Edmonton is Canada's chief oil city as well as the capital of Alberta, the province that hosts the bulk of the country's tar sands. Given the expense of converting this mix of dirt and heavy oils to more usable petroleum products, the province is not keen on alternative fuels. Nevertheless, in 2012 Edmonton will host a chemical plant owned by Enerkem that will turn garbage into 36 million liters of ethanol and methanol per year.

"Waste as a feedstock [for biofuels] has a number of advantages," says Enerkem's co-founder and chief technology officer Esteban Chornet, a former engineer at the U.S. National Renewable Energy Laboratory. "It is logistically available and it is low in value, if not negative in value."

Turning garbage into fuel is potentially an answer to two pressing problems—diminishing the world's dependence on fossil fuels and an alternative to burying trash in landfills. In fact, the 468 million metric tons of trash produced in North America each year could provide 47 billion liters of ethanol—or roughly the same amount as produced from corn, which presently supplies 10 percent of U.S. gasoline demand.

Enerkem takes the "fluff" of municipal solid waste—the plastics, textiles and wood that isn't recycled or the leftovers of agriculture or forestry—gasifies it and, using catalysts and water, transforms the gas via multiple chemical steps into ethanol or other products. Other companies, such as Wheelabrator, simply fortify the gas and burn it directly to produce electricity—although that can result in the emissions of toxic chemicals, such as dioxins—or employ additional complex chemical steps. For example, Range Fuels in Georgia similarly attempted to gasify waste from the pulp and paper industry and transform it into ethanol directly but foundered in perfecting its catalysts. "Nature has not given us that selectivity to shift syngas to ethanol," notes chemical engineer Chornet, who started Enerkem in 2000 to make fuel from forestry residues, inspired by his father on Spain's island of Majorca, who made electricity by burning wood waste from his sawmill in the 1930s.

Similarly, BlueFire Ethanol turns waste into ethanol by using sulfuric acid to release the cellulose in the trash and then adds enzymes and microbes to ferment it into fuel. Coskata, Inc., has had a large demonstration plant that uses microbes to turn gasified waste into ethanol since 2009, and argues that it should remain the "major renewable liquid fuel" due to the ease with which biomass (or waste) can be transformed into it—although subsidies are required to develop the technology. "It's a pittance being spent on reducing our dependence on oil than putting our boys in harm's way overseas," says Coskata's Wesley Bolsen, chief marketing officer and vice president for government affairs.

Compared with making ethanol from crops, the environmental benefits of making it from waste are clear: It diminishes the demand for landfills and cuts greenhouse gas emissions. And trash-based biofuels need not compete on cost with fuels, as long as they offer a lower cost than their other competitor—landfills. That's why Waste Management, Inc., has invested in a slew of such waste-to-energy companies, including Enerkem. Ethanol-maker—and oil refiner—Valero Energy Corp. has also invested in Enerkem. Companies such as Ineos Bio are turning trash into other chemicals such as plastics. "Essentially, we intersect [with the waste] before it goes to the landfill, where it would just contribute to the methane gas already coming from there," says Ineos business manager, Dan Cummings.

In the end, making a fuel from garbage remains a promising opportunity—as long as the waste is already divvied up into its own component parts, as is happening in Edmonton and at the Three Rivers landfill near Pontotoc, Miss. In 2013 Enerkem plans to open a plant there, too, with the help of $130 million in taxpayer funds from the U.S. Department of Agriculture and Department of Energy. The plant will turn 300 metric tons of raw fluff per day into 36 million liters of ethanol per year. "The business of ethanol is a very substantial market opportunity," Chornet says. "You can place it in refineries throughout North America. You can substitute it for corn ethanol if produced at a lower cost."