State may issue $50M in bonds for biofuel effort


Hawaii could issue up to $50 million in special purpose revenue bonds to support a company’s plans to turn agricultural waste into biofuel and animal feed.

Since 2011, the Pacific Basin Agricultural Research Center has worked with BioTork, a Florida-based company, to see how effectively algae could be used to find new applications for agricultural byproducts and wasted crops.

According to state officials, the research has been promising, and lawmakers are considering issuing the bonds to help put the technology to use.

A bill to authorize the issuance of the bonds, which would allow the company to tap low-interest loans, has passed each of its three committees in the state Senate. It will next be up for a vote before the entire Senate.

The bonds would be used to plan, construct and operate a facility. They would be repaid through project revenue rather than taxes.

James Nakatani, Hawaii Agribusiness Development Corporation chairman, said the first facility would likely be built on the Big Island and use papaya, left over after harvesting.

“I think we want to do a demonstration project at least or a validation project on the Big Island,” he said.

As much as 35 percent of papayas end up going to waste because of over ripeness, physical imperfections or insect damage, Lisa Keith, a PBARC research plant pathologist, told Stephens Media Hawaii last year.

BioTork wants to use that wasted produce to feed algae that can be used for biofuels or animal feed.

Other applications of the research could use sweet potatoes, sugar cane, mango and albizia.

“It is very, very promising,” Nakatani said.

Other facilities could also be built on Maui to take advantage of the molasses supply, which could be used for high-protein feed, as well as Oahu, he said.

Nakatani said he is optimistic that BioTork could begin construction in about a year.

Attempts to reach BioTork representatives were unsuccessful.

The state Department of Agriculture also supports BioTork’s proposal, said Director Scott Enright.

“Really what we want to do is get a return for the papaya growers,” he said.

Sen. Gil Kahele, D-Hilo, introduced the legislation along with Sen. Malama Solomon, D-North Hawaii.

With this type of bond, Kahele, who called the project a “win-win all the way around,” said the state would not be on the “hook if anything goes wrong.”

The state’s credit rating could be impacted if the bonds aren’t repaid, he said.

“You want to make sure when you provide the state’s credit rating … (you have) a project that is doable,” Kahele said.

If approved by the Legislature, the state would review BioTork’s business plan before issuing the bonds, Nakatani said.

Email Tom Callis at tcallis@hawaiitribune-herald.com.