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The federal government has poured millions of taxpayer dollars into the struggling biofuels industry, doling out grants and loans to projects around the country — including Hawaii — as part of the federal 2009 stimulus package.

The goal: to reduce the nation’s dependency on foreign oil and spur economic growth.

One of the companies to receive the funding under the American Recovery and Reinvestment Act is Honeywell UOP, a $38-billion-dollar venture that licenses technology to oil and gas companies.

The company got a $25 million grant in 2010 to help it build a biofuels demonstration plant at Campbell Industrial Park on Oahu. James Rekoske, vice president of renewable energy for UOP, tells Civil Beat the biofuels project would not have moved forward without the money.

But whether Honeywell’s project — or throughout the country that in total received as much as $564 million in stimulus funds — can create the jobs they promised is still unclear.

The U.S. Department of Energy, which oversees the grants, declined Civil Beat’s request to review Honeywell’s application, saying that it was private.

DOE says that a peak of 85 construction jobs and an average of 40 permanent jobs per year during the duration of the project.

But in two years, Honeywell has only created about 10 permanent jobs, according to Rekoske.

He said the company also employed about 60 people while it was building the first phase of its biofuels plant — which it plans to unveil this week. And Honeywell hopes to scale up the initial facility, which would create additional short-term construction jobs.

Honeywell will be testing feedstocks such as eucalyptus plantings, guinea grass, macadamia nut shells and coffee bean husks to gauge whether they can be successfully converted into drop-in fuel for use in ground transportation. This could help stimulate the local agricultural sector by creating a local market for farmers to sell crops for use as fuel.

The demonstration plant is expected to produce 60,000 gallons of fuel annually. If the technology is successful, Rekoske said a full-size commercial operation would produce about 67,000 gallons, or 1,600 barrels, a day.

While the demonstration plant might not create hundreds of jobs, Rekoske insists there is significant long-term potential for job creation.

Rekoske said that a commercial-scale facility could create about 700 jobs during its construction. And according to a company , an additional 1,000 jobs could be created in biomass production and refinery operations. The company hopes to license the technology to fuel distributors in Hawaii, or other locations.

The federal grant program, part of President Barack Obama’s $787 billion stimulus package was designed to aid the economy that began plunging in 2007 under President George Bush. Many of the country’s top financial institutions teetered, some collapsing, as a result of a loosening of financial regulations. And subprime mortgage scandals prompted widespread housing foreclosures, a weakening of the economy and significant job losses.

While companies such as Honeywell haven’t created jobs during the economy’s darkest days, the stimulus was designed to have long-term impacts as well, according to Van Jones, who oversaw recovery funding under President Barack Obama in 2009. (He spoke to Civil Beat while in Honolulu last month testifying on a bill that would create a “clean economy bank” in Hawaii.)

Jones dismissed the idea that the $80 billion that went to green job creation was intended to spark jobs all at once.

“That outlay was always supposed to be about long-term recovery,” he said.

Funds under the ARRA program didn’t have to be spent until September 2015.

Still, there are obstacles to Honeywell’s ultimate success and long-term job creation.

The company has an agreement to test the fuel with Tesoro, one of two refineries in the state and the largest. The company is hosting Honeywell at its site and providing technical assistance to the project. But earlier this year, Tesoro announced that it was pulling out of the Hawaii market and selling its operations.

What this means for Honeywell’s demonstration project is unclear.

“The uncertainty is a bit of a concern for us,” said Rekoske. “Frankly, it’s better to know who your parter is than to not know.”

But he said that much of the demonstration plant could be completed before a potential sale of Tesoro and that there was an opportunity to work with a new buyer. And Chevron, the other main refinery in Hawaii, could also be a potential buyer of the fuel.

Lance Tanaka, a spokesman for Tesoro, said that he believes agreements between the company and Honeywell are transferrable. He said that Tesoro doesn’t expect to announce a buyer before the second half of the year, and after that he “couldn’t even begin to predict” when a sale could be final.

The biofuels industry has also seen a lot of start-up companies go under, something Rekoske acknowledges. And in Hawaii, many companies have struggled to make biofuels work at a price that would be competitive with oil.

But Rekoske is positive about the potential of the company’s technology.

“We’re excited about the project,” he said. “We’re probably more excited about the project today than when we started it. Things have gone right.”

Rekoske said that he expects the second demonstration plant to be completed and producing fuel by 2013 — a year ahead of schedule. And the project has been meeting its required milestones, he said.

But that hasn’t stopped the Department of Energy, which has for funding the struggling industry, for asking Honeywell to move forward faster, he said.

“I think with these integrated biofuel refinery projects, there’s been a certain amount of success and a certain amount that hasn’t been successful,” said Rekoske. “I don’t blame the DOE for pressuring us to move faster so they can continue to utilize us as a success of how it can work.”