UK govt-funded SAF-developer faces debt default at first US project
Quantum Commodity Intelligence – The company behind one of the UK's flagship government-funded sustainable aviation fuel projects has defaulted on bonds issued to finance a similar project in the US, according to media reports.
US company Fulcrum Bioenergy has placed on hold plans to sell up to $500 million of state-backed environmental bonds to fund its Gary, Indiana waste-to-SAF project after defaulting on similar bonds worth up to $290 million issued for its Reno, Nevada facility, reported The Bond Buyer.
The bond trustee for the Nevada facility, UMB Bank, posted notice on October 17 that the bonds were in default and has told Fulcrum on behalf of bondholders to speed up repayment of the 30-year term securities, said The Bond Buyer.
The move called into question the viability of other projects by the company, which include the NorthPoint SAF project collaboration with refiner Essar in Stanlow, the UK, which received £16.8 million ($20.35 million) in UK government funding last year.
Fulcrum processes landfill waste into synthetic crude oil which it either sells on to be processed further into low-carbon replacements for transport fuels or turns into fuels such as renewable diesel and gasoline or sustainable aviation fuel (SAF) itself.
Synthetic crude
The Sierra Biofuel Plant in Nevada is the smallest but the first into operation after starting up last December, processing up to 175,000 mt of landfill waste into synthetic crude which is then turned into 11 million gallons of fuel by Marathaon at a nearby oil refinery.
The Centrepoint Biorefinery in Indiana is planned to process as much as 700,000 mt of waste into 31 million gallons of fuel starting from 2026, while the UK project would utilise 600,000 mt of waste and make 22 million gallons of SAF from a planned Q1 2027.
The UK awarded £82 million in funds to five SAF projects as part of a strategy to have five domestic plants under constriction by 2025 to help meet its SAF blend mandate, which starts at 2% that year and rises to 10% in 2030.
Airlines and other industry watchers have warned that the UK mandate and an EU-wide target also starting at 2% in 2025 could be missed due to a lack of SAF supply.
Fulcrum Bioenergy did not respond to a request for comment by the time of publication.
But company vice president Rick Barraza told the Chicago Tribune that "Fulcrum's decision to not move forward with the Centerpoint bonds has no relation to the Sierra bonds."
"Fulcrum is working closely with UMB and the Sierra bondholders to finalize a forbearance agreement to resolve the current matter with UMB...[and] remains steadfast in its commitment to both the Centerpoint and Sierra projects and their respective bondholders."
Environment
Critics of Fulcrum's projects in the US have said that its processes may be unviable at commercial scale and some local residents have protested against incomplete impact assessments of air pollution.
In February, UK newspaper The Guardian published an article alleging that a Chevron-planned SAF plant using waste plastic feedstock in Louisiana could cause high levels of cancer in neighbouring residents.
"Over and over again Gary residents have questioned the feasibility of the project, and over and over again, Fulcrum has said we should look to its Sierra plant as a successful example of what it plans to do in Gary," residents group Gary Advocates for Responsible Development (GARD) told the Chicago Tribune.
"Well, now we know. They have not produced fuel at scale and cannot pay back their investors. This is just further evidence that this is an ill-gotten venture that is bad for Indiana taxpayers and should be abandoned."
