Four years ago, in a muddy Mitchell County field, Georgia entered the big leagues of biomass production. Ground was broken in January 2007 outside Camilla for the largest biofuel factory in the Southeast.
Politicians one-upped one another with paeans to plans for the lowly corn cob that would bring 300 jobs to rural South Georgia, pump $267 million into the state economy, scrub the nation’s polluted air and break dependence on foreign oil.
One day, the dreamers said, Georgia would turn corn, pine trees, yeast, soy beans, peanut shells — any rapidly grown feed stock — into gasoline for cars or diesel for trucks. Alternative energy factories would dot the countryside. Georgia would be transformed into the “Saudi Arabia of biomass.”
Four years later, the state’s alternative energy future is hobbled. Southwest Georgia Ethanol, the corn-to-fuel factory in Camilla, filed for bankruptcy earlier this month. Range Fuels, the state’s prized cellulosic (i.e. not corn) ethanol factory in Soperton, closed its doors in January.
Biodiesel plants in Atlanta, Rome, Perry and beyond have either curtailed or ceased production. Today, Georgia only boasts a few unsexy wood pellet factories.
Visions of an alternative fuel Mecca remain foggy even after local, state and federal agencies pumped tens of millions of tax dollars into two dozen biomass ventures.
“Expectations were too high and people promised things they just couldn’t deliver,” said Sam Shelton, research director for Georgia Tech’s Strategic Energy Institute. “Renewable fuels are not going to make big, rapid growth without a lot of energy policy and mandates from the state and federal governments.”
Biomass proponents caution it’s too early to dig graves for ethanol and biodiesel. Some of the state’s biodiesel makers say they’ll soon ramp up production, thanks to renewal of a federal subsidy. The Camilla ethanol factory is still producing and, with a cash infusion or corporate takeover, might one day flourish.
Unbowed, the state’s biomass boosters tout the $1 billion invested in renewable energy ventures the past five years. And they preach the wonders of the next can’t-miss energy alternatives, whether it’s leafy miscanthus or “drop-in” fuels.
“We’ve had more announced bioenergy projects than any other state in the nation and that says a lot about what we have to offer,” said Jill Stuckey, the state’s tireless alternative energy advocate. “I don’t think we’ll be the Saudi Arabia of biomass, but I want Georgia to be independent from foreign sources of oil. Just give me 15 years and we’ll do it.”
Biofuel boom, then bust
Georgia jumped on the bio-fuel bandwagon in 2006, designating the rural-based industry an economic development priority eligible for financial incentives. The Herty Advanced Materials Development Center in Savannah, a state-funded development authority, predicted 60,000 jobs, 30 alternative-fuel factories and a $30 billion economic impact statewide by 2017.
At first, the alternative energy industry blossomed. Ethanol, biodiesel and pellet plants dotted the state. Southwest in Camilla imported trainloads of corn from the Midwest to make ethanol. Range Fuels, bankrolled with $82 million in state and federal subsidies, built its plant in Soperton.
FRAM Renewable Fuels in Baxley produced wood pellets for environmentally conscious European utilities. Former President Jimmy Carter welcomed Alterra Bioenergy, and its claim to brew 30 million gallons of biodiesel, to his hometown of Plains.
Today, the alternative energy landscape is littered with padlocked distilleries, empty storage tanks and broken dreams. Unemployment in Treutlen County, where the Range factory is located, is 13 percent. Range’s promised 69 jobs dwindled to a few when the ethanol maker shut its doors last month.
“We were hoping they’d be hiring instead of laying off,” said John Lee, the county’s business recruiter.
Forisk Consulting, an Athens-based forestry research firm, compiled a list last month of 36 wood-based biofuel projects once planned for Georgia. Only nine are in operation. Two are under construction. Most of the remainder are “proposed.”
“People had high hopes, but that’s not to say they won’t become reality in a few years,” said Amanda Lang, operations manager for Forisk. “These are capital-intensive projects and it’s hard to secure funding needed to develop that technology.”
Tales of the industry
Here’s what happened to industry stalwarts in Georgia:
● Southwest Georgia Ethanol. Its ethanol-brewing subsidiary filed Chapter 11 bankruptcy protection, yet it continues production. The company lost $2.2 million in fiscal 2010 and lists debt of $134 million, according to its SEC filing.
CFO Lawrence Kamp blamed rising corn costs and too-low ethanol prices. Importing 100,000 bushels of corn daily by train from the Midwest also proved costly (the company owes Norfolk Southern and CSX more than $2.1 million).
“It never did make sense why they’d ship corn from the Midwest to their plant to make ethanol rather than make ethanol up there in plants that already exist and ship the ethanol down here,” said Georgia Tech’s Shelton.
● Range Fuels. The $225 million factory closed last month after reportedly making only a small batch of cellulosic ethanol. The Colorado-based company planned to turn tree limbs, grasses, cornstalks and garbage into ethanol.
Range had raised $158 million privately, $76 million from the U.S. Department of Energy and $6.2 million from the state of Georgia. It also received an $80 million loan guarantee from the U.S. Department of Agriculture. Most of the money has been spent on construction and equipment, so recovery is unlikely. Range says it will restart production once it raises more capital.
● Biodiesel. More than a dozen biodiesel factories, which turn soybeans, restaurant grease and chicken fat into a diesel additive, were planned and/or operating across Georgia a few years ago. Now, virtually all of them have ceased or greatly curtailed production.
“There’s no demand in the local market. We can’t rely on the tax incentives and support from Congress. And the pricing of raw materials is a real challenge,” said Bobby Heiser, a partner in BullDog Biodiesel in Ellenwood. “And Europe, once a large market for us, placed very steep tariffs specifically against biodiesel that originated in the U.S.”
Subsidies a lifeblood
The nation’s biodiesel and ethanol producers live and die on federal and state subsidies. The $1-a-gallon tax credit for diesel refiners expired in 2009 and decimated the industry. BullDog stayed open, but slashed its work force from 30 to six employees.
Georgia, unlike many other states, offers no mandates for biodiesel and ethanol usage.
“Really the only way we’ll replace gas and diesel is if we have government mandates or oil gets over $100 a barrel and stays there and people will become convinced it will never come back down,” Shelton said.
Washington recently rejuvenated the biofuel industry.
Congress last December reauthorized the $1-a-gallon biodiesel tax credit. BullDog’s Heiser said he’ll soon re-hire 15 laid-off employees.
The EPA last year approved blended gasoline with as much as 15 percent ethanol for vehicles produced in 2007 or later. The agency later extended the E15 blend to cars and light trucks built between 2001 and 2006.
Georgia’s wood pellet business, turning trees and timber scrap into fuel, is poised for a comeback, too. Boosters point to this year’s expected opening of the massive Georgia Biomass factory in Waycross as evidence of a robust pellet industry. The company, owned by two European utilities, could produce 750,000 tons of pellets annually to be shipped to Germany and Sweden.
After a dreadful 2009, production nearly doubled to 140,000 tons last year for FRAM Fuels. Harold Arnold, the company’s president, is shooting for 200,000 tons this year.
“We’re still bullish on the renewable fuel industry, and we’ll see more consumption coming on line in the United States, Europe and certainly in Asia,” Arnold said. “But we need to make renewable fuels more attractive through incentives for commercial-sized operations like hospitals and apartment buildings. That will come.”
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