Deadly Price

Thirteen months ago, in February 2007, the announcement that Hawaiian Electric Company (HECO) would partner with BlueEarth Biofuels LLC to build a $61 million biodiesel refinery on Maui caught many by surprise. Touted as a way to start weaning Maui Electric Company’s (MECO) Ma‘alaea generators off petroleum, the secondary goal was to stimulate local agricultural production of biofuel crops. “This is a huge and gigantic step in the right direction,” Mayor Charmaine Tavares said at the time.

Yet many unanswered questions dampened the initial enthusiasm. Who was BlueEarth? Was the company qualified to do such a project, even though it never built a refinery of any size, much less a 120 million gallon/year facility? And why were they chosen by HECO and MECO—bypassing state procurement laws—over award-winning local producer Pacific Biodiesel?

More issues arose. Should the state Legislature consider awarding $59 million in special revenue bonds without even the benefit of reviewing an Environmental Impact Statement (EIS)? Would building such a large facility really stimulate local biodiesel crop production? A 2006 mandate for 10 percent ethanol in our gasoline had predicted similar local business opportunities, but hasn’t yet panned out. As a result, all Hawai‘i’s ethanol still comes from outside the state.

Then there was the most burning questions of all: would Hawai‘i import palm oil from Indonesia and Malaysia, where its boom has brought about devastating environmental, ecological and social justice issues?

News of the HECO/BlueEarth proposal was soon followed by word that Imperium Renewables of Seattle hoped to build a 100 million-gallon-a-year (mgy) biodiesel refinery on Oahu. Imperium was also planning to import “significant amounts of palm oil from Southeast Asia, primarily Indonesia and Malaysia,” according to U.S. Securities and Exchange Commission filings.

Now, a year later, it’s time to examine the true price of HECO’s decision to open a “palm oil pipeline” for Hawai‘i’s electrical generation needs.

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“It is unthinkable that such an environmentally aware state as Hawai‘i would consider for a moment importing palm oil from anywhere in Southeast Asia,” Sean Whyte, Chief Executive of U.K.-based Nature Alert, says. “If it does, it will arrive tainted with the blood of thousands of orangutan deaths. Hawai‘i residents will then become part of the problem rather than part of the solution.”

Nature Alert’s regular email outreach on the destructive impacts of the palm oil industry echoes those of dozens of other environmental organizations. 

Two weeks ago, a study released by the World Wildlife Fund warned that destruction of Sumatra’s natural forest is accelerating global climate change and pushing endangered species closer to extinction. Though the island of Borneo is similarly facing rapid expansion of oil palm plantations, Indonesia’s fastest rate of deforestation is occurring in Sumatra’s Riau province, according to the study. There, during the last 25 years, more than 4.2 million hectares (10.5 million acres) of tropical forests and peat swamps have been cleared for industrial plantations.

“Worldwide, deforestation continues at an alarming rate of about 13 million hectares (nearly 33 million acres) a year,” announced the United Nations Food and Agriculture Organization in their 2007 State of the World’s Forests report. 

In 2007, the UN Environment Programme released a compelling Rapid Response Assessment, titled The Last Stand of the Orangutan/State of Emergency: Illegal Logging, Fire, and Palm Oil in Indonesia’s National Parks. The Borneo Orangutan is listed as Endangered, while the Sumatran Orangutan (a separate species) as Critically Endangered, with barely 7,000 left in the wild. Loss of habitat from deforestation has driven some of these magnificent apes to starvation, though others are shot, killed by machete or burned alive from slash and burn clearing.

In Malay, the word “orang-utan” translates to “man of the forest.” Indeed, this magnificent ape may be man’s closest relative, sharing nearly 95 percent of the DNA with homo sapiens, the species placing their survival in jeopardy.

While the orangutan is the “poster child” of rainforest destruction in this region, the impacts on countless other species, endangered and otherwise, has approached tragic proportions. A long list of Critically Endangered species includes the Javan Rhinoceros, Silvery Gibbon, Mentawai Macaque, Sumatran rabbit, flying squirrel, rhinoceros and water shrew. Another 100-plus species are designated Endangered or Vulnerable, including the Clouded Leopard, Sumatran Tiger, Borneo Pygmy Elephant, Malayan Tapir and Porcupine, as well as dozens of bird species.

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The broad impacts of the Malaysian and Indonesian palm oil boom are not limited to the forests and their unique creatures. Surging palm oil prices are causing food costs to soar, indigenous people to lose their traditional lands and lifestyles as well as poisoning the earth, air and water.

