Two years after Gov. Sonny Perdue called bioenergy “the cornerstone of the new Georgia,” many Middle Georgia biofuel projects have been delayed or canceled, and biodiesel refineries have stopped production.
Biofuels such as ethanol and biodiesel are renewable fuels made from organic sources such as crop wastes and animal fat. State and national politicians have voiced support for alternative fuels in recent years as a way to reduce pollution and dependence on foreign oil.
With its 24 million acres of forest land and more than 10 million acres of crop land, Georgia has tried to market itself for biofuel projects that rely on raw materials such as pine trees and soybeans.
A few years ago, Middle Georgia seemed poised to be a leader in biodiesel development. But subsequent changes in regulations, oil prices and the economy have caused that industry to slow to a near halt. Ethanol producers are faring better, although they’re less common in Middle Georgia. One new pilot plant is set to begin production Tuesday in Thomaston.
Georgia’s Center for Innovation in Energy, which creates a one-stop shop for companies considering bioenergy projects, helped broker 37 new bioenergy projects in the past two years, said its director, Jill Stuckey. But she could not say how many of those are actually in production today.
Status of midstate efforts
A series of Middle Georgia biofuel projects either failed or never actually got off the ground.
In 2007, NewGen Technologies announced plans to build a biodiesel plant in Sandersville that never materialized. U.S. Ethanol in Cordele, which was to make ethanol from flat soda, became mired in a bankruptcy.
Likewise, Macon-based Alterra Biofuels had touted — with the help of former President Jimmy Carter — a biodiesel plant planned for Plains, to be built shortly after the company completed another plant in Gordon.
Although a warehouse was built in Plains, fuel was never refined there. Stuckey said the facility is now for sale.
Lisa Ryan with Alterra declined to answer questions about whether the company still exists or produces a product. Its Macon office numbers have been disconnected.
Alterra had switched from producing biodiesel in Gordon to making a cleaner-burning diesel additive. But the Gordon facility is now being used by a Xcel Plus Global Holdings, said Mike Parsons, its president and CEO. The Alabama company stores and blends a biomass-based oil there that can be burned to power pulp mills, kaolin and cement kilns, and other industrial processes, he said.
“We’re really hopeful we’ll be able to crank up the Alterra plant as soon as we get some customers in that area,” he said. Xcel has a contract with Alterra, which is no longer producing anything at the plant, he said.
The oldest biodiesel plant in Middle Georgia is also struggling. Middle Georgia Biofuels in Dublin has not produced fuel since the third quarter of 2009, said its president, Fred Young.
“We would love to be in production next week, but it’s got to make economic sense,” he said. “We’re waiting on an improvement in the market.”
Cellulosic ethanol
Two Middle Georgia companies plan to produce a different type of biofuel: cellulosic ethanol, made from the fibers of plants such as pine trees.
One of the first commercial-scale cellulosic ethanol plants in the country has been built by Range Fuels, which originally planned to begin production in Soperton in 2008.
However, that timeline was pushed back repeatedly despite receiving taxpayer support for construction. Range received a $76 million Department of Energy grant, an $80 million loan guarantee from the U.S. Department of Agriculture, and a $6 million grant from the state of Georgia.
But David Aldous, chairman and CEO of Range Fuels, said the majority of the project (estimated at $225 million) has been funded privately. It created 200 employee and contractor construction jobs during its construction, he said in an e-mail.
Aldous said Range expects to begin operations in the second quarter of 2010. Initially, the plant will produce less than 10 million gallons a year, he said, increasing to more than 100 million gallons, probably by 2013.
American Process Inc. plans to begin producing cellulosic ethanol this week at a pilot plant in Thomaston, said Bob Belling, vice president of business development.
The American Process project differs from Range Fuels’ in several ways. It’s a small plant being built simply to test a new technology. And the project relies solely on private investment provided by partner Diamond Alternative Energy, a subsidiary of Valero Energy Corporation.
The problems facing biodiesel
The sluggish economy has meant less demand for fuel generally, said Jessica Robinson with the National Biodiesel Board, the major industry association. The tight credit markets also have stressed the industry, which relies on loans for up-front costs much as farmers do, she said.
National and international regulatory and policy decisions have been disastrous for the biodiesel industry in the last year. A producer’s tax credit of $1 for every gallon of biodiesel expired at the end of 2009, and an extension remains mired in Congress.
“Once this tax credit went away, that put a lot of people out of work,” said Charise Stephens, executive director of the Middle Georgia Clean Cities Coalition. “We’re all on pins and needles, especially in the Southeast region. We have a lot of biodiesel production, and we’re at a standstill.”
Young said Middle Georgia Biofuels can’t afford to produce a product without the tax credit, and has laid off its four employees.
Hopkins said biodiesel producers had been hopeful that the tax credit would be renewed as part of the jobs bill, but the measure was removed from the bill a week ago.
One of the oldest biodiesel plants in Georgia, U.S. Biofuels in Rome, is still producing fuel, but at “slim to no margin,” said president and CEO Greg Hopkins. “The only reason we’re still running is we had a contract to go through the first quarter,” he said.
Hopkins said biodiesel costs about $1 to $1.50 more a gallon than diesel without the tax credit.
Robinson said U.S. biodiesel production dropped from 700 million gallons in 2008 to an estimated 475 million gallons in 2009.
“And in the last two months, we’ve seen a dramatic slowdown in the industry, layoffs, sometimes stopped production,” she said.
The loss of the tax credit followed a European Commission decision in March to add an import duty of $1.50 per gallon to American biodiesel sold in Europe, based on the argument that the U.S. tax credit was allowing American companies to undercut European biodiesel producers. The tariff effectively cut off the market that U.S. biodiesel producers most relied on.
Biofuel producers also were suffering through a delay in the renewable fuels standard. The details of that standard were finalized this month, offering a bright spot for the industry.
Hopeful signs
The renewable fuels standard mandates that a certain amount of cellulosic ethanol and biodiesel be sold in the U.S. each year. That includes at least 1.15 billion gallons of biodiesel in 2010, increasing to a total of 21 billion gallons by 2022.
“Having a required market tends to smooth out the prices, so it will certainly help,” Hopkins said.
Dennis Burnett, alternative fuels manager for with Perry-based distributor Davis Oil Co., said the new standard makes him hopeful about the future of biodiesel.
“If they can straighten out the biodiesel tax credit, I think that biodiesel will come back really strong because of the mandate,” he said.
Hopkins and Young say Georgia could help the industry by mandating 2 percent biodiesel blends — adding probably 2 cents a gallon to the price, Hopkins estimated. Young suggested the state government could also require itself to use a certain amount of biodiesel to set an example. Other states have taken such measures or offered tax rebates to companies for each gallon of biodiesel produced, Young said.
But such measures aren’t likely.
“Our governor and Legislature don’t believe in forcing mandates on the people,” Stuckey said. “We believe in using our strengths.”
That’s why the state is now focusing on attracting companies that use renewable materials as a fuel to make energy, either directly or in the form of pellets that can be burned. The biomass pellet industry is thriving without assistance, she said.
Stuckey said she expects some announcements soon of biomass-to-electricity projects in Middle Georgia, and possibly a pellet plant, too.
She noted that her program sometimes helps businesses make smart decisions by steering them away from projects, such as biodiesel plants, that are unlikely to be successful.
Information from The Telegraph’s archives was included in this report.
To reach contact S. Heather Duncan, call 744-4225.
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