At $5 a gallon and competition for feedstock, Oregon’s fledgling biodiesel industry could burn out before it ever gets going
Sunday, June 08, 2008
The Oregonian Staff
There’s a shortage of fryer grease in America.
Thieves pilfer it by the gallon. Investors wage a bidding war for every golden drop. Add to that the soaring price of soy and canola seed, and you can understand why 26-year-old Libby Rodgers, who hopes to launch a biodiesel company, won’t reveal the sources of her blend.
“I don’t want to shoot my mouth off,” says Rodgers, who collects grease from places around Prineville that she won’t name. “I can’t say too much about my feedstock. It is just so competitive.”
Not long ago, restaurants might have paid Rodgers to haul away their oily dribbles. But with a runaway commodity market and growing friction in the food vs. fuel conflict, secondhand grease has become the diamond of gemstones to biodiesel brewers.
Now, the grease crisis has become just one part of a slippery slope that threatens Oregon’s biodiesel bonanza.
Never mind that people don’t eat enough french fries to make enough grease to go around. Skyrocketing prices for soy and canola have no end in sight. Already, the controversy over food being used for fuel has scared off some consumers. And, despite the growth of a biodiesel cottage industry, many still face challenges developing large-scale production and distribution systems to meet the projected demand.
Last week, the price of biodiesel reached a record $5.26 a gallon at some Portland-area gas stations, surpassing the price of petroleum diesel even with tax breaks to consumers meant to spur the industry’s development.
If prices keep climbing, consumers could stop buying, just as the biodiesel bandwagon gains traction. Oregon’s biodiesel industry might burn up before it ever catches flame — turning to ashes the green dreams of environmentalists, politicians and investors.
“I am as skeptical as anyone in this business now,” Rodgers says. Her company, Lookout Mountain Biofuels, is just weeks from certification by the Oregon Department of Agriculture. She worries whether her company — and the state — will be able to sustain the momentum.
“It’s pretty volatile. It’s a really critical time for this industry. If we don’t find other sources, biodiesel will be just another additive.”
What is biodiesel?
Environmentalists and politicians alike have heralded biodiesel as the ultimate renewable energy source. Biodiesel supporters say the fuel reduces reliance on foreign countries by pumping dollars into local agricultural economies. It is less toxic than table salt and biodegrades as fast as sugar. And, it has lower emissions and better gas mileage than petroleum, according to the National Biodiesel Board, an industry group.
Biodiesel’s main ingredients are oil from crops like soy, canola or palm, and used vegetable oil from restaurants.
The problem is, none of biodiesel’s renewable ingredients are renewing fast enough to keep up with global demand.
Less than three years ago, Vancouver-based Burgerville would have felt lucky to have the stuff taken off their hands.
The company, with 39 restaurants, generates 4,400 gallons of used cooking and frying oil each month, which used to cost up to $2,400 to remove, says Jack Graves, head cultural officer at Burgerville.
But the demand for biodiesel means a complete flip-flop in the marketplace.
“We’ve been approached by several firms offering to pay for it,” Graves said. “The value is shifting. It’s a matter of supply and demand.”
Burgerville’s grease translates to 3,330 gallons of biodiesel a month. But it’s not just biodiesel producers who are trying to get their hands on it. Other industries need it as an ingredient in dog food and cattle feed. It’s also a component of cosmetics and lipstick, with most of the demand coming from Asia.
“You’re basically putting french fries on your lips,” Graves says.
As its value has increased, so have thefts of yellow grease, which now sells on the commodity market for about $2.50 a gallon, up from 57 cents a gallon in 2000.
Some grease collectors, such as Eugene Chemical and Rendering Works, say as much as 40 percent of their grease is stolen weekly.
Bill Frye, branch manager for Baker Commodities Inc., which collects restaurant grease across Oregon, says the thefts have gotten so bad that the company is buying padlocks for its containers. Some weeks, Frye says, he’ll show up at a restaurant to find an entire 900-pound drum pumped dry. That means restaurant owners don’t get paid for the oil and Frye has nothing to sell to biodiesel producers.
“It’s like going into someone’s house and robbing them,” Frye says. “This is not a high margin industry, so losing a little bit impacts you quite a bit.”
Never enough grease
Tyson Keever, co-founder of SeQuential Biofuels, needs a lot of grease to help carry out the state’s green dream of producing 15 million gallons a year.
