Special Subcommittee on Energy


Minutes of the<MeetNo1> 2nd Meeting

of the 2012 Interim


<MeetMDY1> July 20, 2012


Call to Order and Roll Call

The<MeetNo2> 2nd meeting of the Special Subcommittee on Energy was held on<Day> Friday,<MeetMDY2> July 20, 2012, at<MeetTime> 10:00 AM, in<Room> Room 131 of the Capitol Annex. Senator Brandon Smith, Chair, called the meeting to order, and the secretary called the roll.


Present were:


Members:<Members> Senator Brandon Smith, Co-Chair; Senators Joe Bowen, Ernie Harris, Ray S. Jones II, Johnny Ray Turner, and Robin L. Webb; Representatives Royce W. Adams, Rocky Adkins, Dwight D. Butler, Leslie Combs, Tim Couch, Will Coursey, Jim Gooch Jr., Wade Hurt, Martha Jane King, Lonnie Napier, Tanya Pullin, Tom Riner, Kevin Sinnette, John Will Stacy, Fitz Steele, and Brent Yonts.


Guests:  Sue Nokes, Ph.D., P.E., Professor and Department Chair of the Department of Biosystems and Agricultural Engineering, University of Kentucky, and Michael Montross, Ph.D., P.E., Professor of Biosystems and Agricultural Engineering, University of Kentucky; Melissa Howell, Executive Director, Kentucky Clean Fuels Coalition, and Thomas Clark, Vice President, Kentucky Clean Fuels Coalition.


LRC Staff:  Sarah Kidder, and Susan Spoonamore, Committee Assistant.


The June 15, 2012 minutes were approved by voice vote, without objection, upon motion made by Representative Steele and seconded by Representative Couch.


The University of Kentucky’s Federal Grant to Study On-Farm Biomass Processing:

Michael Montross, Professor of Biosystems and Agricultural Engineering at the University of Kentucky, spoke about On-Farm Biomass Processing: Towards an Integrated High Solids/Transporting/Storing/Processing System. He stated that the research is being funded by the United States Department of Agriculture (USDA) under the Biomass Research Development Initiative, which awarded this project $6.9 million. UK was responsible for securing 20 percent non-federal cost-share, most of which is coming through a partnership with Case New Holland (CNH). Other than the University of Kentucky, participants in the research project include the University of Wisconsin, North Carolina State University, Oak Ridge National Laboratory, and USDA-ARS Food Animal Production Unit. The researchers are also partnering with farmers across Kentucky, primarily in the Logan County area.


There are four objectives for the research project. The first is feedstock development in which the focus is modifying energy crops so they can be more easily processed and converted. Dr. Montross stated that his team is using two energy crops, miscanthus and switchgrass, and two agricultural residues, corn stover and wheat straw. The second objective revolves around crop management, production, and on-farm bale storage. The next objective is the development of biofuels and biobased products during which the researchers employ two methods to break down the lignants to extract the cellulose or sugars, one involves the use of iron and hydrogen peroxide and the other involves white rot fungus. Once the biomass is developed, it is stored in on-farm bunker silos for the conversion to butanol, which could take two to three months, which is the fourth objective. At that point, it is transported to a refinery and the scope of this project ends. The USDA required that the project focuses on butanol as opposed to ethanol because butanol is less corrosive and has a higher energy density than ethanol. It also can be blended into gasoline at higher concentrations than ethanol and can be blended into diesel fuel.


The project has a life-cycle assessment group tracking the environmental impact, including soil sustainability and erosion control, the product flows, energy expenditures, and greenhouse gas emissions. The researchers will also produce a detailed economic analysis to ensure the fiscal viability and feasibility of on-farm biomass processing. Dr. Montross said that the most commonly cited barrier to biomass production is the costs associated with transportation, so the goal of this on-farm processing project is to mitigate those costs by moving away from the low energy and bulk density typical of off-farm biomass processing, making it an attractive and profitable venture for Kentucky farmers.


Dr. Montross stated that given the current acreage of corn, wheat, and hay crops in Kentucky and the acreage of useable abandoned farmland and abandoned mine land, conservative estimates conclude that on-farm biomass processing could yield 35-40 gallons of butanol per ton. After capital and feedstock costs are factored in, Kentucky farmers, coops, or small businesses could make a profit of about $10 per ton if butanol sells for $1.40 per gallon. Dr. Montross said that this would be a profitable outcome for farmers considering that butanol has 87 percent of the energy content of gasoline by volume. The researchers conclude that biomass has the potential to replace 25 percent of Kentuckians’ gasoline use on an energy basis. If butanol is worth $2 per gallon, up to $4.3 billion would stay in the Kentucky economy.


