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John Plaza of Imperium Renewables said the new company hopes to produce biodiesel from winter canola grown in Washington.

John Plaza of Imperium Renewables said the new company hopes to produce biodiesel from winter canola grown in Washington.

Rising prices for diesel fuel and gasoline are compelling farmers and researchers in Washington State and nationwide to take a closer look at using—and producing—alternative fuels such as biodiesel and ethanol.

Trying to catch a renewed wave of interest in fuel alternatives ignited by rising petroleum prices and other factors, the state government is also jumping into the issue.

Washington State Governor Christine Gregoire in March signed a bill approving a renewable fuel standard requiring 2 percent of the state’s gasoline and diesel consumption to be ethanol and biodiesel by December 2008.

The Washington State Department of Agriculture is evaluating applications for Energy Freedom Loans, and the legislature has approved $17 million for low-interest loans to help launch an expanded bioenergy industry.

Grower experiment

Like other farmers, Mike Roy of Roy Farms, which grows a number of crops in the Yakima Valley, feels the pressures of rising fuel costs. Having tinkered with small-scale production and use of biodiesel, he welcomes the state measures, but is skeptical of the viability of large-scale production.

“I think it’s going to take some government help,” Roy said. “We’re looking to try to tap into some of that help.”

After running his tractor experimentally—and briefly—on used canola cooking oil, and doing some more research, Roy was interested enough to plant a test plot of canola.

“It’s addressing a national security threat,” he said, alluding to the nation’s dependence on imported oil. “The future depends on whom you talk to. I can see fuel prices continuing to rise over the long run. Another problem is we have to plan financially, and if fuel prices continue to be volatile, any unexpected jump hits us.

“We need a more stable market, which would be another advantage to biodiesel,” he added. “Our farm goes through 40,000 gallons of diesel a year,” he said. “We absorb all the price increases. We pass on nothing. These days we have to become more and more efficient to offset rising fuel costs and remain profitable.”

Roy said diesel prices rose 20 percent between 2004 and 2005, and another 8 percent between 2005 and 2006.

Despite the promise of renewable fuels, producing and switching over to biodiesel isn’t a slam-dunk, he said, because of the cost of producing it, and transporting it. The further it has to be hauled to buyers by conventional means, he said, the more expensive it gets.

Level playing field

William Warren, who farms 105 acres of apples and pears in Columbia County on his 4,000 acres of farmland, is a strong proponent of biodiesel.

As chair of the Washington State Farm Bureau’s biofuels committee, Warren, along with environmental organizations helped draft legislation for renewable fuels standards for biodiesel and ethanol in Washington State.

Warren said rather than experimenting with such crops himself, he’s trying to create a profitable market for fuel crops to give farmers more options and ensure they have a level playing field.

The rising cost of petroleum-based fuels is hurting his operation in more ways than one, Warren said. Employees who commute about 30 miles from Walla Walla, for example, are being hit hard by rising gas prices.

“We’re competing against jobs that are closer,” Warren said. “When you’re compensating your employees for extra expenses, it’s going to hurt you.”

Along with governmental and industry allies, Warren helped form a nonprofit corporation, Pacific AgriEnergy, aimed at attracting venture capital. His goal is to launch an operation large enough to produce biodiesel crops on a profitable basis.

Most biodiesel is produced from either Midwest soybean or Canadian canola. Warren and his partners have accumulated $110,000 in funds for a proposal to determine the feasibility of large-scale growing and marketing of oilseed crops in the Pacific Northwest.

A 2004 study that the partnership commissioned exposed substantial risk to farmers eyeing the potential for such crops, he said. Farmers need to make 13 cents a pound to make a profit on such crops, while the existing price is 8 cents.

“Farmers aren’t going to consider growing crops for under 13 cents a pound,” he said.

Warren said winter canola is the strongest candidate for a profitable biodiesel crop as it yields twice as much per acre as spring canola. Even at that, it has to compete with winter wheat in terms of profitability for farmers.

Warren rejected mustard seed, as it contains less oil than canola and its byproducts require considerable processing before it can be used as stock feed.

Washington State Senator Jim Honeyford (Republican) of Sunnyside last spring slammed the state’s renewable fuel law. In a letter to the Capital Press, Honeyford cited figures indicating farmers will need a price of 13 cents a gallon for biodiesel fuel to make growing oilseed crops profitable. Noting that Canadian canola is being imported for 8 to 10 cents a gallon, Honeyford questioned why U.S. farmers should take such a risk.

“To meet the mandate, Washington farmers will need to devote 400,000 acres on a three-year rotation for the production of oil seeds, making them the state’s third largest crop,” he said. “Are you willing to bet the farm on one crop?”

Proponents counter that the economics will change as production volume increases and competes more readily with rising imported petroleum prices.