Bio energy backers stay upbeat despite setbacks

Wood-derived ethanol is latest promised fuel

The December announcement from a small Atlanta company vowing to turn wood scrap into fuel in nearby Thomaston rang all too familiar: Yet another bold promise to create rural jobs, help wean the country from foreign oil and stem global warming.

Since 2006, more than three dozen alternative energy projects — ethanol, biodiesel, wood pellets, wood-to-electricity — have been announced in Georgia with great fanfare and tens of millions of dollars in local, state and federal tax breaks.

Most, though, have postponed production, reduced capacity, declared bankruptcy or remained commercially unfeasible. They struggle for financing, especially with the disappearance of credit and the recession.

The federal government, with its on-again, off-again biofuel mandates, also inhibits industry growth. Once-promising markets in Europe have dwindled due to import restrictions. Cheap oil keeps Americans from switching to ethanol and biodiesel, too.

“To some degree there’s a shaking out that naturally occurs in any new industry when more people get into it than there’s room for,” said Greg Hopkins, president of U.S. Biofuels in Rome, which halved its production last year. “More than that, though, I don’t think this country has truly decided that alternative fuel is where we’re going.”

American Process Inc., whose Thomaston venture is bankrolled by energy giant Valero Energy, expects to be different. The Midtown-based company, with 40 employees in Atlanta, Greece and Romania, has extensive experience in the pulp and paper industry — a proving ground for its wood-to-fuel technology.

API plans to transform a vacant factory in Upson County, about an hour south of Atlanta, into a biorefinery that could produce 80,000 gallons of ethanol by year’s end.

“Over the last few years, there’s been a lot of talk about all these technologies and breakthroughs, but progress has been slow,” API President Theodora Retsina told The Atlanta Journal-Constitution during a recent interview about the bioenergy industry. “We’re setting out to prove that [our technology] is realistic, practical and financially viable, something investors can put their money into.”

Georgia made bioenergy an economic-development priority in 2006, and some of the state’s distressed rural regions have benefited. First United Ethanol in Camilla, for example, produces 100 million gallons of ethanol annually from corn. United Biomass celebrated the opening of a wood-to-biofuel factory recently in Nahunta.

In Thomaston, API hopes to turn trees, limbs, grasses and other organic matter into commercially feasible ethanol to be blended with gasoline. Retsina says her process for producing cellulosic ethanol has been proven scientifically in small batches in Atlanta laboratories. Thomaston will serve as a demonstration project to prove her technology is also commercially feasible.

About 30 jobs will be created, including 10 engineers, developers and designers in Atlanta. Retsina said ethanol biorefineries could offer financially hard-hit pulp mills, in particular, another source of revenue.

The Upson County factory should be running by the end of February, and full-bore production, most likely outside Georgia, could begin within three years.

“We have a great opportunity to create a whole new technology boom that will support jobs and exports,” Retsina said. “Cellulosic ethanol is a reality. It isn’t some kind of dream.”

Not a drop, though, fuels the nation’s Fords, Chevys or Hondas.

One of the country’s most ballyhooed cellulosic ethanol projects, Range Fuels in Soperton, announced big production plans three years ago, but it has yet to produce a gallon for sale.

Range, which has received nearly $100 million in grants, tax breaks and other incentives from the U.S. Department of Energy, the state of Georgia and local sources, expected to begin production last year. But technical issues, and the recession, pushed the factory’s completion date to next month.

“When it became clear that equity markets would not support financing and building, as originally planned, we had to trim the scope of our project,” said Bill Schafer, the Colorado company’s senior vice president for development.

Schafer added that by midyear, Range will begin selling ethanol to refiners that will blend it with gasoline. More financing will be needed, though, to expand the Soperton factory for large-scale production.

Forisk Consulting, an Athens-based forestry research firm, compiled a list last fall of 29 wood-based alternative-energy projects announced in Georgia the past few years.

Only 12 will likely “make it,” said Forisk’s Amanda Lang. Most are “proposed” — awaiting permits, financing, contracts or the technology to make them feasible.

Oglethorpe Power Corp., the huge Tucker-based energy cooperative, had planned to build wood-to-electricity plants in Appling, Echols and Warren counties. But it didn’t buy the Echols property and put “on hold” the Appling project, spokesman Greg Jones said.

But Oglethorpe will invest an estimated half-billion dollars in the Warren project, expected to generate 100 megawatts of electricity, enough to supply 50,000 homes annually, by 2014.

Georgia Power said Monday it will postpone the transformation of a coal-burning plant near Albany into a biomass factory due to uncertainty over federal regulations.

“Have we got everything started that was announced? No, but we’re doing pretty doggone good,” said Jill Stuckey, director of the state’s Center of Innovation for Energy. “The prospects look very good for the future.”

Tell that to the biodiesel guys. U.S. factories have the capacity to fill 2.7 billion gallons of biodiesel, but only 15 percent of that amount was produced last year, according to the National Biodiesel Board.

Alterra Bioenergy, with operations in Plains and Gordon, ceased biodiesel production last year. And U.S. Biofuel in Rome, which used to ship all its chicken fat-based biofuel to Europe, cut production by 50 percent.

U.S. Biofuel’s Hopkins and others blame governments on both sides of the Atlantic Ocean for the industry’s torpor. The European Union slapped a huge tariff on imported biodiesel in March that crushed U.S. exports. And domestic blending mandates, requiring a certain percentage of biofuel mixed with diesel, weren’t renewed by the federal government last month.

“Our industry relies so much on federal legislation, but that isn’t the magic bullet to make us less dependent on imports of foreign oil,” Hopkins said. “But Washington could help build us a bridge until we find that magic bullet.”