Idled Imperium biodiesel plant may reopen next year

Less than two years ago, Imperium Renewables opened an $88 million biodiesel plant in Hoquiam to the applause of politicians who hoped it would jump-start a Pacific Northwest biodiesel industry that would be an important new source of green jobs.

Now the plant sits idle, most of its workers laid off and its tanks serving as temporary storage for South American soybean biodiesel.

Imperium was hammered by the rapid decline in the price of oil amid rising costs for agricultural feedstocks. Another big hit came this spring, when the European Union imposed a tariff on imported biodiesel, says founder and CEO John Plaza.

"It was a hard blow because it took away the only market," said Plaza.

During the past year of financial troubles, Plaza rarely spoke publicly about Imperium.

But he recently has granted interviews to discuss the company's operations and his hopes for the future.

Plaza says the Hoquiam plant last made biodiesel earlier this year, when canola oil from Canada was turned into fuel.

He hopes to resume operations next year, but that depends on what happens in a lengthy federal rule-making process to guide the future of biofuels.

An initial Environmental Protection Agency draft of those rules does not favor the canola-oil biodiesel Imperium produces.

"It's been frustrating and difficult for the industry," said Plaza, who challenges the EPA analysis.

When it began operations in 2007, Imperium's 100 million-gallon-a-year plant was the largest yet in the United States. The company that year employed about 120 people, boosting a Grays Harbor economy that had been stung by long-term declines in the timber industry.

Imperium's financing came from private investors who hoped a planned $300 million initial public offering of stock would launch the company into rapid expansion in a new era of high-priced petroleum and expanded government support for alternative fuels.

Since then, Imperium has laid off about 75 percent of its workers.

The remaining staff is divided between a Seattle office and Hoquiam, where the plant stores biodiesel from Argentina, Plaza said.

A turnaround likely depends on how the EPA finalizes rules that flesh out biofuels legislation passed by Congress in 2007.

When the Imperium plant first opened, Plaza thought the rules would be in place by 2009 and would guarantee a significant U.S. market for biodiesel.

But the final rules are still awaited, and the EPA has launched an extensive review to address a hotly contested issue: how to accurately compare the greenhouse-gas impact of biofuels compared with petroleum fuels.

Some scientists have concluded that earlier studies overstated the greenhouse-gas reductions of biofuels.

They said it was important to account for the indirect effects of biofuels — spurring conversion of more forest and grasslands to agriculture, thus releasing greenhouse gases.

These findings triggered a political battle in Washington, D.C., with environmentalists pushing for the EPA to conduct that analysis, while industry lobbyists questioned whether that analysis could be done accurately.

Environmental impact

Proposed EPA rules released earlier this month do attempt to calculate those indirect effects.

They conclude biodiesel made from canola oil and soybeans should not be included in the federal mandate because they do not do enough to reduce greenhouse gases, according to the EPA.

But the biodiesel industry will be lobbying for changes, which could be vital to the resumption of operations at Imperium.

Despite the production shutdown at the Imperium plant, biodiesel continues to be available in Washington state.

Propel Fuels, one of the most high-profile distributors, is marketing biodiesel from waste grease and agricultural rendering in the Pacific Northwest.

Six outlets

It is sold at six outlets in Western Washington at prices ranging from $2.54 for a 5 percent biodiesel blend to $3.19 for a 99 percent biodiesel fuel.

"Our customers ask us for the most local and sustainable product that we can provide them," said Rob Elam, president of Propel. "So that's what we do."

Hal Bernton: 206-464-2581 or hbernton@seattletimes.com