In response to Senator Smith, Dr. Montross said that coops of small farmers, farmers with significant acreage, and small businesses would most likely be able to implement on-farm biomass processing and turn a profit. It is estimated that it will take two to three months after putting the product in the bunker before the biomass would generate revenue. Dr. Nokes stated that farmers have two advantages, space and time, and this process design would allow the them to continue regular farming activities during the waiting period. In response to Senator Smith, Dr. Montross said that sugar cane requires fourteen months of frost free weather, so it would not work well for Kentucky. Sweet sorghum, on the other hand, would be a good fit for Kentucky’s land, but the USDA restricted the types of feedstocks that could be used in the research.


In response to Senator Harris, Dr. Montross said that miscanthus and switchgrass could be put into crop rotation, alternating what feedstock goes into the bunker silos. This process would supplement, as opposed to replace, regular farming activities. While it would be possible to move a baler from field to field in smaller acres, this process would work much better on a large farm.


In response to questions from Representative Yonts, Dr. Montross said he thought that on-farm biomass processing is feasible and viable for Kentucky farmers. In the eastern part of the state, miscanthus and switchgrass may not be practical so farmers would need to look to other types of feedstock. Dr. Montross said that one large square baler would cost around $100,000. Dr. Nokes said that their team completed an economic analysis that showed the possibility of profit for farmers, and now the team’s job is to apply the research design to test those analyses.


In response to Representative Steele, Dr. Nokes said that butanol is not fully marketable right now because it is still considered a fairly new fuel alternative as of the early 2000s. Responding to Representative Steele, Dr. Montross said that John Deere equipment was not being used because he has a long-standing relationship with CNH, and the grant required the identification of the non-federal cost share in a short amount of time.  


In response to Representative Martha Jane King, Dr. Montross said that there was some feed value in switchgrass which is a native grass. Miscanthus has no feed value but would produce higher yields. Farmers are most interested in the feedstock that produces the most tonnage of cellulose per acre. Representative King said that Logan County has farms that participate in equipment exchange and cooperative ownership programs. This beneficial relationship is already integrated into the farming communities across the state and could be useful in this research.


In response to Senator Webb, Dr. Montross said that university researchers and farmers are still working with sweet sorghum, even though this research project does not address it. The primary hurdle with sweet sorghum is that the juice is not stable, but he said that sweet sorghum would produce more tons per acre of sugar.


In response to Senator Smith, Dr. Nokes said that kudzu could theoretically be used as a biomass feedstock, but that the problem would be harvesting it in an economic manner.


Representative Riggs requested that the researchers look at promoting the use of farming coops for sharing equipment and costs.


In response to Representative Riner, Dr. Montross said he did not know the exact cost of building a bunker silo, but he estimated it to be about $1.00 per ton over ten years. The bunker silo would be approximately 40 feet long, 40 feet wide, and 12 feet tall.


In response to Representative Adkins, Dr. Montross said the process of breaking feedstock down to liquid fuel is being done on the farms that are a part of the research. He also said it would be expensive for small farmers or small businesses to build the needed facilities and buy the needed equipment to complete the process, which is why a coop and/or regional facility design would work well for most small farmers.


In response to Representative Combs, Dr. Montross said no adjustments would have to be made to vehicles in order to use butanol. Dr. Nokes said that butanol was not ready to compete on today’s market. She said that the USDA is funding this research so that more exact information can be known regarding on-farm biomass processing, various feedstocks, liquid volume, expenses, revenue, and profitability.


Advancing Transportation Fuels Across America:

Melissa Howell, Executive Director, and Thomas Clark, Vice President of the Kentucky Clean Fuels Coalition (KCFC), discussed advancing transportation fuels across Kentucky. Ms. Howell said that KCFC is a nonprofit organization that works to provide its members and fleet, fuel, and transportation professionals with the latest industry information. She said that all of KCFC’s projects and programs are listed on their website, which is updated at least three times a week.


Ms. Howell said that a grant of $12.8 million was awarded in 2010 for the purchase of hybrid electric school buses. Kentucky has 162 hybrid school buses, which is the largest fleet of hybrid electric school buses in the nation. The average fuel savings these buses produce is about 34 percent. KCFC is able to collect specific data on the use of these buses, including but not limited to the number of times a bus driver presses on the brakes or the length of time a bus idles. She said that while the buses do produce significant savings in fuel, school districts will not be able to purchase hybrid buses without some form of assistance because the buses are not affordable in the short term. The base bus price is approximately $78,000 and the hybrid upcharges are about $56,000, so until the fuel savings make up for the technology costs over the estimated 14 years of use in hybrid electric school buses, the buses will not be as widely adopted as they have been in other companies with large fleets, such as UPS or Coca Cola.