SeQuential, Oregon’s largest producer of biodiesel, plans to increase output from 1 million gallons a year to 5 million by August. Workers are just putting the finishing touches on the company’s new plant in Salem.
But while the company doesn’t have any problems selling every last drop of biodiesel from its 34 retail pumps throughout Oregon, it does, however, face a problem that many biodiesel producers are facing: How to get enough grease?
Each Oregonian produces only about one gallon of used grease each year. If all the state’s used grease went to biodiesel production, SeQuential would have only half what it needs.
“Supersize the meal,” Keever says, “we need the grease.”
In addition, biodiesel producers, fearing a backlash by consumers confused by the conflict over crops raised for biofuels, are increasingly returning to restaurant grease as a sole ingredient. More than 90 percent of SeQuential’s biodiesel comes from wasted vegetable oil.
On Swan Island, Jon Norling, a lawyer who started making biodiesel on the side, is finishing his own plant, which will pump 1.4 million gallons of biodiesel as soon as next week. He, too, hopes Portland Biodiesel will be entirely dependent on recycled vegetable oil. It’s not only the best raw material for environmental reasons, it’s also the cheapest feedstock available.
“That’s the only way we can survive,” Norling says.
Over the past year, the price of canola seed tripled, from 9 cents a pound to 30 cents, says Brent Searle, an economist with the Oregon Department of Agriculture.
“It’s close to $4 a gallon just for the feedstock,” Searle says. “And the export market has gone nuts.”
Oregon has limited regions for growing soy and canola, which are considered invasive to some areas. The commodities face stiff competition with markets overseas, China being one of the biggest buyers of oil and soy products.
Kent Madison, of Madison Farms in eastern Oregon, grows canola for biodiesel for the Portland Water Bureau’s fleet. He says he’s able to do it because of a contract that ensures a small profit to him, which gets him out of the commodity market.
For most farmers, profit margins for canola haven’t been high enough to attract them.
“When I plant a seed and raise it, I don’t know what I’m going to get paid for it in the end,” Madison says. “The contract with the Water Bureau guarantees us the cost of production. When the public is willing to pay a premium, we’ll raise biodiesel.”
Making more diesel cars
Over the past three years, biodiesel has gone from the fuel of renegade tree-huggers to the mainstream. Urban professionals use it to power their Mercedes Benzes. Families use it to fill up their Volkswagens. Farmers tap it for their John Deere tractors.
The city of Portland requires 5 percent of all diesel sold in the city to be biodiesel. Oregon lawmakers last year began requiring 2 percent of all diesel sold in the state to be biodiesel, accounting for 5 million gallons a year.
They hope to increase that to 5 percent as soon as Oregon producers can make 15 million gallons a year.
Starting next year, a federal mandate will require at least 500 million gallons of biodiesel to be produced — and consumed — in the U.S., a growing but small fraction of the 60 billion gallons of regular diesel consumed each year.
Though only about 4 percent of passenger cars and trucks in the U.S. run on diesel, that number is likely to climb to 11 percent by 2012. Carmakers, to meet the growing popularity of diesel engines in the U.S., plan to release dozens of models starting this year. Diesel engines get about 30 percent better gas mileage than gasoline engines.
Biodiesel advocates have high hopes that new technologies will supply the demand beyond used vegetable oil or crop oils. Scientists are experimenting with algaes and other types of fast-growing crops, says Amber Pearson Thurlo, a spokeswoman for the National Biodiesel Board.
“There’s new, exciting feedstock being developed to help the supply,” Pearson Thurlo says. “But it will be a couple of years out.” Until then, a shortage of expensive raw materials poses big challenges for the fledgling industry.
In Washington, the nation’s largest biodiesel refinery announced it would scale back after less than a year. Imperium Renewables opened a new plant August 2007 at the Port of Grays Harbor on the Washington coast, close enough to ship in vegetable oil from across the seas and to ship biodiesel out. Much of the biodiesel it produces goes overseas to Europe, home to the largest biodiesel industry in the world.
“There’s been a bandwagon effect,” says Bill Jaeger, professor of agricultural and resource economics at Oregon State University. “There’s so much capacity now and not enough feedstock to fill the capacity. That means you can’t cover the cost of the plant and some businesses will close.”
