Turning whey from dairy wastewater into alcohol and revenue

Turning whey from dairy wastewater into alcohol and a revenue stream was the subject of a recent presentation by Paul O’Callaghan CEO of O2 Environmental. This presentation was for Water Tech Week February 2011 in San Jose, California, USA and outlines, by way of a case study, how it is possible to save money and actually create revenue streams. This is through sustainable water and energy management and with a little bit of creative out thinking based on the work of Carbery Milk Products.

Carbery Milk Products is a major international food ingredients, flavours and cheese manufacturer headquartered in Cork, Ireland. They have operations in the US and were examining what to with their whey in their waster water.  What is interesting was they were not motivated by environmental reasons, there was an economic driver.

To view the PowerPoint here is the link

To view the script linked to the presentation here is the link

Resource Recovery from wastewater – the new paradigm

Everywhere you look people are trying to do more with less. Reduce costs, increase efficiency, reduce energy use, recover resources. There are strong economic drivers to do all of these things, they also happen to be sustainable.

Last Thursday (July 22nd 2010) I moderated the first in the BlueTech Tracker(TM) Webinar series: Mineral & Resource Recovery from Wastewater. We featured four companies with innovative technologies, and perhaps even more importantly, innovative business models. The companies were Ostara Nutrient Recovery Technologies, Calera, CASTion and Oberon. Ostara produces a slow release fertilizer product, Crystal Green(TM) from wastewater, Calera, a Khosla Ventures backed company whose technology is part of a new infrastructure designed to view carbon, not as a pollutant, but as a resource. Calera might be accused of having a Superman complex in the cleantech sector, in that their technology simultaneously contributes to solving two of the most pressing environmental issues of our time: climate change and water scarcity. Calera sequesters carbon from power plants, produces a low carbon cement and helps to desalinate water. The CASTion Corporation has an Ammonia Recovery Process (ARP) which can produce an ammonia fertilizer product from wastewater and recently won a $27.1M contract with the City of New York to provide a cost effective method for the City to achieve compliance at its 26th Ward Wastewater Treatment plant.

Concluding the quartet, was Oberon FMR. Oberon takes wastewater from the food processing industry, and through the application of some clever biotechnology (single cell protein synthesis), produces a value added, high protein, fish meal replacement for use in the aquaculture industry.

A few key take-aways:

1. This is about Costs
To get out of the starting gate with wastewater technologies in this area, you have to have a compelling value proposition. Resource recovery can enable a technology provider to off-set operational and capital costs and thereby provide a cost effective solution to their clients.

Ahren Britton, CTO with Ostara put it very succintly with the observation, ‘as a standalone wastewater treatment technology, we wont always be the cheapest way to remove phosphorus; as a fertilizer production company, we might not compete with current ore prices, but put the two together, and that’s what makes for the winning proposition’.

David Delasanta, President of CASTion noted that the decision by the City of New York to go with their ARP system on a new project was driven by economics. The City had a regulatory requirement to remove ammonia and the ARP system represented the lowest cost option occupying the smallest footprint. The City in fact sole-sourced this option from CASTion.

The Sustainability and political angle can help to push these projects over the line, as the person who finally signs off on expenditure is likely to be a political animal. However, to get this far in the process, you first have to convince the people on the ground that this is a good idea, and their concerns tend to be less politically motivated and more related to ‘will this work and how much will it cost?‘.

Seth Terry, Oberon VP of Operations said they have found that the Corporate Sustainability angle of their approach to turn food processing wastewater into a feedstock for fish meal replacement production, has peaked the interest of a number of major Corporations and was one of the factors which helped them to secure a contract with Miller Coors to construct a full-scale demonstration facility at their site.

Here again though, there is a monetary value to a company in terms of brand value to be able to show its shareholders that instead of generating a waste product which required disposal, they were able to ‘up-cycle’ the resources in their wastewater and in doing so, off-set the unsustainable harvesting of biomass from oceans to produce fish-meal for fish farms.
2. Resource Recovery is becoming a geo-political and security issue
Certain resources such as phosphorus are becoming a geo-political issue. China has recently put an export tax on phosphorus to discourage the export of this valuable commodity, to preseve it and keep it a home to enable food production. China is known for its ability to take a long term view on things and this is an early indicator of how important this resource may become. It is worth noting, that like oil, phosphorus resources are found in a number of unstable regions of the world.

3. Companies which succeed in this area need to know two markets
The flip side of producing a product while treating a waste, is that you need to simultaneously build an outlet and channels to market for your product, at the same time as you are developing the infrastructure to produce it. This is challenging when working with a variable feedstock (wastewater) and when the quantities you produce, initially, do not make a dent in the larger market for that commodity.

To succeed, companies need to understand the wastewater treatment market and also, understand the market for the commodity they are producing.