In response to Senator Smith, Ms. Howell said the buses are manufactured by Thomas Built Buses in High Point, North Carolina, and Bluegrass International Trucks, Buses, and Idealease in Tulsa, Oklahoma. The transmissions are manufactured in Kings Mountain, North Carolina. Ancillary equipment is manufactured in Kentucky but there are no bus manufacturers in the state.


Ms. Howell said that with respect to E85 (fuel made from 85 percent ethanol and 15 percent gasoline), there are 24 E85 stations across Kentucky. The Kentucky Corn Growers Association provides retailers with $5,000 per dispenser, though the federal tax credits have expired. Kroger plans on installing a number of new stations in northern Kentucky. The corn-based ethanol plant in Hopkinsville continues to produce 33 million gallons per year.


Ms. Howell said that Mammoth Cave National Park was the first national park in the country to be alternatively fuelled in all operating vehicles and equipment. This park was used as a template for the US Department of Interior and the US Department of Energy for alternatively fuelling all national parks across the country. She said that Mammoth Cave National Park uses four propane school buses, two LPG Ford F150 pickup trucks, and three low-speed electric vehicles.


In 2011, KCFC established Green Fleets of the Bluegrass, which is a program designed to improve the environmental performance of vehicle fleets across Kentucky by reducing petroleum fuel use. The program is structured to provide flexibility for diverse fleets across the Commonwealth to pursue best practices while achieving recognition for successes along the way.


Ms. Howell said that while Kentucky is not at the forefront in terms of electric vehicles, there are electric vehicle projects throughout the state providing leadership in this area, including the 450 trucks that use Mercer Transportation to recharge, Louisville’s urban truck electrification working on idle reduction, the University of Louisville’s seven recharging stations, LG&E and KU’s request for proposals offering financial help for electric vehicle charging stations throughout Kentucky. She stated that UPS is the rolling laboratory for alternative fuels. UPS has two biodiesel storage tanks on the Worldport property in Louisville. She said that 95 cargo tugs were repowered from diesel engines to gasoline engines. Thirteen gates went through gate electrification, all the equipment is now electric, and 20 hybrid electric package trucks are being used in Louisville.


Ms. Howell stated that NASCAR has been using Sunoco Green E15 in all Cup Series races since February 2011. The drivers have stated that they enjoy using ethanol and thousands of fans are able to see the performance benefits.


Ms. Howell said that several years ago, KCFC did a project with the limestone mining company Carmeuse, which sells its limestone to power plants as a sulfur removal agent. The Black River (Pendleton County) and Maysville (Mason County) mining sites have been using up to a 99 percent blend of biodiesel in all underground equipment. A joint air quality-testing program at both sites showed a significant reduction in Diesel Particulate Matter (DPM). Carmeuse is one of the largest users of biodiesel in Kentucky.


Ms. Howell said that August 1, 2012, is the official ribbon cutting for the opening of Waste Management of Kentucky’s natural gas refueling site in Louisville which will be open to the public for refueling. Over $3 million was invested in the facility. She said that Waste Management would be replacing its 100-truck operation with compressed natural gas (CNG) vehicles over the next three to four years. It will be the largest heavy-duty fleet of natural gas trucks in North America with over 1,000 CNG trucks. This will reduce greenhouse gas emission by over 21 metric tons per year, per truck.


Ms. Howell explained that Kentucky signed on to a multi-state natural gas collaborative. Twenty-two states have signed on with more states to follow. The multi-state collaborative is uniting to request that automakers make natural gas vehicles so the states can prepare a market for the vehicles.


As for CNG projects, Westport LD in Louisville is upfitting approximately 15-20 Ford trucks, specifically F250s and F350s, to natural gas per day. The city of Somerset will receive the first Kentucky-made truck for use in Kentucky and will have a fleet of three soon. Freedom Waste, located in western Kentucky, has installed an on-site refueling station in Madisonville for retrofitted CNG vehicles. The Flying J, located in Walton, is a liquid natural gas (LNG) proposal by Clean Energy, a company owned by T. Boone Pickens.


In response to Senator Webb, Ms. Howell said that KCFC is not presently working with anyone to research road maintenance with the loss of gasoline taxes. As diversification progresses, KCFC will certainly be part of that discussion and will be gathering information.


Meeting adjourned.