Haslam, Alexander Agree Gov’t Can’t Subsidize Ethanol Indefinitely

Gov. Bill Haslam wholeheartedly supported the concept Tuesday of making cellulosic ethanol in Tennessee — but not so much government paying for it.

Haslam joined U.S. Sen. Lamar Alexander in touring the fields and facilities in Monroe County involved with Tennessee’s venture into turning switchgrass into fuel.

The state made its first investment in the project during the administration of former Gov. Phil Bredesen, and it was hailed as an innovative way for the state to get involved in clean energy. Haslam and Alexander touted many aspects of the program Tuesday, like the fact it doesn’t use a crop you could otherwise eat, such as corn, the fact that it helps Tennessee farmers financially and the fact that a source of energy is nice when it’s not foreign.

But both the governor and the senator were careful about devoting long-term government funding to what they saw.

“The state set aside $70 million back in 2007, and I think this is a great venture to see if that works,” Haslam said. “We can’t keep doing that. As government, we can’t keep investing in it.”

Still, Haslam liked the idea of the product in a private, commercial market.

“I’m excited to see products that could come out of this,” he said.

Haslam looks upon homegrown ethanol as a jobs boost, however, and that fits in with his top goal as governor.

“The truth is, when you look at unemployment at 9.5 percent-plus in Tennessee, there are pockets where it’s worse, and our rural counties, most of them, have high unemployment,” Haslam said.

“There’s a whole lot of benefits. The key is making the economics work. At this point obviously, the government has an investment in it. That won’t work over a long period of time.”

Haslam and Alexander said they would like to see the program stand on its own.

The complex process involves harvesting switchgrass and through a refinery system turning it into fuel-grade ethanol. DuPont Danisco Cellulosic Ethanol has partnered with the University of Tennessee on the research. The university currently runs a fleet of 150 cars on the ethanol produced at the Vonore facility south of Knoxville. The fuel is donated to the school.

With the basics in place, an adjacent facility to the DuPont plant is being built for further experimentation in how the process works with switchgrass in storage, so the concept is still very much a work in progress.

Haslam and Alexander were joined on the tour by state Sen. Randy McNally, R-Oak Ridge, Sen. Mike Bell, R-Riceville, Agriculture Commissioner Julius Johnson and University of Tennessee President Joe DiPietro.

“With any new technology, the key is to get the cost down, so it can stand on its own in the marketplace,” Alexander said. “The idea of long-term subsidies for energy are not practical.

“But that’s the goal here. We want jobs all over the state in rural towns as well as cities. This is the chance for extra income for farmers in rural areas.”

Alexander refined his personal opinion about such ventures by stating what government’s role should be.

“My view is the federal role is appropriate for research, which this is,” Alexander said. “Federal funding could be appropriate for jump-starting new technology, such as a small nuclear reactor, which might be built at Oak Ridge, such as electric cars, such as making fuel from crops we don’t eat.

“But I’m talking 3-5 years. Long-term subsidies like we’ve had for corn ethanol since the 1970s or like we’ve had for wind (energy) since 1992 are inappropriate in a federal government that’s borrowing 40 cents out of every dollar it spends. This project has a chance to fit right in to the appropriate niche of being quickly one of those new technologies that can stand on its own.”

Government subsidies for the project have been criticized in the past by some groups, including some Tennessee lawmakers. The criticism could increase with even deeper federal and state budget cuts on the horizon. Nevertheless, officials involved in the project evoke optimism about the potential of success of the product.

It was not lost on some observers Tuesday that Haslam has made a fortune selling gas as part of the family business Pilot Flying J. But Haslam pointed to the broader picture.

“If we can produce a product where we’re not subject to the vagaries of the international oil market, that’s a clean product, that’s domestically available, that’s a huge win for us in terms of having supply readily available,” Haslam said.

“It’s a product we depend on so much, yet it’s out of our control in so many ways. It frustrates every American when they see prices go way up.”