KEAAU, BIG ISLAND — Biofuels in Hawaii suffer the chicken or the egg problem.

It’s hard to attract investment for a biofuel plant without an available and proven feedstock, such as eucalyptus or sweet sorghum, to supply it. And it’s hard to get farmers to take the risk of growing the feedstocks without an already built plant.

Now, one company seems to have cracked the formula. And it could change the face of locally-produced biodiesel and the Big Island’s farming landscape.

Earlier this week, Pacific Biodiesel unveiled its Big Island Biodiesel plant, capable of meeting 8 percent of the state’s biodiesel needs for ground transportation. It’s the first plant to be built in Hawaii capable of processing a range of plant products.

The much anticipated facility opening brought out political heavyweights, including Sen. Daniel Inouye, with his Secret Service agents, and Gov. Neil Abercrombie. State Sen. Mike Gabbard and Rep. Denny Coffman, who chair the Legislature’s energy and environment committees, and Big Island Mayor Billy Kenoi also showed up in the remote industrial section of Keaau.

The new fuel plant will process one of the rankest substances there is: trap grease, the fetid, congealed waste products from restaurants.

It will also — hopefully — produce an abundance of fuel from locally-grown plants, such as jatropha, sunflower and safflower, to replace gasoline and help the state meet its goals of reducing its dependence on imported oil.

Pacific Biodiesel’s other two plants, located on Maui and Oahu, have operated on used cooking oil. But this newest plant which is about twice as efficient and can process a wide range of feedstocks could provide a jumpstart to the local ag industry, where farmers haves struggled with the high costs of land, imported fertilizers and feeds.

“The more a farmer can diversify his commodity base the better he will be,” said Russell Kokubun, chair of the state Dept. of Agriculture. “I think that this is something that has a very bright future for the entire state of Hawaii.”

The mood was jubilant with a blessing ceremony, barbecue, musical accompaniment and helicopter rides that provided expansive views of the plant and a local jatropha farm. But the speeches assumed a more serious tone, warning of the need to move the state off of oil — a dependency that state officials have long warned is a threat to Hawaii’s local economy.

Abercrombie told an audience of about 200 local farmers, investors and renewable energy advocates, that the biodiesel plant was an example of people working together to solve Hawaii’s energy problems.

“This is a commitment to renewable. This is a commitment to alternative,” said Abercrombie. “This is a commitment to energy itself and its role as a central feature of whether we can survive as a democracy in these Hawaiian islands.”

Inouye, 87, set the historical context, reminding the audience about the 1970s Middle East oil embargo that sent gas prices soaring.

“The price of oil went up 400 percent. And then you had lines to the gas stations, people with shotguns keeping place in line,” he said. “That’s how bad it was. So what did we do? We spent billions of dollars — billions. We vowed this would never happen again.”

But commitment waned when oil prices dropped back down and investments in green technologies, such as geothermal and OTEC in Hawaii, were abandoned.

“It would be a crime to go through all of this and then some day later say we don’t need this anymore because energy is cheap,” he said. “No, please don’t blink. This time let’s go all the way — because it’s good for the nation and especially good for the islands, especially this island.”

Pacific Biodiesel Unique Success in Hawaii

Local biofuels have had a rocky trajectory in Hawaii. Officials with the state’s major electric utility, Hawaiian Electric Co., have worked to cultivate the local market. But companies have yet to produce fuel on a commercial scale that can be dropped into the state’s generators.

Pacific West Energy has struggled for a decade to produce ethanol from sugarcane.

On the Big Island, SunFuels Hawaii recently put its woody biomass project on indefinite hold. The company was working on a biomass-to-liquid technology that would produce 13 million gallons of fuel annually, but the company said it just couldn’t make the numbers work.

Cellana, one of the most promising algae biofuel companies in Hawaii, has yet to produce oil on a commercial scale. Last year, its partner and investor, Royal Dutch Shell pulled out of the venture and its CEO and one of its top scientists left the company.

Honolulu-based Aina Koa Pono has been hoping to build a biofuel plant in the Kau region of the Big Island. But last year it’s contract with HECO was rejected by state regulators who said that the cost of the fuel was exorbitant and not in the best interest of ratepayers. The project also encountered protests from local residents who worried about health and environmental risks, traffic and noise from the facility.

But Pacific Biodiesel’s plant, called Big Island Biodiesel, was unmarred by protests on Monday. Kelly King, the company’s vice president, said that they only went where they were invited.

The $13 million plant that is capable of producing 5.5 million gallons a year is funded by local investors. About half of its funding comes from federal loans. The rest is from individuals who live in Hawaii or companies that are based in the islands, according to the company.

“Ninety cents of every dollar stays in Hawaii, versus petroleum, which is the opposite,” said King.

About $6 billion to $7 billion leaves Hawaii’s economy every year to purchase fuel, according to HECO. State officials have lamented the figure, which comprises about 10 percent of the state’s gross domestic product, noting that it’s a drain on Hawaii’s economy.

In the Hands of Farmers

Pacific Biodiesel’s new plant has opened up the market for growing agricultural feedstocks for biofuel, but it remains to be seen whether local farmers will be able to rise to the challenge.

Christian and James Twigg-Smith have been growing jatropha on land near the Big Island facility and have begun producing small quantities of oil for Big Island Biodiesel.

Pacific Biodiesel is also working on demonstration projects for sunflower and safflower oil on Oahu. The tests will hopefully aid farmers in gauging the costs and conditions needed to grow the crops, making investments less risky.

But there are still skeptics.

Robert Rapier, chief technology for Merica International, which has been working on biomass-to-energy projects on the Big Island, said he doubted that farmers could produce the crops at a price point that’s competitive with petroleum products.

“It’s the same reason we don’t produce food here,” he said. “It’s cheaper to make (in) other places because land is cheaper in other places. There may be something that would work, but I don’t know what it could be. If jatropha is what they are counting on, I would say it’s not going to work.”

But Richard Ha, owner of Hamakua Springs Country Farms, who has been a vocal critic of biofuels in the past, was optimistic about the plant.

“They have the best business model to make it work,” he said. “And the reason for it is this facility is paid for . . . So when they come and talk to the farmers it doesn’t rest only on the farmers. They already have the business model.”

But he did say that it wasn’t without challenges for the farmer.

He broke it down this way:

Big Island farmers sell hay for $70 — $75 per 500 pound bale. That is $280 to $300 per ton. On the mainland the folks who were planning to make cellulosic biofuels needed it for $45 per ton. But, the farmers were getting $100 per ton for hay. So, they got a $45 per ton subsidy.

Beside the feedstock gap, the farmer will need to pay for something to squeeze the oil out of the sunflower. So, the obstacle to get over is quite high.

However, King pointed out that farmers could potentially profit from more than just selling virgin crop oil. The by-products of the crops could be used for fertilizer and cattle meal, and initial tests have already shown promise. Most cattle in the state are shipped off to Canada after they reach 400 pounds, noted King, where they are fattened up to 1,000 pounds before being sent back to Hawaii because the feed is so much cheaper.

And these additional products could help tip the scales toward success for the local biofuel industry.

“I think one of the really key issues is that you get more out of your feedstock than just fuel,” said Kokubun. “And that is why Pacific Biodiesel and the Kings are so good.”

Big Island farmer, Richard Ha, says Big Island Biodiesel solves the chicken or the egg problem:

Gov. Abercrombie says Big Island Biodiesel is good for democracy:

Sen. Daniel Inouye criticizes Hawaii and the nation for failing to maintain long-term commitments to renewable energy:

Blessing ceremony:

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