Northwest's biofuel boom goes bust

[depakid]

Jay Holthus is the plant manager at Pacific Ethanol's Boardman plant, still operating despite a recent Chapter 11 bankruptcy filing.
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In two short years, the Northwest has gone from biofuels boom to biofuels bust.

The boom began in August 2007, when Imperium Renewables opened a 100 million-gallon-a-year biodiesel plant near Grays Harbor, Wash. A month later, Pacific Ethanol opened a 40 million-gallon corn ethanol plant in Boardman. In June 2008, Cascade Grain opened a 113 million-gallon corn ethanol plant in Clatskanie.

Encouraged by tax breaks and Oregon and Washington standards designed to require biofuels' use, the companies promised environmental benefits on an industrial scale, a quantum leap from smaller-scale producers making fuel from cooking grease and Northwest crops. Nearly 30 more projects were under discussion.

Then came this year.

In January, Cascade Grain filed for bankruptcy six months after it opened, idling its plant and putting a $20 million loan from the state of Oregon in jeopardy. Imperium, whose grand opening was attended by both Washington senators, idled its Grays Harbor plant indefinitely, laying off 24 workers in March.

And Pacific Ethanol, which received $14.6 million in Oregon tax credits for its plant, filed for bankruptcy for five of its subsidiaries last month, including the subsidiary that owns its Boardman plant. It warned that it has enough money to continue operations only through June.

U.S. Ethanol had plans to open Washington state's first industrial-scale ethanol plant in Longview last summer. That plant is "continuing to develop," the company says, but it is not providing a new opening date.

Biofuel supporters expect the industry to rebound quickly once the economy turns, fueled by federal requirements for increased biofuel use.

But the boom-to-bust cycle -- coupled with increasing scrutiny of the green payoff from industrial-scale biofuels -- has raised more concerns about the stability of the industry and the wisdom of subsidizing it.

Federal tax credits of 45 cents a gallon for ethanol blenders mean taxpayers were set to pay about $50 million a year to subsidize fuel from Cascade Grain's plant, or about $625,000 annually for each of the 80 jobs promised there. That doesn't count the Oregon loan, roughly $15 million in state tax credits or local tax breaks.

Last year, the U.S. produced more than 9 billion gallons of biofuels, almost all corn ethanol, using a quarter of the nation's corn crop. The fuel displaced enough petroleum gasoline to power 2.1 million cars. But it reduced greenhouse gas emissions from the U.S. transportation sector by less than 1 percent, the Congressional Budget Office estimates.

"There are big questions about whether (biofuels) are really helping in terms of improving energy security and reducing fossil fuel use," said William Jaeger, an Oregon State University economist who has studied biofuels. "Given all the deficit spending we're doing, we should be even more conscious of what bang we're getting for our buck."

Much more (quite a good article): http://www.oregonlive.com/environment/index.ssf/2009/06/northwests_biofuel_boom_goes_b.html

[BlooInBloo]

1. Wow - he looks exactly like Mike Holmgren.

And that sucks (the story).

[lordsummerisle]

2. Uncanny resemblance

and that story does suck...

[excess_3]

3. the US needs to stop exporting corn

ethanol is a big step in that direction

[NickB79]

4. The US exported 2.25 BILLION bushels of corn in 2007-2008

Which would create about 6.75 billion gallons of ethanol.

The US consumes about 375 million gallons of gasoline per day (and that is taking the reduced demand into consideration; it used to be 390 million gallons per day).

So, for the low, low cost of the starvation of millions of people around the world, we would get a whole 3 weeks of liquid fuel replacement. What a deal!

[EvilStepfather]

5. The prices last summer wiped out biodiesel

I'm a biodiesel user, and last summer, prices for Biodiesel here in LA hit almost six bucks a gallon.

Nobody wanted to pay that. Nobody wanted to pay the $5 a gallon for fossil diesel, either, but at some point you have to buy the cheaper fuel if you're on any kind of a fixed income.

That really had a big affect on things.

And it turns out the whole price run-up, to $144 a barrel (ironically what Osama Bin Laden suggested was a fair price for a barrrel) was a scam, done by traders before the "Enron Loophole" was closed.

All the propaganda about biodiesel being somehow "bad" for the world and taking food out of people's mouths didn't help either.