The Fulcrum Sierra BioFuels project will help reduce the nation's dependence on foreign oil and advance efforts to develop a cleaner, more sustainable alternative energy source, Agriculture Secretary Tom Vilsack tells The Associated Press.
The company, a subsidiary of Fulcrum BioEnergy Inc. headquartered in Pleasanton, Calif., plans to convert 147,000 tons of municipal solid waste into 10 million gallons of ethanol annually at the new plant.
It will be the first such biofuel facility in the region and will serve as a flagship for other plants around the country, said Fulcrum Vice President Rick Barraza.
"What's exciting about this project, it's our first commercial scale facility," Barraza said. "This is really a watershed project."
News of the project and its backing by the federal government coincides with an annual National Clean Energy Summit being held Tuesday in Las Vegas and hosted by Sen. Harry Reid, D-Nev.
"Today's announcement will mean hundreds of good paying jobs and a continued commitment by Nevada to help reduce our dependence on oil," said Reid in a statement, calling the project "another important step in the right direction toward making Nevada and our country more energy independent."
The plant will be built 20 miles east of Reno in the Tahoe-Reno Industrial Center in Storey County. Officials said the project will create 430 construction jobs and 53 permanent jobs after completion by 2015.
In an interview before Monday's announcement, Vilsack said the technology used to create transportation fuel from garbage takes the biofuel industry to the next level.
"We're basically trying to create opportunities in all parts of the country," he said.
The federal loan guarantee is being issued under the USDA's Rural Development Biorefinery Assistance Program that was part of the 2008 farm bill.
Barraza said the company has already obtained a bank loan for the project and the federal government's guarantee provides added assurance to the lender of repayment.
"The USDA is only there if there's a problem, and we certainly don't anticipate any," he said.
Vilsack said such guarantees "create enough confidence in the other funders to allow the project to go forward."
He also said the agency has funded seven other biorefineries around the country that use an assortment of sources — from agriculture residue, woody biomass and algae.
But unlike other so-called feedstocks such as corn, which must be grown, trash is cheap and plentiful.
The trash-to-gas concept has been tried on a smaller scale in other places around the country, Vilsack said, and "has the potential to substantially reduce the pressure on landfills."
"What makes our business model unique, unlike other biomass, we're getting the garbage for no cost," Barraza said. "That helps lower the cost of production and lowers the cost of ethanol."
Fulcrum has 20-year contracts with Waste Management and Waste Connections Inc. to provide the garbage that will be sorted to remove other recyclables such as plastics, cans, bottles and paper. The plant will also use walnut shells from a processing facility in the same industrial park.
From there, the ethanol will be sold to Tenaska BioFuels LLC, which will market it to blenders in the Nevada and Northern California region as a gasoline additive.
Most fuel sold for passenger cars and pickups today is 10 percent ethanol and 90 percent gasoline.
Barraza said the company is already looking down the road to expand its trash biofuel footprint around the country once the Nevada plant is up and running.
"We have access to garbage in 19 states already," he said.