Talking Point

By Rick Geise | March 01, 2004
Entrepreneur and business author Harvey McKay has written often that a key to sales success is to "dig your well before you're thirsty." It's appropriate in mature industries as well as new market development. It's equally true for biodiesel. Alternative fuels in general, and biodiesel in particular, have spent their domestic existence fighting for legitimacy. The key to success must not rest with ideological theory that implies environmental activism, but rather, sound business principles. From a rendering industry perspective, I believe there are three critical areas which must be addressed to ensure biodiesel's continued growth and prosperity:

1. Create a Petroleum Industry Partnership.
Biodiesel must be recognized as an integral part of the energy puzzle. Rather than threaten the petroleum industry elites and their lobbyists, biodiesel should be recognized as a requisite in extending the finite life expectancy of a natural resource. The low inclusion blend is the obvious short-term solution. As a lubricity additive for ultra-low sulfur diesel or compliance tool for a future renewable fuel standard (RFS), biodiesel must be in the general diesel fuel supply. The chicken or the egg question is answered by volume. An RFS mandate will translate into dramatically larger production facilities that will in turn result in economies of scale, reducing producer and consumer costs.

2. Maintain Feedstock Neutrality.
Ultimately, the consumer cares little about feedstocks. We don't specify whether crude oil comes from the North Atlantic or off the coast of Alabama. The ultimate objective of biodiesel has to be more than to generate an aggressive return on investment for one feedstock over another. Rather, consumer preference should be directed to the suppliers that balance product quality with the most efficient production process, regardless of feedstock origin.

3. Establish Fair Legislation.
The path to economic viability is laid by production efficiency and RFS mandates, not subsidies. It's important to note that the commodities produced by the rendering industry do not receive subsidies. If the Commodity Credit Corp. program equalizes the inherent disparity in feedstock values in biodiesel production, then why are excise tax incentives that further differentiate feedstocks necessary? The reality is that state and federal legislative initiatives that support biodiesel related tax incentives must be fair and balanced, or they will not exist. Incentives that promote one feedstock over another will bring into question what is in the consumers' best interest.

I recognize that tens of millions of soybean check-off dollars have been directed to biodiesel. However, the financial and marketing investment made by renderers is also impressive. These are primarily family-owned businesses, many of which have spent millions of dollars out of their own pockets to develop this market and produce a high quality, commercially viable product.

To date, the biodiesel industry through the leadership of the National Biodiesel Board has accomplished a great deal. From a fledgling industry to the fastest growing alternative fuel in the United States, the future is bright. Moving forward, I believe that RFSA-related mandates that create substantial biodiesel demand will accomplish far more than incentives. Through petroleum industry collaboration and an elevation of NBB's stated feedstock neutrality position that is further supported by unbiased legislation and incentives, a revolutionary industry can be built. Working together we can dig the well that will ultimately quench our nation's thirst for renewable energy.

Rick Geise is the marketing director of Griffin Industries Inc., a major rendering facility and biodiesel plant in Cold Spring, Ky. He can be reached by e-mail at [email protected]
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