Fulcrum BioEnergy said Friday it plans to begin constructing an ethanol plant later this year that would turn garbage from homes and businesses into transportation fuel.

The $120 million project will be the company’s first. The company, which was founded a year ago in Pleasanton, Calif., was formed with investments from private equity firm U.S. Renewables Group in Los Angeles and venture-capital firm Rustic Canyon Partners in Santa Monica, Calif.

Fulcrum still needs to raise $120 million to finance the plant that it would build, own and operate.

The company plans to locate the plant, called Sierra BioFuels, at the Tahoe-Reno Industrial Center, which is 10 miles east of Reno in Nevada. Sierra BioFuels would turn nearly 90,000 tons of solid waste into 10.5 million gallons of ethanol per year, with commercial production expected to begin in early 2010.

Fulcrum would then sell the ethanol to refineries to be blended with gasoline.

“Our overall cost of production is lower compared with the production using wood waste or corn,” said Rick Barraza, vice president of administration at Fulcrum. “We are building close to a landfill, close to where the feedstock is, so we reduce the transportation cost dramatically.”

The new plant would be one of the first commercial facilities producing ethanol from trash supplied by haulers, who typically contract with cities or counties to collect garbage from homes and businesses.

BlueFire Ethanol in May said it would begin construction on a 3.1-million-gallon-per-year plant next to a county landfill in Lancaster, Calif., in the third quarter, and begin delivering cellulosic ethanol from the plant next year (see BlueFire to Break Ground). It also is building a plant that is expected to produce up to 19 million gallons for year in Corona, Calif.

Trash could become a sought-after commodity for fuel production. Other ethanol companies, such as Coskata, also are developing projects to make fuels from garbage (see Coskata Picks Pennsylvania for Pilot Plant and Coskata Begins Building Demonstration Plant).

But in spite of the attractiveness of turning trash into treasure, companies making ethanol from garbage could face some challenges. James McMillan, a manager at the National Bioenergy Center, said in May that they will have to deal with the logistical requirements of separating out unsuitable types of trask, as well as the difficulty of dealing with the variety of different sugars that the multiple feedstocks would yield.

Fulcrum has already signed a contract with a garbage hauler and plans to line up more suppliers. Barraza declined to name the company already under contract.

Sierra BioFuels plans to use a gasification technology licensed from Integrated Environmental Technologies and a catalytic technology that was developed jointly by Nipawin Biomass Ethanol New Generation Co-operative and Saskatchewan Research Council in Canada.

During the gasification process, waste that has been shredded into small pieces of 2 inches to 4 inches and mixed with oxygen and sometimes steam, is heated to more than 700-degrees Celsius. The heat breaks down the feedstock into synthesis gas (syngas) containing hydrogen, carbon monoxide and carbon dioxide. The syngas then goes through a purification process to get rid of the particles before going through a catalytic process to turn the molecules in the syngas into ethanol.

Garbage that is suitable for the ethanol production includes wood, paper, yard clippings and plastics. Barraza said the company would not compete with community recycling programs for the feedstock. Instead, Fulcrum would use the garbage that already has gone through the recycling process and is heading to the landfill.

Fulcrum is developing several other ethanol plant projects in the country. The company is working with Casella Waste Systems in Rutland, Vt., on those projects in New England, Barazza said.

With the high oil prices, ethanol companies and governments around the world continue to see a great market opportunity for biofuels made with food or non-food sources. Here are some other biofuel news items from this week:

  • The U.S. Department of Energy awarded two cellulosic ethanol projects a total of $40 million over a five-year period. One project will be developed by Flambeau River Biofuels in Park Falls, Wisconsin. The other by the Verenium Biofuels in Cambridge, Mass.
  • The government of Mozambique approved a $280 million project to produce ethanol from sugarcane. The project is expected to produce 213 million liters (56.27 million gallons) per year.
  • Biofuel Energy has begun shipping corn-based ethanol from its plants in Wood River, Neb. and Fairmont, Minn. Each of the two plants can produce 150 million gallons per year.
  • Dow Chemical and the National Renewable Energy Laboratory (NREL) have teamed up to develop a process for converting biomass into ethanol. The project would use a mixed alcohol catalyst from Dow and non-food feedstock such as wood wastes and leaves from corn plants.
  • Mantra Venture Group has set up Mantra NextGen Power in Nevada to enter biofuel andsolarpower businesses. Mantra NextGen is negotiating with an undisclosed company that has developed a technology for producing ethanol from wood and agricultural wastes.
  • The Organization of Economic Cooperation and Development’s new report states that the annual $11 billion in biofuel subsidies from the United States, Canada and European Union doesn’t do much to reduce carbon dioxide emissions, which contribute to global warming. Emissions from cars, airplanes and ships would only decline 0.8 percent by 2015 in those countries, OECD said. Instead of expanding its ethanol production, the wealthy countries should focus on reducing fuel use for transportation and ditch import taxes on ethanol from Brazil, the report said.