The future of energy in Hawai‘i


Cover image for Dec 1, 2010

environment / Biofuel is a buzzword in a vocabulary that typically includes such nouns and adjectives as “sustainability,” “agriculture,” “clean” and “green”. In the Islands, it’s a word being heard more often as the Hawaii Clean Energy Initiative (HCEI) moves toward its ambitious goal: Replace 70 percent of the state’s imported oil with a mix of 30 percent efficiency measures and 40 percent locally generated renewable sources by the year 2030.

It’s the most aggressive initiative in the nation, designed for a state that is more dependent on imported fossil fuels than any other. While solar, wind, wave, hydroelectric and geothermal power are all components of the initiative, its success depends heavily on biofuels, the only renewable energy source that can provide liquid fuel.

“Biofuel has an important role, especially as a transition fuel,” says Rep. Mina Morita, chairwoman the House Energy and Environmental Protection Committee and member of the HCEI steering committee. “We still need a liquid fuel because that’s the basis of our transportation system.”

While biofuels have taken off in places like Brazil, with its cheap, plentiful labor force, and the American Midwest, where the acreage is vast and farmers have the incentive of federal crop subsidies, the Hawaii industry remains in its infancy.

But issues that have long bedeviled agriculture in Hawaii–escalating land prices, labor shortages, low soil fertility, the expense of importing fertilizer and other farm supplies, high energy costs, disputes over water and a relatively small land base — have re-emerged in discussions about the feasibility of large-scale biofuel production.

Hurdles for Farmers

It is so difficult and expensive to farm in Hawaii,” says Jerry Ornellas, a Kauai farmer and a member of the state Board of Agriculture. “If you’re looking at a relatively low-cost commodity, it will never make it. They’re talking plantation-scale agriculture, and if the plantations couldn’t make it, how can they?”

Still, some of the state’s largest landowners are willing to explore the possibility. Kamehameha Schools, Kauai’s Grove Farm Co. and Maui Land and Pineapple Co. joined forces in 2006 to create Hawaii BioEnergy LLC, which is charged with “actively researching all technically, economically, and environmentally viable processing techniques and distribution channels for a variety of energy crops,” according to its website.

“Nobody would dispute that agriculture in Hawaii is difficult in any form, and that’s why it [biofuel production] will take a coordinated effort that will involve many people,” says Joel Matsunaga, Hawaii BioEnergy’s chief operating officer and executive vice president. “While it’s very difficult, everyone agrees it’s very important for Hawaii to be able to address its energy issues.”

Finding Viable Crops

The company has several crop trials under way, and is looking at sorghum, eucalyptus, sugar cane and algae, among others. The challenge, Matsunaga says, is finding a feedstock that can be grown at the scale and price point required to make it economically viable. “It may be that as you move forward, you don’t work with just one crop,” he says.

Algae, which feeds on carbon dioxide, appears to hold some promise because it’s less labor intensive than other crops and has the potential to yield more oil per acre per year. Algae also could serve as a high-protein animal feed once the oil is removed, Matsunaga says.

But finding a viable feedstock is just one part of the equation, Matsunaga points out. Landowners will also need to form partnerships with farmers, as well as companies that have the technology to process and distribute biofuel. It will also be crucial to secure longterm purchasing contracts to obtain financing for biofuel enterprises, he says.

Morita and Big Island Sen. Russell Kokubun, chairman the Senate Water and Land Committee, says the Legislature expressed its support for both food and fuel when it passed a bill that increased the state tax on a barrel of oil from 5 cents to $1.05. Of that, 55 cents is earmarked for an energy-security fund for the development of renewable energy resources, 35 cents will go to a food-security fund to help farmers and 10 cents will be allocated to the Hawaii Natural Energy Institute.

Conflicts of Interest

Morita says the state may want to re-examine the seed-corn industry, which is lucrative but ties up extensive amounts of state land while providing neither fuel nor food. The state also needs to look more closely at what it can do to support farming, especially in regard to infrastructure.

“While the energy policy is clear, the agriculture policy is not,” she says.

Water is a case in point. It’s needed to cultivate and process biofuels, as well as to grow food for local consumption, but the state’s century-old plantation irrigation system is inefficient and in many places has fallen into disrepair. Meanwhile, longstanding disputes over how much water should be allocated to small farmers, large plantations and restoring stream flows remain unsettled.

That particular battle is already being fought with Hawaiian Commercial & Sugar (HC&S), which sees the Navy’s biofuel research initiative as “a significant step toward our goal of transforming HC&S into a large-scale energy farm, playing a key role in securing Hawaii’s energy future,” according to a statement by HC&S General Manager Chris Benjamin in an April 2010 press release.