The January New York Times article “Once a Dream Fuel, Palm Oil may Be an Eco-Nighmare” related the rising cost of cooking oil throughout Asia, especially in India, where palm oil demand for biodiesel has tripled its price over the past two years. Food costs among the poorest of Asia’s people are greatly affected, the Times reported. 

A February study by Smithsonian scientists published in the prestigious journal Science revealed that many biofuels, including Malaysian palm oil, have greater aggregate environmental costs and emissions than fossil fuels when other factors are weighed, including forest burning, carbon release from draining peat lands, processing and transportation to the end market. 

(Maybe that explains why every time I type “biofuels,” my computer’s spell check program wants me to change the word to “befouls.”)

Oil palm production is also dependent on large input of fertilizers, mostly nitrogen, according to John McCarthy, a lecturer at Australian National University who’s managing a research project in Indonesia. One observer estimated the fertilizer demand at 50 kilos per year to achieve maximum production. Writing in the Mar. 28 Jakarta Post, McCarthy noted that with new policies allocating lands to investors interested in bio-fuel production crops, the country’s land in plantation production is expected to triple to 20 million hectares (nearly 50 million acres).

Forest Peoples Programme, a human rights group based in the Netherlands, has collaborated with the Indonesian group Sawit Watch on a number of publications about the ongoing injustice to indigenous peoples’ landholdings and tribal rights. The collective stories they tell share a common theme: native people pushed off their own lands by profiteers at the expense of their lifestyles, livelihood, resources and dignity. Sawit Watch works in 17 Indonesian provinces and has documented more than 350 land conflicts related to palm oil plantation development.

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Back in Hawai‘i, HECO’s announcement had barely sunk in with the community when local eco-minded organizations sounded the alarm. Why would HECO support the huge refinery proposals, knowing that it would be five to 10 years before any biofuel crops planted locally would mature and bear fruit? This would lock us into another imported fuel—one with its price rising dramatically in addition to its myriad deleterious impacts. Furthermore, the combined capacity of the two proposed refineries far exceeded the capacity of what could be produced on statewide agricultural lands, even if all available acreage were utilized for this purpose.

In May 2007, the state Legislature approved $59 million in special revenue bonds bill, with amendments, despite testimony that opposed the vote by a six to one margin. Special revenue bonds are not an outlay of state funding, but allow a business venture to use the state’s preferred bond lending rate to their advantage.

Word quickly spread beyond the Islands. Last June, Rettet den Regenwald (Rainforest Rescue)—a German rainforest action group—posted a Hawai‘i coalition press release and online action to ask Governor Linda Lingle to veto the $59 million revenue bond measure. Despite more than 8,000 emails sent from the site to the governor’s office, she signed the bill. 

Concurrently, HECO began trying to deflect criticism that they were going to be complicit in environmental destruction in Southeast Asia or elsewhere. They announced a partnership with the Natural Resources Defense Council (NRDC) to hash out the criteria for procurement of “sustainable biofuels.” 

This curious alliance raised a number of eyebrows. Why would such a respected conservation and protection group go through this exercise in trying to assign sustainability criteria to an industry clearly out of control with regard to environmental standards?

The agreement to work together actually pre-dated the mid-summer 2007 round of public meetings on three islands that attempted to explain draft “sustainable biofuels” criteria. Months earlier in appeals to the Legislature for revenue bond funding, HECO and BlueEarth incorporated their “working with NRDC” comments into written and spoken testimony to imply adherence to good environmental standards.

As a former contributor to NRDC, I often clicked on their BioGems email appeals, signed petitions and sent money to save wild places from pending development. Past and present BioGems efforts include ecosystems from Patagonia to the Arctic Refuge, and from the Tongass National Forest and Yellowstone to the Tahuamanu Rainforest in Peru.

The dire situation in Indonesia and Malaysia from illegal logging and palm oil plantation slash and burn clearing could have originated a BioGems appeal of its very own:

Dear BioGem Defender:

Two giant energy companies are pushing to import over 200 million gallons of palm oil from alongside Indonesia’s spectacular rainforests.

We need your immediate action to block this destructive green-washing scheme, which could pave the way for further massive agro-business industrialization and devastating these natural resource treasures and unique ecosystems.

Please go to http://www.hawaiibiofuel.org and urge Hawaiian Electric Co., BlueEarth Biodiesel and Imperium Renewables to halt the palm oil importation proposals until thorough studies of potentially devastating environmental impacts can be carried out.

The Indonesian Rainforest is an important resource in the fight against global warming as the “lungs of the Earth”, sequestering massive amounts of CO2.  The emissions from thousands of yearly fires in SE Asia, while clearing forest and peat for mono-crop plantations, has landed Indonesia as the world’s third largest producer of harmful greenhouse gases, after China and the U.S.

