Searching for the Next Iowa
As the number of corn ethanol producers stabilizes, companies are expanding their efforts out of the Corn Belt and into regions of the country that currently use ethanol, but do not produce it. Florida has many proposed projects and a massive market for ethanol, but no local producers. Could the Citrus State be poised to become the next Iowa?
As the fifth largest consumer of transportation fuels in the nation, Florida represents a gigantic distribution market, but currently lacks any homegrown production. The state uses 8.7 billion gallons of gasoline annually and is implementing an E10 mandate in 2011, but without in-state production it will have to rely on other states for its ethanol supply. This scenario led state leaders to begin exploring alternatives years ago and continues to drive the state's interest in ethanol and other alternative fuels.
Florida began to expand its energy and fuel portfolio in 2005 when then-Gov. Jeb Bush signed an executive order calling for the state to develop an energy plan that would include, among other elements, an analysis of the state's ability to generate, store and distribute fuel, including ethanol. The resulting official Energy Plan, released in 2006, demonstrated Florida's near-total reliance on other states and nations for its fuel supply. According to the state's findings, Florida's transportation fuel needs in 2006 were approximately 28.1 million gallons per day and were expected to increase to 32.3 million gallons per day by 2016. At the time of the report's release, there were no publicly available ethanol filling stations in the state.
In the report, energy recommendations made by the state's Department of Environmental Protection were: to raise public awareness for alternative fuel vehicles, to provide grant funding for research and development projects associated with alternative fuel vehicles and other emerging technologies, and to provide corporate sales and income tax incentives to improve production, develop distribution infrastructure and increase availability of clean fuels, including biodiesel and ethanol.
That same year, the Florida legislature created the Florida Energy Commission, to be housed with the environmental protection office, to provide further recommendation for the state's energy policy. The commission's first report was released to the legislature on Dec. 31, 2007. It showed some signs of progress (the number of retail stations selling E10 had increased from 0 to 50, for instance), but also pointed out again that there were no operational ethanol facilities in the state.
In 2008, state legislators unanimously passed energy policy that included a renewable fuel standard mandating the use of E10 beginning in 2011, in addition to expanding the grants programs meant to encourage development in alternative fuel and energy technologies.
The Florida legislature established a Renewable Energy Technologies Grants program in 2006 as a method of stimulating capital investment in the state and to promote and enhance statewide utilization of renewable technologies. The environmental protection agency was initially in charge of distributing grant money and received 183 proposals seeking nearly $215 million, nearly 15 times more than the $15 million that was allocated for the 2006-'07 program, in response to its first solicitation. A similar number of applications were received in response to the state's 2007-'08 and '08-‘09 grant programs.
To date, more than $67 million in funding has been provided by Florida for renewable energy projects. Additionally, the state energy office controls the $126 million Florida received through the American Recovery and Reinvestment Act of 2009 and has many incentives plans and grant programs planned that could benefit renewable energy projects.
Market Makes the Difference
Despite the state's efforts to supply grants to alternative fuel projects, plentiful grant programs may not be Florida's key to successfully establishing a local ethanol supply. While all of the projects making progress in Florida have received state funding, most company leaders say the No. 1 factor leading to their decision to locate in Florida is the available market for their product, followed closely by the availability of feedstock.
"One of the obvious things that we wanted to do was find a location that had a good market for the ethanol and Florida certainly meets that criteria," says Mark Niederschulte, chief operating officer for INEOS Bio. INEOS and New Planet Energy LLC recently formed a joint venture, INEOS New Planet BioEnergy, which will break ground on an 8 MMgy waste-to-ethanol plant in Florida by the second half of this year and be fully operational at the end of 2011. "There's a large market, a renewable fuel standard and no ethanol producer, so the state relies on ‘imported' ethanol, which provides a logistical advantage," Niederschulte continues. "From a feedstock perspective, we're looking at the ability to take really any kind of biomass to stick into the front end of the production process. Florida meets that criteria quite well because it has a large quantity of varying types of biomass, not just pine trees or something like that. It has everything from sugarcane bagasse to trees and other kinds of vegetative waste."
According to Jay Levenstein, deputy commissioner of Florida's agriculture department, the state represents between 7 percent and 10 percent of U.S. biomass resources available to be used for renewable fuel or power generation. "I don't know how much beyond the grants that we've really done to entice companies to come here other than there's a market," he says. "Depending on who's technology and what feedstock they're using, there's certainly availability here."
Several proposed Florida projects plan to take advantage of the state's climate to supply them with tropical feedstocks. Southeast Renewable Fuels LLC will use sweet sorghum to produce ethanol at its facilities. In December, the company entered into the permitting process for a 20 MMgy sweet sorghum-to-ethanol facility to be located in Hendry County near Clewiston and is also reviewing sites for two additional plants, for a total production capacity of 100 MMgy. "We believe we can get all of those sited in Florida," says executive vice president and chief operating officer Don Markley. "Feedstock is everything. [Florida] is where we believe we can get the acreage to grow sweet sorghum in the quantities that are needed to support the facilities." Markley says Southeast Renewable Fuels expects to use 1.1 million tons of sweet sorghum annually for a 20 MMgy facility and that the company has preliminary feedstock procurement agreements in place.
U.S. EnviroFuels LLC is also planning to utilize sweet sorghum, as well as sugarcane, for its 30 MMgy Highlands EnviroFuels LLC plant in Highlands County. President Brad Krohn says the company completed Phase 1 process engineering in December and plans to break ground on the facility this year. He says that if someone is interested in cellulosic biomass, Florida has the supply. His company has the ability to bolt on cellulosic capabilities to utilize sugarcane bagasse in the future, but the company remains focused on producing sugar-based ethanol in the near-term. "The technology is low-risk [and] we believe sugar-based ethanol can be a bridge to cellulosic," he says.
INEOS, Southeast Renewable Fuels and U.S. EnviroFuels have all received state grants to further their projects. Other well-known projects to receive state funding include the Verenium Corp.-BP plc joint venture, Vercipia Biofuels, and Coskata Inc.
No Room for Corn
One specific type of ethanol project notably missing from Florida's list of grant recipients is corn-based ethanol. Levenstein says this is because the grant programs were created to utilize Florida-grown biomass, such as citrus or sweet sorghum, rather than biomass that will most likely need to be shipped in from the Midwest. "As we get into the ethanol business, it's going to be next-generation and advanced biofuels that come out of Florida, not corn ethanol," he says.
Leon Dupree Hatch Jr., secretary for East Coast Ethanol LLC's board of directors and Florida project manager, says it has been more difficult to establish its corn-based project in Florida than in Georgia, South Carolina or North Carolina, where the company is also working to develop corn-based production facilties. "State government officials haven't really knocked our doors down to try to help us because it seems the objective in Florida is to look at second-generation biofuels," he says. "I think that has hindered us some."
The fact that Florida lacks corn production can also be a contributing factor to the state's delayed entry into ethanol production. "The challenge with these projects is, we're not Iowa," Levenstein says. "It's not an off-the-shelf plant, where the model is already there. [Corn ethanol producers] have been doing it for decades and they've pretty much got all the questions answered. With what we're doing, it's all new. There's more unknowns and it's not been proven at a commercial scale yet."
Having said that, Levenstein says Florida has enormous potential to become the next Iowa as far as ethanol production, "emphasis on ‘potential'," he says. "Admittedly, we're not at the point today where we had hoped we would be five years ago. We've created the demand, now it's just a question of whether we'll be able to fill our own demand with production facilities in the state." EP
Kris Bevill is the editor of Ethanol Producer Magazine Reach her at email@example.com or (701) 850-2553.