… by feeding carbon sinks to our cars, trucks, and buses.
My wife pointed me to an article on biodiesel in the business section of the Seattle Times yesterday. I discussed this issue once before. But hey, if the Times can repeat the same story over and over, why can’t I?
Let me parse this article out.
Plaza says Imperium’s contract provides palm oil exclusively from sustainable farms, and it plans to perform audits to make sure that proviso is honored.
You can’t possibly verify where a given gallon of palm oil came from, especially in a third world nation where graft and bribes are still standard operating procedure. What would you do if the person you send to Indonesia on a verification mission discovers that your competitors have hogged up all the palm oil from the “sustainable” plantations (whatever those are supposed to be) and that they are sending you oil from newer plantations (ones that more recently usurped rainforests)? Try to envision how effective this strategy will be.
“Quick! Shut down the refinery and lay everyone off! Recall that last shipment! We are using palm oil being grown on recently cleared rainforests!” Spare me. Had he said, “We will not be using oil imported from third world tropical countries because the incentive to destroy rainforest carbon sinks is just too great and there really is no effective way to verify sustainability,” I would have been deeply impressed. You will also note that nowhere in this article was global warming mentioned.
Eric Bowen, an energy expert with Sigma Capital in San Francisco, said that among the 100 biodiesel business plans he’s reviewed there are three types of companies: agribusiness giants like Archer Daniels Midland with lots of cash and talent; old hippies working on small projects that will mostly fail; and a new breed of “pure-play” venture-backed companies focused on making large volumes of biodiesel.
There’s been talk of Eastern Washington farmers growing canola seeds as a local source of vegetable oil, but the idea has sputtered due to a lack of processing facilities.
Well, old hippies (70s-era environmentalists) and local production enthusiasts, it looks like the profit motive is going to roll over you, along with the planet’s biodiversity.
Some people like biodiesel because it is renewable and pollutes less than regular diesel fuel. Others are intrigued by its potential to reduce America’s dependence on foreign oil.
I’m not the only one who can be repetitive. Now that low sulfur diesel is here, diesel vehicles will soon be as clean as gasoline ones. So at that point, you can scratch the cleaner-than-diesel argument. Also scratch the potential to reduce our dependence on foreign oil, for several reasons, the most comical being that this refinery plans to use foreign oil to make much of its fuel.
The renewable argument is mostly a matter of definition. Yes, you can grow more every year, usurping food crops, water, land, and rain forests while feeding the dead zone in the Gulf of Mexico with fossil-fuel-derived fertilizers and pesticides … but how can you call that sustainable (renewable)?
It’s interesting that ethanol is taking the lion’s share of critique from environmentalists when it is biodiesel that’s exacerbating the razing of rainforests around the world. Even here in the U.S., it takes five times as much land for soy oil to produce the same amount of mileage as corn ethanol.
Nationally, there are several companies trying to prove biodiesel isn’t just for altruists anymore. One competitor, Bioselect Fuels of Galveston, Texas, has oil-industry veterans in management, and investment capital from Chevron. It says it is pursuing a strategy similar to Imperium’s, using large-scale refineries, cheap ocean transportation and diverse sources of vegetable oil.
New refineries are being announced almost on a weekly basis, bringing refinery capacity up to 1.4 billion gallons a year.
That’s right, it sure isn’t for altruists anymore. Lots of biodiesel refiners are planning to import cheap oil from tropical countries.
Imperium, he said, is in the third camp. Bowen said he’s not sure the company has “a secret sauce” for success, but Chief Executive Martin Tobias, who took Seattle-based Loudeye public in the dot-com heyday, has to be taken seriously. “Whether these guys are riding a bubble of biodiesel or building a business for the long term is a fair and open question” …
This biofuel craze is in no way analogous to the dot-com craze. In the latter case, entrepreneurs were testing the free market waters and most failed, as is the norm. Here, the government is guaranteeing profitability, and if the last thirty years of ethanol subsidies are any indicator, the government may continue to support the profit margins of investors for decades to come. This means accelerating loss of rainforest has nowhere to go but up.
Imperium does not receive direct subsidies for making it, but distributors get a $1 a gallon discount on the fuel’s federal excise tax, a savings that can be passed to consumers.
The above attempt to deflect growing criticism is proof that ranting whiners like myself are making inroads. But seriously, how much biodiesel would they be selling to distributors if consumers had to pay an extra dollar a gallon?
Local governments like King County Metro and the city of Seattle are also among Imperium’s best customers. Plaza says he’s gotten a lot of support from elected officials and travels once a month to Washington, D.C., to lobby for their help.
This is called subsidization in sheep’s clothing. Help with what … profitability? Seeking profit in this manner does not sit well with me at all. Washington State’s growing biodiesel industry is now dominated by its wealthy elite partnering with our politicians. Is it just me or is there is something wrong with this picture?