Use by energy companies and utilities in Hawai‘i would accelerate the demand for palm oil exportation and production, and, with the help of NRDC, would continue to encourage reckless and destructive everlasting alterations of these unique ecosystems.

Please go to www.lifeofthelandhawaii.org/Palm_Oil_for_Electricity_Generation.html and demand that the NRDC protect the rainforests, their indigenous peoples and endangered species and stop burning down the forest!

Thank you for helping to protect our remaining pristine rainforests, and keeping our precious Hawaiian islands from becoming the scourge of the global environmental community.

* * *

The HECO/NRDC alliance appears to have been forged through a long-standing friendship between Karl Stahlkopf, HECO’s senior vice president, and Ralph Cavanaugh, NRDC’s senior attorney.

Stahlkopf worked for a national utility company—Energy Power Research Institute of Palo Alto, California—that had dealings with Indonesia during the heyday of the corrupt Suharto regime.

According to a December 1998 Wall Street Journal article, most of the billions of dollars of U.S. electric-power investments in Indonesia between 1990 and 1997 went through Suharto’s cronies and relatives. Suharto died in January. He had been ousted in May 1998 after 32 years of dictatorship but escaped a corruption trial associated with his amassing a huge fortune during his years in power because his lawyers said his poor health would not allow him to stand trial. A recent Bali Times cover story reported that Suharto’s half-brother was freed from jail after serving two-thirds of his four-year sentence for corruption.

  As for Cavanaugh, he’s “never met a private utility he didn’t like,” Daniel Berman, co-author of Who Owns the Sun? said during a WBAI-FM interview, according to environmental author Lorna Salzman’s article “National Resources Defense Council: Eco-logic or Eco-sellout?”

For its part, the NRDC insists that its partnership with HECO will be for the good. “NRDC decided to become involved since HECO planned to move forward to source biodiesel with or without our involvement and we hoped that with our involvement we could help to steer the production of palm oil in a more sustainable direction and that although burning biodiesel for electricity is not the ideal source, it is better than burning fossil fuels from a total GHG perspective,” NRDC’s Amy Greer emailed me.

Eventually, Hawai‘i groups rallied, and a coalition of five organizations issued a 46-page analysis of the HECO/NRDC draft criteria, which also faced scathing questions during a round of public meetings. The five groups—Sierra Club-Maui, KAHEA, Life of the Land, ‘Ilio‘ulaokalani Coalition and Environmental Defense-Hawai‘i—released the critique of HECO’s proposed sustainability criteria for procurement of biodiesel from palm oil. Circulated to worldwide groups, soon more than 70 organizations from a dozen nations lent their support to the Hawai‘i coalition comments.

Undaunted, HECO and NRDC issued their final biodiesel procurement policy in late August 2007, claiming they had incorporated public input into the document and strengthened safeguards. An independent auditor would assure sustainability standards, they wrote.

They added that their criteria complied with the standards set by the Roundtable for Sustainable Palm Oil (RSPO), an international organization of more than 200 members “representing all aspects of the palm oil industry that has worked for the past five years to create a sustainable model for palm oil production,” according to the HECO press release. Around the same time, Hawaiian Electric Company became a member of the RSPO.

Also last summer, Maui watchdog groups publicly called for HECO and BlueEarth to prepare an EIS, noting that one of the triggers for Hawai‘i’s law is building an oil refinery. Sharp eyes noted that BlueEarth’s website had changed language about their facility from a “refinery” to a “transesterifaction facility,” claiming the process was more akin to making soap than refining oil.

Then in September, BlueEarth yielded, announcing that they would prepare a “voluntary EIS.” So far, more than six months have passed, with no sign of such a document.

BlueEarth has conducted their work largely behind the scenes, with Kiwanis and Rotary meetings and a panel discussion at the November 2007 Maui County Energy Expo being the only times they addressed the public, other than on their website or The Maui News’ op-ed page.

Along the way, the company hired former Maui County Council Chair Dain Kane as their Maui Liaison. When the Maui County Council re-hired Kane as their lobbyist to the state Legislature in January of this year, some questioned if there was an ethical conflict of interest in lobbying for both the county and BlueEarth.

Just before the holidays, Imperium Renewables fired its Chief Executive Officer. Two weeks later, the company announced that they were postponing an IPO—Initial Public Offering—of $345 million in company stock. Imperium had intended to use two-thirds of that sum to construct refinery facilities in Argentina, Philadelphia and at Barber’s Point on Oahu. 

