Lexington, KY - Some very timely and relevant buzz words and phrases came to mind in talking with Steve Manning, chairman and CEO of Commonwealth BioFuels of Lexington: sustainable energy source, alternative energy, carbon footprint, economic development, and startup are just a few.
What inspired the formation of Commonwealth BioFuels, LLC?
Actually it was my son Josh's idea. Josh graduated from the University of Florida and now has his own business at Penn State University, a tutoring business. Some entrepreneurs he knows from the University of Florida contacted him about getting into fuel sale technology, and we met with a friend of mine in Washington, D.C., who is a consultant for a biofuels company, who encouraged us to get into the biofuels area because of the renewable fuel standard that was passed by Congress a few years ago. So we decided to form the company, Josh and I and a friend of mine, Tom Peacock from Washington D.C. We formed the company in late January. Since that time, we've been looking at various feed stocks and technologies, and we're going to go forward with putting up at least one if not two plants here in Kentucky.
And what is your background in energy?
After I left Dinsmore and Shohl, I was an environmental compliance regulatory affairs counsel for a company called Re-Mediation Services. They are the clean up or mediation contractor at the uranium enrichment plant in Paducah. They were a contractor for DOE, and at the end of 2008, they decided to close the Lexington office and eliminate my position. So since the job market out there is not real great right now, I decided I would just start my own business, and fortunately my son, who is a very strong environmentalist, came up with this idea of getting into renewable energy.
What is the mission of Commonwealth BioFuels?
Our mission is first and foremost obviously to make a profit, but we also want to make a profit in a green manner. We want to make a project that is environmentally safe, does something to help our community and helps the United States become energy independent. So that's our primary motivation and also, I'd also like to give back to Eastern Kentucky. That is where my family was from originally and that is where we intend to build our plant.
Why biofuels?
Primarily because of the mandates that Congress passed known as the Renewable Fuel Standards, which dictate that by the year 2022, 44.44 percent of all fuels for cars and trucks in this country, both gasoline and diesel, have to be second-generation cellulosic biofuels. And with those mandates in place, and particularly the Obama administration and its stimulus package, have given a great deal of incentive to entrepreneurs to get into this business, and it will require government assistance, quite frankly, to make this venture go forward.
Do you think that government assistance is appropriate?
I certainly think it is appropriate because I think without it the private sector would not do the research necessary to accomplish the goals that have been set by Congress. And yes, I think it's definitely appropriate; particularly it's a national security issue more than anything else. We can no longer be dependent on foreign countries for our fuel.
In a press release about the new company, you state, "We support the sustainability of biofuels production and use, such that social, economic and environmental requirements of Americans can be met now and in the future." Could you elaborate?
Well, obviously, we want to have a biofuel product that is environmentally safe. We want to help reduce carbon dioxide emissions. Biofuels do have a much smaller carbon footprint. From an economic standpoint, again, we want to be able to be energy independent in the next twenty years. From a social standpoint, obviously, we want to create jobs. We want to create jobs in distressed areas of Eastern Kentucky that right now have no jobs, quite frankly, other than coal.
Are you looking at any particular sites?
Yes, we are. We're thinking about a couple of plants; our ultimate goal is to build a commercial-scale facility somewhere in Eastern Kentucky, probably close to the only refinery in Kentucky, which is in Cannonsburg in the Ashland area. Somewhere between Morehead and Cannonsburg we'd like to build our facility, using a feedstock known as miscanthus grass, which quite frankly is an ornamental landscape grass. I have it in my backyard. You see a lot on golf courses; it looks a little like pampas grass. It's not native to the United States; it's actually from Asia, but we're going to use that as feed stock for the large plant. We've been getting a lot of encouragement from the University of Kentucky and from Morehead State University and some representatives in Eastern Kentucky to look at sweet sorghum, so we may build a small plant somewhere in Morgan County or Wolfe County to give another outlet for sweet sorghum farmers, other than just selling it for molasses. And the problem there, it wouldn't be a year-round plant, because obviously we have a short growing season in Kentucky. So we would probably operate about six months out of the year, unless we find another feed stock that we can use for the remaining six months. So it will be a small plant, probably between 500,000 and a million gallons per year, whereas the big plant that we hope to build in the next three to five years will be somewhere between 10 and 20 million gallons per year.
