"Consider Kentucky's legacy to the world and two items usually come quickly to mind: horses and bourbon. Now, a Nicholasville-based company wants to add a third: bio-fuels.
That's the vision of Dr. T. Pearse Lyons, president and founder of Alltech. During the month of October, Lyons is touring the commonwealth, talking with agriculture, education, business and government leaders to promote innovation in agriculture. The tour's theme is "Vision 2010: Fueling the Future of Rural Kentucky."
Lyons is introducing Alltech's Rural Community Bio-refinery concept — the first such model in North America. The concept is unique in integrating food, feed and fuel production.
"Today we are faced with two confounding global challenges: feeding a hungry world and providing that world with energy," Lyons said.
Kentucky has the opportunity to be at the forefront in solving this global
crisis while simultaneously paving the way to building a new economy, Lyons said. The Alltech bio-refinery would produce ethanol, distiller's grains and a number of value-added products.
The first refinery could be up and running in 14 to 15 months. Alltech is not currently releasing information on sites being considered. The basic bio-refinery would involve an investment of $40 million. As various value-added products are developed, the investment could include an additional $30 million.
By today's ethanol plant standards, the Kentucky-based rural plant would be small, producing approximately 10 million gallons of fuel per year. The plant would use 100,000 tons of raw materials, including such sources as wheat midds, corn stover and switchgrass, as well as grain.
It would be the first U.S. plant to use cellulose as the major part of its raw material. Most ethanol distilleries use corn, which in recent years has created record corn prices and rising food costs.
In 2005, Congress enacted an energy law mandating the use of renewable fuel in gasoline. The law required 7.5 billion gallons of renewable fuel to be used by 2012, compared with 3.5 billion in 2004. Use of ethanol has already surpassed that goal, with 7.8 billion gallons expected to be used in 2007 and 11.5 billion by 2009.
"This could be the next industrial revolution for Kentucky," said Harvey Mitchell, director of agriculture for the Center for Rural Development. "This is an all-encompassing plan of energy use, from the time the product is delivered to the production of energy."
Kentucky is better equipped to take advantage of this opportunity than many states, he said. The commonwealth is one of the greatest forage producing areas in the United States and has the highest concentration of cattle in the world. Kentucky also is 47 percent forested with 11.7 million acres.
The Alltech Rural Community Refinery concept is also unique due to its value add-ons. While the rural bio-refinery will produce ethanol, its goal is to also produce as many value-added products as possible.
For example, surplus CO2 from the plant would be used to grow algae, which would be used as feed for fish production. Another by-product of the plant would be re-fermented for use as a cattle feed. The rural concept includes marketing locally produced beef under a locally branded label.
Kentucky currently has an annual milk deficit that amounts to $250 million, Lyons said. The Alltech Rural Community Bio-refinery would address this need. Over 100,000 cows would be needed to make up the current deficit in milk and milk products.
Kentucky's southern neighbor states of Tennessee, Georgia and Florida are also in a milk deficit situation that is growing. There is an opportunity for Kentucky to not only address its own deficit but to start exporting milk and milk products to other states.
Lyons also pointed out that there is an international market for the value-added products Kentucky could produce. Citing a recent article in the International Herald Tribune entitled "Milk: the New Oil," he noted that developing countries around the world have a milk deficit. For example, the Philippines imports 98 percent of its milk products for its population of 95 million. Kentucky has the opportunity to fill that demand, Lyons said.
The bio-refinery would utilize approximately 40 acres. A related dairy would probably consist of 1,000 cows and would use as much as 400 acres. Each 100 cows added to a dairy creates approximately five jobs, Lyons said.
"I think it's important when it comes to the distillery/bio-refinery concept that we point out that there is no effluent," Lyons said. "It is a total cycle — a total recycling process."
Initially, the plant will use natural gas as its energy source. Later, methane will be generated from feedlot manure. Methane collected from a single cow would have a positive carbon footprint equivalent to driving one car 12,000 miles.
Alltech has been developing the rural bio-refinery since the early '70s. Lyons observed that early investors in the gasohol revolution floundered as they took one commodity (corn) and converted it. He was convinced that in creating value-added products, plants would become viable. When the Archer Daniels Midland Company did that by producing ethanol along with value-added products like amino acids, vitamins and other products, Lyons knew he was right.
Alltech, founded in 1980, is a global leader in animal nutrition. The company has 1,800 employees working in offices in 85 countries. It is also the sponsor of the Alltech FEI World Equestrian Games, to be held in Lexington September 25-October 10 in 2010.
Alltech has received a great deal of interest from other countries regarding its bio-refinery concept. Serbia, a grain-rich agricultural country, is interested. In Quebec, Canada, the government has earmarked funds to support bio-refineries and has expressed interest in the concept. China has also inquired.
All things being equal, Lyons would prefer that the first bio-refinery be located in Kentucky. "We are a Kentucky-based company," Lyons said. "The state has allowed us to grow and continues to do so. Kentucky would be our preference."
The goal of the October tour is to help communities understand the rural bio-refinery concept and to create momentum around Dr. Lyons' vision, according to Billy Frey, Alltech public relations manager, North America.
"My son said it best," Lyons said. "He said, 'Dad, you've been talking about this all your life — go do it."
"I do think it is a legacy," Lyons said. "It's a legacy for Alltech; it's a legacy for Kentucky. It's a legacy that will have dramatic implications not just for the commonwealth, but for the world."