Last week’s hearings in Honolulu regarding how Hawai‘i’s gas will be mixed with ethanol has many here wondering how it will affect them. Officials with the state Department of Business, Economic Development and Tourism contracted BBI International Consulting to produce
Last week’s hearings in Honolulu regarding how Hawai‘i’s gas will be mixed with ethanol has many here wondering how it will affect them.
Officials with the state Department of Business, Economic Development and Tourism contracted BBI International Consulting to produce a report, “Economic Impact Assessment for Ethanol Production and Use in Hawaii.” The Nov. 14, 2003 report found that the economic impact during construction of the three facilities — one each on Maui, Kaua‘i and O‘ahu — is estimated to be $253 million statewide, with about $80 million on Kaua‘i. It will increase personal income to $82 million statewide, and Kauaians should pocket some $25 million in the first year during construction, followed by $5.1 million annually thereafter, the report found.
Annual statewide economic activity following construction is $112 million.
The petroleum industry hoped to create enough of a cost-at-thepump scare to stymie the rulemaking process and the industry altogether, say proponents of ethanol here.
But the BBI report showed that “the use of ethanol is not likely to reduce or increase gasoline prices.” The BBI report found that the worst-case scenario was an increase in pump prices of .05 cents per gallon.
The overall conclusion of the report was that Hawai‘i has significant potential to economically produce ethanol from sugar cane.
Large-scale ethanol production could add as much as $300 million to the local economy in direct and indirect value, and ethanol could be produced in Hawai‘i at a large scale (up to 90 million gallons per year) at a competitive cost.
One of the petroleum industry’s latest arguments against the use of ethanol in Hawai‘i has been that ethanol manufacturers here will not be able to meet a quota of 40 million gallons per year (MGY) using local-grown products.
State officials say ethanol will not be economically sustainable unless 40 MGY is produced here.
But the BBI report found that feedstocks are, indeed, available for commercial-scale ethanol production, up to and beyond the 40 million gallons per year required by the state.
According to the report, the in-state market potential for ethanol is approximately 41 million gallons per year, projected to increase at an annual rate of 1.05 percent per year.
It showed that a feasible scenario is 40 MGY statewide from three ethanol production facilities, including an O‘ahu facility, producing 15 MGY from municipal solid waste, a 15 MGY facility on Maui producing ethanol from molasses and sugar, and a 10 MGY facility on Kaua‘i using molasses and sugar.
A small experimental facility will be built on Gay & Robinson land by Worldwide Energy Group, to produce ethanol from bagasse, a sugar-harvesting byproduct.
More than 70 percent of O‘ahu’s ethanol will come from food, plastic, paper and other waste products — good news for an island with a rapidly growing waste-stream problem, and an inspiration to Kaua‘i, which will soon be facing its own waste-stream problems.
It all underscores the idea that ethanol will not just benefit Maui and Kaua‘i, but also O‘ahu, says William Maloney of Maui Ethanol LLC.
Can ethanol production save Kaua‘i sugar? Yes, says Gay & Robinson.
“Gay & Robinson is committed to agriculture, but its economic viability is currently being challenged with low sugar prices and higher costs,” said Charles “Charlie” Okamoto, director of finance and property management for Gay & Robinson, at last week’s hearing.
“Sugar producers also need more support for value-adding activities, and income support while the industry restructures,” he said.
In 2003, Gay & Robinson earned $24.1 million in gross annual revenues.
A little more than 2 percent came from its cattle ranch, a bit less from its ecotours.
The bulk came from the 57,000 tons of sugar it processed last year.
Ethanol could double plantation income, helping to save some 300 jobs, while creating 176 new jobs directly, and 623 indirectly, according to the BBI report.
“We must find an alternative to our core sugar business, and we’ve identified production of ethanol to be one target that would be viable,” Okamoto said.
His concerns are echoed by others in the sugar industry who say that the long slide of world sugar prices, and the competition coming from countries like Brazil and others in South and Central America, could effectively make it open season on America’s agricultural industry.
“We’re just not making enough money from sugar,” said Alan Kennett, president of Gay & Robinson.
“We’ve got to start thinking about how to convert our byproducts into value-added products,” Kennett said.
“We’ve got to start thinking out of the box,” Kennett concluded.
