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The Maw of Inconsequence: Evaluating Biodiesel’s Future » Biodiesel is Good

The Maw of Inconsequence: Evaluating Biodiesel’s Future

September 1st, 2010 by matt Leave a reply »
CEO of Springboard Biodiesel

CEO of Springboard Biodiesel

I am the CEO of a small cleantech manufacturing company focused on small-scale biodiesel production equipment. Springboard Biodiesel’s equipment is generally considered “best in class”; we manufacture everything in the US and probably source over 80% of our materials and parts from within Butte County in Northern California. Focused as we are on biodiesel, we pay attention to our carbon footprint, and calculate that our 600+ unit installed base has the production capacity to produce over 5MM gallons of ASTM-grade biodiesel (that’s good enough for the US government to allow it to be sold for a profit) and remove over 85MM pounds of CO2 from the atmosphere. It helps that our customers use our products to make ASTM-grade biodiesel for less than the price of diesel.

Manufacturing, cleantech, greenhouse gas reductions, made in the USA: what’s not to like? Unfortunately, everything. Don’t get me wrong. I love my job; I am passionate about our products; I go to work every day knowing that I am engaged in a business that has the ability to benefit a great number of people. However, the process of managing our nation’s voracious energy appetite and weaning even a small percentage of the economy off of petroleum is a battle that we as a society do not yet seem to have the visceral desire to attempt. As a result, the obstacles that face the biodiesel industry are generally artificial, bureaucratic and lobby-money based.

Without an easily “media-fiable” disaster (apparently dumping 190 million gallons of oil into a once productive fishing ground doesn’t pull the heartstrings like it once did), the empirical need to find alternative fuels remains unfelt. The Biodiesel industry is, perhaps, the poster child for our Country’s alternative energy policy of benign neglect. For five (5) consecutive years, the US govt, under the none-too-environmentally-subtle president Bush legislated tax credits that supported a small but rapidly growing commercial biodiesel industry. As a result, over 50,000 jobs were created, billions of dollars were invested in infrastructure, and in 2008 nearly 12 billion pounds of CO2 were kept out of the atmosphere.

In 2010, the tax credit has been allowed to expire, resulting in a dramatically shrunken industry that has shed over 20,000 jobs and sees itself staring into the maw of inconsequence. If you visit the National Biodiesel Board’s website, you will find a pathetic countdown widget updating you on the 243 days, 14 hours and 2 minutes that the industry has been without the necessary legislative support embodied in the biodiesel producer’s credit.

My company has been developing some exciting new products that are aimed at the small-scale local production market. This is an under-covered sub-sector of the biodiesel market (given what I’ve described above, you may worry that almost by definition this area is fruitless), but we believe that both in the US and overseas, we have a compelling market opportunity. With the extension of the tax credit, our financial plan indicates that our planned network of 65 small scale biodiesel production units (we call our unique system the ILP™) will be able to produce almost 20 million gallons of ASTM-grade biodiesel – surely just a pittance in the brobdignagian world of energy extraction, consumption, demand and wealth creation. But hang on, doing the right thing need not cost us an arm and a leg. In fact, while the “cost” of supporting this environmentally friendly fuel will set the US tax payer back $19MM in tax credits over 5 years (in the case of Springboard Biodiesel’s planned production), the returns far exceed the support – economically and socially. By investing in this vital industry, innovative cleantech companies will be allowed to grow and mature, such that the tax credit can expire without condemning the industry to either death or emigration (the rest of the world is far more interested in building a biodiesel economy).

Springboard Biodiesel is a very small company. However, with our product roadmap and a reinstatement of the tax credit, we plan to create 165 new jobs with an estimated cumulative payroll in excess of $12MM. In addition, we will contribute over $10MM in direct taxes, pay local suppliers over $13MM, and our products will keep over 320MM pounds of CO2 out of the atmosphere. So roughly $35M of economic returns created for the cost of $19MM. That’s an investment with a double digit return – somewhat of a rarity in this economic environment (it should be noted that this calculation places zero value on our positive environmental impact nor the local “ripple effect” of job creation).

And yet the legislation necessary to support the commercial biodiesel industry continues to stall in the Senate – a dysfunctional house that of late has threatened to succumb to complete “Balkanization”. The formidable lobbying armies of both Big Oil and the US automotive industry view biodiesel as either an unnecessary distraction (oil) or a potential cost (cars). And the average American is informationally overstimulated such that increasingly black and white issues are merely different shades of grey, too difficult to focus on for long periods of time, and certainly not worthy of deeper exploration. In short, the age old newspaper rule still resonates: unless it bleeds, it can’t lead.

So while I wait for the blood – another oil disaster, $100/barrel, some insane conflict in the Middle East – I find myself bouncing between two perspectives: Glass half full and glass half empty. The former is more uplifting, but the latter is gaining momentum as I hear Big Oil executives dismiss biodiesel as “an additive product, not a fuel”, or I see yet another commercial biodiesel plant shutter, or I casually calculate, again, that the US consumes almost $200B of diesel fuel annually and derives the majority of it from foreign countries. Yesterday, I read of the hottest summer on record, again, and I worry that every day activities, conveniences and joys that we have always taken for granted will be missing from my Children’s and my children’s children’s lives.

Bellyaching is all too easy, and unfortunately ignoring the failings of our elected officials is easier than actively working to change the status quo. However, at the end of the day, all we can do is what we believe is right. I believe that substituting biodiesel for diesel is good for every single constituency I can think of. I’ll continue to work towards the commercial success of biodiesel. I encourage all of us to make our preferences known. Be it biodiesel or any other issue. Don’t let the status quo destroy our future. Make alternative energy a voting issue and hold do-nothing-but-squabble-for-the-cameras politicians accountable. The maw of inconsequence is not good for this country or this planet.

 

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