Okamoto tells DBEDT hearing that plan is critical to future of company By Phil Hayworth – The Garden Island HONOLULU — Proponents of ethanol production in Hawai‘i say without ethanol, there will soon be no sugar industry. Opponents of ethanol
Okamoto tells DBEDT hearing that plan is critical to future of company
By Phil Hayworth – The Garden Island
HONOLULU — Proponents of ethanol production in Hawai‘i say without ethanol, there will soon be no sugar industry.
Opponents of ethanol production, mainly representatives of the state’s petroleum industry, say gas-pump prices will rise, and question whether or not leaders of the ethanol industry will be able to produce required amounts of ethanol if Gov. Linda Lingle signs off on administrative rules that would require ethanol be blended with gasoline and offered at pumps across the state.
Both sides agree that the ethanol industry will bring $104 million in new investment and construction to the islands, as well as 84 direct jobs, and 601 indirect jobs, 200 of which will be on Kaua‘i.
Charles “Charlie” Okamoto, of Gay & Robinson of Kaumakani, one of two remaining sugar plantations in the state, said the survival of his company is tied to a favorable decision by Lingle on the ethanol rules.
“It is imperative that ethanol be produced on Kaua‘i for the survival of Kaua‘i sugar,” Okamoto said at a public hearing here called by officials with the state Department of Business, Economic Development and Tourism, to decide how ethanol will be manufactured in the state.
Officials in the petroleum industry expressed doubts that planned ethanol plants on Kaua‘i, O‘ahu and Maui would be able to produce the required 40 million gallons of ethanol per year within 18 months of the implementation of the ethanol rules.
“The people of Hawai‘i require a guarantee of local ethanol from local sugar,” said Daniel T. Riley, vice president for government, community and industrial relations for Tesoro Hawaii. The implication is that Kaua‘i and Maui facilities won’t be able to produce enough sugar to produce enough ethanol.
“Yes, it will” cost more at the pump. “Yes, it will affect us. It will affect us all,” Riley said.
Indeed, ethanol-industry officials agree that they might not be able to meet the quota immediately, and have a plan to import feed stock to burn to produce ethanol until the plants can produce enough ethanol through the burning of bagasse (a byproduct of sugar harvesting) to meet the quota. Eventually, they say, they will be able to meet that quota.
“All I know is that I can produce in my plant,” said William Maloney of Maui LLC. If the rules aren’t passed immediately, Maloney says, “We’ll wait. We’ll give it a little bit of time. Twenty-four months, 36 months; we’re in it to win it.”
But G&R doesn’t have that luxury, Okamoto said. “We don’t have the deep pockets of Alexander & Baldwin,” Okamoto said of Hawaiian Commercial & Sugar Company on Maui, whose parent company is A&B. The rules have to pass now, Okamoto indicated, again stressing that the very survival of the sugar industry is tied to the quick implementation of the ethanol rules.
Bob Shleser, technical director for Worldwide Energy Group, which is in negotiations to build plants on all three islands, said, “We’re ready to go. We’ll have enough.”
Both Maloney and Riley feel the rules will be approved, though are uncertain exactly when that will be.
Also, it was learned that G&R plans two ethanol plants, both to burn bagasse. A small, $5 million plant will be experimental, to make sure the technology will work on a larger scale. The second plant, to be financed through the sale of $50 million in tax-exempt, special-purpose revenue bonds that don’t cost taxpayers a penny, will be a larger plant capable of producing the 10 million gallons a year of ethanol Kaua‘i will be required to produce under the rules as written today.
In the meantime, leaders of the petroleum industry will have to modify their facilities to accommodate the mixing of gas and ethanol together. Costs will be passed onto consumers, and will show up at the pumps, they say.
But a DBEDT study indicates the worst-case scenario will be additional costs to the driving public of just 0.05 cents per gallon.
Petroleum-industry leaders also said they won’t agree to the rules as written unless there is a guarantee that the ethanol industry produce 40 million gallons of ethanol a year within 18 months of the rules being enacted.
The ethanol issue, while tied to sugar’s survival on the Neighbor Islands, is also critical on O‘ahu, where trash is expected to be burned to produce ethanol. A study contracted by DBEDT officials indicates that 72 percent of O‘ahu’s ethanol will come from O‘ahu waste products including food trash, yard trash, plastics and other items.
It’s not just about saving Neighbor Island sugar, according to the study. It’s about saving O‘ahu residents from being buried under mountains of their own trash, ethanol proponents said.
Around 70 people showed up at the meeting.
The feeling by those coming out of the meeting is that nothing is set in stone, and anything can happen. The decision is in the hands of DBEDT officials, charged with writing the administrative rules and, ultimately, Lingle. She either signs off or she doesn’t. Even if she doesn’t sign off for another six months or longer, the ethanol industry is willing to wait.
Meanwhile, state Rep. Mina Morita, D-North Kaua‘i, said the petroleum industry is using “fear tactics” to stall implementation of the ethanol rules, saying pump prices will go up, and that ethanol may add to pollution in the islands. Those in the ethanol industry say “what’s three cents a gallon” more at the pumps, when a mix of ethanol and gasoline will reduce air pollution, ensure sugar’s survival and the green spaces that come with it.
Phil Hayworth, business editor, may be reached at 245-3681 (ext. 251) or mailto:phayworth@pulitzer.net
