Bullish on Biofuel

More than half of TDOT's clean-fuel grant proposals come from East Tennessee

Tennesseans are, by now, used to being kicked around in the press over our state's eco-none-too-friendliness. The eastern half of the state, in particular, consistently fares poorly when it comes to environmental rankings. In its 2007 State of the Air survey, the American Lung Association gave Knox County an "F" for its high number of high ozone days and airborne pollutants.

And, of course, there's the 2004 report from the National Parks Coalition Association that ranked the Great Smoky Mountains the most polluted national park in the country.

And just this month, the Knoxville News Sentinel reported that the six counties comprising the greater Knoxville area all fail under new EPA smog emissions.

Luckily for our lungs, the state government, for the past few years, has been trying to edge its way toward a slightly less apocalyptic future. Its focus? Alternative fuel technologies. Biofuels, like ethanol and biodiesel, burn more cleanly than traditional fuels, releasing less carbon dioxide into the air and, as the state sees it, can help provide a solution to our air quality problem. And this year, East Tennessee seems to be leading the charge.

Gov. Phil Bredesen signed an order in 2006 creating the alternative-energy group BioTenn, tasked with helping to clean up Tennessee's eco-mess. Last year, the state handed out its first round of Green Island Corridor Biofuel Grants, available to fuel retailers who plan to introduce a biofuel pump.

Soon, a second round of grants will be going out. Announced in November, the state was accepting applications for the grants until Feb. 15. Officials did not say when the grant winners would be announced, but the Tennessee Department of Transportation is currently reviewing 23 applications.

According to TDOT spokesperson Julie Oaks, 12 of those 23 applications have come from the eastern third of the state, three within Knoxville city limits.

The first gas station to receive a Green Island grant was Pilot #105 at 205 Walker Springs Rd. right here in Knoxville, just after it put in its first E85 pumps last year. The grant was given to install B20 pumps. E85, a blend of 85 percent corn ethanol and 15 percent standard gasoline, and B20, a blend of 20 percent biodiesel (usually made from soy beans) and 80 percent standard diesel are the two most commonly used biofuels on the market.

One reason for the region's success this year may be the East Tennessee Clean Fuels Coalition, a group founded in 2002 by Jonathan Overly. Overly says the ETCFC helped, in some way, to broker nearly all of the 12 East Tennessee proposals, from providing background information on alternative fuels to active participation in getting the proposal written.

The key to getting retailers to make the switch, says Overly, is showing them how profitable biofuels can be. Grant money helps remove part of the initial financial risk of setting up the new pumps.

"Can stations do it on their own? Absolutely," he says. "But we need to put our money into the little guys who need to grow up," instead of subsidizing Big Oil.

"For 60 or 70 years, oil has been federally subsidized. You've got record profits by the oil industry. And now, finally, in 2008, getting some federal legislators saying, ‘Hey, maybe we should stop giving these tax breaks to oil companies,'" Overly says.

The goal of the program, says Oaks, is to get a biofuel pump every 100 miles along Tennessee's interstates.

The grants reimburse up to 80 percent or $45,000 of the cost of setting up an E85 or B20 pump. That should more than cover the average cost, says Philip Freels, general manager of two Knoxville Regal Fuel stations. Freels decided last year to add both B20 and E10 (10 percent ethanol and 90 percent standard gas) to the mix at his stations at 1206 Proctor St. and 5428 Trebor Ln.

"It was something that we thought we had a little space to do, and we thought it would be good for the community," he says. So they went ahead.

And it's been lucrative. Freels says that it can cost as little as $20,000 to set up biofuel pumps, and those clean-burning fuels now account for as much as 50 percent of his business. He deals mostly in bulk, though, distributing the fuel to chain gas stations and convenience stores in the region. For small-end retailers, biofuels typically account for about 5 percent of overall business, and "that's on the more optimistic end," Freels adds.

To Lauren Ray, who's been fueling up her '97 Volkswagen Passat with B20 for more than a year—while manufacturers recommend that cars using E85 have new "flex-fuel" engines, any diesel engine can, with some minor adjustments, take biodiesel—that sounds like good news. Ray, a Knoxville graphic designer, goes to Freels' Proctor Street station to get her gas. She's happy that she switched over, but she would like to see more stations.

"The station I go to is kind of hidden and not very well lit," she says. "Any more locations we can get the better."

But Ray may not be seeing any more B20 pumps any time soon, at least not any funded through the Green Island grant program. Knox County is being targeted as a priority for E85 pumps, meaning that any E85 grant proposals will probably be given more serious consideration than B20 proposals.

TDOT is just trying to even out the bio field, says Oaks.

"In the urban areas, we are hoping to see at least three E85 and three B20 pumps," Oaks says in an e-mail. "Knoxville already has three B20 pumps, so that is why the county was placed as a priority area for E85. That does not mean that we will not fund additional B20 pumps in Knoxville, it just means that E85 is our priority."

Ethanol use and production have raised plenty an eyebrow in biofuel circles. It's blamed partly for the meteoric rise of corn prices in the past few years, a belief echoed in a recently released report from the U.S. Department of Agriculture, which predicts that the U.S. will be producing 14 billion gallons of ethanol by 2017. The report goes on to say that this will cause corn prices to rise as more corn crops are diverted from food to fuel production. And the price of corn, of course, affects the price of meat, eggs, and dairy, since cows and chickens are often given corn-based feed. Add to that the billions of dollars in ethanol and corn subsidies farmers receive, and many consumers feel they are paying two or three times over for the crop.

Also, some studies have suggested that mass ethanol production and use could actually yield more harm than good to the environment, an argument that's been frequently de- and re-bunked over the years. The most recent one, conducted by researchers from the Nature Conservancy and the University of Minnesota and published in the Feb. 29 issue of Science, contends that the clearance of millions of acres of forest to make room for new corn crops to produce ethanol could release hundreds of times more carbon dioxide than the fuel's use is expected to reduce.

Overly, whose group backs both ethanol and biodiesel, concedes that ethanol production should move away from food-based sources like corn. He takes issue with the idea that ethanol production has been the sole, or even the primary, culprit in driving up food prices.

Overly points to a December report from Informa Economics that identifies other factors like rising labor costs, packaging, advertising, and, most important to Overly, the rising cost of oil in sending food prices up. The report says that, on average, only 19 cents of every dollar spent on food goes to the farmer, while those other factors are responsible for the rest.

"Even if (the cost of corn) keeps going up, it's primarily the cost of energy, the cost of petroleum, that's what's driving those prices up," he says.