A Seattle company is proposing to build a biodiesel refinery on state land at Kalaeloa Harbor, the second such facility planned in Hawai'i that would decrease the state's dependency on imported petroleum.

The estimated $90 million project by Imperium Renewables Hawai'i LLC would produce diesel from vegetable oil primarily for use in commercial applications as well as consumer vehicles and possibly a proposed new Hawaiian Electric Co. power plant at Campbell Industrial Park.

Imperium Renewables Hawai'i plans to produce biodiesel from palm oil imported from Malaysia, though the refinery would potentially encourage local farming of biofuel crops such as oil palm, soybean, flax, rapeseed, sunflower, peanut, kukui nut, avocado, coconut, neem and algae.

Large-scale biodiesel refining in Hawai'i has the potential to spur farming on acres of agricultural land abandoned by sugar and pineapple producers over the past several decades, provide a competitive alternative to petroleum-based diesel and help reduce greenhouse gas emissions.

Imperium Renewables Hawai'i recently filed a draft environmental assessment notice with the state outlining its plans to develop the production plant on 11 acres leased from the state Department of Transportation.

If environmental approvals, a lease and other permits are obtained, the company anticipates starting construction this summer and producing biodiesel in 2009.

The company through a spokesman would not elaborate on its project because it is in the permitting review process, but has shared its plans with the Makakilo/Kapo-lei/Honokai Hale Neighborhood Board and various state and county officials.

Kioni Dudley, a Makakilo resident and neighborhood board member, said the board enthusiastically supports the plan. "This is a way of reducing our dependence on carbons," he said. "I think people are pretty solidly behind that kind of thing. I think this is the kind of thing we need."

Imperium Renewables Hawai'i is an affiliate of Imperium Renewables Inc., a Seattle firm started in 2003 by former Northwest Airlines pilot John Plaza, who got venture capitalists to back his interest and research in alternative fuels.

The company has one plant operating in Seattle and one under construction in Grays Harbor, Wash. Three others are in early development phases, including one on the Mainland and another in Argentina.

The O'ahu biodiesel plant is the second proposed for Hawai'i. In February, a joint venture between Hawaiian Electric and Mainland power and renewable-energy project developer BlueEarth Biofuels announced plans for a $61 million biodiesel refinery on Maui.

The Maui plant by BlueEarth Maui Biodiesel LLC is scheduled to be in service by 2009 and annually produce 40 million gallons of biodiesel from palm oil imported from the the Pacific Rim and South America. Two envisioned expansions would increase annual production to 120 million gallons by 2011.

Imperium's plant is designed to produce 100 million gallons a year of biodiesel.

The two projects, if built, would be the first large-scale biodiesel production facilities in the state, which has a handful of smaller producers, such as Pacific Biodiesel, that mostly make biodiesel from used cooking oil collected from restaurants.

According to a November report produced by the Hawaii Agricultural Research Center for the state Department of Agriculture, 150 million gallons of biodiesel per year represents 55 percent of diesel used in the state in 2004.

"If biodiesel can be developed, it will not only bolster agriculture, but also address our need to decrease our dependency on petroleum-based fuels," Sandra Lee Kunimoto, state Board of Agriculture chairwoman, said in a statement announcing the report.

Most diesel in Hawai'i is consumed by commercial users such as the maritime, aviation, construction and electric power industries. Relatively little is consumed by automobiles on the road.

Currently, about 3 percent of all diesel vehicles in the state are powered by biodiesel, which today generally costs 20 to 30 cents more than conventional diesel, though biodiesel was cheaper during much of last year.

On Maui, BlueEarth's planned biodiesel plant is envisioned to run the 215-megawatt Ma'alaea Power Plant owned by Hawaiian Electric subsidiary Maui Electric Co.

On O'ahu, Imperium would sell its biodiesel through distributors and retailers, and expects its primary market to be large commercial users.

Hawaiian Electric has solicited a supplier of biofuel to run its proposed 110-megawatt Hawaiian Electric power plant that it expects to be running at Campbell Industrial Park by mid-2009.

The power plant is designed to burn a variety of fuels, including biodiesel, ethanol and fossil fuels such as diesel and naphtha, though using a biofuel would help HECO meet a state mandate that 20 percent of its electricity production come from renewable sources by 2020.

HECO spokesman Peter Rosegg said the plant, anticipated to satisfy peak evening electricity demand, would likely burn 5 million to 12 million gallons of biodiesel a year if a biodiesel supply is selected.

Rosegg said HECO is reviewing competing proposals to fuel the power plant, which could change over time. Ultimately, the company would prefer to have a fuel supply from locally grown biofuel feedstock.

The Agriculture Department report said Hawai'i could probably produce enough biodiesel feedstock to reduce imported diesel by 20 percent, but also said it could take five to 10 years to determine the best crops and locations for farming.

Both BlueEarth and Imperium support using Hawai'i-grown crops to produce biodiesel if a supply becomes available. In Washington, Imperium primarily imports oil, but is working on two pilot projects with area farmers and has begun using some locally produced canola oil from rapeseed.

Imperium's planned O'ahu plant would be capable of making biodiesel from any suitable vegetable oil.

The oil palm originated along the western coast of Africa and has since spread to most tropical areas in the world, according to the Agriculture Department report.

Oil palm farms have been criticized for contributing to tropical rainforest destruction. Biodiesel supporters cite the industry's benefits on foreign oil dependency, emissions reductions and renewable energy.

Imperium said its O'ahu plant should employ 50 to 60 people and operate 24 hours a day in the industrial harbor area near Campbell Industrial Park. The facility's tallest structure would be an 80-foot distillation column. A 75-foot exhaust stack and 17 storage tanks up to 65 feet tall also would be part of the facility.

Imperium is seeking a zoning height variance to allow the tall structures. The company also needs permits, including a special management area use permit and an air permit. A lease is being negotiated with the Transportation Department but has not been signed.

Reach Andrew Gomes at agomes@honoluluadvertiser.com.