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OTTAWA (Reuters) - Canadian biofuel producer Enerkem Inc said on Thursday it has received a $80 million loan guarantee from the U.S. Department of Agriculture for a new waste-to-fuel plant in Pontotoc, Mississippi.
The funding, which follows a $50 million grant from the U.S. Department of Energy, will allow the privately held company to close financing on the plant.
The USDA also awarded Coskata Inc a $250 million loan guarantee on Thursday to build and operate a cellulosic ethanol plant in Alabama.
In the United States, government mandates call for production of 36 million gallons of biofuel annually by 2022. Ethanol makers produced about 13 billion gallons of the renewable fuel in 2010, mainly from corn.
Enerkem expects to start building the Mississippi plant this summer, with construction ending in late 2012. Production is expected to start the following year.
Built on a landfill, the plant will process about 100,000 tonnes of non-recyclable garbage into 36 million liters (10 million gallons) of ethanol annually.
Under Enerkem's process, municipal, forest or agricultural waste is broken apart and reassembled into a synthetic gas. The "syngas" is then scrubbed and conditioned for conversion into ethanol, methanol or other chemicals.
Enerkem, which is currently constructing a similar plant in Edmonton, Alberta, is developing projects that are close to landfills and refineries that can blend the biofuel it produces.
"We have a number of other projects that will get announced throughout the year," said Chief Executive Vincent Chornet.
Enerkem claims its technology has advantages of speed and efficiency and the purity of the synthetic gas it produces from breaking down biomass and other waste material.
Reporting by Susan Taylor; editing by Rob Wilson