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Pete Bigelow · Special Report: Can Detroit Airport Experiment Help Aviation Biodiesel, Local Economy Take Off?
October 17th, 2011
ROMULUS, Mich. – The runways at Detroit Metropolitan Airport rank as some of the nation’s busiest, handling some 452,000 takeoffs and landings each year along with more than 32 million passengers.
The land adjacent to them, on the other hand, sits mostly unused. Other than creating a buffer for noise-prevention and security reasons, that land has little useful value.
Officials at Detroit Metro and three other Michigan airports are hoping to change that. They’ve partnered with a Michigan State University researcher to grow oriental mustard seed and other plants on that property. Those plants will be harvested and processed into aviation-grade biodiesel that’s then used at the facility.
The project is believed to be the first of its kind in the Midwest, and it’s attracting attention from airlines, government agencies and even a former high-profile Ford Motor Company executive.
In the short term, it’s an experiment to see whether researchers can create an alternate fuel source grown in close proximity to airport users. In the long term, officials believe the biofuel industry in general and aviation-grade biodiesel in particular can make a significant economic impact in Michigan.
“It is going to take a concerted effort by farmers, by industry, by airlines and engineers and developers in order to see this all come to fruition,” said Dennis Pennington, a bioenergy educator from the MSU Extension leading the project, which is funded by a $476,000 state grant.
For now, the three-acre plots at Detroit Metro, Willow Run in Ypsilanti, Grand Rapids and Muskegon airports are primarily for demonstration. But even on a small scale, they have attracted the eyes of groups that could influence where the fledgling aviation biodiesel industry is headed.
Representatives from Delta Air Lines, Detroit’s primary carrier, the Air Transport Association, the U.S. Department of Agriculture and the Commercial Aviation Alternative Fuels Initiative are among the dozen or so groups acting as stakeholders in the project.
Wayne County EDGE, an economic development arm of the county that houses Detroit Metro, is also involved. It promotes the creation of an “aerotropolis” in the 11-mile stretch between Willow Run Airport and Metro Airport. It envisions a transportation hub that pools the area’s aviation, rail and highway resources. And, the possibility of attracting a fuel refinery or other companion biofuel businesses on or near airport grounds is intriguing.
“We want to become a region known for energy excellence,” said Azzam Elder, deputy CEO of Wayne County.
Getting there with regard to aviation-grade biofuels is complicated, however.
Biofuels is a broad term that includes soybean, corn ethanol, algae or other plants, like Pennington’s oriental mustard seed. Each source brings its own set of challenges in the growing, refining and delivery processes.
Whichever is selected, it must be processed into a standardized biodiesel that arrives at airports compatible with current fuel systems. And it must be used by all airlines — jet fuel is purchased by airports in bulk and shared among users. At Detroit Metro, approximately 300 million gallons of Jet A, essentially kerosene refined from crude oil, are pumped each year.
Investing in the infrastructure to make all that happen is expensive. Even a small refinery costs approximately $20 million. And the market is fragmented. Many entrepreneurs are waiting to see the results of experiments like Pennington’s to see which structure emerges as the most cost-competitive with gasoline before making large-scale investments.
They may now have more incentive. In August, President Obama announced that the Departments of Agriculture, Energy and Navy would invest as much as $510 million over the next three years in public-private partnerships to create drop-in aviation and marine biofuels, funding that stems from Obama’s efforts to diminish the country’s reliance on foreign oil. Ultimately, that’s the sort of investment needed for biofuels to find a niche, Pennington believes.
“Policy drives where this industry is going,” he said.
Focus on marginal land
Biodiesel accounts for approximately 2 percent of the nation’s overall 60-billion gallon annual diesel consumption. Market share is increasing: The government has mandated the production of 800 million biodiesel gallons in 2011 and 1 billion in 2012, through the Renewable Fuel Standards program.
It’s a nice jumpstart for a fledgling industry. Right now, the biggest challenge in taking advantage of it is ensuring the biodiesel cost structure is competitive with the rack price of regular diesel.
