Greener fuel proves profitable for small operators

Jul 2 2008 by Karen Dent, The Journal

Once hailed as the region’s industrial saviour, the biofuels industry has been hit by a series of setbacks. But while producers have faced problems, the sector has proved successful for many smaller businesses using or selling this greener, cheaper fuel. Karen Dent reports.

BIG biofuels businesses have faced a tough time lately as they try to complete on an uneven playing field with US counterparts that have undercut them at every turn.

This so-called splash and dash – where US producers import biodiesel from a third country, add a splash of petroleum diesel then dash to Europe to sell it before claiming a second round of subsidies – is now being investigated by the European Commission.

The move, long lobbied for by producers such as Teesside’s Biofuels Corporation, may yet save the industry. And there is also a renewed sense of optimism since the introduction of the Renewable Transport Fuels Obligation (RTFO) in April, which means that all petrol and diesel sold in the UK must contain at least 2.5% biofuel, rising to 5% by 2010.

Although the difficulties facing the sector led to Middlesbrough-based D1 Oils mothballing its refineries on Teesside and Merseyside to concentrate on growing renewable energy crops in India and Africa, the neighbouring Biofuels Corporation is starting to see the light at the end of the tunnel.

It is concentrating on producing fuels to be blended with conventional mineral fuel, which are sold on the UK and European market.

Chief executive Sean Sutcliffe said: “The European Commission is looking to stop the unfair US subsidies and has formally launched an investigation which will last for nine months. This is a step in the right direction.”

He also pointed to the RTFO, and the changing attitudes among consumers as the soaring cost of oil pushes prices at the pumps skywards.

“People are always looking to save money but I think they realise one of the reasons why the price is so high is that we can’t continue to do what we have always done,” he said.

“The case for doing something to get a lower carbon footprint and a cheaper source of fuel has never been stronger.”

Agricultural co-operative and retailer Farmway runs petrol stations at Morpeth and Bowburn which sell 5% biofuel diesel and have done for a number of years.

Chief executive Peter Hull, who is also a founder member of the North East Biofuels industry umbrella group, said: “It’s through the Jet brand and we persuaded Jet to sell this.”

But he says providing pumps of pure biodiesel would not work for his business.

“To compete with the fuel industry, to make a significant difference, we couldn’t be big enough,” he said. “You couldn’t produce enough biodiesel.”

However, there is demand for 100% biodiesel. Bruce and Susan Black were inspired to start their own business selling the eco-friendly fuel after being forced to travel from their home in north Northumberland to Scotland or South Yorkshire to source it.

They opened Go Green Biofuel last month, selling 100% biodiesel in containers of 25 litres, 50 litres, 200 litres and 1,000 litres, from their base at Spittal in Berwick.

They plan to sell the fuel from the pump as soon as possible and demand has been so great, they are opening a second branch in Cramlington and increasing the opening hours at Spittal. “There are manufacturers in Northumberland but they don’t supply small amounts to the general public.

“They are more interested in selling it straight to the bigger companies,” said Susan.

“We are interested in the manufacturers using recycled vegetable oil. It’s quite difficult as there is a huge influx of imported oil. We collect waste oil from our local area and send it off to be processed.”

It is now illegal for food businesses to dump waste oil but Susan says that as business owners more become aware of this alternative fuel source, food businesses are becoming more savvy.

“Some businesses are now charging you to take it away, there is so much demand for it,” she said.

Although demand was slow to begin with, word of mouth has attracted people to try biodiesel.

Bruce said: “I think a lot of people did not really know very much about biodiesel and were reluctant to try it in case it had any detrimental effect on their vehicle.

“We have found that once one person uses it and find that their cars run smoothly and efficiently with biodiesel, then others are more likely to follow.”

The firm’s customers include taxi firms, haulage companies and general business and private motorists.

At the time of writing, Go Green Biofuel was charging 0.97p a litre plus VAT, which works out at £1.14 per litre, compared to the average price of £1.30.9p a litre (including VAT) for conventional diesel at the region’s garages. HM Revenue and Customs creams off 50p in duty per litre of conventional diesel and 30p in duty per litre of biodiesel.

However, the Road Haulage Association says that the duty on biodiesel means it is not considered a particularly cheap choice by the industry.

Northern area spokesman Malcolm Dodds said: “Haulage companies may use it as a supplement to ordinary diesel, so they may use part diesel, part biodiesel. But what they are finding is that there is no cost benefit. It does make them more environmentally- friendly, which all hauliers are striving to be.”

Matthew Kirby, who set up Hexham-based Eco Cabs a year and a half ago, agrees that biodiesel has not significantly reduced his costs. “We have been saving a little bit of money but any money we do save, we put back into servicing costs,” he said. “You need to replace fuel filters more often and have the fuel lines cleaned because biodiesel is more gunky.

“We started using 100% biodiesel and we ran into problems with the engines. Then we changed to a blend of diesel and biodiesel and that has worked really well.”

Kirby, who runs seven biodiesel cabs, three hybrid cars that run on electricity and has 12 staff, says he believes newer vehicles need to be specially adapted to use biofuel, despite claims that motorists can fill up and go.

“The only way to cut out the conversion costs is to buy an older car. Older cars run better on biofuel,” he said. “The main manufacturers need to make the cars be able to use biodiesel from the start but they have too big a connection with the fuel companies.”

DIY DIESEL

WITH a bit of time and investment, it is possible to make your own biodiesel at home.

Legally, individuals can manufacture 2,500 litres of biofuel annually for their own use and remain exempt from duty.

A number of ‘how to’ books have been published, including From the Fryer to the Fuel Tank by Joshua Tickell and How to Make Biodiesel by Dave Derby and Jon Halle.

Dozens of recipes for converting vegetable oil to biodiesel, usually by adding methanol and a catalyst, can be found online.

Those keen to do more than dabble may also be interested in equipment to make fuel on a larger scale, although the price of these specialist processors starts close to £1,000.

CASE STUDY

GROWING crops for food versus fuel is the latest issue to rock the biofuels industry but Gatehead’s Henry Colbeck Ltd has the perfect riposte to critics – it is running its fleet of trucks on a blend of fuel made from a food by-product collected from its customers.

The business supplies fat and oils, fish, sausages and other fresh products to 2,500 chip shops and caterers in Scotland and Northern England. For the past year, it has been collecting customers’ used fat and converting it into biodiesel at a specially-built £100,000 plant on the Team Valley to fuel its 28 lorries and 12 cars. The initiative, partially funded by One NorthEast, has created five jobs.

Managing director Andrew Naylor said: “We were collecting waste oil from chip shops and selling it on to others to make biofuel, so we decided to complete the circle.

“It’s a complicated process. You need specialised equipment and you need permits from the Environment Agency if you are doing it as an industrial application.”

Much of the waste collected cannot be processed because it was originally solid fat, so is passed to another company for disposal.

“There is a bit of an urban myth that often appears telling people to collect waste oil from their local chip shop to make biofuel, but nearly every chippie uses solid fat not a liquid,” said Naylor.