Though most biodiesel users fill up out of environmental or philosophical reasons, cost is becoming more of an issue as biodiesel prices rise. The state gives a tax credit for biodiesel burners up to $200 a year.
With a tightening economy, price will either drive demand or squelch it, Jaeger says.
At Jay’s Garage in Southeast Portland, Rodney Wojtanik, 40, watches the price gauge going up and up for biodiesel. Past $50 to $55 a tankful, and up from there.
Wojtanik hasn’t decided to stop buying biodiesel yet. The Portlander still feels strongly that biodiesel is better for the local economy than petroleum. Instead of switching, he considers driving less and taking fewer trips this year.
“It’s painful, very painful,” Wojtanik says. “I struggle with this question every day.”
As a local resident, businessman and parent, I share the concerns of many who are alarmed about the unprecedented threat posed by global warming to our environment, economy and our children’s future.
The impact in Oregon is real. A glance at old photographs of glaciers on Mount Hood is shocking — some have completely melted away!
Scientists estimate a 50 percent reduction in the average Oregon snowpack by the 2050s, meaning less water for farms, fish, recreation and drinking. In some streams, salmon and steelhead are already experiencing stressful and even lethal water temperatures above 70 degrees.
Many in Congress support reducing greenhouse gas emissions. But what’s the best method? A carbon tax, new government spending on clean energy sources, or voluntary reductions?
I believe that a cap-and-trade system is best because it puts a clear limit on carbon emissions and gives us targets. This approach caps the total amount of global warming pollutants generated.
That cap will be gradually reduced, and polluters who reduce emissions below their cap can sell their unused allowances to others, creating incentives to reduce emissions without government spending and new taxes.
Such a solution was on the table last week in the U.S. Senate. The Climate Security Act (CSA) — co-sponsored by Sens. Lieberman, Warner and Boxer — would reduce greenhouse gas emissions 70 percent by 2050, beginning in 2012. We would cut emissions gradually by about 2 percent every year to reach the goal.
But because of a filibuster, the Senate didn’t act on the legislation. And if Congress delays even two years, we’ll need to cut pollution at twice that rate.
Economic analyses of the CSA conclude that we can afford to fund new investments in clean energy technologies while growing our overall economy. In fact, President Bush’s Department of Energy predicts the CSA would not impact economic growth. Further, the CSA would decrease oil imports by more than 8 million barrels a day by 2025, saving more oil than we currently import every day from OPEC countries.
The CSA would also help create opportunities for Oregonians to continue to drive innovation by adding to the “green collar” jobs already created in wind, solar and biofuels. Salem is already home to Oregon’s only commercial biodiesel production facility that truly produces energy by using locally collected, used cooking oil as its primary feedstock.
The Willamette Valley is a magical place for growing things, and Oregon universities are on the cutting edge of energy research. Our local farmers and foresters can provide cellulosic feed stock for ethanol instead of the wasteful shipping of corn around the country chasing subsidies.
Our congressional delegation has a wonderful opportunity to push this legislation.
John Miller of Salem is president of Wildwood/Mahonia, a group of Salem-based companies involved in agriculture, urban design and development and biofuel production. He can be reached at firstname.lastname@example.org.
The Metolian, a 640-acre resort planned in Central Oregon, will employ sustainable building practices
POSTED: 04:00 AM PDT Friday, June 6, 2008
BY SAM BENNETT
Ground zero for ecotourism in Oregon may be a 640-acre site two and a half hours southeast of Portland.
A proposal by Dutch Pacific Resources LLC will create an “eco-adventure” development called The Metolian – a sustainably built resort with several hundred single-family homes and cabins for rent or purchase, located in the Deschutes National Forest near Suttle Lake.
“This could have great potential benefits for Oregon, ecologically and economically,” said Shane Lundgren, a partner in the Sisters-based development firm. “It’s a great platform for Oregon to promote itself as a leader in sustainable development both nationally and internationally.”
Dutch Pacific Resources has hired Ankrom Moisan Associated Architects to work on conceptual planning. The development will have approximately 300 single-family homes and 175 rental condos and cabins.
The Metolian will cater to what Lundgren calls the “REI consumer” – a health- and environmentally conscious traveler or second-home buyer who wants more than the usual pampering offered at high-end spas, and greater outdoor options than an 18-hole golf course.
