Sorghum for Ethanol
Megha Bahree
Forbes Magazine dated September 07, 2009

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.
Southeast Renewable might be a profitable venture. It might not.

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

CONTACT: GOVERNOR’S PRESS OFFICE 850-488-5394

Governor Crist Highlights Florida’s Renewable Energy Technology Industry

~ Announces grants designed to stimulate investment in renewable energy projects ~

www.MyFloridaClimate.com

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.

“Florida is leading the way as a major marketplace for advanced energy technologies,” said Governor Crist. “As our state and nation recover from challenging economic times, we must continue to encourage companies to invest in clean technologies here in Florida, which will bring ‘green’ jobs to our people, as well as protect our environment and stimulate our economy.”

The Renewable Energy and Energy-Efficient Technologies Grant Program, awarded by the Florida Energy & Climate Commission, advances the growing establishment of renewable energy technologies in the state. The 2008-09 grant recipients are as follows:

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)
University of South Florida - $1,422,364, "Smart Grid with Renewable Strategic Load Pocket" ($1,422,364)
ARI Green Energy Inc. - $2.5 million, "Next Generation Small Wind Generator Systems Manufacturing Site" ($2.5 million)
Mustang Vacuum Systems LLC - $577,636 (partial funding), "Solar Energy Project" ($577,636; partial funding)

Bioenergy Grants

· 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)

During today’s roundtable discussion on the current state of Florida’s renewable energy industry, Governor Crist highlighted Florida’s projected plans for future expansion and growth. Several of Florida’s top education, business and energy leaders participated, including Florida Department of Environmental Protection Secretary Mike Sole; Tim Anderson, director of the University of Florida Energy Systems Consortium; Susan Hill Skemp, executive director of Sea Tech Ocean Engineers at FAU; Stephen Clarke, director of industrial research and development for Florida Crystals; Jim Murley, assistant dean of FAU’s College of Architecture, Urban and Public Affairs and chair of the Florida Energy & Climate Commission; Florida Public Service Commissioner Katrina McMurrian; Jeremy Susac, director of the Governor's Energy Office; Frank Brogan, incoming state universities chancellor; Buck Martinez, senior director of development for Florida Power and Light; Dr. David L. Block, P.E., director emeritus and University of Central Florida engineering professor and director of the Florida Solar Energy Center Alternative Energy Banner Center workforce training and education program; Dr. John Pritchett, recently appointed FAU Interim President; and Nancy Blosser, chair of FAU’s Board of Trustees.

Governor Crist highlighted the ocean energy research and technology development at Florida Atlantic University’s Center of Excellence. Created by the 2006 Legislature, the 11 university-based centers focus on emerging technologies with potential for economic and societal impact, including alternative energy and life sciences, among others. In addition to the center at FAU, the Florida Institute for Sustainable Energy Technology Incubator at the University of Florida also focuses on alternative energy.

At the Marathon Petroleum ethanol blending facility in Tampa, Governor Crist applauded the company’s success as one of the nation’s largest blenders of fuel ethanol. The company has used more than $9.7 million in tax incentives from the state, with $5.2 million going to install an automatic blending station at the Tampa facility. In 2008, Marathon Petroleum blended approximately 550 million gallons of E10 at its three Florida terminals. The company has already blended nearly that same amount in 2009, the majority of which has been blended at the Tampa terminal. Marathon Petroleum distributes fuel from its three facilities to gas stations throughout the state, helping achieve Florida’s goal of 10 percent ethanol blended with gasoline by 2010.

Tomorrow, Governor Crist will participate in the annual 2009 Farm to Fuel Summit, continuing his focus on the renewable energy industry in Florida. The 2009 Farm to Fuel Summit brings together leaders from the agriculture industry, academia, financial institutions and government to discuss and exchange ideas on how Florida can use renewable resources to meet its energy needs. The Farm to Fuel initiative was created by the 2006 Legislature to enhance the market for and promote the production and distribution of renewable energy from Florida-grown crops, agricultural wastes and residues, and other biomass and to enhance to value of agriculture products or expand Florida’s agribusiness.

About the Renewable Energy and Energy-Efficient Technology Grants

Grant proposals are evaluated based on various criteria, including cost share percentage, economic development potential, energy efficiency and how the project fosters public awareness of renewable energy technologies. Grants are awarded at a maximum of $2.5 million per project for eligible applicants, such as Florida municipalities and county governments, established for-profit companies licensed to do business in Florida, universities and colleges in the state, utilities located and operating within Florida, not-for-profit organizations and state agencies. The targeted grants utilize technologies such as hydrogen, biomass, solar energy, geothermal energy, wind energy, ocean energy, waste heat and hydroelectric power, as well as energy efficiency and conservation.

Originally established in 2006, the grant program is designed to stimulate capital investment in Florida and promote and enhance the statewide utilization of renewable energy and energy-efficient technologies. The nine grants will bring private cost-share funds of more than $336 million into the state. In addition, four of the projects are located in a designated Rural Area of Critical Economic Concern (RACEC) – Hamilton, Highlands and Hendry Counties.

CEO plans to produce ethanol from South Florida sorghum
By Doreen Hemlock
Staff Writer | South Florida Sun-Sentinel
October 5, 2008

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.

His Fort Lauderdale company seeks to build three factories by the lake to produce the biofuel from sweet sorghum, a tall stalky plant now used mainly as a cattle feed sweetener.

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.
Pepper is planning one of the first sweet sorghum-to-ethanol factories worldwide. Several are being developed in India and South America.

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."

Doreen Hemlock can be reached at dhemlock@sun-sentinel.com or 305-810-5009.

Southeast
Renewable Fuels,
LLC

Business:
Ethanol
production from
sweet sorghum

Founded:
2007

Headquarters:
Coral Springs

CEO:
Aaron Pepper

Projected
investment:
$75 million
on first plant,
to open in
2011

Source:
Florida Department
of State;
Sun-Sentinel
research

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.

Clewiston attorney Antonio R. Perez and SRF President, Carlos Rionda have been instrumental in these developments

For additional details, please contact Don Markley, Chief Operating Officer of SRF at its Ft. Lauderdale office,
954-492-1588 or Mr. Perez at 863-983-4000.