Tell us more about miscanthus.
We've determined that it is probably the best grass for a number of reasons. Number one, it is a perennial grass, meaning you plant it once and the crop will last 20 to 30 years. Each year you cut it down, you harvest it, and the next year it comes back. It requires very little if any fertilizer, it doesn't require a great deal of water, it doesn't require a great deal of attention, unlike the tobacco crop that Kentucky used to have. And it has many good properties, and in addition, it is a great soil erosion plant. We've looked at the possibility of using it on abandoned strip mines or at mountaintop removal sights to help keep the soil in place. So it has a lot of advantages, and it also has some great yields - somewhere between 14 and 17 tons per acre. And you can get about 100 gallons of ethanol for every ton of feed stock. Ö It will be a new crop for the state of Kentucky, which we obviously need. We used to have 60,000 farms in Kentucky that grew tobacco, and now we have 6,000. So I think this would be a good replacement crop for tobacco.
Are you currently looking for investment capital?
Yes, we are. The reason I say it will be three to five years before we build a commercial-scale plant, you have to plant the miscanthus using rhizomes, and the reason you use rhizomes is that it could become a nuisance plant. If you use a rhizome or 'mule,' it's sterile and therefore won't reproduce, so you don't have to worry about it becoming a "kudzu of the south." It will take about two years ... before we can actually get a crop as a feed stock. We're going to go out probably in the next six months to a year and start contracting with farmers in Mason County, Lewis County, Boyd County, Greenup County, Rowan County, Elliott County - all of those counties along the I-64 Corridor. We obviously want to reduce costs of transportation, so if we get contracts with farmers within 75 miles, it makes it cost-effective for them as well as for us.
Some very timely and relevant buzz words and phrases came to mind in talking with Steve Manning, chairman and CEO of Commonwealth BioFuels of Lexington: sustainable energy source, alternative energy, carbon footprint, economic development, and startup are just a few. A podcast of Tom Martin's entire interview with Manning is available online at bizlex.com.
What inspired the formation of Commonwealth BioFuels, LLC?
Actually it was my son Josh's idea. Josh graduated from the University of Florida and now has his own business at Penn State University, a tutoring business. Some entrepreneurs he knows from the University of Florida contacted him about getting into fuel sale technology, and we met with a friend of mine in Washington, D.C., who is a consultant for a biofuels company, who encouraged us to get into the biofuels area because of the renewable fuel standard that was passed by Congress a few years ago. So we decided to form the company, Josh and I and a friend of mine, Tom Peacock from Washington D.C. We formed the company in late January. Since that time, we've been looking at various feed stocks and technologies, and we're going to go forward with putting up at least one if not two plants here in Kentucky.
And what is your background in energy?
After I left Dinsmore and Shohl, I was an environmental compliance regulatory affairs counsel for a company called Re-Mediation Services. They are the clean up or mediation contractor at the uranium enrichment plant in Paducah. They were a contractor for DOE, and at the end of 2008, they decided to close the Lexington office and eliminate my position. So since the job market out there is not real great right now, I decided I would just start my own business, and fortunately my son, who is a very strong environmentalist, came up with this idea of getting into renewable energy.
What is the mission of Commonwealth BioFuels?
Our mission is first and foremost obviously to make a profit, but we also want to make a profit in a green manner. We want to make a project that is environmentally safe, does something to help our community and helps the United States become energy independent. So that's our primary motivation and also, I'd also like to give back to Eastern Kentucky. That is where my family was from originally and that is where we intend to build our plant.
Why biofuels?
