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Nov-06-2009Tenn. gov: Biofuels project criticism 'outrageous'(topic overview)
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The plant was only built to produce a maximum of 250,000 gallons -- 5 percent of what was intended and not enough to make it profitable. For the time being, DuPont isn't using switchgrass; it's using corncobs until 2011, even though the state is paying farmers $5 million a year to grow switchgrass. There's information lawmakers can't get about how money is being spent because it's considered proprietary information by DuPont. Lawmakers said they feel like they've already wasted money and now might have to pay millions more to keep the plant going. University of Tennessee leaders defended the project, saying the state building commission approved the scaled back plan and this is a sound investment by the state. [1] In partnership with DuPont, the plant was supposed to produce 5 million gallons of ethanol a year made from switchgrass. Lawmakers Wednesday heard what they approved isn't occurring, and they're mad. "It looks like we've been sold a bill of goods down here in the General Assembly on this plant," said state Rep. Curry Todd. Those original plans changed, and lawmakers said they didn't have a clue.[1]
Several members of the legislature's Fiscal Review Committee said Wednesday that they have been misled by Gov. Phil Bredesen's administration and the university after a series of changes were made to the state's $70 million biofuels initiative in the two years since it was approved. Those changes include partnering with Delaware-based DuPont Co. to build an experimental refinery and using the chemical giant's existing technology that produces ethanol from corncobs, not switchgrass, a prairie grass common in the state.[2] NASHVILLE Some state legislators said Wednesday they may have been misled in approving $70 million for the University of Tennessee's Biofuels Initiative and questioned whether taxpayers should continue to underwrite the costs. The Fiscal Review Committee, a joint House-Senate panel that oversees state spending, voted after hearing a report on the project to delay its approval of an amendment to a contract on operation of the facility that involves about $11 million of the funding. The UT Research Foundation has set up Genera Energy, LLC, to operate the project, and its president and CEO, Dr. Kelly Tiller, defended changes that have been made and said taxpayers still stand to make a "significant return on their investment" in the long term.[3] As first reported in the Tennessean.com, state lawmakers say they may remove funding from a project dedicated to the University of Tennessee that will produce ethanol from switchgrass. This news came about after legislators were informed that the school will be doing business with DuPont (a corn based ethanol producer) and scaling down ethanol production. Cost for the government for these changes would increase the project an additional $11 million through June 30, 2013. "The state is subsidizing DuPont to do all this research. It's all they're doing," said Rep. Curry Todd, R-Collierville. "It's a sad commentary that we were led down this road by the governor, UT and whoever else was involved in it."[4]
State lawmakers say they might pull the plug on a University of Tennessee effort to produce ethanol from switchgrass, after school officials said it has changed business partners, scaled down production and now plans to start out using corncobs, not switchgrass.[2]
Originally, as part of the 2007-2008 budget, Tennessee's Gov. Bredesen asked the legislature to approve a plan to study switchgrass for biofuel production as a way to get Tennessee into the ethanol industry and find a way to produce fuel ethanol cheaper than using corn.[4]
A central point was that legislators were told two years ago that the pilot project would produce 5 million gallons of ethanol per year from switchgrass - an amount now reduced to 250,000 gallons with initial production involving corn cobs. Bredesen likened White's "terrible behavior" to a prosecutor appearing before a jury in a criminal case, acting as if he had discovered "a great secret."[5] As originally envisioned, the facility was to produce 5 million gallons of ethanol per year that could be sold to pay the operating costs of the research refinery.[6] The initial projection of a facility producing 5 million gallons of ethanol per year was based on Department of Energy estimates at the time for the size needed to be commercially viable. When things got further along, she said, "We became convinced the 5 million gallons was too big to be affordable and operate cost effectively going forward (as a research facility) but not big enough to be a commercial operation in the future."[3]