Such declarations don’t sit well with Kapua Sproat, an assistant professor at the University of Hawaii’s Ka Huli Ao Center for Excellence in Native Hawaiian Law, who has helped litigate citizen challenges to HC&S’s use of water from several Maui streams.

“HC&S is always saying they need every last drop of water they have now or they won’t survive,” Sproat says. “If that’s the case, where is the water for biofuels going to come from? The water belongs to everyone, and not just the few companies that have been hoarding it for the last century.”

Labor is another stumbling block, with Henry Curtis, executive director of Life of the Land, pointing out that the average age for farmers nationwide is 56, but in Hawaii, it’s 58. “If you do have biofuels as a crop, where are you going to get the labor from?” he asks.

Ornellas had a slightly different question. “What are you going to pay the farmers? How can you plan an entire industry without knowing your feedstock costs? These plants use huge amounts of water and electricity. No one has told us what will be the cost of these resources.”

Sproat urges caution, noting that industrial agriculture has “fundamentally impacted life in rural communities” and contributed to numerous other problems, such as erosion, runoff and the degradation of nearshore marine ecosystems.

“Rather than converting from one monocrop to the next, it would serve all of us well to step back and examine what’s really necessary to sustain Hawaii into the future,” she says.

Morita agreed that “there are environmental and social justice issues that have to be carefully considered” as the state makes the transition to alternative energy.

Despite the challenges, some renewable energy proponents say Hawaii can’t afford to ignore biofuel’s potential, especially since it is now attracting research and development money that can help the state, private industry and citizens decide what mix of energy sources best suit the Islands.

“A lot of has to do with trial and error,” Kokubun says. “We tend to go for the brass ring in its entirety instead of building on smaller successes.”

Growing Appeal

The prospect of a biofuel bonanza has drawn both investors and research-and-development ventures to the Hawaii market. They include eBay founder Pierre Omidyar and his wife, Pam, whose Ulupono Initiative is providing financial support and management to ClearFuels, a company looking at cellulosic ethanol and renewable diesel from sugar-based feedstocks.

The US Department of Energy has agreed to give Cellana LLC up to $9 million investigate large-scale production of fuels and feed from microalgae grown in seawater in Kailua-Kona on the Big Island, and has awarded Phycal $3 million toward the first phase of a 40-acre pilot algae farm in central Oahu.

Meanwhile, Hawaii Pure Plant Oil is growing jatropha in East Hawaii for possible use in production of biodiesel, although the plantation is not yet in full production, and SunFuels is trying to secure state land to grow eucalyptus.

Pacific West Energy, lured by generous tax credits and a 2006 state mandate requiring that 85 percent of all gasoline sold in the Islands contain at least 10 percent ethanol, is attempting to develop Hawaii’s first sugar ethanol and power plant on Kauai.

Pacific Biodiesel, a mainland-based firm, is successfully recycling used vegetable oil and grease from restaurants into diesel engine fuel on Maui. The company also got a $5 million federal loan guarantee to build a $10 million biodiesel plant on the Big Island that can process used grease, animal fats and oil from jatropha, sunflowers and algae.

Working on a small, localized scale, Kauai Farm Fuels is also recycling used vegetable oil into three products: true biodiesel, which meets federal standards as a certified fuel; purified oil for use in modified diesel engines; and oil that has been cleaned up enough to be burned for heating purposes.

“We’re trying to do a completely alternative fuel so we have to create new infrastructure and a distribution system,” explains Adam Asquith, a founding partner of Kauai Farm Fuels. “We had to figure out how to store and transport it.”

Some of the earliest customers to come on board were Rylo Construction Co., which uses biodiesel in its heavy equipment, and Niu Construction, which modified its Niumalu plant so it could burn the fuel to heat asphalt. Farmers also purchase it to run their tractors and other machinery, which is a use the company seeks to promote in keeping with its goal of fostering sustainability on Kauai.

“If its use truly goes back to agriculture, it almost completes the whole cycle,” Asquith says.

Working Out the Kinks

Meeting the goals set by the Hawaii Clean Energy Initiative will require a major makeover for the Islands, which currently use imported fossil fuels to run its transportation system and generate nearly all its electrical power.

“We’re re-doing the entire energy system, from both the transmission and fuel sides,” says Morita.

The effort is meeting numerous trials. Among them are the need to make substantial infrastructure investments, making changes to the utility regulatory structure and ensuring that governmental agencies have sufficient staffing and funding.

“Leadership is very important,” says Morita, who hopes policy-makers “keep their eye on the ball” as new players take their place in the Legislature, governor’s office and state administration.

