State budget cuts threaten future of biofuels research in North Carolina

State budget cuts threaten future of biofuels research in North Carolina

By John Ramsey
Staff writer

WALLACE - The test field in front of John Garner looks more like a jungle than a farm, with thickly clustered rows of grassy plants towering 15 feet high.

The bamboo-like plants called arundo donax - or giant reed - were chopped to 6-inch stalks in January.

Arundo donax is just one of several fast-growing plants, including miscanthus and switchgrass, that Garner and other researchers at the North Carolina Biofuels Center hope will someday replace corn as the chief ingredient in biofuels.

Researchers say Southeastern North Carolina is uniquely poised to become a national leader in biofuel production for two primary reasons:

The coastal Bermuda grass now grown on hog farms goes virtually unused because the hog waste sprayed on it contains so much nitrogen that anything grown there has little value, other than to feed cattle. Thousands of acres on hog farms could be used to grow the high-energy grasses, such as arundo.

Climate. A top Texas A&M University researcher said last year that the Southeastern United States has the right climate to become the "Saudi Arabia" of biofuel production.

The region offers so much promise that Chemtex, an Italian company with its North American headquarters in Wilmington, plans to break ground this winter on a $200 million refinery on 166 acres in Sampson County. Chemtex plans to convert 20 million tons of grassy plants into biofuel each year.

In July, Chemtex signed an agreement for 6,000 acres of energy crops grown on hog farms owned by Murphy Brown, a company that raises hogs for Smithfield Foods. Those 6,000 acres account for only a sliver of the 100,000 acres on hog farms in Sampson, Duplin and Wayne counties that could someday potentially be used to produce plants for biofuel. Most of those hog farms are concentrated in Sampson County.

All of that may sound promising, but there's a big catch: The state legislature this summer eliminated funding for the North Carolina Biofuels Center, forcing it to close by Oct. 1. Since its creation in 2007, the state has spent more than $24 million on the center.

Although the N.C. Department of Agriculture will take over some of the responsibilities of the Biofuels Center researchers and analysts say the state has taken a big step backward and could lose ground - and potentially thousands of jobs - to other states.

More than two dozen research projects could lose funding, including some that are trying to answer important questions about whether arundo donax and other plants are suitable replacements for corn in energy production. Arundo donax is classified as a noxious weed in California and Texas because it has spread along waterways. California has spent more than $70 million trying to eradicate it.

Even the farm where Garner works, with most of its land dedicated to energy crop research, hangs in limbo. A state Department of Agriculture spokesman said officials are trying to determine whether and how they can keep funding research, and projects related to Chemtex and biocrops will be a high priority. But, spokesman Brian Long said, it is too soon to say exactly what will happen.

"We are absolutely shooting ourselves in the foot," said John Bonitz, a biomass specialist and farm outreach and policy advocate with the Southern Alliance for Clean Energy. "One of the things I'm going to regret for (the Biofuels Center) having gone away is that the knowledge of biomass production processing and handling itself is going to suffer here in North Carolina. And that will harm different energy sectors. It will harm our ability to displace other fuels. It's profoundly disappointing to me."

The Biofuels Center studied more than a dozen potential energy crops, including industrial sweet potatoes, before finding that North Carolina's best option was in energy grasses and trees because they can produce more fuel on less land.

During the past five years, the center spent $10.1 million on 71 projects dedicated to understanding how best to grow and control the crops in North Carolina and analyzing how the new industry could affect the economy.

"Just at that cusp of significant credibility and accomplishment, just at that cusp, the plug has been pulled," said Steven Burke, the Biofuels Center's president and chief executive. "The challenge for North Carolina is how to convince companies that the state has not pulled back on its commitment to biofuels through elimination of this organization's funding."

Chemtex said its plans - which include millions of dollars in state and county tax incentives along with a federal loan guarantee - are far enough along that the center's closure will not derail them.

"They've been a great partner, and we're to a point where the project is of its own," said Charlie Harper, a Chemtex spokesman. "Not having that as a resource could have been very problematic a couple of years ago."

Chemtex officials said they will keep working with the state departments of agriculture and commerce as it begins building what will be one of the first second-generation biofuel facilities in the country.

Research in jeopardy

Research that is now in jeopardy because of the closure of the Biofuels Center includes trying to answer important questions about the challenges of growing energy crops here.