Under the current plan, the facility will produce only about 250,000 gallons, enough to determine whether the process of turning switchgrass to fuel will work for a full-size refinery, but not enough to pay the ongoing costs, committee executive director Jim White said. After the presentation some Republican senators told the Knoxville News Sentinel they were misled when they approved $70 million for the public-private partnership in 2007. [6] "I'm more than irritated. I'm mad about this," Bredesen said. "We are very, very close to announcing a very large investment in East Tennessee because of this facility." Now, Bredesen said, the potential investors have threatened to take their project elsewhere if legislators are going to politicize the refinery. The committee delayed its approval of an amendment to a contract on operation of the facility that involves about $11 million of the funding. White on Thursday defended his presentation. "I do not agree that the point of the meeting was to allege a nefarious conspiracy to keep the legislature in the dark," he said. White said his presentation was factual and it was the legislators who became concerned they were not being kept informed after they learned of the changes.[6] Bredesen said all the changes in the program actually went through appropriate government channels, including the State Building Commission, and were appropriately considered. He said the administration was not consulted in advance and could have explained the issues on request. He said, the result was "sandbagging" on a level that no governor he can recall has ever faced from the Legislature. Bredesen said the attack came with he and other administration officials on the verge of signing off on a proposal from an unnamed company for a major investment in East Tennessee that is directly tied to the initiative. "They may have single-handedly lost a lot of jobs for Tennessee," Bredesen said. He said the pending investment was "one we got out of another state" and that he was contacted Thursday by company officials concerned about media reports on the White report. He declined to give any specifics about the proposed investment, but said it was jeopardized. "We are scrambling like mad to keep this thing together right now," the governor said. "It's just ridiculous. It's outrageous."[5]
In 2007, the state Legislature approved spending $70 million to build a cellulosic ethanol plant in east Tennessee.[1] The report noted that the project has changed substantially from what was projected in 2007, when legislators approved $70 million in state spending on the initiative.[5]
The plant has run up costs of $55 million so far for construction and equipment, with $36.7 million coming from the state and the rest from DuPont Danisco Cellulosic Ethanol LLC, a private partner in the project, the report says.[3] The state has covered other costs, including staff salaries and payments to farmers for growing switchgrass, as it moves toward expending the $70 million total. The state pays $5.3 million per year for operating expenses with two more years of those payments scheduled.[3] The plan also called for paying farmers in the region $1.75 million to grow enough switchgrass to produce as much as 5 million gallons of ethanol annually and create a surplus of jobs in the state.[4] • Initial output of a pilot plant built at Vonore has been cut back from 5 million gallons of ethanol a year to 250,000 gallons. It will initially use corncobs, which are chemically similar to switchgrass, and switchgrass won't become the raw material of choice until at least 2011. Members of the legislature's Fiscal Review Committee complained Wednesday that they had not been kept informed of these changes.[7] The production capacity at the $36.7 million refinery was slashed to 250,000 gallons of ethanol a year from 5 million gallons.[2]
Plans now call for just 250,000 gallons and the initial production of ethanol will use corn cobs.[3]
Most of the crop will go for research purposes other than ethanol production. White's report says the project cannot be self-sufficient and "production capacity is not large enough to generate revenue to pay its operating costs."[3]
White said the project has had little oversight from government, though Tiller said the State Building Commission had approved changes from the original plans. "This disappoints me more than anything I've heard in eight years at the Legislature," said Rep. Eddie Yokley, D-Greeneville. "We bought this on the assumption that we had the facts showing this would work."[3] Tiller said all changes to the refinery had been approved by the State Building Commission, the panel that supervises construction in the state.[2]
The project leader said the State Building Commission, which supervises state construction projects, approved the refinery changes.[7]
The changes would require the state to spend an additional $11 million during the next four years to keep the project alive.[7] Tiller said the project is on track and has "tremendous potential" and has been integrated into other research and development at UT and Oak Ridge. It also has received $15 million in federal funding.[3] Tiller said the refinery has "tremendous potential" and has been integrated into other research and development at UT and Oak Ridge National Laboratory. It has received $15 million in federal funding and 18 million from development partner DuPont Danisco.[6]
Initial optimistic projections of results and production dates are almost guaranteed to miss the target. The concept of the switchgrass-to-ethanol experiment has such potential that lawmakers should not allow disappointments to derail it. Ken Goddard, former Henry County Extension Service leader, is the project's man in the field, working with farmers to promote production of the woody-stemmed grass that grows naturally in this region. "This is very much focused on switchgrass," project leader Kelly Tiller of UT said. [7] UT Extension Biofuels Specialist Ken Goddard walks through a switchgrass field at Randall Peters farm in Vonore last summer. Gov. Phil Bredesen touted switchgrass in his 2007-08 budget[2] The report, presented by Jim White, executive director of the committee's staff, included a showing of videos of officials describing plans for the Biofuels Initiative in 2007, when it was initially approved at the urging of Gov. Phil Bredesen.[3] The report on the University of Tennessee's Biofuels Initiative presented to the Fiscal Review Committee on Wednesday was highly critical of changes in the project since it was first announced.[6]
