportunities with one of its affiliates, SK Ecoplant, which has transformed into an environmental and energy solution provider, to identify opportunities in the domestic market and at the same time expand its presence in the global waste-to-fuel and bioenergy markets.”