Typical eco-adventure resorts focus on encouraging visitors – through mountain climbing, rafting or safaris – to explore nearby natural settings.
Metolian visitors will be able to select from numerous outdoor activities in a pristine setting with views of Mount Jefferson. Activities include hiking, trail running, rock climbing, biking or forest stewardship in the summer, and cross-country skiing, ice-skating, snow-shoeing or downhill skiing in the winter.
The site is located on a heavily logged section of land previously owned by a timber company in the Metolius Basin, about 14 miles west of Sisters. The resort will be a few miles from Three Fingered Jack, half a mile from Suttle Lake and a few miles from the Pacific Crest Trail.
Funding from resort revenues will provide an economic base for ecological restoration projects not only on site but around the basin, according to Lundgren.
The Metolian will be built and operated to incorporate the latest sustainable design principles – another draw for environmentally conscious visitors. The eco-resort’s green infrastructure may include solar collectors, wastewater natural purification and reuse, heating from wood collected on nearby U.S. Forest Service land, naturally ventilated homes and swimming pools that use wetlands for water purification, rather than chemicals.
Lundgren said the development might also fund a wildlife bridge, so deer and other forest animals can cross nearby Highway 20.
“We have outlined an extensive list of appropriate concepts and systems for everything from minimization of water and energy demand, to potential off-grid and regenerative systems,” said Steve Poland of Ankrom Moisan. Poland said the developers have conveyed “a clear need and intent to make this development a very forward-looking demonstration of sustainable design, construction and operation.”
Dutch Pacific Resources has hired Morgan Brown of Idaho-based Whole Water Systems as a consultant on the project. Brown said “natural pools” are “going gangbusters in Europe,” using wetlands as adjacent landscaping features in order to cleanse the water used in the pools.
Jason Eckhoff, the Metolian’s hospitality manager, said the Metolian could become a template for eco-resorts.
“We want to be at the cutting edge of this trend, which we all believe is here to stay,” said Eckhoff. “The research we’ve done shows that the consumer is really looking for ways to connect with the environment, and this is at the forefront of tourism now. People want an opportunity to share with their entire families their vision for making this world a better place.”
Lundgren said the Metolian may begin as a sort of hybrid – partially on the grid, until the technology is available for the resort to be net zero, and ultimately “running the meter backward” by feeding excess electricity back into the grid. “We hope to be net-zero water and power by 2030,” he said. One natural heating source could be biofuel created by excess forest ground cover that is converted to fuel pellets.
The development could also demonstrate Oregon’s leadership in sustainable practices and a new form of forest stewardship. Like other Oregon forests, woodcutting, four-wheeling and animal poaching have been practiced in the Deschutes National Forest. “I feel strongly that by creating a constituency of conscientious members that we can raise the bar on interactions occurring in the Metolius Basin,” he said.
Lundgren added that eco-resorts, such as Explora in Chile, serve as an example of some of the goals he is aiming for, in terms of visitors connecting with nature. Other eco-resorts can be found in Africa, but Lundgren said his resort will go a step further by incorporating the latest sustainable building technologies.
“Customers are looking for more experiential travel and resorts that take advantage of natural surroundings,” said Eckhoff. A typical morning at the Metolian, he said, could involve a hike and a yoga class.
Lundgren and co-manager James Kean bought the property in 2005, since which time they have been planning for the Metolian. The site was previously used for logging, but in December 2006, Jefferson County mapped the property for use as a destination resort.
The project manager is Jon Skidmore.
The design is in the conceptual phase, so it’s too early to know exactly what the lodge, homes and condos will look like. But Lundgren and Poland said the designs should be simple and straightforward, rather than ornate.
To reduce the development’s footprint on the 640 acres, Lundgren said he would like to see clusters of homes that are no larger than 3,000 square feet.
The project, he said, has generated much interest from potential investors. “The minute you start talking about it, you wouldn’t believe the energy and the people who are drawn to it. We’re getting tons of traction with a lot of smart people.”
I applaud the three Metro councilors who oppose building a new bridge over the Columbia River (“3 suggest toll rather than new I-5 bridge,” May 27).The majority of drivers crossing the Columbia on Interstate 5 are commuters who live across the river to avoid the state income tax and land-use planning. I have nothing against Clark County or the state of Washington, but a new bridge would subsidize this kind of behavior.
