On this wintry afternoon between lunch and dinner, the USA Family Restaurant is quiet except for a table in the back where seven local residents sit, drinking coffee, trading good-natured insults and discussing the day’s news.
Topping the agenda — a Minnesota company’s plans to invest up to $350 million in an iron ore pellet plant in Reynolds that will create 120 jobs.
Not bad for a tiny crossroads town boasting one stoplight, one gas station, 533 residents and 150,000 pigs. But if grand plans stir a little cautious déja vu these days in Reynolds, it’s perhaps understandable.
Nearly eight years earlier, Indiana’s newly inaugurated governor, Mitch Daniels, dropped by with another big plan — to make Reynolds energy independent, using corn, soybeans, manure and other renewable sources. Reynolds would become known as BioTown USA, Daniels predicted.
Today, “BioTown” is as dependent on the energy grid as ever. The iron ore pellet plant, when built, will make it even more so. Yet, although BioTown, as such, never materialized, inroads have been made in the use of renewable energy.
On a windy stretch of land just outside town, a farmer’s privately owned anaerobic digester turns hog waste and other organic material into electricity — enough to supply most of the town’s needs, although it’s not sold directly to the town.
As with any experiment, some things were learned even though BioTown didn’t live up to its name. And residents haven’t forgotten the experience that placed the town in a national spotlight.
“There’s some good things that have happened here,” says Cindy Campbell, a longtime Reynolds resident. “But we’re on a slow track to embracing alternative energy. The idea that we would be a hub of it or a symbol, I think that’s gone.”
• Read the entire package in our BioTown USA special section.
'Mind-blowing experience'
Back at USA Family Restaurant, Daniels’ visit to Reynolds in 2005 brings back vivid memories.
“How do you describe a time like that?” longtime resident Rick Buschman says. “It was full of hope, promise and everything else. It all just seemed so surreal. It was a mind-blowing experience.”
To be sure, the spark ignited by Daniels’ vision for Reynolds spread far beyond White County. The story of Reynolds’ planned transformation was told near and far as national news media, including CBS and The New York Times, picked up the story.
In 2006, BioTown hype reached fever pitch as a concert tour bus carrying members of Crosby, Stills, Nash & Young made a detour in Reynolds to refuel with soybean-based biodiesel. A special truck was summoned because plans to install a biodiesel pump hadn’t yet materialized.
David Crosby gave a plug for BioTown’s promise, and Graham Nash, while waiting for his meal to arrive at USA Family Restaurant, said, “Someone has to lead us out of this dark hole of dependence on foreign oil ... and it might as well be you.”
From Daniels to Crosby and Nash to The New York Times, Reynolds embraced its celebrity status while it lasted.
“There was so much promise about what would happen,” Cindy Campbell reflects. “That in a short amount of time we’d be self-sustaining. ... There’d be changes in things like our infrastructure, the maintenance of the town. It’d look more vibrant and beautiful. They were promising things we wouldn’t be able to achieve any other way.”
One by one, the elements needed to make the dream happen either failed to materialize, or materialized and then failed. Buschman views BioTown as a great concept that never got its chance.
“All of the processes that needed to come together couldn’t come together,” he says, his knuckles whitening a bit around his coffee cup. “It was a valiant effort.”
What went wrong
The original plan for BioTown was one piece of a 20-year strategic plan, developed by Indiana’s then-new Department of Agriculture, to harness agricultural resources for economic development purposes.
Daniels and other state agencies saw potential in using corn, soybeans, manure, sewage and other biowaste as renewable sources of energy, not just for corn-based ethanol used in gasoline but for everyday energy needs. Out of Indiana’s myriad small towns, Reynolds was chosen to be the prototype of this potential bioenergy independence.
By the agriculture department’s estimates, Reynolds and the surrounding agricultural countryside produced 74 times more energy than the town consumed in 2005, making it a prime test ground for an anaerobic digester, greenhouse and other projects.
The state’s BioTown plan, however, did not include money to make it happen. Rather, Daniels and others figured private investors would see the value in the project and put their money on the line.
Initial interest was promising.
General Motors Corp. in late 2005 agreed to provide 20 town residents, chosen by lottery, with flex-fuel vehicles at no charge for two years. Flex-fuel vehicles run on gasoline or on E-85, which is 85 percent ethanol and 15 percent gasoline. Incentives also were offered for flex-fuel vehicle purchases, and eventually more than 150 flex-fuel cars were sold through the BioTown promotion.
The next year, the Reynolds BP gas station installed an E-85 tank and pump .
Though not included in the original BioTown plans, Indianapolis-based Algaewheel Technologies LLC got into the game, providing a $2.7 million algae wheel for the town’s wastewater treatment plant. The device purifies sewage by feeding it to algae that’s harvested and used as biofuel.
But bigger ideas stalled, notably the part where the town would derive its energy from a central anaerobic digester that turns waste, manure and biosolids into electricity. Fertilizer, created as a byproduct, would be applied back to the land.
“It didn’t turn out exactly as envisioned in the beginning,” said John Heimlich, a White County commissioner who was involved with the BioTown concept from its inception.
Rose Energy Discovery Inc.’s plan to build the anaerobic digester fizzled out when it became clear that investors couldn’t fund the project. Next in line to try to develop a digester in Reynolds was Energy Systems Group, a subsidiary of Vectren Corp., which vowed to have its digester running by the end of 2008. That failed, too.
The Journal & Courier was unable to reach Rose Energy or ESG for comment.
