Special Report: Can Detroit Airport Experiment Help Aviation Biodiesel, Local Economy Take Off?
One mile south of Detroit Metropolitan Airport, a field of oriental mustard seed plants is part of an aviation-biodiesel experiment.
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.
The Complexities
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.
An aircraft departs Detroit Metro Airport to the south, flying past a field of plants that could one day provide its fuel.
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
Officials believe a nascent biodiesel industry could one day provide jobs in the Detroit aerotropolis region.
“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.”