Imperium’s plans are now uncertain, and they could default on an exclusive contract to supply biodiesel to Constellation Energy on the East Coast by this December. In analyzing the reasons for the recent moves, Rick Kment—a biofuel analyst in Omaha, Nebraska—noted that the price of soybean oil has risen by 78 percent, and that palm oil, also used by Imperium, has also seen prices rise sharply.

It seems that HECO—the parent public utility company for three of four Hawaiian Island counties (Kauai Electric is co-operatively owned by its ratepayers)—has pigeon-holed itself into choosing biofuel electrical generation above all other choices. Indeed, MECO, which is heavily invested in diesel-burning power plants that require some 75 million gallons yearly, might assume that replacing petroleum with biodiesel in their Ma‘alaea boilers is the quickest fix towards renewable energy. They may be missing the greater point that, while some may consider biofuels renewable, the biodiverse forest ecosystems that once stood where they are grown are irreplaceable.

* * *

“All sustainability is local.” That’s the mantra of Kelly and Bob King, owners of Kahului-based Pacific Biodiesel. Their successful business model incorporates using locally available oils (recycled cooking oils at their Hawai‘i facilities) to produce competitively priced biodiesel fuel, mainly for transportation purchases. 

“There’s too many things that don’t add up about the motivation to do this project,” Kelly King said at last July’s public meeting regarding the HECO/NRDC procurement criteria. Importing foreign oil, diesel or otherwise, should in no way be deemed “sustainable,” she said.

The Kings are also co-founders of the non-profit Sustainable Biodiesel Alliance, whose ultimate goal is a certification process to verify that all points in harvesting, production and distribution meet sustainability standards for community-based biodiesel.

“If you build it, they will come,” HECO’s Stahlkopf said at the July meeting, referring to an incentive for local agricultural ventures to grow biodiesel feedstock crops. Yet, local high costs of land, water, labor and equipment may never compete with those in so-called “Third World” countries, and no cost analysis or fuel crop testing has been done to date in Hawai‘i. In fact, HECO has also failed to acknowledge that it may be far more important to utilize available or fallow Hawai‘i farmlands for food production rather than energy crops, as we import 80 to 90 percent of both our food and energy needs.

Hawai‘i environmental groups have urged HECO to pursue renewable energy solutions that incorporate locally abundant sources—wind, solar, waves and ocean thermal technologies. Yet public utilities officials seem unyielding in their support for constructing the huge biodiesel refineries, far beyond the scope of what could ever be supported by future locally grown biofuel agriculture.

The premise that an “independent auditor” could verify “sustainable source” for palm oil strikes many as ludicrous, especially since Hawai‘i has a mottled history of environmental enforcement, including the recent lawsuits swirling around the process to approve the $230 million Hawai‘i Superferry.

Henry Curtis, Life of the Land’s Executive Director, is a veteran of dealing with legislators, HECO and the state Public Utilities Commission (PUC) on energy issues. “In an era where so many cases of abuse are being documented worldwide regarding agrofuels and palm oil, Hawaiian Electric Company pledged transparency, but has now reneged on that promise, and has requested multiple layers of secrecy before the Hawaii PUC,” Curtis wrote in response to HECO’s Imperium Services proposal. “Shame. Shame. Shame.”

Curtis was among those participating in public education sign-waving in January at the University of Hawai‘i campus. With the world’s media watching a U.S.-initiated meeting with 16 of the world’s top carbon-emitting nations, protesters held signs saying “HECO: No Rainforest Destruction For Biofuels” and “BlueEarth Greenwash.”

Against objections, HECO has gained approval to build another liquid-fuel burning generation plant at Oahu’s Campbell Industrial Park. Originally proposed to burn ethanol, HECO switched their plans to have the 110-mw plant burn biodiesel. With palm oil prices soaring, Imperium’s plans wavering and the world watching Hawai‘i’s decisions, the new plant, scheduled to be operational in 2009, appears to be in limbo.

So what is the ultimate price of HECO, BlueEarth and Imperium’s decisions to commit resources to importing another foreign fuel? In the case of palm oil biodiesel from Indonesia and Malaysia, the ultimate price is not paid in dollars, but in ecological crimes against nature, injustices to native peoples and in extinctions to some of the most majestic creatures with which we share the planet Earth. Sacrificing all this to keep Hawai‘i’s lights on and homes and condos air-conditioned is not merely unacceptable, but is also ill-conceived and reprehensible.

To paraphrase Nature Alert’s director Sean Whyte, it’s time for Hawai‘i to step forward and be part of the solution, not part of the problem. MTW

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