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Huge biodiesel shipment arrives

A Tampa company has lofty plans to continue importing the alternative fuel from Ecuador to sell for use in diesel engines.

By DAVID ADAMS and STEVE HUETTEL
Published November 19, 2005

TAMPA - Riding a recent boom in alternative fuels, a Tampa company, EarthFirst, unveiled its first shipment Friday of foreign-made biodiesel imported from Ecuador.

Trumpeted as the largest shipment of biodiesel to reach the United States, it was met by a firestorm of protest from American soybean growers, the nation's largest producers of biodiesel.

Higher petroleum prices have made biodiesel an increasingly sought-after fuel in the nation's efforts to decrease dependence on fossil fuels. It produces far less air pollution than regular diesel and can be made from any animal, plant or cooking grease.

But the American Soybean Association accused EarthFirst of unfairly taking advantage of a new tax incentive under the 2004 American Jobs Creation Act for domestic biodiesel producers.

The 267,000-gallon shipment was produced in Ecuador using palm tree oil technology, a cheap and highly productive source of biodiesel.

The soybean association said it has already begun a lobbying effort in Congress to ensure that foreign fuels, such as palm oil, are not eligible for tax credits.

"I'm not saying it can't come into the country," said Bob Metz, president of the soybean association, by telephone from his soy farm in South Dakota. "But it shouldn't take advantage of the tax credit. That was not the intent of Congress, or the people who have worked so hard to lessen our dependence on foreign oil."

Keith Collins, chief economist for the U.S. Agriculture Department, can understand their frustration.

"The American Soybean Association has spent many millions of dollars developing, testing, and promoting biodiesel, working with engine manufacturers and helping establish the fuel's acceptability and presence in the U.S. marketplace," he said.

EarthFirst said it was not surprised, or deterred, by criticism from heavily subsidized American farmers.

"The purpose of this legislation is to bring more diverse energy sources to better safeguard national security," said EarthFirst consultant Elio Muller. "We are answering the call with our technology."

EarthFirst was careful to seek approval from the Internal Revenue Service before going ahead with the project, he added. Under an Andean trade pact, there is no duty on palm oil imports.

EarthFirst has suffered recurring losses from its beginning in 1997, according to a report the company filed with the Securities and Exchange Commission. The company posted a $3.55-million loss for the first six months of this year on revenues of $17.9-million.

The company hasn't lined up long-term buyers yet but said it is speaking with a wide variety of potential customers, including power companies, trucking firms and even the cruise ship industry.

"We'll sell it. We expect to do well," said Peter Calvert, EarthFirst's chief technical officer. "We've got some missionary work to do, but people are interested in it."

EarthFirst's first customer was McMullen Oil Co., a Clearwater fuel distributor that filled a 6,000-gallon tanker truck with biodiesel.

McMullen Oil doesn't have a buyer yet but expects to sell a diesel blend with 20 percent biodiesel to retailers and construction businesses, said owner Paul McMullen.

"There's a trend to move away from fossil fuels . . . and a biodiesel blend is the quickest and easiest fix to the (nation's foreign) oil dependency problem," he said.

EarthFirst wouldn't say how much it's charging for biodiesel. But the product is "price-neutral" with regular diesel fuel, Muller said.

Distributors such as McMullen receive a $1 federal fuel tax credit for each gallon of biodiesel they sell. So EarthFirst gives them a "small incentive" by selling its product for less than $1 over the price of diesel, Muller said.

EarthFirst's foreign partner is LaFabril of Manta, Ecuador, one of the region's largest manufacturers of oils from palm, soy and rapeseed. The company says it hopes to start monthly shipments next year from Ecuador, with an annual goal of 45-million gallons.

Such high expectations raised eyebrows among some in the industry. World Energy Alternatives, which owns one of the country's largest biodiesel processing plants in Lakeland, has the capacity to produce 18-million gallons a year.

"There's room for everybody," said Aaron Evenson, general manager of Ward Oil, Tampa's largest biodiesel distributor. "Palm oil is a good product. Their technology is good." But like others in the industry, Evenson questioned the wisdom of affording tax benefits to foreign products.

The United States last year produced 25-million gallons of biodiesel. That is estimated to grow to 75-million by next year, and 200-million gallons by 2007, according to the National Biodiesel Board, which represents the industry.

That's still a drop in the bucket compared with the 6-billion gallons in annual sales of petroleum diesel.

Until recently, biodiesel use was limited to federal and local government fleets (including the military) mandated by the 1992 Energy Policy Act.

Biodiesel consumption in Florida has risen steadily in the last five years. Users include Pinellas and Broward county fleet vehicles, the University of South Florida, MacDill Air Force Base, some Jacksonville city departments, Florida Power & Light Co., and the Postal Service in Miami.

It cannot legally be sold yet at retail outlets in the state, but that could change soon. A proposal to update state fuel rules to include biodiesel is currently being considered by the Bureau of Petroleum Inspection in Tallahassee, which regulates fuel use in the state.

Biodiesel, which is also produced from leftover restaurant grease, is fully compatible with regular diesel engines, either in its pure form or blended with petroleum-based diesel.

Pinellas County began using biodiesel 41/2 years ago and currently runs 35 vehicles on it.

"It's been very positive," said Keith Grant, Pinellas County fleet manager. "Once we get the pricing down, our goal is to convert our entire diesel fleet," he added, or about 950 vehicles in the county's fleet of more than 2,000 cars, vans and trucks. Using biodiesel reduced emissions by 35 percent to 50 percent, he added.

The University of South Florida began using biodiesel to run its transit buses in 2002. A 99 percent biodiesel blend is now used to fuel 30 of the 33 buses.

"It seemed like a plus move for the university to be at the lead on the environment," said USF's transit manager, Rick Fallin.

Though he hasn't tested the emissions, he says the results are so obvious it's hardly necessary.

"Sight and smell is enough," Fallin said. "They don't blow huge clouds of black smoke. Smells more like mom's kitchen than a motor pool."

[Last modified November 19, 2005, 01:09:04]