October 15, 2014 | Itawamba County – Mitchell Stanley, president of Washington-based non-profit group the National Center for Sustainable Development, called BlueFire Renewables a small company with big ambitions.
“They’re like babes in the woods, here in Washington: They’re stumbling around, they don’t know what to do,” Stanley said of the California-based company, which has been struggling to finance a $350-$400 million ethanol plant in Fulton since 2009.
Up until December of last year, the U.S. Department of Energy was funding more than $80-million of the project’s construction costs. But a series of missed deadlines for various paperwork filings on BlueFire’s part resulted in the DOE’s decision to withdraw support, throwing the project in jeopardy.
During this time, Stanley’s group, which supports alternative-energy based companies, was working with various agencies in China to help the country replace their non-sustainable energy models with sustainable ones.
“They’re dying at a record pace because their air is so bad they cannot breathe it,” Stanley said.
The Chinese, he said, are looking for different ways to create fuel that doesn’t pollute as heavily. But as a culture, they’re more risk-adverse than the U.S.
“They’re very reluctant to try new things that could help their problems with pollution. They’re so afraid of failure,” he said.
But they’re not afraid of investing in companies willing to take risks. Working through the NCSD, China was searching for technology they could eventually utilize on their shores. That’s where BlueFire comes in.
“I was intrigued with what [BlueFire CEO Arnold Klann] was trying to do in Mississippi,” said Stanley, who served as Deputy Administrator of the U.S. Small Business Administration under President George Bush. In that capacity, he handled the agency’s finance, investment and procurement assistance programs.
During a phone conversation with The Itawamba County Times, Stanley said the thing that appealed to him most about BlueFire was the scale of the company’s ambition versus its size.
“It is a traditional American small business,” Stanley said. “What does that mean? It means everybody is doing everything, and there’s not enough money to go around.”
The DOE withdrew its support in December 2013, deeming the company an “at risk” project. BlueFire was originally expected to show a certain amount of progress by Oct. 2010. They were given an extension until Oct. 2013, a deadline they still couldn’t meet.
Now, funding is in place, thanks to the NCSD’s connections across the Pacific. In August, China Eximbank, one of the largest financial institutions in China, provided BlueFire with a letter of intent to help finance the Fulton project. According to the letter from Klann, DOE funding was pulled even though the agency was aware that financing was being provided by the Chinese banking company.
According to China Eximbank’s letter of intent, they are willing to fund up to 85 percent of the plant’s engineering, procurement and construction costs. BlueFire is planning to borrow $220 million from the Chinese import-export bank. The loan received the approval of the China International Water and Electric Corporation and the Chinese government.
Last week, BlueFire officially announced the partnership.
But without the DOE’s support, the project’s still not going to float.
In a pleading Oct. 2013 letter from Klann to David Danielson of the U.S. Department of Energy, the cellulose company head explained the puzzle-like nature of the project. Without every piece interlocking, the picture can’t be completed.
“With the other sources of equity and sunk monies in the project spent, the funds necessary for the construction, startup and operation of the plant are available to the BlueFire project. While we are both aligned in our interest in starting the construction as soon as possible and to see the project succeed, the current DOE deadlines could render all of everyone’s work useless, if not impossible, to recover if the DOE, as a major stakeholder, pulls out.”
At the same time, former Itawamba County Development Council Executive Director Greg Deakle also sent a letter to Danielson stating much the same. In it, he stated the county has a total of $3.68 million invested in the project, or $5.2 million if financing costs are considered. He said both Itawamba County and the State of Mississippi continued to believe in the BlueFire project.
James Wang, President of China International Water and Electric Corporation, also sent a letter to Danielson.
Despite the support of local and state officials, the DOE has yet to restore funding to the project. According to Stanley, the representatives from Itawamba County — some of whom have met with him on multiple occasions — show continued faith in the project. The commissioners in Itawamba County, he said, are also the only ones who routinely send Chinese backers letters of confidence in BlueFire.
“Certainly, Itawamba County has rolled out the red carpet for them,” Stanley said.
Stanley was less kind when he spoke of the DOE’s lack of faith in the energy company and what he considers an overall lack of support on the federal stage. In his eyes, the DOE “pulled the wool out from underneath” BlueFire when it pulled its funding, which was being provided as part of 2009’s American Recovery and Reinvestment Act.
He said the DOE sees BlueFire as being “too small to succeed.”
“As much as Washington states it supports small business, it really doesn’t like them … But ultimately, they are what create the jobs,” Stanley said. “Every other state has their representatives in Washington beating the drum for our state … But we don’t seem to be able to get through to anybody to make an effort to bring these jobs to Northeast Mississippi. It’s a little perplexing to a lot of people why this hasn’t been done.”
He called BlueFire a game-changer, not only for Itawamba County but for the state of Mississippi as a whole. It also has the potential to bolster U.S. – China relations.
“They can become really catalytic engines in a local community,” he said, citing the planned 700 or so construction jobs that will be created during the two-year building process and the 80 or so permanent positions when the plant is up and running. There are also ancillary jobs, he said, and the increased salaries of all the company’s local employees.
“The multiplier effect is, as we learned in economics class, having all that money circulating through the local economy. That’s of real benefit to the community,” he said.
So, what happens next? According to Stanley, that almost entirely hinges on whether or not the DOE restores its funding to the BlueFire project. BlueFire has until Sept. 2015 to begin construction or else lose the funds entirely. The NCSD, BlueFire and Itawamba County representatives are currently reaching out to Mississippi Sen. Thad Cochran to voice his support of the program.
“BlueFire is not asking for additional or new funds and simply wants to make good on its commitment to deliver a viable and replicable project.” Klann wrote in a letter to Senator Cochran, pressing him to speak with officials at the DOE and ask for funding to be restored.
Whether or not that’s going to happen remains to be seen.
“Blue Fire doesn’t have money to spend on lobbyists, on campaign contributions,” Stanley said. “All they have is their story.”
Stanley’s hoping that’s enough. For his part, he’s pulling for BlueFire. During his career, he’s seen a lot of small businesses come and go. He believes BlueFire has the wherewithal and creativity to be successful, if only given the chance.
“Wherever you are, you’ve got waste piling up,” Stanley said. “Tree waste, cultural waste, manufacturing waste … all of this can be used in the BlueFire process and be made into a high value product. We think this is a good use of making money from waste. There’s a lot of stuff that’s left over that you really can’t use, but you can use it if you think of it in a creative way.
“It’s some big, big stakes,” he added. “And they may fail. But give them a chance. Don’t jump on their air hose just because they’re trying to do something different … Just let them have a chance to succeed. A lot of people depend on it.”
Source: Itawamba Times