A Canadian biofuels developer plans to build a $24 million plant in southeast Missouri that would convert wood scraps into fuel to operate factories and heat office buildings.
Dynamotive Energy Systems claims the operation would consume up to 73,000 tons of wood byproducts from nearby sawmills to produce 12 million gallons of what it calls "BioOil" annually.
Since the primary market for "BioOil" would be industrial boilers, the operation represents a significant shift away from development of alternative fuels for cars and trucks.
But that's not to say the boom in renewable energy is over. David Miller reports on a Midwest entrepreneur who has quietly become one of the nation's top producers of ethanol.
Over the past 23 years, Bruce Rastetter has owned a feed supply company, operated a top 20 contract hog enterprise, and has launched a new venture that will make him the 4th largest producer of ethanol in the United States. To say Rastetter is driven would be an understatement.
Bruce Rastetter, CEO, Hawkeye Renewables: "I don't think there's any substitute for had work and being around people that think the same. I early on had some people tell me, ya' know, don't spend much time in coffee shops, don't go to the local co-op and listen to the latest rumor, ya know, focus on how you're going to make a difference and, and be betterf and get that sale and add value to your customer that you're working with."
Rastetter grew up on an Iowa farm but had his eyes on other things. He received his under graduate degree in the late 70s and went on to law school. Halfway through his studies he quit and returned to his hometown of Alden, Iowa.
In the early 80s, after farming and working at the local post office part-time, he decided there was a niche to be filled in the livestock feed business. After putting together a business plan and getting a few local investors to loan him some money he opened Alden Feed.
As time went on he saw another business opportunity contracting hogs and in 1994 launched Heartland Pork. Through loans, business contacts, and venture capital investment he raised $30 million to get the operation started. By the time Rastetter sold Heartland in 2004, the company was acknowledged as the 13th largest hog operation in the United States, with 540 employees, and 120 contract producers in 3 states.
Though it might appear Rastetter had clear sailing starting his businesses there were times when just getting bankers to say "yes" was a task in itself.
Bruce Rastetter, CEO, Hawkeye Renewables: "...and they probably had reasons to say "no." At the time I didn't think they had as good of reasons as they should have but they did say no. So, it's okay to have rejection and you've just got to bounce back from that, go on to the next guy, learn form your mistakes a, and ultimately get that loan."
Not long before the sale of Heartland Pork Rastetter was already planning his next move and in 2003 he launched Hawkeye Renewables. The plan was to open 5 biorefineries, produce nearly 500 million gallons of ethanol annually and sell the distillers grains as a feed additive.
Bruce Rastetter, CEO, Hawkeye Renewables: "I think today people call that entrepreneurial and I had difficulty spelling that word. So I, and I still do at times. So, I think what it is, is it's back to knowing what you don't know and if you question and then want to go to people that know those aspects of the business, I mean, clearly we used some business acumen on financing and employing people, and those kinds of things, in management, but we didn't know how to build an ethanol plant. We didn't know how to market ethanol. So you go to people that do ... making sure you make the right choices and you try to make the best choice possible at the time and building the business."
Based on his previous success, Rastetter was able to raise enough money to build two plants, start construction on two more, and plan for a fifth. When the four facilities are finished the cost of construction will approach $600 million. When the fourth plant is completed Hawkeye will need 120 million bushels of corn annually.
And by the end of 2008, they plan to employ 260 people and have the capcity to produce 565 million gallons of ethanol every year.
Rastetter feels one of the keys to his success is the ability to be flexible.
Bruce Rastetter, CEO, Hawkeye Renewables: "...if you don't succeed are you going to try again and the belief that ya know, it's not a prefect world, but if we believe that we continue to make improvement by doing the right thing, hiring bright people, having a business plan that makes sense, questioning ourselves as to whether we've looked at all the sensitivities on, on cash flows and cost increases, and what can go wrong rather than what can go right, I think you'll solve a lot more problems."
One of the biggest problems Rastetter faced was the volatile market for both ethanol and its primary feedstock -- corn. As corn has more than doubled in price after Congress established production mandates the price of raw ethanol declined by 25 percent. Those realities forced Rastetter to put construction of the fifth plant on hold.
Market forces aside, Rastetter also contends with ethanol critics who blame the renewable fuel for higher food prices.
Bruce Rastetter, CEO, Hawkeye Renewables: "I think it's really unfortunate the emotional reaction to corn going up a dollar and that we're raising food prices in the country because it's clearly being overstated. What's raising food prices in this country is increased energy costs, not increased corn costs."
And on the issue of increased water use, Rastetter wants consumers to know ...
Bruce Rastetter, CEO, Hawkeye Renewables: "...it takes three gallons of water per gallon of ethanol, one of the things that they don't talk about is that it takes eight gallons of water per gallon of gasoline to produce it. So we're much more efficient than that industry. But the reality is a message that doesn't get told, is that the water we discharge is not processed water, does not touch any of the corn, and also is cleaner that what we're withdrawing from the aquifer. "
Despite any pitfalls, Rastetter believes whole-heartedly in the promise of renewable fuels. And he claims ethanol is fueling a brighter tomorrow for rural America and one kid in particular from down on the farm.
Bruce Rastetter, CEO, Hawkeye Renewables: "It's just a wonderful system that we have and they can let somebody that grows up on a small farm that isn't ya know best in his class and ya know I wasn't a great student and, and be able to have success and surround himself with a, with people that are brighter than him that know all these things and, and can do great things."
For Market to Market, I'm David Miller.