In most areas where energy crops are grown, the idea is to figure out the least amount of water and fertilizer needed on land that won't support cash crops such as corn and soybeans.

But Chemtex and others who have looked at North Carolina are interested in spray fields used by hog farmers, which changes the equation.

Hog farmers are required to keep a certain amount of land designated to spray with hog waste. Typically, those fields are planted with coastal Bermuda grass because it absorbs large amounts of nitrogen from the hog waste and prevents runoff into streams or rivers. Food cannot be grown on the fields, meaning energy companies do not have to compete for land with cash crops such as corn and soybeans, which have seen their prices skyrocket in recent years.

Farmers are lucky to break even from using the Bermuda grass as cattle feed or selling it. In the spray fields, farmers need to know the maximum amount of fertilizer that energy crops can absorb.

Switchgrass has been approved for the spray fields because it consumes about the same amount of nitrogen as Bermuda, but it is smaller and therefore less efficient as an energy crop than others. While switchgrass typically yields between 6 and 10 tons per acre in North Carolina, miscanthus can yield as much as a dozen tons per acre and arundo has yielded up to 15 tons.

But the nitrogen-absorption science is still out on miscanthus and arundo, meaning they are not yet feasible in spray fields.

Ron Gehl, an assistant professor and extension specialist in the N.C. State University Soil Science Department, has been working to assess how much nitrogen energy crops such as miscanthus can absorb. But his planned five-year project is among those that were funded by the Biofuels Center, and he is not sure whether money will be available so he can continue his work.

The grasses were planted just last year and take a few years to reach maturity, which could affect how much nitrogen they absorb. Early signs were not promising, with miscanthus absorbing four times less nitrogen than switchgrass or Bermuda. Most farmers would not be willing or able to dedicate four times as many acres to spray fields, Gehl said.

Gehl is also trying to determine whether harvesting the crops during the middle of growing season will increase their nitrogen intake.

"If we were to be cut now, we would not answer hardly any of the questions that need to be answered," Gehl said. "If a biofuels company wanted to come to North Carolina and we can't tell them what crops will work for them, they very well could go somewhere else to build their plant."

About two-thirds of the land Chemtex plans to use will be spray fields where hog farmers apply hog waste.

Chemtex's favored plant is arundo donax, the main crop used for its new plant in Italy. The crop was recently approved by the Environmental Protection Agency for use as an energy crop but remains controversial because it has been invasive in other states. It also has not been shown to absorb enough nitrogen to plant in spray fields.

Paolo Carollo, executive vice president of Chemtex, said the company will rely on a variety of crops such as winter rye and sorghum to keep the plant running year round, so a potential setback with arundo will not kill the project.

"It's not a piece where that makes or breaks the deal," Paolo said. "Even if arundo is not approved yet on spray fields, each and every piece of the supply chain is important."

Sampson plant

Although Chemtex has not broken ground on its Sampson County plant, there are signs of progress.

About half of the acres the company will initially need to feed its facility are already under contract.

Garner and other farmers in the region say the 6,000-acre deal with hog-farming giant Murphy Brown gives Chemtex added credibility among smaller farmers.

Chemtex estimates the facility will help create more than 300 jobs in the region while helping the nation reduce its dependence on foreign oil.

It also marks a move away from using corn for fuel, which has had the unintended effect of driving up food prices.

Once up and running, the plant will have about 65 employees making an average of $48,000 a year.

Farmers, truckers, harvesters and others involved in growing the crops and getting them to the plant will see an economic boost of more than $12 million, said John Swope, Sampson County's economic development director.

"It's not just at the plant; it's truly one of those regional impacts," Swope said.

And that could be just the beginning. Chemtex documents say North Carolina has enough available land to support as many as 15 refineries, which could mean 5,000 new jobs and a $2 billion boost to the state's economy.

Some in the biofuels industry wrote letters to legislators with concerns about the effect of closing the Biofuels Center.

The N.C. Biodiesel Association asked lawmakers not to cut the funding because the center "has been critical to our past success and will be to future growth."

A letter to the General Assembly from one of Chemtex's partners says, "Chemtex would not have made the decision to locate its first U.S. advanced biofuels facility in North Carolina without the (Biofuels Center.)"

Staff writer John Ramsey can be reached at ramseyj@fayobserver.com or 486-3574.