On Friday, Jet A sold for about $3.06 per gallon in the Chicago market, according to the Oil Price Information Service. Biodiesel prices are volatile and can vary greatly based on the plant source. But a generally accepted industry rule of thumb is that biodiesel is a niche product that costs approximately 10 percent more per gallon — and that’s after a federal subsidy.
The significance of Pennington’s project is that it addresses the biggest component of those costs.
Jim Padilla, co-founder of The Power Alternative, a southeast Michigan-based company that focuses on biodiesel plant construction and process innovation, says that 80 percent of overall costs come from the crops and land used to grow them.
In many cases, like the growing of corn for ethanol, that land is also used in food production. Combined demand between fuel and food drives up prices. That’s why Padilla is enamored with Pennington’s experiment. None of the land in the aviation biofuel project is otherwise used for farming.
“With respect to that cost, one of the ways you decouple yourself from the agriculture market is to decouple yourself from food production,” says Padilla, a former executive with Visteon and Ford.
Pennington has focused on farming marginal land, or acreage that’s never been farmed for food. Airport sites make attractive options. Muskegon County Airport has 1,500 acres used for approach protection, according to airport manager Marty Piette. Together, Detroit Metro and Willow Run hold 1,700 acres suitable for use, according to the Wayne County Airport Authority.
In addition to airport property, Pennington has also farmed sites along highways, behind rest areas and vacant urban lots. Padilla is growing crops on a former Superfund site in Detroit.
In Michigan, there are approximately 4.5 million acres of marginal land not being farmed, Padilla said. It would be inconceivable to suggest every available acre could be utilized, but he uses the figure to illustrate the untapped potential of land that does not compete with food crops. What sort of dent could Michigan’s unused land put in meeting fuel demand?
Using mustard seed, Pennington says it would take roughly 200,000 acres to supply enough crops for a processing plant that makes 50 million gallons per year. On 4.5 million acres, that could yield 1.125 billion gallons per year — roughly the same amount of biodiesel that flows through the U.S. each year.
If a burgeoning industry could tap just a fraction of that potential, it would create “infrastructure to handle it, crush it and get it into a plant to refine it into a fuel,” Pennington said. “That’s job creation and economic development.”
Federal government subsidies help biodiesel close the cost gap by approximately $1 per gallon. Their funding levels have been uneven, which hurt production this year and pointed prices upward. But in the long run, Padilla said there would be an economic payoff on that investment.
“Obviously, that provides a little heartburn for people,” Padilla said. “But there’s a couple things around that. One, is the multiplier effect to fuel that’s being produced locally. Two, is that’s effectively 1 billion gallons we’re not importing. It’s domestic content. And domestic content equals domestic jobs.”
Why Detroit works
A chance meeting led to Detroit Metro’s involvement in Pennington’s project.Officials at the Wayne County Airport Authority wanted to explore using some of the acreage surrounding the airport — in what way, they weren’t sure. A consultant recommended biofuels as an option to Michelle Plawecki, who manages DTW’s noise-mitigation program.
She knew nothing about biofuels. So she attended a green-energy conference at Henry Ford Community College, at which Pennington happened to be speaking. Intrigued by his presentation, she approached him afterward.
“Aviation as an industry is interested in developing alternate sources of jet fuel,” Plawecki said. “There’s a lot of land near the airports in urban areas, and if that could be used to create a renewable natural resource, wouldn’t that be wonderful?”
In many ways, Michigan in general and Detroit Metro are ideal places for the experiment.
Agriculture ranks as the second-largest component of the state’s economy. Conventional supply chains already in place. And Michigan’s two-fold winters offer a two-fold benefit: some crops used for biodiesel can be grown in the winter months when farmers and their fields are otherwise idled, and cold weather typically means better performance for biodiesels.
From an entrepreneurial standpoint, southeast Michigan also was intriguing. In December 2010, the Michigan state legislature passed laws that created the aerotropolis as a regional authority that melds jurisdiction from two counties and seven municipalities surrounding Detroit Metro and Willow Run Airport. Tax incentives are available to companies settling within its borders.
