Thank you very much.
It's a real pleasure and a real honour to be invited to come and tell our story to this committee. We were asked to share with you a little bit of the history. It's a bit of a story that spans a decade, and you may imagine that over a decade we accrue enough policy recommendations to fill up a book, so we'll try to keep those near the end and focus on the story.
You mentioned Bern and Mike Kotelko. Around 1999 they were at the genesis of this project. They owned a very large feedlot that produced 500 metric tonnes of manure a day. A soil scientist came to them and said, “Hey, what are you doing to the soil? There may be some issues that are building up over time”, and there was some disagreement. Obviously, manure is a good thing and it's a natural product for the soil, but there can be too much of a good thing. So they looked for ways to get the same value that they were getting using that natural product as fertilizer out of the manure technologically.
I've said manure about ten times in the last two minutes. Get used to it.
So they looked at all the available technologies. They looked at composting, they looked at drying and pelletizing, they looked at burning, they looked at gasification, and they looked at anaerobic digestion. It turned out that anaerobic digestion is about the best way to approach some waste management issues. Not only does it produce renewable energy, it also allows you to recover natural products. We can get into all the technical details on that without going too much further at this time.
It turned out, though, that there was no good anaerobic digestion technology available worldwide that could handle feedlot manure, due to scale and due to the fact that everywhere it had been developed in the past, everything was easy, liquid, nice, beautiful stuff. Feedlot manure isn't. So clearly there was an opportunity to develop a technology that would work. So a little company was formed to co-develop that technology. We put that together--well, I wasn't there yet, but it was put together and around 2002 they built a pilot plant on a lab scale. In 2003, after thinking that pilot plant was working well, they started building a commercial-scale demonstration plant that at that time was the largest anaerobic digester in the world. This was just a demonstration facility. You know, you're talking about scale. In 2005 that plant was commissioned. It can handle 20% of the manure produced at Highland Feeders. The total is 500 metric tonnes a day, so it's handling 100 metric tonnes a day of manure and produces a megawatt. When it was commissioned it was the largest in the world. It's been eclipsed, but it's about to become the largest in the world again, and I'll tell you a little bit about that.
In 2006 we deemed it a qualified success, a bunch of patents were filed, and I joined the company to write a business plan. We presented that business plan to the board in November 2007. In January 2008 Shane and his brother were brought into the company to really provide a lot more horsepower in the intellectual property development area. Subsequently, we divided the company into two: one that owns intellectual property and one that owns physical assets. It's the physical assets that are doing what we're all talking about today, this integrated community energy solution.
It's not just an anaerobic digester any more. What we're building at the same site where we built the pilot plant is a 400% expansion project of the anaerobic digester. That's a fourfold expansion. We call the new thing Growing Power Hairy Hill. That expansion also integrates with it a medium regional-scale ethanol production facility. So it creates--with the feedlot, the anaerobic digester, and the ethanol plant--what we call a virtuous loop. All the byproducts from each of those processes--manure from the feedlot, low-end heat from the anaerobic digester project, and distiller grains from the ethanol--become the input products for the next process down the line. That's true integration. What we're able to do with that integration, with those three facilities on site, is produce ethanol with an energy balance that far exceeds anything that's even in the lab for cellulosic ethanol, and we're not doing anything different. We're still doing moonshine, essentially. We're able to get a 4.4-to-one energy balance out of that. Corn ethanol in the States, for example, is at best 1.4 to one. Diesel fuel is 0.8 to one.
That's all due to integration. We can also reduce the amount of water that's used. Amazingly, by adding an ethanol plant that uses as much water as a feedlot to a feedlot, you only increase the amount of water 25%. All the liquid waste that comes out of the feedlot ends up being processed through the anaerobic digester and all the pathogens reduced out of that.
I've gone off my notes.
I do want to highlight that Growing Power Hairy Hill is a $100 million project. It's under way. We're doing the first phase, which is the anaerobic digestion phase, right now. We started construction of that when we got our permits in November. The second phase, the ethanol plant, is under way pending financing, which should close fairly shortly.
You don't build a $100 million project without having some pretty significant economic returns available for investors to get in on this. We all know that renewable energy doesn't necessarily provide the type of investment returns that, say, an oil and gas or a gas drilling play would in Alberta. It's only the integration that allows us to provide the types of returns that investors like.
We can go into why integration has lower risk and all sorts of that stuff in questions. I do want to just highlight a few reasons why anaerobic digestion technology at the centre of an integrated project is really important. It applies really well to all forms of organic material. And I don't like to use the word “waste”, but I'll say it now: anything that stinks when it rots can have the energy that's inherent in it recovered. And cities and towns produce an awful lot of this waste. There's some leadership in towns--Edmonton is one of them--to reduce it, but there's still an awful lot of waste out there. The food processing industry produces an awful lot of waste, and agriculture, as you know, produces an awful lot of odour. Currently only the largest projects of these types are economic. That leads us to go into some recommendations.
Because the capital investments are larger than any food processor or farmer can reasonably float, and liquidity challenges are ongoing, there is some room there for incremental government support. We see some leadership out of the United States in the 2008 farm bill. They're offering 70% of projects as loan guarantees. This is something that we really see as leadership and as really interesting.
There are some other items in section 9 of the 2008 U.S. farm bill that could apply, not only to farm integrated energy solutions, but also to community-based and city-based, municipal-based integrated energy solutions. The structure is there.
Anything we can do to de-risk the development of clean tech, putting a price on carbon, all of these things that have been talked about so much--the smart grid--anything we can do to invest as heavily as possible in research and development and commercial demonstration projects.... We've talked about multiple iterations of pilots. There is some real value in investing heavily in these areas. It really helps us get around the curse of resources, sometimes known as the Dutch disease, and coming from Alberta we sure know what happens at the end of a Dutch disease cycle.
I have about another minute, and I might ask Shane to finish it up for us.