Sugar Companies in Florida Explore Ethanol from Molasses

The fields of western Palm Beach County support the sugar cane that provides quick energy to people.

Jan. 16—The fields of western Palm Beach County support the sugar cane that provides quick energy to people.

Before too long, that same cane could provide energy for vehicles, in the form of ethanol. The manufacture of ethanol has been confined almost exclusively to the Midwest and the Great Plains, where there are 81 plants in 19 states that convert corn into the fuel. Now the sugar industry, under pressure from a weak and changing market, is taking a hard look at using molasses, a byproduct of sugar production, to make ethanol.

Florida Crystals Corp. in West Palm Beach and the Sugar Cane Growers Cooperative of Florida in Belle Glade have received a preliminary report from two Miami firms they hired to determine the feasibility of producing ethanol from molasses, said Jose Alvarez, senior vice president for planning and operations at the cooperative.

"We got together about six months ago and decided it would be in our best interest to look at ethanol," Alvarez said. "We have not come to any conclusions.

"It must make economic sense, or there's no reason to do it."

During the last 25 years, South Florida's sugar industry has considered ethanol production two other times and concluded it wouldn't be worth the cost. But today's analysis is taking into account two major changes.

One is the rising cost of and competition for the world's oil and gasoline. The other factor is the sugar industry's uncertain economic outlook.

"Every time oil prices go higher, everybody begins to think of alternative ways of providing energy," Alvarez said. "We are trying to determine whether we should be in the game."

Sugar's economic crunch stems from a variety of factors, including decreasing sugar consumption, increased importation of sugar-containing products from other countries and free-trade agreements that will open the United States to even more foreign sugar.

Florida's only other sugar company, Clewiston-based U.S. Sugar Corp., is also researching whether ethanol production makes sense here, Senior Vice President Robert Coker said.

"Our company is reviewing it," he said. "We are clearly a long way from making a decision."

The Florida firms are not alone in their quest, said Dalton Yancey, executive vice president of the Florida Sugar Cane League in Washington.

The majority of cane growers in the country are considering the idea, he said.

"At today's energy prices, everybody has to look at it," Yancey said.

Consumers fed up with high gasoline prices will benefit from fuel that blends ethanol with gasoline, according to a recent study conducted by LECG, a consulting company based in Wayne, Pa. A blend that includes 10 percent ethanol will reduce the retail price of regular gasoline by 5 percent, or 6.6 cents a gallon, saving consumers $3.3 billion annually, LECG said.

So far, the co-op and Florida Crystals have learned it would cost roughly $60 million in "investment costs" to build an ethanol plant and the infrastructure needed to produce 30 million gallons of ethanol a year. That comes to roughly $2 a gallon, not including production costs. The study, being conducted by International Technical Services Inc. and CBT Corp., is continuing, Alvarez said.

"It's a lot more complicated than we originally anticipated," he said. "We are trying to determine whether we can get a return on our investment that would be adequate."

Aside from the millions of dollars needed to ramp up, another stumbling block is what to do with a byproduct of ethanol production known as stillage that must be disposed of properly to avoid environmental contamination.

If the project comes to fruition, the cane plant would be the first in the U.S. to make ethanol from molasses. Along with the sugar and molasses, producers also would be able to pull about a gallon and a half of ethanol out of each ton of cane.

Monte Shaw, spokesman for the Renewable Fuels Association in Washington, said many countries around the world make ethanol from molasses. Crude oil prices are expected to remain high over the next few years, and that makes ethanol more cost-competitive, he said.

"Every single petroleum component that goes into gasoline is very expensive," Shaw said. "Right now, of all the octane components of gasoline, ethanol is the most affordable."

A typical corn-based ethanol plant with 40 million gallons of output a year would cost $60 million, Shaw said, so an investment cost of $2 a gallon isn't completely out of whack. The molasses-based ethanol would be manufactured and distilled in Palm Beach County and mixed with gasoline at seaports in Tampa or Jacksonville.

The demand for more fuel is there, with the South Florida market a potential 80 million gallons a year for an ethanol-gasoline blend, Alvarez said. The U.S. produces and uses more than 3 billion gallons of ethanol a year and consumes 300 billion gallons of gasoline, he said. By 2010, ethanol production is projected to be at 7 billion to 8 billion gallons a year.

"You would buy gasoline and not even know it has been blended with ethanol," Alvarez said.

One possibility would be to produce ethanol from molasses during the October-to-March sugar cane grinding season, then produce it from corn in the summer. That way, a supply would be available year-round, Alvarez said.

"Ethanol is a renewable resource," he said. "You can continue to make it as long as you can grow corn or sugar cane. It's a way of avoiding dependence on foreign oil."

Even if ethanol production becomes a reality in the Glades, Alvarez doesn't view it as the answer to all of the sugar industry's problems.

"We have to look for ways to diversify this industry a little bit. Ethanol is not the answer unless we can make and sell sugar at a reasonable level," he said. "Ethanol would be a complement to that, but not the answer to the dilemma."

Florida Crystals spokesman Gaston Cantens summed it up this way:

"We are always looking at ways we can increase the viability of the company. If we can grow our own fuel, why be dependent on foreign countries?"

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© 2005, The Palm Beach Post, Fla. Distributed by Knight Ridder/Tribune Business News.