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Sorghum for Ethanol
If the U.S. insists on getting motor fuel from crops, it should think about putting them closer to the equator.
Corn ethanol swallows tax subsidies, jacks up food prices and doesn't do much to reduce the world's carbon footprint. So what does one say about the newest contender in the biofuels industry, sweet sorghum? Perhaps the most compelling sales pitch that can be offered about it is this: It's no worse than the alternative.
Federal law mandates that by 2012 gasoline refiners use at least 7.5 billion gallons of renewable fuel a year. If agribusiness executive Vikram Shroff has his way, sorghum will get a significant share of this market. Shroff runs United Phosphorus, an Indian firm founded by his father that sells sorghum seeds, as well as fertilizers, pesticides and industrial chemicals. He says many American farmers looking for a piece of the biofuels market should try growing sorghum along with sugarcane on their land.
A sorghum-sugarcane mix, says Shroff, can yield double the ethanol per acre of land as corn, uses less fertilizer and doesn't raise food prices (not directly, anyway). Persuading farmers in the southern U.S. to give his fuel-producing plant a try would give his firm a nice boost but not have a huge impact. Its unconsolidated Advanta ( ADVNA - news - people ) Seeds operation, 29% of which is sorghum seeds, would have added only $140 million to up's $960 million in revenue in the latest fiscal year. The Mumbai firm, whose shares are traded in India, netted $96 million.
For the moment United Phosphorus hasn't found many buyers for sorghum seeds for ethanol in the U.S. outside of university labs. Most of the existing sorghum market is in South Asia, Africa and Central America. "Some companies consider sorghum an orphan crop," says Ram V. Kaundinya, chief executive of Advanta Seeds. (up bought Advanta in 2006 from Fox Paine, a California private equity firm, for $130 million.) "We've invested in some technology and made our seeds drought-resistant."
Shroff believes biofuel's future involves a combination of sorghum, sugarcane and corn. In a tropical climate like Brazil's pure sugarcane is the most cost-effective source of biofuel. In the northern U.S. corn is the usual source of ethanol. Near Advanta's U.S. office in Hereford, Tex., where it is testing 50 hybrid strains of sorghum for ethanol production, a mix of sugar and sorghum might work. You harvest the sorghum, which has a four-month growing cycle, in July, but the sugarcane in September. The two plants use the same processing mill, which then gets better use.
Put it all together--and allow for two sorghum harvests in a good year--and the dual crop could yield 750 gallons of ethanol per acre in the southern U.S., Kaundinya says. Corn in Iowa is good for only 450 gallons an acre. That stands to reason: The sunlight is brighter in Texas.
The corn people demur. Their crop is ready to meet fuel demand now, they say, not just in some grand plan. Their biofuel plants produce valuable by-products (corn oil and animal feed); sorghum plants do not. They don't buy the argument that land used for sorghum is exempt from the competition between food and fuel; all tillable acreage impinges on potential food supply.
With sorghum, the ethanol distillery can put the bagasse (plant stalks) to use as a boiler fuel, generating heat for distillation and steam for electricity. Southeast Renewable Fuels, a privately held firm in Fort Lauderdale, Fla., is buying sorghum seeds from Advanta and has arranged for their planting by farmers on 25,000 acres. Goal: a minimum of two sorghum harvests per year on every acre. This fall Southeast plans to break ground on a plant that will extract the sugar and ferment it into 20 million gallons of ethanol a year. The plant will cost $100 million. The state of Florida is chipping in $2.5 million, and most of the balance will come from favorable-interest loans (tied to the export from Brazil of plant equipment). Donald Markeley, Southeast's chief operating officer, plans to sell 165 million kilowatt-hours a year of electric output at maybe 8 cents apiece.
"There's a pretty sizable market for green electricity, and the more lucrative end of the process may be the bagasse for cofiring," insists William Rooney, associate professor of sorghum breeding and genetics at Texas A&M University.
This one plant (the promoters see two more) would yield ethanol worth $40 million a year (it gets a steep $2 a gallon in Florida) and electricity worth $13 million. Out of that revenue stream it will be paying the farmers maybe $15 million for the crop, paying a few million dollars in debt service, and paying to process as well as ship inputs and output.
Producing biofuel is easier said than done. The equipment is expensive and is inevitably idle most of the year because it has to process a crop quickly, since sorghum, whose stem juice is anywhere from 12% to 20% sugar, spoils quickly. Then the mill has to work with no serious hitches for these new operators. Of course, harvesting and hauling the harvest burns up diesel fuel and, to some degree, defeats the purpose of the exercise.
And then there are the political risks. It's conceivable that Congress will back down from the costly biofuel mandate, or tilt the field to favor corn, or remove the tariff that keeps out the far more cost-effective Brazilian ethanol.
In the end Shroff's firm may find the payoff on its Advanta acquisition a long way from the U.S. Advanta's research director, Alan Scott, explains: "Corn is a highly productive crop in a good production area. The problem comes when it's put under stress, and this is where sorghum really flies. In Australia, western Argentina, India, places where moisture is a restriction, sorghum is the answer."
FOR IMMEDIATE RELEASE
JULY 29, 2009
~ Announces grants designed to stimulate investment in renewable energy projects ~
DANIA BEACH – Governor Charlie Crist today recognized Florida’s growing renewable energy technology industry as a part of his ongoing focus on economic development. During a roundtable discussion at the Center for Ocean Energy Technology at Florida Atlantic University (FAU) with leaders of Florida’s renewable energy industry, Governor Crist congratulated the nine recipients of $15 million in grant funding through the Renewable Energy and Energy-Efficient Technologies Grant Program. Earlier today, Governor Crist visited Marathon Petroleum’s ethanol blending facility in Tampa.
