PUUNENE – Within five years, Hawaiian Commercial & Sugar Co. may be out of the sugar business and use its 37,000 acres on Maui to grow much-desired biofuels, company, state and federal officials, announced Wednesday afternoon.
The announcement came with the personal endorsement of senior Hawaii U.S. Sen. Daniel Inouye, who made a pledge to sugar workers who gathered for the event at HC&S headquarters in Puunene.
"In my name, I promise HC&S will not go under like the 16 other sugar cane operations," Inouye said. "If I am wrong, I will be out of a job."
The U.S. Department of Energy, through the University of Hawaii, and the Navy, through the U.S. Department of Agriculture, will provide at least $4 million annually toward research to help HC&S determine whether it is feasible to convert the more than 130-year-old company into an "energy farm," or a high-tech producer of renewable fuels, said HC&S General Manager Chris Benjamin.
It would be a dramatic transformation, officials said. The move could preserve hundreds of agricultural jobs on Maui for decades to come and potentially lead to tens of millions of dollars in capital improvement investments to the company’s aging sugar mill.
"This (funding) could help define a new future for HC&S as an alternative energy producer," said Benjamin, who called the news "historic" and "exciting."
His comments drew applause and cheers from mill and fieldworkers who gathered in the conference room. HC&S employs 800 Maui residents, and financial losses and water rights disputes have threatened the company’s existence.
In January, the board of directors of Alexander & Baldwin Inc., HC&S’ parent company, gave it a year’s reprieve, if it can increase sugar production.
On Wednesday, Benjamin was careful to say that the company has not abandoned the sugar business model or its role in providing livestock feed, at least not yet. Instead, HC&S and its multiple public partners – who teamed up about two months ago – will help the company decide if the costly shift to creating biofuel is worth it, Benjamin said.
The entire proposal is part of a broad effort by the administration of President Barack Obama, the Navy, USDA, Gov. Linda Lingle and Mayor Charmaine Tavares to invest, research and create sustainable and cleaner energy sources as soon as possible.
Under the agreement now in place, the Department of Energy has pledged $2 million a year to the UH College of Tropical Agriculture and Human Resources to research energy crop development as well as energy conversion technologies.
The Navy’s Office of Naval Research will have another $2 million a year to investigate complementary crop and technology assessments and evaluate the long-term needs for the production of biomass, which are the crops or natural byproducts used to make biofuels, such as biodiesel.
The USDA will direct all the research initiatives as well as accelerate efforts to grow feed for livestock and figure out effective ways to use the leftovers for biofuel.
"Hawaii, with its semitropical climate, is among the states with the greatest potential to produce biomass," said USDA Deputy Secretary Kathleen Merriggan said. "And, with its significant Naval presence and its heavy reliance on imported fuels, Hawaii is a perfect location for growing biomass for the production of advanced biofuels."
She said the state is filled with renewable energy opportunities, such as solar, wind, geothermal and wave power, to develop other advanced energy systems.
Wednesday’s announcement could result in HC&S growing sweet sorghum or tropical grasses or perhaps green sugar cane, which does not require the unpopular practice of cane burning to harvest the crop, Benjamin said.
He also said that he hopes this new development will show the state Commission on Water Resource Management HC&S’ commitment to pursuing the goal of becoming a renewable energy farm. The company is awaiting the commission’s rulings on the plantation’s access to surface waters drawn from the East and West Maui watersheds.
At least 35 million gallons a day of water from both resources could be lost if the commission rules in favor of the plaintiffs seeking the return of natural mauka-to-makai stream flows. The commission’s decisions are expected to come in May.
Inouye and Benjamin said it’s impossible to say how much water this new business model would need, but Hawaii’s senior senator said HC&S will probably require as much water as it gets today.
The research process itself is expected to take two years, Benjamin said. Converting the mill would likely take another three years, he said.
A lot of questions about the best crops to grow, right technologies to use, fuels to make and customers to find – other than the military – need to be answered, he said. HC&S will need to develop a business plan, too, he said.
Now is the time for change, he said.
The company already burns bagasse, or leftover sugar stalks to power steam electric turbines that supply 7 percent of Maui Electric Co.’s output. And HC&S looked at turning sugar into ethanol 20 and 30 years ago and spent millions on renewable energy research, Benjamin said.
But what’s different today is that the technology that converts crops into fuels has grown dramatically in recent years, he said. When HC&S makes renewable energy, it’s also always been with agricultural byproducts, not the primary crops, he said.
Merriggan and UH College of Tropical Agriculture and Human Resources Dean Andrew Hashimoto were also on hand for the partnership announcement.
"There are a lot of questions, and they need to be answered in a credible manner," said Hashimoto, noting that the project will be subject to a great deal of public scrutiny.
He said he was confident this group of partners would produce excellent results.
HC&S has been on the ropes lately. With an ongoing drought and roller coaster commodities trading, it has lost about $45 million in the past two years.
But Inouye expressed confidence that a solution would be found to not only create renewable energy sources, but save jobs and make HC&S money and preserve an important part of Hawaii’s history, the sugar plantation.
"We don’t know the answers yet," Inouye said. "But we are very excited to be part of this adventure."