NASHVILLE - Gov. Phil Bredesen branded a legislative attack on the BioFuels Initiative he launched two years ago as "ridiculous" and "outrageous" Thursday and said it endangers an unannounced "very large investment in East Tennessee."[5] NASHVILLE, Tenn. — Gov. Phil Bredesen says a legislative staff member who attacked a state-backed initiative to turn switchgrass into ethanol is playing politics and endangering chances to land a large investment for East Tennessee.[6]
"We took about half of our project and converted it to mono-culture switchgrass, looking down the road that it might become a cash crop," Greenwell said. CROET, or Community Reuse Organization of East Tennessee, manages much of the project, but they receive assistance from other organizations like Oak Ridge National Lab.[8] East Tennessee scientists and farmers are pairing up for a major project, and Wednesday, they harvested some of the fruits--or grass, more directly--of their labor.[8]
The project was described at the time as a way to get Tennessee into the ethanol industry by developing ways to produce the fuel using a plant that was cheaper than corn and could be grown on marginal soil.[2] The farmers growing and harvesting it are another. "Farmers are really interested in looking for alternative sources of income on land they're not using for commodity crops," Downing said. Their work may go far beyond the ethanol plants.[8]
Genera officials decided to start the plant up using that material ' not switchgrass ' because the two are chemically similar, said Kelly Tiller, a university professor and Genera's chief executive. "This is very much focused on switchgrass," she said.[2] "The University is looking at a process to pelletize switchgrass so you can burn it in a pellet stove for homes, in biomass boilers, in power plants," Greenwell said. "This land used to be farmland," Greenwell said. The swithgrass harvested today will be bailed Friday and find its final destination at the new biofuels plant opening in Vonore later this year.[8] When the 40-acre field beside the former K-25 site was seeded a few years ago, it was never intended for a biofuels plant.[8]
The field will yield about 5 to 8 tons of dry material per acre and will continue to sprout new switchgrass for 15 to 20 years without reseeding.[8] Only about 2,700 acres are now under contract for growing switchgrass, with farmers paid $450 per acre per year.[3]
Several members of the committee said the expenditures seemed wasteful, especially in light of the state's tight budget situation. "This is my eighth year in the legislature, and I don't know. Frankly, what I've heard this morning, this disappoints me more than anything," said Rep. Eddie Yokley, a Greeneville Democrat. They also said the Bredesen administration and university officials had not adequately informed them of the changes. [2] "I'm more than irritated about it, I'm mad about it," Bredesen told reporters at a news conference when asked about the Fiscal Review Committee report, presented on Wednesday by the panel's executive director, Jim White.[5] Bredesen shot back on Thursday saying the changes had been approved in public meetings. He accused White of acting outrageously by making it seem like the administration was trying to hide something and he had "discovered a great secret."[6]
Sen. Bill Ketron, R-Murfreesboro, who chairs the committee, said the project was approved at a time when the state was "flush with cash" while now the state faces major revenue shortfalls with prospects of state employee layoffs and more budget cuts. "This program may need re-evaluation," Ketron said. "We're going to have to turn over every rock to balance this next budget."[3]
When Governor Bredesen announced a $70-million biofuels project, plans changed.[8] NASHVILLE, Tenn. -- Lawmakers said they feel they were duped into spending $70 million of taxpayer money on a plant that isn't living up to its promises.[1]
Concerned about changes in the project, some legislators are threatening to pull the financial plug. It has been replaced by DuPont, which already had a project to make ethanol from corncobs. [7]
SOURCES
1. Lawmakers Feel Duped By Ethanol Plant Deal - Money News Story - WSMV Nashville
2. TN legislators may scrap $70M biofuels project | tennessean.com | The Tennessean
3. Legislators disappointed in status of UT biofuel initiative; CEO says it has potential » Knoxville News Sentinel
4. TN Legislators May Discontinue Biofuels Project - Domestic Fuel
5. Bredesen calls biofuel criticism 'outrageous' » Knoxville News Sentinel
6. The Associated Press: Tenn. gov: Biofuels project criticism 'outrageous'
7. The Paris Post-Intelligencer > Opinion > Editorials > State should keep switchgrass plant
8. WBIR.com | Knoxville, TN | Switchgrass harvested at K-25, farmers diversify income
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