In the case of Calera, this means they have to know the concrete and aggregate business. In the case of Oberon, they have to know the fish-meal business. Ostara and CASTion both have to understand the dynamics of the fertilizer industry. When you hear Calera CEO, Brent Constanz speak about the nuances of the concrete and aggregate market, and then switch back to the importance of piloting on different wastewater streams, you get a feel for the level and depth of understanding required to succeed in straddling these divergent worlds.

At least a part of the sustainable business advantage these companies have, is their ability to understand and create a business model which meets customers needs on both sides of the fence. Companies that can do this are pulling away from the herd. When you combine this with technical know-how, continued innovation and a strong IP position, you have a sustainable first mover advantage which will be difficult for a ‘me-too’ to catch up with in the short term.

The next Webinar in our BlueTech Tracker(TM) Series is on Thursday July 29th at 12 noon PST and will put the spotlight on Microbial Fuel Cells and Bioelectrochemical systems. This group of technologies has the potential to generate electricity from wastewater and produce fuels and chemicals which can be sold. Again the approach is the same, how to squeeze some value out of that wastewater.

Paul O’Callaghan is Principal of O2 Environmental, a consultancy group providing water technology market expertise, founder of the BlueTech Innovation Forum and co-author of ‘Water Technology Markets 2010′.

Whiskey’s for drinkin’, water’s for investing in

Last week I put out the idea that we were approaching a tipping point in water re-use. There were a few other headlines this week which support that. For one thing California’s second largest reservoir is now ‘at its lowest level in 30 years’. Last Monday the California Department of Water Resources Director, Lester Snow, stated that next year “could be the worst drought in California history”. Governor Arnold Schwarzenegger and U.S. Senator Dianne Feinstein have proposed a $9.3 billion plan to the Legislature to fund a number of measures aimed at improving California’s water system.
So that’s California, – which bear in mind would be the 7th largest economy in the world if it was a country and has been the number one food producer in the United States for more than 50 years. Now let’s take a look at what’s happening in the capital of the world’s second largest economy. In Beijing, in the run up to the 2008 Olympic Games, Siemens Water Technologies has started up a wastewater reuse system at the city’s Beixiaohe wastewater treatment plant. The goal is to process 90% of the wastewater with 50% of the treated wastewater being recycled and reused.

2008 may be remembered as the year in which China hosted the Olympic Games but is also an auspicious year for another reason. 2008 is the first year in which the population of the planet will be more urban than rural. (Apparently this change occurred May 23rd 2008!). That’s an important turning point and if we are to increasingly live in cities, this of course means that we need to have means of sustainably meeting demands on water use in these cities.

Al Gores’ challenge to the US to move towards 100% non fossil fuel energy by the end of the decade, may be a long shot, but at least in theory it is achievable. There are alternatives to fossil fuels. The same can’t be said of water. There is an elasticity in water use, – up to a point, but there comes a point where you can not reduce water use any further without seriously impacting our ability to live. Mark Twain put it well when he said ‘Whiskey’s for drinking and water’s for fighting over’. Whether or not we end up fighting over it, history has shown that times of crisis leads to accelerated technological innovation.

This technological innovation is likely to take place in small start-up companies. Commenting on this in his article Inventing Water’s Future, William Pentland, noted that in purchasing Zenon Membranes for $700M, GE is effectively outsourcing their innovation in clean technology to small start-ups.

Some venture capital firms, like Toronto’s XPV Capital have placed big bets on this and are choosing to invest in innovative water start ups on the assumption that they will be future targets for ‘Big Water’ industry giants like GE Veolia, Siemens etc as scarcity, climate change and energy prices increase the value of water. In fact overall the amount of money invested in water and wastewater technologies in the U.S. rose 436% between 2006 and 2007, according to the Cleantech Group,

A good general yard stick to track the water business is the ISE Water Index (HHO). This index tracks a bundle of 36 companies engaged in water distribution, water filtration, flow technology and other water solutions. The ISE Water Index has enjoyed an impressive rally this year, has tacked on nearly 5% since the start of 2008, which compares favorably with the S&P 500 Index’s (SPX) loss of 7.7% during the same time frame. In fact, the index has climbed steadily higher since it was created in January 2006, gaining more than 36% along the way. As was outlined in Jocelyn Drakes ‘Cross Currents In Water World’ article.

Finally to close, one technology I came across this week which I thought was really ingenious and also just a lovely idea is called Play Pumps. It’s basically a children’s merry-go-round that pumps clean, safe drinking water from a deep borehole every time the children start to spin. So the system utilizes the energy of children playing, to purify water. Genius. You can check out a video of it in use in Africa on You Tube.

Paul O’Callaghan is the founding CEO of the Clean Tech development consultancy O2 Environmental. Paul is the author of numerous papers environmental technologies and lectures on Environmental Protection technology at Kwantlen University College. He is chair of a technical committee on decentralized wastewater management in British Columbia, is a Director with Ionic Water Technologies and an industry expert reviewer for Sustainable Development Technology Canada.