When Michigan Gov. Rick Snyder traveled to Asia earlier this month on a trade mission, the aerotropolis and its energy potential was a fixture in his recruitment efforts. Much of that was focused on advanced-battery technology, but biofuels were also part of the conversation, according to Elder.
Citing the two interstates and two airports within the aerotropolis borders, he said, “we are definitely in a great position to encourage the businesses of biofuels and refineries, that’s the easy part for us. If you can move cars, you should be able to move fuel.”
Twenty-five years from now, the aerotropolis region could employ 64,000 more workers and add more than $10 billion of economic activity, according to a study completed by Jones Lang LaSalle, one that the authority officials like to tout.
Whether that growth actually happens or remains a pie-in-the-sky prediction like so many other reclamation projects around Detroit remains in question. But the fact that a biofuel contribution has the potential to touch multiple industries — from farming to engineering to aviation research and development — makes it an intriguing proposition.
“The question then becomes, ‘Can we get a critical volume?,’” Pennington said. “We burn an awful lot of fossil fuels in the U.S. every year. I don’t have a silver bullet or magic answer. But I certainly believe we have got to come up with some kind of alternative.”
Pete Bigelow · Midwest Memo: Biden Touts Jobs Bill in Michigan, Rahm Emanuel Promises to Face Chicago’s ‘Sacred Cows’
October 13th, 2011
Three stories making news across the Midwest today:
1. Biden champions jobs bill. Vice President Joe Biden made two stops in Michigan on Wednesday, touting President Obama’s $447 billion jobs bill. In a visit to Flint, Biden noted the city’s rise in murders, rapes and fires that occurred as police and fire staffing levels dropped. “That is a witch’s brew,” Biden tells Businessweek. “That is a mixture for a cancer in the city.” Later, during a stop in Grand Rapids, the vice president said economists believe the American Jobs Act would create 2 million jobs next year. Flint Mayor Dayne Walling said federal funding recently helped the city hire six police officers, but more are needed.
2. Chicago budget proposal chops services. On Wednesday, Chicago Mayor Rahm Emanuel unveiled a budget that called for taxes on tourists and suburbanites, close three police stations, streamline garbage collection, cut library hours and double water bills for the average household by 2015, according to the Chicago Tribune. “I’ve taken on a tremendous amount of political sacred cows,” Emanuel said during a presentation to the City Council. “Not once, not twice, not three times, not four times, but multiple times across the budget.”
3. Hydrofracking permits soar in Ohio. The pace of permits being issued for hydrofracking in Ohio has quickened. The Columbus Dispatch reports today that 27 permits were issued for drilling in the Utica Shale formation underneath Ohio from July to September – more than half the total number issued since 2009. Meanwhile, Democrats in the state House said yesterday they would seek a moratorium on hydrofracking in the state until the U.S. Environmental Protection Agency completes a study on the controversial drilling’s effects on air and water.
Pete Bigelow · Midwest Memo: Ford Reaches Agreement With UAW, Wisconsin Aims to be Energy Industry Leader, Coal at Crossroads
October 4th, 2011
Three stories making news across the Midwest today:
1. UAW and Ford reach tentative deal. The United Auto Workers union has reached a tentative agreement with Ford Motor Co., announced Tuesday, that calls for $6,000 in signing bonuses and the creation of 5,750 new jobs at plants in the United States. Workers could vote on the agreement by the end of the week. “The American auto industry is on its way back,” UAW President Bob King said in a statement, adding the jobs will be added by the end of 2012. Crucial to the deal was consensus on entry-level wages of approximately $17 per hour. The tentative agreement means that Chrysler is the only automaker of the Big Three without a deal.
2. Coal at a crossroads. Coal produces nearly half the electricity used in the United States, but benefits associated with coal are outweighed by pollution and health problems that cause more economic harm than good, according to a recent study from the American Economic Review. Our partner station Ideastream begins a multi-part series today examining the economic impact of coal and its future in the Midwest. First up in the series: the natural gas boom has given coal added competition. Coal’s share of the nation’s electricity production was at its lowest level in more than 30 years through the first quarter of 2011.
