By any measure, Waste Management is a giant in the U.S. garbage collection and recycling business, but its future may lie in a different service: turning trash into energy. That helps explain why the Houston company recently has been boosting investments in technologies that can convert much of what goes in the landfill into fuels, electricity and other energy products. While those investments are still relatively small for a firm that collected $12.5 billion in revenue last year and 100 million tons of trash, they highlight a shift in the way the country’s biggest garbage hauler views its business as well as waste itself. Waste Management“In my mind, it’s pretty simple why we’re doing it: If we don’t figure it out, somebody is, and they’ll take the waste away from us. If we lose the waste, we’ve certainly lost the business,” said Carl Rush, vice president of the company’s organic growth group, the chief vehicle for its energy investments. The shift in thinking comes at a time when U.S. landfill collections are hitting a plateau as Americans recycle more, consumer products makers reduce packaging and many large corporations adopt “zero waste” goals. Demand for renewable energy and fuels also is increasing, in response both to regulations requiring them and to public concerns about the nation’s reliance on fossil fuels and their environmental impact. The confluence of trends has pushed Waste Management’s leaders to take a hard look at where the company is headed, and has brought a slow and sometimes reluctant culture change to a business that had been set in its ways. “Five years ago it would have been, ‘just put it in a hole and don’t worry about it,’?” Rush said. Today, company officials try to avoid even using the term trash. Instead, it’s “materials” or “resources,” he said. “It’s remarkable to me to see the change that’s taken place just in the mind-set of the people in this company.” Waste Management’s energy portfolio can be divided into two broad categories, existing and emerging. In the first, the company operates 17 waste-to-energy plants that incinerate garbage to generate electricity. It also collects methane gas from 129 landfills and turns it into electricity, which it sends to the grid for public use. Combined, those projects produce enough energy to power 1.1 million homes – more than the U.S. solar industry. And the company has a goal to double that by 2020. The emerging side, however, is where Rush and his team are placing their focus. Their goal is to identify and invest in technologies that can convert more materials in the waste stream into energy resources – and they’ve placed many bets in the last few years. Among them: Terrabon, a Houston firm that has developed an acid fermentation process that converts organic waste into a gasoline nearly identical to its petroleum-based counterpart. Agilyx, an Oregon firm that makes a crude oil substitute from waste plastics. Enerkem, a Canadian company that can make ethanol from municipal solid waste and wood chips. Waste Management also has its own pilot plant in Oklahoma that converts landfill gas to diesel fuel for its trash collection trucks. And it’s in a joint venture with Linde in an Altamont, Calif., plant that turns landfill gas into liquefied natural gas and powers 1,000 garbage trucks there. The list goes on. The company now has a portfolio of nearly 30 acquisitions, joint ventures and investment projects at various stages of development. Rush won’t disclose the actual amount Waste Management has spent on the projects, but he said typical outlays have been $5 million to $10 million each. Most of the technologies aren’t yet contributing to the bottom line. But several should start production within the next two years, he said. As they grow, the goal will be to integrate them into Waste Management sites and capture more revenue. “That’s sort of the next phase,” Rush said. But some analysts are getting antsy to see a return on the investments. “I’m not seeing any benefit from it probably for three to five years,” said Michael E. Hoffman, who follows the company for Memphis, Tenn.-based Wunderlich Securities. “That’s a long time for investors.” While he agrees with the longer-term strategy of extracting more value from landfills, he believes the company should have kept the investments quiet until they were closer to commercialization. Amol Deshpande, a partner at Silicon Valley venture capital firm Kleiner Perkins Caufield & Byers, said that may be sooner than many people think. Kleiner Perkins has partnered with Waste Management on several waste-to-energy projects, and commends the trash hauler for picking up on trends that are gaining momentum around the world and within the investment community. “It’s what any very good, forward-looking management team would do,” he said. “It’s about being prepared for where the industry is eventually going.” Source: Fuel Fix