Biodiesel industry keeps rolling

Rich Gillis is selling his biodiesel plant.

But Gillis, president and chief executive of Watsonville, Calif.-based Energy Alternative Solutions Inc., intends to stay in the business. Once the sale is complete, he plans to focus on development of marketable biofuel crops like camelina, which requires very little water and has been grown successfully in the San Joaquin Valley.

"Biodiesel is taking off," he says. And camelina, which is harvested for its seeds, has a bright part in that future, he adds.
The biodiesel business certainly isn't putting the petroleum companies out of business. In fact, the market remains relatively limited with most sales going to fleets or established customers. However, its niche is extensive with more than 600 fleets using biodiesel blends in their vehicles and the military testing it as a 50 percent additive to jet fuel.

Gillis says he sees the fuel as an intermediary that will serve to ease dependence on petroleum until a substitute can be found. And that may take awhile.

The EPA has forecast through its Renewable Fuel Standard program a target of about 1 billion gallons of biomass-produced biodiesel this year. In 2006, 250 million gallons were sold, with more than 900 million projected to sell in 2011.

The EPA says biodiesel can help reduce U.S. dependence on foreign oil and provide greenhouse gas emission reductions: "It reduces emissions of carbon monoxide, particulate matter and sulfates, as well as hydrocarbon and air toxics emissions."

Derek Mead of calls biodiesel the workhorse of the biofuel sector. He writes that the "market is projected to continue to increase production and is still a stable sector."

Gillis' plant, which sits near the central coast in Gonzales, Calif. just south of Salinas on Highway 101, recycled 150,000 pounds of waste vegetable oil into biodiesel each week and has been on line since 2007. Over its history, the plant has produced more than 1 million gallons.

Biodiesel can be produced from vegetable oils, animal fats and used restaurant grease.

Gillis says the plant was built by Pacific Biodiesel, headquartered on Maui, Hawaii. "They are one of the oldest producers of biodiesel fuel and production plant builders in the country," he says.

Gillis says he'd like to see the plant bought and relocated to the nearby San Joaquin Valley where it would be close potential fields. He says "parties interested in relocating the plant to the San Joaquin Valley will be given a credit with a cap for the cost of disassembly and transport of the plant."

Gillis says that although a $1 per gallon tax credit wasn't renewed by Congress, renewable fuel credits are available through the U.S. Environmental Protection Agency "and remain an excellent source of support for producers of biodiesel. Cap and trade will also have a positive effect on the industry."

The tax incentive was enacted in 2004 as part of the American Jobs Creation Act and expired at the close of 2009.

The National Biodiesel Board says the industry generates substantial economic benefits. In 2008, the U.S. biodiesel industry supported 51,893 jobs, added $4.287 billion to the economy, and generated $866.2 million in tax revenue, it says.

Gillis says the elimination of the tax credit either eliminated or temporarily shuttered about half the jobs in biodiesel.

Gillis believes in biofuels and would like to see more jobs developed. He'd also like to find a buyer for his plant -- although he may have a line on it with a couple interested parties. He's got a list of the equipment for those who would like to know more. Price is negotiable, the list says.