Innovation Fuels

Source: Energy Digital

Date :08/05/2008 07:18:17

Energy is a global issue and therefore a global marketplace, says John Fox, president and CEO of Innovation Fuels. He tells Exec how this approach is helping drive his company forward

Written by Sam Wright and Produced by Melissa Abbott

Most companies are trying to tread the line between what’s best for their business and what’s best for the environment. It’s never been an easy thing to do, especially when investors are involved, but one renewable energy firm has not only achieved this quietly and - every pun intended - efficiently, but they are now set to take their message worldwide.

Headquartered in Albany, NY, with facilities in Newark and Milwaukee, Innovation Fuels produces biodiesel by chemically reacting alcohol with vegetable oils, fats, or greases. With capacity of over 130,000 tons of biodiesel annually (set to rise to over 300,000 in 2009), the company has its roots in Hampton Biofuels and Homeland Energy Biofuels, two New York-based firms that have considerable expertise in the renewable energy sector.

John Fox, the company’s president, CEO and founder of Homeland Energy, has been involved in this field for a number of years, and has carried on his passion in to his latest venture. But from the start, Innovation has looked outside the New York area to further its business.

Going global

“What we saw back in late 2005,” says Fox, “was an opportunity in the market to consolidate. There were a lot of smaller plants – this is also when feedstock prices were beginning to escalate – so what we decided to do was develop an entity that was truly focused on renewable fuels and had a global reach, because we saw a lot of local producers in the United States being really hampered by feedstock prices and the market in the US not being aggressive as say Europe.

“We’ve always been involved in energy,” he adds, “and particularly the renewable fuels market – and that’s globally and not just regionally. It’s a trap that I think a lot of other companies have found themselves in the past – they’ve focused regionally on not only production but also offtake, and really it is a global marketplace.”

With this emphasis being with the company from the outset, the company’s recent announcement of a deal with Belgian based Apardis Group, a major European distributor of biodiesel and glycerin, to market its products to European consumers. It’s a partnership that, Fox says, has considerable potential.

“Apardis has a broad reach in Europe,” he explains. “They’ve got seven offices, including Antwerp, it’s a publicly traded company, they’ve got production facilities, a strong sales team and the ability to trade products all across the continent, plus offices in the Middle East in Asia. We saw them as a strong partner and, with the opportunity increasing in Europe, it made sense.”

A diesel culture

This opportunity is driven by and large by the European Union’s biofuels directive, which stipulates that all member countries will replace 5.75 percent of transport fossil fuels with biofuels by 2010. It’s a policy which has come under some criticism in recent months - back in January, the EU announced a rethink of its plans in light of concerns associated with biofuels such as rising food prices and deforestation – but Fox is keen to state that these are just temporary setbacks.

“There’s been a lot of news about how biofuels are affecting the environment,” he explains, “especially through food prices, which is a short-term issue. Longer term, as we move to much more sustainable living, this just won’t be a problem.”

Even aside from the directive, the weak dollar and a difference in both driving culture and fuel usage has made Europe a much more attractive proposition for firms like Innovation than the US.

“The way I see it,” says Fox, diesel fuel is so ubiquitous, even in light duty vehicles, that Europe is much further ahead of the US. Plus the price at the pump is significantly higher than what we’re paying here in the US, which is starting to follow the European model.”

Making waves

Of course, making the trip across the Atlantic meeting this demand means a strong and flexible infrastructure. For this, Innovation couldn’t be better situated - both its Milwaukee and Newark sites have international market access via ocean vessels, with the former also having pipeline access.

In addition to direct, deep-water international lines, the company’s assets also include interstate access by three Class I railroads, Norfolk Southern, Union Pacific and Canadian Pacific, together with rail staging for over 50 cars, existing tank storage and access to a refined petroleum pipeline. Increasing its coverage is a major goal for the company, and vital to its long-term plans.

“We are actually looking specifically at port locations within the United States,” explains Fox, “because ultimately we think that the market is going to be driven by Europe and the US for the next maybe three to five years, and then Asia in the long term. Our interest is actually to spread into the full renewable fuels market, and not just biodiesel. There are other fuels such as synthetic gas, and more in the market that are just developing. But biodiesel is a good place to start, as there’s such a strong demand for it.”