Enerkem today said that it raised $60 million from fuel refiner Valero and others to build plants that convert municipal waste to biofuels.

Enerkem gasifies waste and then uses a catalyst to convert the sythetic gas to fuel or other chemicals.

The company said that investment from Valero could lead to a commercial agreement between them. Other companies to invest include existing investor Waste Management, Rho Ventures, Braemar Energy Ventures, and Cycle Capital.

There are a number of companies with methods for converting municipal garbage into fuels, but Enerkem is one of the farthest along. The company said the money will finance construction of future plants and its third ethanol plant in Pontotoc, Mississippi, which is slated to produce 20 million gallons a year. Enerkem started construction of a garbage-to-fuel plant in Edmonton, Alberta, Canada, last year with a capacity of 1.3 million gallons a year.

Rather than burn waste to get usable energy, Enerkem sorts recyclable material and then gasifies the remaining waste to make fuel. The waste is heated to the point where it breaks down into its component parts, creating what is called synthetic gas of carbon monoxide and hydrogen. The gas is filtered and then, using a catalyst, is made into ethanol or other chemicals.

A 10-million gallon Enerkem plant can convert 115,000 tons of non-recyclable trash per year.

Several companies have pursued cellulosic ethanol, or making ethanol from non-food sources, such as wood chips, agricultural residue, or grasses, but most plans have not progressed as fast as expected. In addition to Enerkem, there are a number of other companies seeking to use municipal solid waste as a feedstock for fuel or power.