September 21, 2008 in Business

Running on fumes

Despite efforts to improve energy independence and reduce greenhouse gases, biofuel efforts have fallen flat in Washington
By The Spokesman-Review
 
Brian Plonka photo

Columbia Biofuels manufactures the alternative fuel source that is currently being tested in locomotives.
(Full-size photo)

Washington farmers can grow almost anything, but they are not growing much fuel.

Despite excitement over the potential to reduce greenhouse gas emissions and make the United States more energy independent, biofuels have so far not fully taken root, despite fertilization in the form of state loans.

Biodiesel, the focus of most state development efforts, is still not cost-competitive compared with petroleum-based fuel, experts say. And high commodity prices have farmers sticking with the crops they know instead of unfamiliar oilseeds like camelina, the main feedstocks for biodiesel production.

By the end of this year, some of the $13 million set aside by lawmakers for five proposed biofuel projects will likely be returned to Olympia, including $2.6 million awarded the Spokane County Conservation District. The money can be re-allotted to biomass or other bioenergy projects, but more help for biodiesel is not likely until the economics make better sense.

Even the state’s showcase biofuel plant, the privately funded $78 million Imperium Resources refinery at Hoquiam, has lost partners and laid off employees.

Pending requirements that fuels consumed in Washington be at least 2 percent ethanol or biodiesel will not help much, said Peter Moulton, senior energy policy specialist for the state Department of Community, Trade and Economic Development.

Ethanol, mostly distilled from corn in the U.S., is a gasoline additive that has been used for years to help reduce urban pollution. Ethanol already constitutes more than 6 percent of gasoline used in Washington.

Biodiesel is refined from oil pressed from canola, camelina, mustard and other seeds, although other fats can be used. Only 0.7 percent of the diesel burned in Washington is biodiesel, Moulton said.

But with nothing in the law providing for enforcing the alternative-fuel requirements, he said, they are more a goal than a mandate.

He said the state itself, primarily the ferry system, will have to provide much of the lift if the 2 percent goal for biodiesel use is to be reached.

Because biodiesel costs more than conventional fuel — ethanol, however, is cheaper than gasoline — King County Metro Transit earlier this year backed off a commitment to use 20 percent biodiesel, he noted.

Controversy over whether crops grown for biofuel production are displacing food crops also figured into Metro’s decision, but Moulton dismissed those concerns.

Seed crops can be rotated with wheat, for example, or grown on land unfit for other crops, he said.

Moulton said biofuels could get a significant boost this week when seven states and four Canadian provinces outline plans for achieving greenhouse gas reductions that are part of a Western Climate Initiative launched last year.

While the economic, environmental and ethical crosscurrents get sorted out, Washington’s biofuels industry struggles.

“We’re weathering a bit of a storm right now,” said Nikola Davidson, program director for the Northwest Biofuels Association.

Domestic growers have little interest in seed crops, she said, and a weak dollar has undermined the economics of Imperium, for one, by making imported seed too expensive.

Attracting capital for biofuel plant investment is tough when the price of feedstock crops hangs on the weather in Australia, or on gyrations in currency markets, Davidson said.

The association last month published a letter responding to critics who blame biofuels for higher food prices and question whether the energy and expense of growing fuel makes economic or environmental sense.

While acknowledging the challenges, the letter says biofuel development has attracted $500 million in investment and generated new jobs and tax revenue, mostly in small communities. Also, it says, these early efforts will be a bridge to second-generation crops and plants that will go much further fulfilling the promise of biofuels.

“It takes a while to build infrastructure,” Davidson said, and the region is gradually filling in the gaps that will create a more mature industry.

Meanwhile, the smaller biofuel plants that are operating in Creston, Sunnyside and Burbank, near the Tri-Cities, are scrambling for whatever raw material they can get, from canola to chicken tallow.

The Natural Selection Farms seed crusher at Sunnyside takes in camelina seed shipped almost 1,000 miles from Culbertson, Mont., and presses out the oil. Great Plains Oil & Exploration, which supplies the seed, processes and markets the oil and the leftover solids, called cake, that make a high-protein cattle feed.

Natural Selection Farms President Ted Durfey said Great Plains wants to double plant production, in part with camelina grown by Sunnyside-area farmers.

Camelina is an attractive crop, he said, because it will grow on arid land. The cake, meanwhile, can be sold to area dairies. A biodigester can convert manure from those operations into fertilizer and electricity.

“We’re creating our own sustainability,” he said. “It just takes time.”

Time will apparently run out on the Spokane County Conservation District’s effort, in conjunction with farm cooperatives in the area, to build a seed crusher and biodiesel refinery.

District spokesman Jim Armstrong said the project’s economics looked attractive in 2006 when wheat was selling for less than $5 a bushel, but as commodity prices spiked — to more than $10 per bushel in the case of wheat — there was little enthusiasm for planting canola.

“I don’t blame them for sort of sitting back,” Armstrong said.

Feedstocks are the problem for the Columbia BioEnergy refinery at Creston, said co-Founder Brad Lyons.

He said the plant operates below capacity despite strong demand for its product by customers like the Eastern Washington Gateway Railroad, which has been running on a biodiesel mixture for three months.

Lyons said plant managers have supplemented oil seed with waste cooking oil in their effort to seize on every raw material possible.

The privately funded facility is holding its own financially, he said.

A Washington State University research team led by natural resources economist Jonathan Yoder is looking at the feedstock problem and others that have come into better focus as lawmakers, environmentalists, farmers and end-users gain more real-world experience.

The group will report to a legislative committee in December.

Besides feedstock availability and economic potential, the study will also look at market incentives for biofuel production, and how to promote more research.

“In my book, every policy out there is not well-targeted,” Yoder said. “They are written as if designed solely to help agricultural production.”

Other factors, like emissions and the proper balance between public assistance and private risk, need more attention, he said.

“There’s an awful lot going on that frames the biofuels issue,” Yoder said.

Like the Biofuels Association, he said, the WSU panel may suggest that early state efforts to foster biofuels may just set the stage for the development of next-generation fuels like cellulosic ethanol and diesel that can be manufactured from wood waste, grasses and other non-food materials, even algae.

Ralph Cavalieri, director of the WSU Agricultural Research Center, said answers must be found, not just for Washington, but to respond to tremendous increase in demand on all world resources as more countries and their citizens become more prosperous.

The United States, after decades of wasted time, must help respond to the challenge, he said, and it does not have to be all that complicated.

“Think of the moon shot,” Cavalieri said. “That’s a much more complex issue than this one.

“I hope we have the courage to stay the course.”

Contact Bert Caldwell at (509) 459-5450 or bertc@spokesman.com.


Thoughts and opinions on this story? Click here to comment >>

Get stories like this in a free daily email