3. Wisconsin announces microgrid project. On Monday, Wisconsin officials announced a new project that aims to make the state a national center for energy microgrids, according to the Milwaukee Journal Sentinel. By using energy storage devices and battery systems, microgrid “energy islands” maximize the use of energy from renewable sources, according to the newspaper, and could help if main power grids are disrupted. Several Milwaukee-area companies and the state’s four largest engineering schools are among the participants in the project.
Pete Bigelow · Midwest Memo: Ford and White House Clash Over Ad, Critics Charge Ohio Has Grown Too Cozy With Industry
September 27th, 2011
Three stories making news across the Midwest today:
1. Ford stops controversial ad campaign. Ford has curtailed an ad campaign that featured an indirect rebuke of the federal bailout of the auto industry. The Detroit News reports the White House had “questions” about the marketing campaign, which featured a “real person” explaining his decision to buy a Ford instead of a car from a company bailed out by the government – a shot at rivals General Motors and Chrysler. “This thing is highly charged,” a source tells the newspaper. Ford “never meant it to be an attack on the policy.”
2. Ways to close Chicago’s budget gap. Chicago’s City Hall watchdog agency has proposed more than $2.8 billion in spending cuts and revenue increases, according to our partner station WBEZ. Ideas include a city income tax, tolls on Lake Shore Drive and privatizing trash collection, among others. The proposal from Inspector General Joe Ferguson includes 63 ideas to help Chicago contend with a projected $635 million deficit in 2012. Among the more controversial cuts is the possibility of laying off more than 700 firefighters and more than 300 police officers to save $190 million.
3. Critics: Ohio too cozy with industry. When the state of Ohio decided to set air-pollution standards on shale-gas wells earlier this year, the Ohio Environmental Protection Agency sought advice from Chesapeake Energy, a drilling company. That’s one example of a too-cozy relationship between Ohio officials and industry, critics charge. Their concerns have mounted as gas-shale has boomed. “These agencies have an open-door policy with industry that they don’t with the public,” Teresa Mills, director of an environmental advocacy group tells The Columbus Dispatch.
Pete Bigelow · Midwest Memo: Illinois Budget Deficit May Grow, Groupon IPO In Flux, Ohio’s Shale-Gas Boom
September 26th, 2011
Three stories making news across the Midwest today:
1. Illinois’ deficit may grow. Despite budget cuts and tax increases, the state of Illinois’ budget deficit will reach $5 billion next year, according to a report released today by a government watchdog group. The Civic Federation says added pension and debt costs are causing an increase from this year’s $4.6 billion figure. “In spite of a tax increase, we’re actually losing ground under this budget,” said Laurence Msall, president of the non-partisan budgetary think tank, tells the Chicago Sun-Times.
2. Groupon IPO still uncertain. U.S. regulators are scrutinizing documents related to Groupon’s upcoming IPO more thoroughly than expected, which is delaying the offering. The Wall Street Journal reported Sunday that the Chicago-based daily deals company remains committed to the offering, but the timing is still unclear. On Friday, Groupon amended its offering documents to report reduced revenue from 2010 to $312.9 million from $713.4 million, the newspaper reported.
3. Fracking fuels Ohio boom. State regulators and industry officials may be debating the practice of hydrofracking, but across Ohio, the shale-gas boom is already taking off. Energy company workers are clogging courthouse hallways across eastern Ohio to research documents that determine who owns property, according to The Columbus Dispatch. “I’m told that, even back in the coal days of the 1950s and 1960s, it was never as busy as this,” the Harrison County recorder tells the newspaper.
