How To Make Biodiesel

May 26–Tobin Freid has heard so many proposals to build ethanol and biodiesel plants in North Carolina over the past few years that she’s lost count. “It seems like every day we get some announcement, but a lot of them don’t come through,” said Freid, the Durham-based coordinator for Clean Cities, a U.S. Department of Energy project to encourage use of renewable fuels. Some of the developers plan to construct more than they’re capable of and become overwhelmed, she said. Others are lured by the relative ease by which animal fats or vegetable oils are processed into biodiesel but fail because they don’t focus on other important elements of building a commercial plant, such as logistics and securing feedstocks and permits. “On the other hand, there are some people who know just what they’re getting in to; they plan very well and they succeed,” Freid said. Today, there are no ethanol plants in North Carolina and none are under construction, according to industry groups. But four biodiesel plants have been built, and five new ones are under construction. It’s now Hampton Roads’ chance to witness up close the fast- growing bio-fuels industry, where investors have been trying to cash in on the production of clean-burning fuels. In the late ’80s, ethanol plants started gaining popularity in the Midwest, spurred by the abundance of corn used to produce it. In the past couple of years, a confluence of major developments have heightened demand for alternative fuels and enticed developers to start bringing these plants to the East Coast to be closer to large population centers. In 2005, a federal tax credit took effect that benefited biodiesel producers, according to the National Biodiesel Board, a trade group. Last year, ethanol took the place of gasoline additive MTBE, considered an environmental contaminant. Today, most all gasoline outlets have signs noting a mixture of up to 10 percent ethanol. And taking the bully pulpit in his past State of the Union address, President Bush urged the country to use 35 billion gallons of alternative fuels every year by 2017, a fivefold increase over current requirements. At least three developers are proposing alternative energy projects locally, including a biodiesel refinery billed as the world’s largest and an ethanol plant that would be one of the country’s biggest. Altogether here, up to eight plants are proposed to produce fuels designed to reduce air pollution and curb the nation’s reliance on imported oil. They would join the more than 100 ethanol plants and 105 biodiesel plants operating across the country, according to industry groups. Another 81 ethanol plants and 85 biodiesel plants are in various stages of construction or expansion. In Virginia, there is one small ethanol plant near Roanoke and four biodiesel plants. The closest is in New Kent between Richmond and Williamsburg. The Hampton Roads prospects are in the midst of lining up land, government permits and financing. The first, the mammoth biodiesel plant in Chesapeake’s South Norfolk section, is scheduled to begin operating by April of next year . Yet whether any will produce a drop of fuel is anyone’s guess. Upstart companies are behind all of the efforts, though the firms say their key people have energy industry experience. Concerns over fire and other risks associated have arisen with the ethanol plant proposed for Chesapeake, near Norfolk Naval Shipyard, though the developer says the company will meet city and state fire protection regulations. And rapidly rising prices for corn and soybean oil, two key biofuel ingredients, have sharply compressed the profit margins for such facilities. A year ago, ethanol plants had fat 24 percent net margins, a measure of operating income, and the net margins for biodiesel plants were even better, at between 30 and 35 percent, said Ian Horowitz, an alternative energy analyst with Soleil Securities Group in New York. The chance to make that much money attracted many people to build plants in an atmosphere akin to the dot-com boom of the 1990s, he said. In 2006, North American venture capitalists invested $1.3 billion in alternative energy generation projects, more than double the amount in 2005, according to the Cleantech Venture Network, an industry group. Now, net margins for ethanol and biodiesel plants are between 2 and 3 percent, Horowitz said — still not bad for a high-volume business. However, this situation has caused investors and lenders to be more discriminating as to where they place their money. “People are having a little more realistic outlook on things,” Horowitz said. A year-old company is behind the largest of the energy projects planned for Hampton Roads, a $532 million biodiesel plant in Chesapeake along the Elizabeth River’s Southern Branch. The project, by Bakersfield, Calif.-based Smiling Earth Energy LLC , would produce about 320 million gallons of biodiesel annually . Across the river, a division of Inter Bio Energy of Zug, Switzerland, has proposed a roughly $500 million project encompassing a 225 million-gallon-per-year ethanol plant and a 75 million-gallon-per-year biodiesel refinery. Work would start in the middle of 2008 on the project’s first phase, with production beginning in 2009. Endicott Biofuels LLC of Houston has proposed building between two and five biodiesel plants in Hampton Roads, with an expected size of 30 million gallons each. The first plant would be built somewhere in Portsmouth or Chesapeake, company principal Richard D. Wyatt said this week, declining to be more specific. Amy Parkhurst, a vice president of the Hampton Roads Economic Development Alliance, said her office has gotten six to eight calls in the past year from companies interested in building ethanol or biodiesel plants. “That’s a lot for the same industry,” she said. The companies were looking for waterfront sites with deep water access and rail service, which Hampton Roads has, she said. “It’s a hot industry,” she said. “It’s people jumping on the bandwagon.” Staff writer Mike Saewitz contributed to this report. — Reach Gregory Richards at (757) 446-2599 or gregory.richards@pilot online.com. Credit: The Virginian-Pilot, Norfolk, Va.

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