Enbridge Inc. has entered into a US$1-billion infrastructure development agreement with Divert Inc., which will support renewable natural gas (RNG) facilities across North America that turn food waste into clean fuel.
In addition, Divert secured US$80 million in growth equity from Enbridge and US$20 million led by current investor Ara Partners. Calgary-based Enbridge (ENB-T) now has a 10 per cent stake in Divert.
Founded in 2007, Concord, Mass.-based Divert provides an end-to-end waste solution via its anaerobic digestion facilities.
Divert is planning an expansion of anaerobic digestion facilities to sustainably convert wasted food into clean energy, which it says can potentially offset up to nearly 400,000 tonnes of carbon dioxide annually.
Caitlin Tessin, Enbridge’s vice-president of strategy and market innovation, told SustainableBiz Enbridge has been looking to expand into the U.S. and sought infrastructure partners, specifically in feedstock and food waste, to create RNG.
"Divert certainly caught our eye,” she said. "They're very well respected in the industry. They have a 15-plus year track record of diverting food waste, for donations and then ultimately, to keep it out of the landfill. So we just felt like it was a really great partnership of bringing our R&D expertise with their food waste management capabilities.”
The Divert-Enbridge agreement
Divert plans to scale its facilities to every major geographic region in the U.S. to be within 100 miles of 80 per cent of the U.S. population over the next eight years. New waste-food-to-RNG facilities will also be considered for Canada.
Tessin did not disclose details on Canadian considerations, but said, “Certainly, with our presence in Canada, I don't think that would be a very far stretch at all.”
Enbridge is a Calgary-based company which owns and operates pipelines that transport crude oil, natural gas and natural gas liquids throughout Canada and the U.S. It has offices in Houston, Toronto and Edmonton, with nearly 14,000 employees.
According to Tessin, Enbridge and Divert hope to have three or four of the facilities in operation by the end of 2024.
According to Reuters, the RNG facilities will be spread across 30 sites. However, there is no upper limit to the agreement, as Tessin said Enbridge looks at the relationship in the long-term.
An Enbridge release states the agreement will provide “line of site to greater than $1 billion of new capital growth which will be underpinned by long-term take-or-pay contracts.”
“The way to think about it is, is we're helping finance the projects for the exclusive use of Divert. They have proprietary technology, and obviously the feedstock,” Tessin said. “So we're coming alongside from a structured financing perspective, and then we'll be working (on) projects with them up to that billion-dollar number.”
The US$80-million investment was part of $3.3 billion in accretive investments recently announced by Enbridge.
Enbridge expects to close the transaction later in March.
Divert and RNG
According to Divert’s release, the U.S. generates more than 100 million tons of wasted food annually, with over 50 per cent going to landfills or incinerators. Wasted food contributes up to 10 per cent of global greenhouse gas emissions.
“We've known the Divert guys for a little while, and just have been watching their growth. So I can't remember who was necessarily courting who, we've just known them for a while,” Tessin said.
“I think became clear to both of us that from a strategic infrastructure perspective, we bring a lot of expertise and from a feedstock and food waste diversion perspective, they bring a ton of capability.”
In 2022, Divert expanded its retail customer base by nearly 35 per cent to include nearly 5,400 retail stores, with over 1,000 additional stores already contracted in 2023. The company also recently signed an off-take agreement with BP plc worth approximately US$175 million.
“We are fortunate to have amazing national retail and funding partners supporting our journey to transform the food value chain,” Nick Whitman, Divert’s co-founder and COO said in the announcement.
“Enbridge shares our vision to build data-centric, transformational infrastructure to combat wasted food, generate renewable energy and strengthen our communities and environment.”
Enbridge is open to similar agreements, noting the variety of feedstocks available from farm waste to landfill and dairy.
“We're actively looking at a variety of different R&D projects, and specifically trying to serve the needs of customers both from those large blue-chip, ESG-focused companies as well as some of our largest utilities that that were connected to,” Tessin said.
EDITOR'S NOTE: SustainableBiz has updated the story with comments from Enbridge.