Canadian energy infrastructure giant Enbridge (ENB.TO)(ENB) says it will invest nearly US$100 million in a new food waste-to-fuel facility south of the border as the company charts a "conservative" course on investing in renewable power.
On Thursday, Enbridge announced a plan with its Massachusetts-based partner Divert for a 66,000-square-foot facility in Longview, Washington. Scheduled to begin operations in 2024, the site is expected to process 100,000 tons of wasted food per year into low-carbon fuel that can be injected into any natural gas pipeline network.
Earlier this year, Enbridge and Divert said they could deploy up to US$1 billion worth of new "anaerobic digester" projects across the United States and Canada. Caitlin Tessin, Enbridge's vice-president of strategy and market innovation, told Yahoo Finance Canada these will likely be similar in scale to the Longview project, with comparable US$100 million price tags.
"We have a number of sites that we're looking at with Divert, and will be green-lighting over the next year," she said in an interview on Wednesday. "The ones we are looking at right now are in the States. But certainly, given our presence in Canada . . . it would not surprise me if one of the ones in the future is located in Canada."
Enbridge's announcement on Thursday comes on the heels of news of the company's much larger plan to buy a trio of traditional U.S. natural gas utilities from Dominion Energy in a US$14 billion deal. If approved, Enbridge says the transaction would create North America's largest natural gas utility platform.
Citing data from the industry-backed American Gas Association, Tessin estimates 10 to 20 per cent of traditional natural gas could in theory be replaced with renewable natural gas (RNG), including supply sourced from food waste. According to the Canadian Gas Association, Canada's natural gas utilities are targeting five per cent RNG blended into natural gas streams by 2025, and 10 per cent by 2030.
"The new energy slice is still small now, but I think over the next handful of years and decades it will certainly be a more prominent part of our portfolio," Tessin said.
Her remarks stand in contrast to recent commentary from Suncor Energy (SU.TO)(SU) chief executive Rich Kruger, who made headlines last month for saying the Canadian oil and gas producer has put "disproportionate emphasis on the longer-term energy transition."
"Unlike some of the upstream players, Enbridge has been rewarded, and consistently is conservative in what our commitments are," Tessin said. "We have been a smart follower in that space in making sure we're not over-committing."
Renewable power generation amounted to less than three per cent of Enbridge's earnings before interest, taxes, depreciation and amortization for the quarter ended June 30, according to regulatory filings.
Jeff Lagerquist is a senior reporter at Yahoo Finance Canada. Follow him on Twitter @jefflagerquist.