Public policy and infrastructure need to encourage people to live near where they work. A toll on the Interstate Bridge is a step in the right direction.
GERSON ROBBOY Northeast Portland
While considerable attention is given to anti-car, anti-congestion, anti-Washingtonian, environmental considerations, I am surprised how little consideration is given to Washington commuters and the benefits they provide to Portland, the metropolitan area and Oregon.
Washingtonians working in and commuting to Oregon contribute considerable direct and indirect benefits to the local economy, quality of life and ability of government to spend. They are employers and employees; they spend money on this side of the river; they pay taxes and they get virtually nothing in return.
I would imagine if as few as 25 percent of those people and their dollars left for the Vancouver side, the economic impact to Portland, the metro area and the state would be devastating.
How much abuse do you expect these people to take before the cost of relocating exceeds the cost of the commute?
Also realize that making it more difficult to cross I-5 may divert more traffic to Interstate 205, and that will make for an even greater negative impact.
It seems to me that we owe them some direct benefit for their taxes paid. Consider financial incentives (for carpooling with four or more people, express buses, express light rail) in the mix of solutions.
BRAD LEVY Gresham
Three Metro councilors have proposed that Interstate 5 travelers pay a toll to cross the existing, paid-for Interstate Bridge between Vancouver and Portland.
The Interstate Bridge isn’t the Oregon Zoo — people can’t simply “choose” to cross in the same sense that one can say “The Oregon Zoo is too expensive, so I just won’t visit it.”
To prove the point, I would suggest that the Metro councilors place a “toll” on any person (especially Metro employees and the councilors themselves) wishing to access the Metro Regional Center or any other Metro-owned facility.
Then, the Metro Council should report back as to how many Metro employees quit their jobs because they have “chosen” not to take the daily required trip to their workplace, or were fired for not showing up to work because of transportation issues.
It’s easy to force one’s choice on others while not accepting the challenge themselves.
ERIK HALSTEAD Southwest Portland
Metro Councilors Robert Liberty, Carlotta Collette and Carl Hosticka should be commended for thinking beyond the “larger Interstate 5 bridge is better” paradigm. If we really want to get serious about addressing global warming, we need to encourage less vehicle travel, not more.
By proposing to charge tolls on the existing bridge and using the funds for earthquake improvements, safer on-ramps and greater mass transit, the councilors are building a more sustainable bridge to the future.
MARK RALSTON Southwest Portland
To delay the construction of the solution for the Columbia River Crossing is to increase the cost of that solution exponentially. This issue has been talked about and studied enough. How many more decades does anyone think it will take to arrive at the conclusion that it needs to be fixed?
Most citizens realize that already. The Metro councilors who want to wait and do more studies are simply sidestepping their elected duties to wrench out the truth. This needs to be done now.
To the elected officials of all the involved agencies, for the sake of the citizens of the West Coast, please take your responsibility to fulfill our infrastructure needs to heart.
NOLAN CHARD Milwaukie
More than a decade ago, I decided to escape Portland, my hometown, and its inexorable progression toward auto-hating, overpopulated urban density, removal of key arterial streets and grossly overinflated property values and taxes promulgated by Vera Katz and her ilk.
I found to my great pleasure that Southwest Washington still holds dear the values of suburban life, with ample greenspaces and large lots in which children can play.
Now I learn, with no surprise but great dismay, that certain Metro officials want to put the brakes on the much-needed new Interstate 5 bridge.
A letter to the editor (May 27) hit the real issue — Metro Councilor Robert Liberty is garnering votes on “his side of the river.” Another letter correctly emphasized that this is an “interstate” bridge, part of an interstate freeway system — not the pawn of the city of Portland, Metro or any other local entity.
Frankly, I don’t care if Portland builds a wall around itself and bans cars altogether, but let’s call this Metro posturing what it is — a feeble, chauvinistic attempt of a few elected officials to aggrandize their power and influence at the cost of the greater good.
Car pollution is having a huge impact on our environment, affecting everything from the size of the hole in the ozone layer to the health and wellbeing of the general public, with vehicle air pollution contributing to the rise in individuals suffering from acute respiratory conditions around the world. One of the most devastating impacts of increased motor vehicle use is the increased level of pollutants it is releasing into our air and atmosphere.