Bioenergy

Renewables in the Market and on the Farm

With labor shortages, the rising costs of energy, stringent regulations and diverse opinions on biotechnology, California producers are seeking creative solutions to continue to plant and harvest specialty crops, while at the same time maintaining profitability. When it comes to managing both energy costs and energy availability, currently there are not many options.

I recently spoke on this subject at a national conference in Kansas City. As I expected, the emphasis of the conference gravitated to the production and economics of corn ethanol and biomass liquid fuel. Because the United States does not have the acreage to meet both the ongoing demand for livestock feeding and a significantly expanded demand for ethanol, technology to create biomass fuel by converting grasses, forestry products, rice straw, corn stalks, boiler litter and other plant products warrants further research. In California, other than the few ethanol plants that are under construction and which plan to import corn from the Midwest, the current renewable energy technology in use primarily includes solar energy. However, there are very few examples of installations of any magnitude. In Fresno County, Pat Richutti last year completed the installation of one of the largest privately financed solar-energy systems in the state. With the 7,730 solar panels on top of his 150,000-square-foot packing house, Richutti’s 928 kilowatt solar system supplies enough electricity to power 50 percent of a facility that processes about 1.5 million boxes of fresh fruit a year. That amount of electricity is enough to power about 216 homes. But this $6.4 million project would not have been possible without the Pacific Gas & Electric incentive program — funded by ratepayers and taxpayers — which provided a 50 percent rebate on the project’s total cost. Even with this rebate, it will still take about 11 years to recoup the initial investment. Specialty crop growers look forward to the opportunities to be part of solutions that include new energies such as solar, wind, ethanol and biomass fuel. However, any farmer’s investment in new technology has to first and foremost be financially feasible. The very fact that there are few tangible examples of on-farm energy generation makes the point that the solutions are not yet available. Given current public policy for energy and existing energy costs–although they are now high and getting higher — and given available technology, there has not yet been much opportunity for individual growers to manage energy costs and availability risks. Like almost anything else, the solutions do not become available and affordable until there is a crisis. With crude at $70-plus a barrel, alternative and renewable energy technologies start to look attractive or at least as good. The ironic part is that energy costs have to get unbearably high to first create the demand for technology for renewable energy energy, and then it has to stay high to sustain that demand. For example, there has been much interest recently in Brazil’s self-sufficient fuel industry utilizing ethanol. But the reason it works is because of the high price of oil and because it has a state-imposed pump price for fuel. Gas in Brazil now costs the equivalent of about $4.69 per gallon. Pure ethanol — taxed at slightly lower levels — goes for about $3.59 per gallon. With U.S. fuel prices determined by the free market at $3-plus per gallon, the economics begin to work for alternative energy. While waiting for affordable market-driven economies for renewable energy, I would advocate that we all push for more accessible tax incentives, cost share installation rebates, research funding, net metering regulation and renewable portfolio standards so that we may begin to utilize renewable energy technologies in our own operations. I was very pleased to hear Gov. Schwarzenegger’s recent announcement on his Bioenergy Action Plan that calls for California to produce 40 percent of its biofuel consumption by 2020. With the development of the new Farm Bill now in progress, we have additional opportunities to voice our concerns to ensure that funding for developing and installing energy-efficient technologies is available to all producers. Joe Zanger is chairman of the CFBF Trade Advisory Committee. He can be reached at [email protected] Article courtesy of the California Farm Bureau Federation.