At the height of the BioTown excitement, South Dakota-based VeraSun Energy Corp. announced that it would build an ethanol plant just outside Reynolds. Construction started in 2007 but stalled as the U.S. economy slowed, along with demand for ethanol.
The original BioTown plan didn’t call for an ethanol plant, but when VeraSun went bankrupt in 2008, many associated that failure with BioTown.
“The letdown was god-awful,” Buschman recalled.
Momentum slows
Some residents criticize NIPSCO, the investor-owned utility that provides electricity and natural gas to much of northern Indiana, for blocking — not helping — the BioTown project’s chances to succeed. That argument goes something like this: NIPSCO wasn’t pleased with the example Reynolds might set if it indeed went “off the grid.”
NIPSCO disputes that line of reasoning.
“We clearly had an interest at the time based on the discussions we had with everyone involved in the project,” spokesman Nick Meyer said. “But really, we don’t view that project as a failure. We see it as something that has just evolved from its original concept.”
NIPSCO now offers net metering and feed-in tariff programs to residential and business customers — both are growing in popularity — for those who want to sell clean energy generated by alternative sources.
The state’s role in the project — to make deals, search for leads and facilitate conversations — eventually petered out. Along with it went the momentum. Residents said they felt the state lost interest after the deals with Rose Energy and ESG went sour.
Misty Livengood, a spokeswoman for the state’s agriculture department, told the Journal & Courier in an email that there was “no hard cut date” when it came to the state’s involvement in the project.
Daniels, the former governor and current president of Purdue University, is not shy about what happened. The project just fizzled out.
“I’m glad we tried it,” Daniels says. “Some parts of it worked fine, and others didn’t pan out, which is pretty much the story, of course, of a lot of alternative energy to date. We don’t know where it’s going. There’ve been all kinds of failed experiments.”
A national case study
For a while, Reynolds’ BioTown USA concept became a case study for renewable energy’s potential. Government and private researchers followed its development as they tried making sense of the changing energy landscape.
In 2007, Brookings Institute fellow David Sandalow spent time in Reynolds and cited the BioTown project in his 2007 book, “Freedom from Oil: How the Next President Can End the United States’ Oil Addiction.” He’s now the U.S. acting undersecretary of energy, helping oversee the Energy Department’s renewable energy programs.
“Could Reynolds really disconnect from the grid?” Sandalow wrote. “Today, almost two years after the first conversations, Reynolds is on the way to getting all its energy from renewable sources. But it still has a long way to go.”
Degrees of success
The idea that a town, city or community can run solely on renewable energy is not unique. A few communities have attempted it, with varying degrees of success. Feldheim, a small town in Germany near Berlin, installed its own energy grid powered by wind, biogas and other local sources.
Rock Port, Mo., claimed in 2008 to be the first place in the U.S. to produce more renewable energy for its power grid than the town consumes. A town in Australia hopes to join the small list of energy-independent towns.
Despite the failure of the BioTown experiment, renewable energy still is a priority for the state, said Tristan Vance, director of Indiana’s Office of Energy Development.
“There are a number of types of waste or byproducts within the state that can be used to fuel bioenergy,” Vance said. “This includes animal waste or wastewater treatment plants, things that aren’t going away, so we know we will continue to have sources to fuel bioenergy.”
BioTown Ag, a private company owned by Reynolds-area farmer Brian Furrer, is proof of that. Furrer has quietly pursued his own version of BioTown by building an anaerobic digester outside the town. The digester turns manure, orange peels and bright green watermelons into electricity that he sells to NIPSCO, thereby indirectly supplying much of the town’s energy needs.
The BioTown project’s eventual shift into a private, nearby firm’s hands makes it only more powerful as an example for other communities, Connie Neininger says.
“Some of the original investors had to change their path, but I think (BioTown Ag’s undertaking) really has greater opportunity to be replicated,” the former White County economic developer said.
'We need the jobs'
Following the letdown after the BioTown experiment, activity and optimism are picking up again in Reynolds.
One reason is the announcement by Magnetation LLC of Minnesota that it plans to build an iron ore pellet plant in the spot where the VeraSun ethanol plant was to go.
That news, first revealed in November, has re-energized the town.
The company plans to have the plant up and running in late 2014 or early 2015. It will turn iron ore concentrate, mined in Minnesota and shipped by rail, into iron pellets for use in automotive steel production.
It’s a far cry from harvesting bioenergy, but jobs are jobs, Daniels says: “Sure, there’s an irony ... (but) it’s not as though they’re incompatible. We need the jobs, wherever they come from.”
Heimlich, the county commissioner, says it’s almost better than if the VeraSun deal had worked out.
“This is really twice the size of the VeraSun project,” Heimlich said. “Let’s face it, the VeraSun project, while it stalled out in mid-construction, the footprint that was left was what attracted Magnetation, a huge project, to the town of Reynolds.”
Still, distrust in big plans remains in Reynolds.
“There was always a lot of talk, and our hopes were high,” said Ron Benakovich, manager of the Ezra Auto car dealership . “For the most part, it was just because of the excitement.”
Residents are cautiously optimistic about the jolt of activity surrounding Magnetation’s announcement and how it could translate into local prosperity.
Jim Van Voorst, who has lived in the area for six years, is happy to hear about the company’s plans to revitalize the abandoned VeraSun property.
“That property is just sitting there,” Van Voorst said. “It’s disappointing. I guess you could call it being nosy, but I just want to see the community grow. VeraSun had good intentions.
“It’s a lot like BioTown. You never know.”
