INTERVIEW: 'Transformative' bioenergy market to connect agriculture and fuel production, SGP BioEnergy says

Randy Letang, CEO of US-based renewable energy company SGP BioEnergy, said the bioenergy industry will ignite growth in emerging regions and foster new social and economic development routes, noting, however, that the market has faced various challenges, particularly concerning broader product adoption by end customers.

In an interview with S&P Global Commodity Insights, Letang said that cultivating raw materials in different areas and then processing these feedstocks into fuels and products locally would pave the way for the next generation of the industry. He added that the development of the bioenergy industry has faced several challenges.

"Even with the best technology and engineering contractors to build the facility, the rules of economy of scale still apply," Letang said. "We need to build a refinery of a certain size to achieve a lower overall cost per gallon of fuel."

The competition between jet fuel and sustainable aviation fuel has been an example of one such challenge. Letang said airlines have fixed parameters in which they operate and cannot adopt unfeasible practices.

"[Airlines] might overpay for SAF only if their growth allows them to absorb the costs," Letang said. "Otherwise, with their thin margins and high fuel expenses, it's not feasible."

Letang said the industry is addressing this in three ways: passing costs to consumers, developing policies where consumers absorb costs through tax credits, and creating tax schemes for trading incentives among various parties.

Another consistent concern in the bioenergy industry is feedstock availability. However, Letang said feedstock issues are specific to certain producers and not industry-wide.

"When I hear about feedstock limitations for HEFA, it's clear that the connection between agriculture and HEFA technology hasn't been effectively established yet," Letang said. "The reality is there is plenty of feedstock available -- enough to match current petroleum production once this link is made."

Letang sees industrial hemp as a potentially viable feedstock for his Panama Project under the READY.GROW. program due to its unique characteristics; industrial hemp sequesters four times more CO2 than other crops, removes toxins and heavy metals from the soil, and is carbon neutral, according to Letang.

Additionally, industrial hemp can return nutrients to the soil, requires only a third of the water needed for sugarcane and produces as much oil as canola, creating a zero-waste ecosystem, Letang said.

"Industrial hemp can thrive in challenging environments, breaks the trade-off between fuel and food production, and benefits from the extensive cultivation knowledge of indigenous tribes," Letang said.

Policy and implementation have played crucial roles in the industry's development, although policy has often outpaced implementation. Constant regulatory changes disrupt developers, altering business models and investor and bank confidence in supporting projects. This uncertainty leads to stalled implementation.

"Aligning policy with implementation, rather than leading it, is essential. Currently, prioritizing implementation over innovation is paramount," Letang said.