Valero’s already making money on ethanol, and now plans to make biodiesel from algae. (image: tour.diabetes.org)

Sometimes profitability can come from the most unlikely places. As the San Antonio Express-News reported on Thursday, Valero Energy Corp. may have had a tough year in the refining business, but is seeing unexpected gains in its production of ethanol. The company is making money with the green fuel after buying seven corn ethanol plants for $477 million. While Valero posted losses for its total business, its ethanol business reported earnings of $49 million for one quarter, and $71 million for the next.

Valero officials have seen an increase in demand for ethanol, most likely due to low prices of corn and government mandates to boost usage. The government does subsidize ethanol production, and producers are more likely to make a profit these days because of cheaper prices of corn and natural gas.

While the sustainability of Valero’s profits is subject to debate, it is prompting further action from producers, who are asking the EPA to allow for a higher blend of ethanol in gasoline. The current blend is 10 percent, while ethanol producers are shooting for 15 percent by next year. The EPA will rule on the matter on Dec. 1, and will likely start out with a compromise of 12 percent.

Valero isn’t the only large company getting into the biofuels game. As HeatingOil.com reported last week, oil giant BP is set to begin commercial production on several different types of biofuel as early as next year. Middlebury College has found alternative uses for willow trees as energy, and an increasing number of commercial jets are turning to biofuel as their power source. Valero itself is looking into the production of biodiesel from algae in addition to their current ethanol production business.

The success of Valero’s ethanol arm of the company is great news for green industry. If the corn-based fuel can prove profitable, it could pave the way for other industries, like the heating oil industry, to use more biofuels in their own dealings. The use of ethanol and other biofuels is a positive development because they burn cleaner and reduce our dependence on foreign oil. This, in turn, likely helps to lower costs for home heating oil and other energy consumers.

The biomass gasification plant at Middlebury College in Vermont. (image: nytimes.com)

The Associated Press reported Sunday on a new effort by Middlebury College to turn willow trees into biofuel. While Middlebury used to heat its buildings with oil and then wood chips, the college recently planted a nine-acre patch of willow shrubs, the first step in an attempt to convert the trees into biomass energy. The college started the experiment amid worries that using wood chips for fuel would eventually lead to the deforestation of Vermont. Willows were selected as a possible answer because they grow faster than other trees, branch out when pruned, and can be harvested in cold weather when the ground is frozen.

The college currently buys 20,000 tons of wood chips a year, which are then put into a “gasifier” that converts the wood into gases that can be burned in a boiler. The wood chips heat about half the campus. Heating oil still heats the rest, but the use of wood chips—begun last winter—will reduce Middlebury’s annual oil bill by $700,000. Given the success of the program, the worry became that other colleges, institutions, and homeowners may follow Middlebury’s lead and deplete Vermont’s wood resources; hence the willow experiment.

“We wanted to anticipate the possibility that our success might encourage increased use of the forests for other biomass systems, and we also wanted to take advantage of another natural resource that we have in abundance in Vermont, and that’s open land for use in agriculture,” said Jack Byrne, director of sustainability for the college.

According to Middlebury’s website, the goal of the willow project is to “cut the College’s consumption of heating oil in half – by roughly 1 million gallons per year.” It is also a cornerstone of their plan to become carbon neutral by 2016. In addition to a description of the project, Middlebury’s site also offers up an FAQ and a video slideshow on the willow project (see below).

Middlebury is joined in the willow project by the State University of New York’s College of Environmental Science and Forestry in Syracuse. Tim Volk of SUNY predicts that willow fuel, along with traditional wood sources, could be a viable option for the future. “It’s something that’s going to start happening fairly quickly in the next few years,” he said. “People can start up a small-scale heating system with biomass, using a mixture of willows and low-value wood harvested from natural forests.”

The news from Middlebury comes on the heels of an announcement out of Boston University earlier this month that they will begin recycling cooking oil for use as a heating agent. As HeatingOil.com reported, cooking oil from on-campus dining halls will be used to heat thirteen of the university’s buildings. There have been similar reports on the use of biofuel in Maine, New Hampshire, and the state of Massachusetts.

As Middlebury puts together its findings on the willow project, one thing is certain. Northeastern states are increasingly investing in alternative energy sources, hoping to scale back demand on heating oil, make the environment a little cleaner, and make the costs a little more manageable.