August 13th, 2009
Biodiesel's future
I recently spoke with Innovation Fuels CEO John Fox. His firm already makes biodiesel at plants in Milwaukee and New York Harbor. He says next year will see a growth in bodiesel production in the U.S. The 2010 federal requirement calls for all diesel oil–heating and vehicles–to have 2% biodiesel blended in. Innovation makes their biodiesel from animal fats and used vegetable oils. They do not use soy beans or other first generation food crops. Innovation and the biodiesel business in America got hurt when Europe began a five-year anti-American tariff on biodiesel. But Innovation still does export some biodiesel. It faces competition from Brazil, Indonesia, Argentina, India and other major farm producers.
Fox says Innovation will not use basic materials like soybeans which can also be used for food. Soy is the basic material for biodiesel currently used in Argentia and Brazil. That can lead to destruction of native forests to clear land for cash crops. In Europe rapeseed or canola is the basic source of much biodiesel produced there. France is the #1 biodiesel producer there.
Fox is encouraged by the “cash for clunkers” program which he expects to lead to more and more diesel-powered cars in America. Europe’s private vehicle fleet is already over half diesel-powered. Diesel is more efficient than gasoline and requires less engine maintenance. German diesel makers will soon face competition in the U.S. from Chrysler and Japanese firms. More diesel cars, more biodiesel.
Innovation is also working with the heating oil industry on introducing more biodiesel blends. The first state to require biodiesel in all home heating oil: Massachussetts. Fox expects that requirement to spread.
WHAT’S SO GREAT?
Biodiesel from waste materials is greener than that made from soy or other traditional raw products, says Fox. He says soy-based biodiesel only results in a 22% percent carbon emission reduction when you measure the process from planting to end product. With Innovation’s recycled products there is an 80% carbon reduction over the lifecycle of the oil. Fox sees something even better in the future.
PENNYCRESS
Pennycress with seed pods. Courtesy: Innovation Fuels.
Related to canola, Fox says the pennycress could be a great raw material. Pennycress holds out a promise of up to 90% carbon reduction compared to a gallon of diesel made from crude oil. The seeds are high in oil content, and on the same amount of land you can produce five times more oil with pennycress than with soybeans. Further, pennycress does not require prime food-production soil nor irrigation. In many areas you can grow two crops per year. Soybeans require much of our best American farmland: been to Iowa recently? Corn and soybeans. Soybeans: one crop per year in the U.S.
Innovation is currently working on pennycress growing and research with universities in New York State and Wisconsin.
WATCHING WASHINGTON
Fox pointed out that his fledgling industry is working to compete with the billions of dollars made in profit by the oil industry every year. They’ve had over a century to build their infrastructure, he says. So far Innovation has spent about ten million dollars. But rapid expansion of home-grown diesel will require considerable capital, he says. Private capital is very scarce these days, he added. There are $230 million dollars in stimulus money that could go for loan guarantees to biodiesel firms, says Fox. Loan guidelines have just been published. He’s hopeful.
If there is a federal energy bill passed into law, that could bring further fuel madates, more money and perhaps even more federal direct spending. Imagine those government limos running on biodiesel blend? Or tanks using biodiesel in military training.
A newsman since 1969, Harry Fuller has worked for CBS, ABC, CNBC Europe, CNET and was founding news director at TechTV. See his full profile and disclosure of his industry affiliations.
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