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Gay & Robinson
wants to use sugar
to fuel isle engines

A company official says
ethanol could power cars,
electric generators

By Anthony Sommer
Star-Bulletin

KAPALAWAI, Kauai -- Gay & Robinson would like to pour a little sugar in your gas tank. And maybe in your electrical appliances as well.

With sugar prices plummeting and oil prices soaring, Alan Kennett, Gay & Robinson manager, has become a major advocate of using sugar cane to manufacture ethanol -- an alcohol fuel -- as an automobile and electric generator fuel.

Hawaii is under pressure from the Environmental Protection Agency to go to a blended gasoline containing 10 percent ethanol to decrease auto emissions, Kennett said.

He added that ethanol could be used instead of oil to fuel the existing turbines that make Hawaii's electricity.

The figures are viable

The concept of fermenting sugar cane to make ethanol isn't new, but Kennett believes it is on the verge, for the first time, of being financially viable, particularly if a bill giving ethanol producers in Hawaii a 40 cent per gallon tax credit becomes law.

Kennett, who has been lobbying hard for the bill this legislative session, said that under current conditions, ethanol made from corn on the mainland would be cheaper. But that's only because corn-growing states give their ethanol manufacturers substantial tax breaks, he said.

A House committee will consider a bill to help ethanol producers at 6 p.m. Thursday.

The Senate version of the bill was to be heard by the Ways and Means Committee tonight. The House Consumer Protection and Commerce Committee has scheduled a hearing for 6 p.m. Thursday.

Gay & Robinson is one of only three sugar producers remaining in Hawaii (the others, Amfac/JMB on Kauai and A&B on Maui, are highly diversified, while Gay & Robinson remains almost exclusively a sugar company).

Measured in tons of crop per acre, Gay & Robinson has by far the most productive sugar fields in the state, Kennett said. Last year, with world prices for raw sugar at 22 cents, Gay & Robinson just about broke even.

Red ink likely this year

This year, with the price at 17.25 cents per pound, Gay & Robinson, which produces 50,000 tons of sugar annually, figures to be $1 million in the red.

"We're looking at a disaster this year," Kennett said. The economics of sugar are very complex, but the basic cause of the price drop, he said, was Brazil, the world's largest sugar producer, dumping sugar on the market.

At almost the same time the federal government slashed price supports-- sugar companies insist the payments are not a subsidy -- to growers in the four states where sugar cane is a major crop: Hawaii, Florida, Louisiana and Texas.

Less than a year ago, Gay & Robinson installed a new vacuum pan, the first step in constructing what would be the first sugar refinery ever in Hawaii.

Company sees a future

Company officials insisted sugar is a long way from dead, and once Gay & Robinson's contract with the C&H refinery ends in 2003 and the company can refine its own raw sugar, it will be highly profitable.

But with the sudden nose dive in prices at the end of 1999 and the loss of federal price supports, Kennett and other company officials are for the first time saying in public that, unless new sources of income are established very quickly, there may not be any commercial sugar industry left in Hawaii by 2003.

So Gay & Robinson is looking for new ways to make money from sugar and Kennett is only too happy to borrow a page from Brazil's book.

Brazil, which is not an oil-producing country, uses its excess cane to manufacture ethanol to sell as automobile fuel.

Hawaii could do it, too

The same could be done in Hawaii, except cars here would run on 10 percent ethanol instead of the pure ethanol used by cars in Brazil, he said.

Here's the math:

One ton of raw sugar is worth $285 if it goes to C&H in California to be refined.

One ton of raw sugar that is fermented to produce ethanol equals 150 gallons of fuel. If sold for $1.40 a gallon, about the going price on the mainland, that ton of sugar would be worth $210.

"Sugar cane used to produce sugar still has a higher value, but it's getting closer," Kennett noted. "And with a tax credit for ethanol production, it would be even closer."

Already highly profitable would be the use of molasses to produce ethanol, he said.

Molasses is what's left of the sugar cane syrup after the sugar is crystallized and extracted. A ton of molasses goes for about $14 a ton when it is sold for animal feed, its primary use.

The same ton of molasses would produce 73 gallons of ethanol.

At $1.40 a gallon, that's $102 per ton of molasses, said Kennett, pounding furiously on his ever-present calculator.