Pete Bigelow · Midwest Memo: UAW Talks Continue, Ohio Eyes Energy Jobs, Wisconsin Median Income Plummets
September 22nd, 2011
Three stories making news across the Midwest today:
1. Ohio eyes energy jobs. Ohio Gov. John Kasich hosted an energy summit Wednesday on the Ohio State University campus that brought together members of the oil and gas industries, utilities officials and environmentalists. The Plain Dealer reports there was widespread enthusiasm over the prospect of Chesapeake Energy Corp. investing $200 billion in Ohio that could bring more than 200,000 jobs. Kasich held some skepticism. “I want to make sure we are steady in this,” he told the newspaper. “I don’t want to get ahead of the curve.”
2. Ford next in UAW talks. While United Auto Workers began to vote today on a four-year deal reached last week with General Motors, the UAW has shifted its focus to negotiations with Ford. The only U.S. automakers that avoided bankruptcy in 2009, Ford workers will likely expect more lucrative terms than the ones reached in the GM deal. Reuters reports there’s some resentment among UAW Ford workers over the $26.5 million compensation package Chief Executive Alan Mulally received, one that UAW president Bob King called “morally wrong.”
3. Wisconsin median income plummets. Adjusted for inflation, median household income in Wisconsin plunged 14.5 percent between 1999 and 2010, according to U.S. Census Bureau Data released today. The Milwaukee Journal Sentinel reports the median household income dropped, when adjusted, from $57,316 to $49,001 last year. “The middle class is taking a beating,” Timothy Smeeding, director of the Institute for Research on Poverty at the University of Wisconsin-Madison, tells the newspaper. “We were manufacturing our pants off. But times are changing.”
It’s rare that a Detroit anchorman gets an interview with the president. But Stephen Clark of WXYZ-TV sat down with President Barack Obama at the White House this week, and grilled the president on the top issues facing people in Michigan and across the region.
Clark told the president that while the unemployment figures may be dropping, many people in Michigan say they do not feel there are many more job opportunities. Obama said he gets thousands of letters each day from families still looking for work.
“I mean they’ve done all the right things, they’re retraining, they are out there hitting the streets, knocking on doors, looking for work,” the president said. “The economy has grown, we’ve actually seen 2 million private sector jobs created over the last 13 months but it’s not happening as fast as people would like and certainly not as fast as I would like.”
Much of the interview focused on rising energy prices. Obama said there’s no silver bullet. “Families day to day are driving to work and they’re just watching their paychecks get whittled away,” the president said. “They need some relief.”
Obama said the growing economy has increased demand for oil world wide, whle unrest in places like Libya has “spooked the world oil market.”
He said his administration is already working with automakers in Detroit to increase fuel efficiency standards and alternative fuel vehicles to help reduce the demand for oil. He also said the U.S. has to continue oil production, adding that it must be done in a safe way to avoid any future disasters like last year’s Deepwater Horizon oil rig explosion.
Obama said the economy, which was shedding jobs, is now growing and adding jobs. He said his administration will keep working to create long-term jobs until every American who wants a job can get one.
Obama and his wife, Michelle, visited Chicago today to tape one of the final episodes of “The Oprah Winfrey Show.” That episode is set to air on Monday.
Here is Clark’s interview with the president. (Feedback for Clark? Find him on Twitter @sclarkwxyz. He convenes a Twitter group each newscast called #Backchannel.)
The Midwest, defined by the Nuclear Regulatory Commission as Region III, has an extensive network of nuclear power operations. There are 24 nuclear reactors at 16 sites across seven states, and 19 research and test reactors.
Among the states we cover at Changing Gears, Illinois leads, by far, with 11 nuclear reactors, including two each at Braidwood, Byron, Dresden, LaSalle County and the Quad Cities, and one at Clinton. Several of those reactors are the same age and type as the ones in trouble in Japan. Our partner station WBEZ looked at the situation Monday morning.
Michigan has four nuclear reactors — D.C. Cook unit one and two, and Palisades, both located on Lake Michigan. There also is the Fermi plant on Lake Erie. Wisconsin has nuclear reactors in three locations — Kewaunee and Point Beach, which has two. Ohio has two, Davis-Besse in the Toledo area, and Perry, which is north east of Cleveland. Indiana has none.