Why isn’t the biofuel market taking hold in Florida? Here are five reasons:
Their intent is good, but their process is a disaster. The military insists on purchasing “drop-in” renewable fuel, which can be used in place of petrofuel. While there are several approaches being developed, none of them are commercially viable yet, and none of the resulting products are certified for use as a replacement fuel. The military blends all of it with petrofuel before use (50-50 blends of several crops are now certified). Drop in facilities cost hundreds of millions to build; couple that with the short-term, competitive, contracts the military uses, and the cost per gallon is enormous, as the producer shoots for the highest price possible to help recoup their enormous investment.
We can make competitively priced biodiesel easily that can be blended with petroleum, but the military doesn’t want what we can make.
Federal (and previously State) grants to build or test or research, etc., fuels, kept just about everyone scurrying after those “free” dollars — and that in turn has kept private sector funding largely out of the picture. There are exceptions — companies like GEVO that are developing products like isobutanol made from corn are doing pretty well (I picked up some GEVO shares a few weeks ago, in fact). Typically, you’ll find these companies have backing from oil companies. In my opinion, grants have delayed, rather than aided, the development of alternative fuels. Companies and other researchers chase these dollars, spending a huge amount of time developing proposals, waiting for review, and then not receiving a grant. Waiting for funding through a grant program has kept a lot of good ideas from being implemented.
The carbon cap restrictions — the military by law can’t buy non-petro fuel that does not have a lower carbon content than petroleum — has been a complete failure. For example, a Florida firm we do some work with can make a gasoline equivalent out of coal, for less than the cost of petrogas. But, because of the restriction, they have no buyer. It’s likely this restriction will be removed, which is a good thing. Interestingly, it’s the Republicans pushing for the rescission of that requirement, while Dems like Udall and Murray want to keep it.
One sad truth we’ve learned over the past four years is that there is no strategy at the state (much less Federal) level for development of alternative fuels. The old Climate Change Commission grants were awarded with no path forward. For example, they granted some money to grow feedstocks, but there were (are) no facilities in Florida that could crush/squeeze the crops into a product that can then be processed in a refinery. This is because the state has never done an inventory of what facilities exist, what crops or other resources are available, or what products can be made — to say nothing of finding buyers for them. Commissioner Putnam understands this and is working on a resource inventory. The initial inventory will be of forest resources. Farm crops are not yet being inventoried.
As an example of the problems caused by a lack of strategy, the kenaf crop (which is a good energy crop) that has been planted the past two years is sitting in round bales around south Florida, with no buyers. The farmers who grew it lost a good bit of money on that one.
MW Consulting has proposed a series of workshops between regulators, refiners, growers, and investors to help develop this path forward. It’s cheap, easy, and effective; we did a similar series for the marine industry a few years ago with great results. But…. not yet. $250,000 would pay for the whole program.
We’ve been aggressively seeking support for a proposal to refine RP-1 — Rocket Propellant used for pretty much everything launched at Cape Canaveral — from feedstocks sourced here in Florida. It’s a small, lucrative niche market. The challenge has been to get all the government agencies involved in space to act. Very honestly, they don’t know how to be proactive.
To sum up, government has been a hindrance — not a help.