Web exclusive posted March 19, 2008 at 4:04 p.m. CST

On March 10, Iowa-based Renewable Energy Group Inc. inked a partnership with ISE Corp., a California-based hybrid-drive-systems and control-software supplier, to market biodiesel to city bus fleets across the United States.

According to the two companies, ISE will help REG identify customers, depot locations, vehicle numbers, existing fuel tank sizes and potential locations for its biodiesel injection blending system. In January, REG announced it would sell the systems to truck stops, enabling truckers to buy biodiesel blends mixed at the pump. This new deal accelerates REG's biodiesel reach into mass transit systems.

"ISE, because of its hybrid-vehicle business, has an established client base with a number of these mass transit authorities already, so it's a natural partnership for us to work with them," said Jon Scharingson, REG director of marketing. He added that the deal could potentially involve "hundreds or thousands of buses, and millions of gallons of fuel."

The companies have preliminarily identified biodiesel market segments such as transit buses, refuse vehicles and port drayage vehicles. "There's almost unlimited potential because there are opportunities with most of the major mass transit systems around the country, particularly a lot of these cities that are going green, to significantly start them off or significantly increase their utilization of biodiesel," Scharingson said.

ISE was formed in 1995. Several California cities use buses powered by ISE's gasoline-hybrid system. REG, which owns seven biodiesel plants with an annual capacity of 220 MMgy, engages in biodiesel production, management, marketing, sales and plant construction management.

"We've looked at different mass-transit systems around the country," Scharingson said. "New York City uses hundreds of millions of gallons of diesel a year, so if you could get them using B5 or B10, you're talking the potential of tens of millions of gallons of biodiesel."