Expert Q&As

We spoke with President of Innovation Fuels, John Fox, to discuss biodiesel in America.

What does your company do and who are your clients?
Innovation Fuels is a biodiesel production company. In the United States, our biodiesel is primarily used by heating oil distributors. We use virgin oils that are non food-based and are largely non-edible to produce our product.

Where do the oils come from?
We work with things like used vegetable oil, rendered fats, and animal fats. Our "raw materials" come mostly from large collectors of animal fats and waste grease throughout the Midwest as well as locally.

How many locations do you have?
Right now we have two primary locations. We are currently producing biodiesel in Newark, New Jersey at the Port of New York, and we are also constructing another facility in the Port of Milwaukee in Wisconsin.

Where do you distribute?
We distribute to the entire northeast and into Europe.

Is biodiesel 100 percent clean to burn?
It's much cleaner than diesel fuel; sulfur is virtually eliminated, carbon emissions are cut by over 70 percent, and particulate matter—which contributes to asthma—is also cut by almost 70 percent. It's very beneficial not only from a global warming and environmental perspective, but also from a health effects standpoint. As an example, over 25 percent of the kids in my Harlem neighborhood have asthma, largely due to pollution caused by trucking and coal-fired power plants in the area. If we used 100 percent biodiesel, it would reduce those emissions by 70 percent.

How much energy can you get out of biodiesel? Is it fairly efficient?
For every fossil fuel energy input into making biodiesel—and that includes energy costs, distribution, etc.—to the time the users uses it, you get almost 3.6 energy output.

Ethanol has been a hot topic lately. To clarify, what is the difference between ethanol and biodiesel?
Ethanol is an alcohol, and it's used as a supplement for gasoline. It is distilled from carbohydrates like corn and sugar. There's also cellulosic ethanol, which is derived from things like wood. Biodiesel is actually an oil, and it can be used as a one-for-one substitute for diesel fuel. Any oil—vegetable oil, animal fats, etc.—that is from a biological source can be made into biodiesel. This is done through a chemical process as opposed to ethanol which is made through distillation.

Innovation Fuels also has a presence in Europe. Do you find that the market is bigger in Europe, and if so, how quickly is the U.S. catching up?
The market in Europe is large. Over 50 percent of European light duty vehicles run on diesel, whereas in the United States it's a much smaller percentage. Diesel is a way of life there. They've also instituted mandates throughout the European continent and the United Kingdom, requiring up to 5.75 percent of all diesel sold to be biodiesel. The United States has been a follower in that regard. Next year, in 2009, we'll institute our own nationwide mandates, starting with 650 million gallons in 2009 and eventually increasing to over one billion gallons that will be blended into the diesel. Starting late this year, all of the major U.S. automakers are going to be offering a clean diesel vehicle which can be run on biodiesel.

The results of the U.S. ethanol mandates have been scrutinized. Will biodiesel mandates help diesel prices or do you think that there will be an initial increase before things level out?
I think that ultimately, it will help prices. Right now we're able to sell our biodiesel at a discount compared to what diesel fuel is selling at locally. So, we're certainly able to offer a competitive price. I don't think the market is going to be offering that. I think we're in a strategic location where we can offer a discounted price because we're able to make our fuel right next to our customers. We don't have a significant amount of transportation charges. I also think that as mandates come in, you may see a slight increase in price, but it's going to be minimal. By primarily using non-food-based feed stocks, we're able to limit the volatile nature of the commodity. Our feed stocks are not necessarily intrinsically linked to other food-based commodities.

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