18th March 2007

Alan Banks sees a burgeoning business opportunity in the rusted pipes and hurricane-scarred fermentation tanks at a mothballed ethanol plant in Central Florida.

With a $12 million renovation plan, Banks, CEO of Losonoco Inc., a Fort Lauderdale-based alternative energy company, hopes to be at the forefront of the state's campaign to produce and promote renewable fuels -- first from truckloads of corn and eventually from wood scraps, tree clippings and hurricane debris.

Every time he sees piles of yard waste, "I start calculating how much ethanol we could produce," Banks said. "I go around and think, `We could make 30 gallons of ethanol with that.'"

From Miami to Tallahassee, private investors and public officials are launching initiatives to create fuel from renewable sources. Among Florida's most plentiful are plant fiber and wood pulp, known as biomass. Proponents say locally produced ethanol could protect the state from price spikes at the gas pump, reduce greenhouse gasses and help meet a national goal to boost production of alternative fuels to 35 billion gallons by 2017.

"We're very committed to getting the technology to solve the twin problems of climate change and oil dependency," Banks said. "What gets us up in the morning and gives us a buzz is the thought that we're getting close to that."

Most ethanol in the United States is made from corn, but as the biofuel market expands, farmers will not be able to meet increasing demand for the crop. Banks and others are pinning their hopes on cellulosic ethanol, fuel from a new process that turns plant fibers from a variety of sources -- wood chips to barley straw -- into fuel.

Although the technology for large-scale cellulosic ethanol production could be 10 to 15 years away, Florida's bounty of forests and agricultural land eventually could make the state a leader in the field, energy specialists say.

"We are swimming in biomass in Florida, and this is the place to be using research to develop cellulosic ethanol," said Ed Glab, director of an energy development project at Florida International University's College of Business Administration.

Florida lags behind Midwestern states, where most of the nation's 114 ethanol plants are located. Another 78 plants under construction are spread across states that are newer to the ethanol boom, such as Georgia, Arizona and New York. Florida has none. Of about 1,100 gas stations across the nation offering E85, a blend of 85 percent ethanol and 15 percent gasoline, Florida has only one, in Tallahassee.

"We're way behind where we can be. We can be one of the leaders in renewable energy if we get on the stick and do it," said Tommy Boroughs, chairman of the Florida Energy Commission, a nine-member board created last year to advise the Legislature on strategies to promote alternative energy. "It's going to take grants and incentives to encourage people."

The Legislature has set aside $15 million to boost investment in renewable energy. Grants were handed out last month to eight firms for projects ranging from promoting solar energy to producing biofuel from citrus peels.

Florida Agriculture Commissioner Charles Bronson has urged legislators to offer state tax credits to encourage production and use of biofuels. One bill introduced this legislative session would offer gas stations a 1-cent-per-gallon tax credit for selling E10, a gasoline blend that contains 10 percent ethanol, and 3 cents per gallon for E85.

Another bill intends to move Florida firms toward "the next generation of ethanol production," said Jay Levenstein, deputy agriculture commissioner, by offering a 5-cent-per-gallon tax credit to producers for biofuels from sources other than corn, such as the fibrous pulp left after processing sugarcane.

"The corn technology has been around for decades, and it's proven, but Florida's ethanol production in the future will come from other crops," Levenstein said.

Despite momentum generated by state grants and potential tax credits, some companies have hit roadblocks.

Jacksonville-based Gate Petroleum pulled out of a proposed $150 million ethanol plant in northern Florida last year after the price of processing equipment and the cost of importing Midwestern corn made the project too precarious.

"We could earn a reasonably good return, but there are so many risks associated with ethanol," said R.B. "Buzz" Hoover, vice president of petroleum supply for Gate Petroleum. "Where is the cost of corn going to go? ... We're certainly not soured on ethanol, and if the economics did look attractive, we would try it."

A Tampa-based company, U.S. EnviroFuels, scrapped plans for an $80 million plant in Port Manatee when it did not get land for the project. Construction of a larger plant at the Port of Tampa slowed after a nearby laboratory sued, claiming emissions from ethanol processing could interfere with its work. U.S. EnviroFuels is working to secure financing for the $86 million project, said President Brad Krohn.

Blake Casper, a U.S. EnviroFuels investor, has started using renewable fuel in his business. Casper owns the largest McDonald's franchise in the state -- 78 stores in the Tampa area and Northern Florida -- and runs his company's five semitrailer trucks on a biodiesel blend that includes soy oil and chicken fat.

With the current ethanol boom in the United States relying on corn, Casper acknowledged building a plant in Florida is "risky business."

Still, he said, it's a first step "on a long road" toward decreasing dependence on foreign oil.

"Every gallon of ethanol we use displaces a certain percentage of petroleum," said Casper, a Florida Energy Commission member. "I'd rather send my check to someone in Iowa than [to] Hugo Chavez in Venezuela."