Renewable Energy and Energy-Efficient Technology Grants
Willard & Kelsey Solar Group LLC - $2.5 million, "Willard & Kelsey Solar Group International Solar Park Manufacturing and Administrative Headquarters" ($2.5 million)
· Southeast Renewable Fuels, "Construction of Sweet Sorghum to Ethanol Advanced Biorefinery" ($2.5 million)
· Verenium Biofuels Corp., "Highlands Ethanol Project" ($2.5 million)
· Highlands EnviroFuels LLC, "No-Tillage Sweet Sorghum Cropping System to Reduce Green House Gases for Biofuel Production" ($305,000)
· Florida Thoroughbred Breeders & Owners Association, "Ocala Equine Energy" ($2.5 million)
· Florida Crystals Corporation and Coskata Inc., "Engineering for Commercial Scale Biomass to Liquid Fuels Plant and Eucalyptus Energy Plantation" ($195,000; partial funding)
About the Renewable Energy and Energy-Efficient Technology Grants
State of Florida Department of Energy
Construction of Sweet Sorghum to Ethanol Advanced Biorefinery
Recipient: Southeast Renewable Fuels, LLC
Grant Funds Requested: $2,500,000
Project Objective: The recipient will build a 20 million gallons per year, sweet sorghum-to-ethanol advanced bio-refinery in Hendry County, with a business plan to expand to 100 million
Energy Potential: Once complete, the project will establish a 20 million gallons per year,
Economic Development: The project will stimulate Florida’s economy by creating
For more information visit: www.myfloridaclimate.com
If Aaron Pepper has his way, the ethanol blended into gas for your car in South Florida will soon come from the shores of Lake Okeechobee.
The first $75 million plant would be up and running by 2011, said the chief executive of Southeast Renewable Fuels.
"This is an untapped market," Pepper said, noting soaring demand for ethanol because of recent government mandates but a lack of commercial-scale factories in South Florida.
But questions abound over the crop in Florida, from potential diseases on large scale farms to available acreage and its sales price.
"Expectations are raised too much with little data," warned George Philippidis, associate director of Florida International University's Applied Research Center.
Pepper said his team has been developing the project for more than 15 months and has a 500-acre test farm near Lake Okeechobee.
It plans its first factory in the Clewiston area of Hendry County, known for sugar, citrus and other crops. The plant would make up to 20 million gallons of ethanol a year, a tiny amount in a state that needs almost 1 billion gallons yearly just to meet 10 percent of current transport fuel needs.
South Florida now gets ethanol – blended into gas to trim fuel prices and cut pollution – mainly by truck or ship from Midwest factories that make it from corn. It also imports sugar cane-based ethanol from Brazil and countries in the Caribbean.
Biofuels experts say sweet sorghum appears promising as a feedstock. It yields more energy than corn and resembles energy-rich sugar cane, so that Brazil's lengthy experience in production can be applied.
Pepper's company already is talking with farm groups about planting sweet sorghum, which grows like sugar cane to 12- to 15-feet tall, but is not widely cultivated in the area. Initial reaction is good, since sorghum yields two harvests a year and can be planted on sugar lands when they are fallow, he said.
The company also is working to raise at least $75 million for the project, with up to 80 percent likely to come from equipment suppliers in Brazil or Spain.
The factory would buy sweet sorghum from local farmers, squeeze juice from the stalks, ferment and distill the liquid into ethanol and also burn stalks to make electricity.
It would earn money in three ways: selling ethanol to fuel companies; selling carbon dioxide captured from producing electricity to soft drink makers; and selling surplus power to the grid – likely 20 megawatts a year worth at least $15 million, Pepper said.
If all goes well, plans call for two larger factories, each costing at least $140 million. Those would boost the company's ethanol output to 100 million gallons a year and require about 100,000 acres of sweet sorghum to supply the three mills.
A former schoolteacher in New York City, 59-year-old Pepper hadn't prepared to become a biofuel entrepreneur.
He had developed a poster company and then sold it five years ago, retiring to South Florida. But eco-business opportunities piqued his interest, and plans to require 10 percent ethanol in all Florida gas by 2011 mobilized him.
"It's too costly to bring in ethanol from the Midwest; there's no pipeline to South Florida. And there's a 54-cents-a-gallon tariff on Brazilian ethanol," Pepper said. "Locally-produced ethanol is the solution."
FOR IMMEDIATE RELEASE
Southeast Renewable Fuels, LLC (“SRF”) announced today its plan to permit and build a 20 million gallon per year ethanol biorefineries on a 60 acre site along Highway 835 - 15 miles south of Clewiston. The company has plans to build at least three ethanol plants around the Lake Okeechobee area.
Aaron Pepper, CEO of SRF and the Londono family have formed the core foundation of the Florida Ethanol Cooperative. Growers and investors are invited to participate in the ethanol project related to the Hendry County site.
Aaron Pepper CEO inspecting sweet sorghum field trials.
Don Markley COO inspecting sweet sorghum field.
The feedstock will be Sweet Sorghum grown in the sandy soils around the Clewiston - La Belle areas. SRF currently has sweet sorghum field trials underway in various types of soils in the counties surrounding Lake Okeechobee. Sweet Sorghum is an ideal rotational crop. There will be profit opportunities for growers and shareholders, as well as numerous industrial and agricultural jobs created.
Carlos Rionda (President) inspecting sweet sorghum field trials.
TOMORROW'S VISION........ TODAY!
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