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Biofuel Furor

Will power plants get caught in ethanol’s food fight?

Fortnightly Magazine - August 2008

and traditionally has come from the byproduct oil of soybeans. The first biodiesel-fueled electric generator in the United States went online in February 2007 and began selling power into the ERCOT grid. The Oak Ridge North plant, built by Biofuels Power Corp., produces up to 5 MW of generating capacity for the Centerpoint grid via three biodiesel-fired engines.

The biodiesel used to run the Oak Ridge North plant is produced two miles away by Safe Renewable Corp., which supplies biodiesel made from soy, cottonseed, canola oil and animal fats. Safe Renewables is one of the few companies producing commercial quantities of biodiesel in the United States, and can switch among multiple vegetable oil and animal fat feedstocks. It might be the only biodiesel supplier that serves both the transportation and electric power generation industries. Biofuels Power also is careful to make clear it does not use corn—ethanol—and does not remove vegetable oils from the food chain. Oak Ridge North’s fuel primarily comes from poultry fat, sourced from large poultry processing operations in Texas.

Biofuels Power recently began building a larger turbine-based biodiesel power plant at the Safe Renewables refinery site. It would deliver approximately 10 MW into the Entergy power grid for customers in East Texas and Louisiana.

Although the new plant is expected to provide twice as much capacity as the Oak Ridge North plant, its relatively small size illustrates a key problem for the biomass power industry: scalability. Fuel supply constraints thus far have kept most such plants small, but some larger projects are being developed. In October 2007, Hawaiian Electric Co. filed an application with the Hawaii Public Utilities Commission for approval of a biodiesel supply contract with an affiliate of Imperium Renewables to serve a new 110 MW electric generating station, with startup expected in 2009. Imperium Renewables also is in the process of developing a biodiesel refinery in Hawaii, which the company says will rely on locally grown feedstocks, such as palm oil.

Political Furor

Whether biodiesel for electric generation (and other nascent biofuels) catches on could depend on whether biofuels in general survive a wave of negative publicity and political attention.

For example, a battle erupted on Capitol Hill this spring, stirred in part by a new farm bill. Rep. John H. Dingell (D-Mich.), chairman of the Committee on Energy and Commerce, noted that “the ink had hardly dried on this new law when the clamoring began to alter the [renewable fuels standard].”

The law, the Food, Conservation, and Energy Security Act of 2008 (H.R.2419) garnered enough votes in the House and Senate to override a veto by President Bush and was enacted into law on May 22. It expands the biofuels research and development programs enacted in December 2007 in the Energy Independence and Security Act of 2007 (EISA). It also strengthens the renewable fuels standard (RFS) enacted in the Energy Policy Act of 2005 and expanded under EISA.

But the salvos have come from all sides. On May 12, Sen. Jeff Bingaman (D-N.M.), chairman of the Senate Committee on Energy and Natural Resources, sent