Biofuels poised for a comeback

They were to cut greenhouse gases, provide energy independence and help America’s struggling farmers. Two years ago Idaho boasted three large processing plants with another cutting-edge plant proposed for Eastern Idaho. But when the recession hit, gas prices dropped, corn prices stayed high and biofuel makers cut back.

Now, “ethanol production is drying up in Idaho,” said John Crockett, the bio-energy manager for Idaho’s Energy Division. But, he said, “it’s going to come back. It’s something we need to do.”

While other plants are still operating in Washington and Oregon, Idaho’s fledgling bio-energy production has virtually frozen. J.R. Simplot Co. sold its biofuels plants in Caldwell and Burley to large multinational companies that haven’t resumed production. Even before the sale, “They just didn’t make money,” said Steve Gray, director of Commodity Risk Management at J.R. Simplot Co.

Simplot’s plants dried the peelings, used enzymes to break down potato waste into starch, then sugar, then alcohol. It was costly, especially to dry the potato waste.

“Potato peelings are about 80 percent water,” he said, which made production of fuel uneconomical.

More traditional corn ethanol producers have made steady improvements in their processes, Gray said, but have scaled back production due to low demand for gasoline. A federal mandate for 10 percent ethanol in all fuel keeps the most efficient plants profitable. But after the market provides the 10 percent, about 15 or 16 billion gallons, ethanol must compete directly with gasoline, Gray said, which is difficult because of high corn prices and transportation costs. The new players, he said, are large multi-national energy-producing companies that have bought the largest ethanol plants in the country.

There might still be room for niche producers. Blue Sky Biodiesel opened in New Plymouth in late 2006 just when fuel prices were rising, but now “just barely operates,” Crockett said. It made biodiesel from oil crops. Calls to the company went unanswered last week.

Calls to the multinational companies that bought Simplot Co.’s plants found the numbers disconnected.

IOGEN nearly opened a cellulosic biomass plant in Eastern Idaho, but instead was lured to Canada. That company would have used corn and wheat stover or wood chips to make fuel, a process that holds promise for small timber-surrounded communities, but is largely untested.

Proponents say ethanol undoubtedly has a future.

“We’re not going to abandon corn ethanol,” Gray said, “because of its broad political support.”

If gasoline prices rise, commodities such as corn would rise as well, he said, negating a clear benefit for ethanol over gasoline.

The real boost to ethanol could happen if the Environmental Protection Agency requires a higher proportion of ethanol in the nation’s fuel blend, an option that’s being considered.

Gray said federal production credits and the mandated ethanol blend help America’s farm economy.

“It’s a clever way to get money to the farmer,” by keeping the demand for corn high, supporting land value and shoring up grower profits. He said while the carbon dioxide benefit of corn ethanol may be negligible, cellulosic biofuels such as wood chips and stover hold more environmental promise.

University of Idaho sponsors a research and education effort that is leading the nation in cellulosic biofuels, Crockett said.