Primarily because of the mandates that Congress passed known as the Renewable Fuel Standards, which dictate that by the year 2022, 44.44 percent of all fuels for cars and trucks in this country, both gasoline and diesel, have to be second-generation cellulosic biofuels. And with those mandates in place, and particularly the Obama administration and its stimulus package, have given a great deal of incentive to entrepreneurs to get into this business, and it will require government assistance, quite frankly, to make this venture go forward.
Do you think that government assistance is appropriate?
I certainly think it is appropriate because I think without it the private sector would not do the research necessary to accomplish the goals that have been set by Congress. And yes, I think it's definitely appropriate; particularly it's a national security issue more than anything else. We can no longer be dependent on foreign countries for our fuel.
In a press release about the new company, you state, "We support the sustainability of biofuels production and use, such that social, economic and environmental requirements of Americans can be met now and in the future." Could you elaborate?
Well, obviously, we want to have a biofuel product that is environmentally safe. We want to help reduce carbon dioxide emissions. Biofuels do have a much smaller carbon footprint. From an economic standpoint, again, we want to be able to be energy independent in the next twenty years. From a social standpoint, obviously, we want to create jobs. We want to create jobs in distressed areas of Eastern Kentucky that right now have no jobs, quite frankly, other than coal.
Are you looking at any particular sites?
Yes, we are. We're thinking about a couple of plants; our ultimate goal is to build a commercial-scale facility somewhere in Eastern Kentucky, probably close to the only refinery in Kentucky, which is in Cannonsburg in the Ashland area. Somewhere between Morehead and Cannonsburg we'd like to build our facility, using a feedstock known as miscanthus grass, which quite frankly is an ornamental landscape grass. I have it in my backyard. You see a lot on golf courses; it looks a little like pampas grass. It's not native to the United States; it's actually from Asia, but we're going to use that as feed stock for the large plant. We've been getting a lot of encouragement from the University of Kentucky and from Morehead State University and some representatives in Eastern Kentucky to look at sweet sorghum, so we may build a small plant somewhere in Morgan County or Wolfe County to give another outlet for sweet sorghum farmers, other than just selling it for molasses. And the problem there, it wouldn't be a year-round plant, because obviously we have a short growing season in Kentucky. So we would probably operate about six months out of the year, unless we find another feed stock that we can use for the remaining six months. So it will be a small plant, probably between 500,000 and a million gallons per year, whereas the big plant that we hope to build in the next three to five years will be somewhere between 10 and 20 million gallons per year.
Tell us more about miscanthus.
We've determined that it is probably the best grass for a number of reasons. Number one, it is a perennial grass, meaning you plant it once and the crop will last 20 to 30 years. Each year you cut it down, you harvest it, and the next year it comes back. It requires very little if any fertilizer, it doesn't require a great deal of water, it doesn't require a great deal of attention, unlike the tobacco crop that Kentucky used to have. And it has many good properties, and in addition, it is a great soil erosion plant. We've looked at the possibility of using it on abandoned strip mines or at mountaintop removal sights to help keep the soil in place. So it has a lot of advantages, and it also has some great yields - somewhere between 14 and 17 tons per acre. And you can get about 100 gallons of ethanol for every ton of feed stock. Ö It will be a new crop for the state of Kentucky, which we obviously need. We used to have 60,000 farms in Kentucky that grew tobacco, and now we have 6,000. So I think this would be a good replacement crop for tobacco.
Are you currently looking for investment capital?
Yes, we are. The reason I say it will be three to five years before we build a commercial-scale plant, you have to plant the miscanthus using rhizomes, and the reason you use rhizomes is that it could become a nuisance plant. If you use a rhizome or 'mule,' it's sterile and therefore won't reproduce, so you don't have to worry about it becoming a "kudzu of the south." It will take about two years ... before we can actually get a crop as a feed stock. We're going to go out probably in the next six months to a year and start contracting with farmers in Mason County, Lewis County, Boyd County, Greenup County, Rowan County, Elliott County - all of those counties along the I-64 Corridor. We obviously want to reduce costs of transportation, so if we get contracts with farmers within 75 miles, it makes it cost-effective for them as well as for us.