Added to that are various external factors, including wide fluctuations in oil prices, which affect the economic feasibility of various alternative fuels; technological advances; the mood in Washington, DC, which currently provides most of the state’s research and development money for alternative energy; and the availability of private capital.

“We’ve got so many balls in the air with technology and policy,” Morita says. “The challenge is how and where to make the right investment so risks and costs are minimized.”

Morita also wants to ensure that the state’s energy transition doesn’t favor those with the resources to exit the fossil fuel system, such as the military and large resorts. If big electric users get off the grid, residents and small businesses could be socked with high utility rates and the cost of maintaining an antiquated grid and transmission system.

“It’s a social justice issue,” she says. “You need to put economics at a human scale, and I’m trying to do that with the HCEI, so that even people with the lowest income can benefit from efficiency and renewable energy resources.”

Thus far, the private sector and federal government have provided most of the funding for Hawaii’s foray into alternative energy, including biofuel, Morita says.

“But that’s changing. The state needs to put up its fair share in matching funds for federal and private sector money to continue coming in. It’s becoming more competitive. We’ve tried to carve out a certain niche for Hawaii. We understand there’s not one solution, and that’s the role Hawaii can play: a model for the integration of various technologies.”

For more by Joan Conrow visit [kauaieclectic.blogspot.com]

What Are Biofuels?

Biofuels come from biomass — recently living material like sugar cane and corn, which is fermented into alcohol, or seeds and grains, which are pressed to produce oils.

The two most common biofuels are ethanol, an alcohol typically derived from fermented sugars and starches, and biodiesel, which combines refined animal, vegetable or recycled cooking oils with methanol or ethanol.

Ethanol is usually mixed with gasoline, while biodiesel can be used as either a gasoline additive or straight fuel source for diesel engines.

Biofuels are often viewed as “greener” and more sustainable than fossil fuels. Biodiesel emissions do have less carbon monoxide, particulates, carcinogenic compounds and sulfates than petrodiesel. And unlike the world’s supply of oil, which is finite, biofuels theoretically can be replenished indefinitely.

In Hawaii, their cultivation and processing is touted as a way to preserve rural landscapes, boost agriculture, provide jobs and support the economy.

But not all biofuels are created equal, and a growing body of research shows the most common ones are far from environmentally benign. Palm oil production, in particular, has been associated with destruction of rainforests in Indonesia and the Amazon. Two recent studies showed that clearing even grass or scrublands to grow biofuel crops released substantially more greenhouse gases than would be saved by the fuel grown on the same acreage. Critics also note that their cultivation requires extensive amounts of land, water, petroleum-based fertilizers, pesticides, herbicides and, in some cases, genetically modified seeds.

“It’s very easy when money’s being thrown at something and you don’t have to look at the side effects to say everything will be green with biofuel,” said Henry Curtis, executive director of Life of the Land. “It’s because of all the unaccounted for agricultural impacts that biofuel is not all it’s cracked up to be.”

Who’s Investing in Biofuels?

Locally, much of the current biofuels effort is focused on research and development–figuring out to blend biodiesel with fossil fuels in power plants and identifying the right feedstock, or fuel, that is cost-effective to cultivate and process locally.

To help boost local production, Hawaiian Electric Co. (HECO) recently put out a request for biofuels grown and processed in the Islands.

“This call for proposals sends a clear market signal to land owners and agricultural interests that if they plant today they will be able to sell their products for a reasonable return on their investment and effort tomorrow,” says Robbie Alm, HECO executive vice president, in an April 2010 press release.

The Navy, meanwhile, has expressed its intent to operate a “green fleet,” which spurred a $12 million biofuel research initiative by the University of Hawaii on land owned by Hawaiian Commercial and Sugar (HC&S) on Maui. The US Department of Energy and Office of Naval Research are providing funding

Big Island Sen. Russell Kokubun, chairman of the Senate Water and Land Committee, thinks it’s crucial to involve the public, particularly farmers, in decisions about biofuel development.

That’s one reason he championed a bill that required public hearings on proposals to use state land for biofuel production. Former Gov. Linda Lingle vetoed the bill, but the Legislature overrode her.

“We need to provide some level of comfort and security to the community that the imagined worst case scenarios will not come to pass,” Kokubun says. “It’s a multifaceted and complex issue.”

Not everyone is convinced that putting farmland into biofuel feedstock cultivation is a good thing, especially if food production is sacrificed in the process.

“We can’t produce a gallon of milk for the kiddies, but we’re gonna make fuel for the military,” Ornellas says. “What are our priorities?”

“I think we have to do both,” Kokubun says. “It cannot be one or the other.”

“Those are the kinds of things that send positive signals to the industry,” Matsunaga says.