If you call John Lytle a visionary, he will modestly deflect the compliment and say that developing alternative energy sources is what he was meant to do.
“It’s my calling,” said the 72-year-old founder and CEO of First American Renewables, Ltd., a Colorado-based company on a mission to develop up to eight biomass processing plants and related agricultural opportunities throughout South Dakota, with the help of BBI International, a bioenergy firm experienced in biomass development. His proposal calls for processing plants to be located relatively close to the state’s Indian reservations and operational railroads for easy distribution.
Lytle says that there are two business opportunities for him. One involves growing the switchgrass and getting it to the plant. The other is building the processing plant and operating it. “I’d like to think that the tribes would hire me to coordinate those activities to bring the deal together,” he said.
But the cornerstone of his vision is switchgrass. Lytle believes if tribes in the Northern Plains grow this hardy, drought-resistant crop on their lands to make biomass feedstock for these processing plants, it would create both an economic boon in the multi-millions for tribes (over 10 to 12 years) and help produce a reliable source of renewable diesel and jet fuels, as well as methanol (Lytle said tribes could be part owners in the processing plants, too.).
“Tribes in the targeted area are all part of the original Greater Sioux Nation,” said the Rosebud Sioux member in his executive summary. “Each of the eight tribes controls a land base large enough to support the growing and harvesting of at least 10,000 to 12,000 acres of switchgrass …” which will produce 55,000 to 60,000 tons of feedstock needed annually by local biomass processing plants, according to Lytle’s estimations. He said it will take three years to grow switchgrass to maturity, and in most cases, will have a total life cycle of at least 10 to 12 years.
The very animated Lytle, who has his own reserve of renewable energy, spoke to ICTMN about his biomass vision:
Why should tribes be interested in the biomass business?
I think biomass represents one of the most exciting opportunities to come along for Indian Country. It’s so much better than gaming. Biomass will allow tribes to leverage or use their biggest asset — their large land bases within their boundaries — to grow switchgrass, a perennial, high-value energy crop that they can sell to biomass plants, year after year. It will also help create jobs for each tribe and the surrounding communities — roughly 35 to 45 agricultural, handling and transportation-based jobs; 35 to 40 construction jobs to build the plant; and an additional 20 to 24 on-site jobs to run it.
How much money can tribes make from growing switchgrass for feedstock?
Much of the land being considered for switchgrass development is currently being leased to non-tribal farmers and ranchers as grazing land, at a rate of roughly $22 to $25 per acre. In comparison, a biomass processing plant will pay about $60 to $70 per ton for switchgrass. One acre of switchgrass will produce about five to six tons, so that amounts to about $300 to $420 per acre annually, gross revenue, compared to the $22 to $25 per acre they are getting just for grazing.
How many tribes in Indian country are already growing switchgrass or other materials for biomass?
I could be wrong, but I’m not aware of anyone but the Shakopee Sioux Tribe in Minnesota, which started one of the first commercial-grade biomass operations in Indian country. They would qualify as kind of a pioneer for the overall effort. We are hoping to garner their support for our efforts in South Dakota.
While it is true that the Feds have provided funds to numerous tribes ($42 million for over 175 projects), most of those involve small, locally based projects … funds were used to fund feasibility studies, business reviews, etc., for numerous projects, none of which has resulted in any commercial grade projects. Their heart was in the right place and the intent is genuine, but nothing ever comes to fruition.
How much will it cost a tribe to grow this feedstock?
The cost is about $185 per acre to establish a stand of switchgrass the first year. In the third year of growing, it will reach full maturity and you can harvest it. Harvesting is the highest cost at about $120 per acre. To develop 10,000 to 11,000 acres and to carry all activities up to harvest time, you’re looking at about $5.2 million, and roughly 50 percent of that cost is recoverable from the USDA’s BCAP program.
How popular is this method of producing alternative fuel?
Biomass is starting to really gain ground. This administration has been pushing the all-of-the-above concept to use federal lands to meet America’s energy needs. According to revised Environmental Protection Agency (EPA) numbers, they want 50.1 billion gallons of renewable fuel by 2022. Here’s the math: If an acre of land produces about 500 gallons of renewable fuel, you will need 100 million acres of land to grow switchgrass, the designated energy crop. There is no way all the tribes in Indian country have that much land. The eight South Dakota tribes have 4.5 million acres collectively. So all the tribes can have as big a piece of this apple as they want.
How far along are you in the project phase?
We are talking to tribal leaders, and very seriously with the Rosebud Sioux tribe, whose reservation has been selected as one of the initial sites. We need to get a feasibility study done as soon as possible. Rosebud Economic Development Company (REDCO) may help us with the money to do this — about $50,000 for a full-blown study, which will take about 90 days to complete. Once tribal leaders see that it makes good economic sense and will create jobs and a new revenue stream for them, I think the other tribes will want to engage, as well.
Lynn Armitage is a contributing business writer and an enrolled member of the Oneida Tribe of Indians of Wisconsin.