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February 11, 2006
AP story on Biodiesel shows up across the nation
My father called today. One of his friends at his knitting class asked if that was his son in the Medford Oregon paper. Yes, father, it was.
in a 2005 Volkswagen Beetle -- one that's entirely powered by soybean oil. The
chief executive of Seattle Biodiesel hopes thousands of others will soon follow
his lead.
To help achieve that goal, Tobias recently attracted $7.5 million in venture
capital financing from Nth Power, Technology Partners and Microsoft co-founder
Paul Allen's Vulcan Capital.
The round, which brings total financing in the two-year-old company to $9.5
million, is among the largest for a
Tobias said.
"We obviously want to be a national company," he said. "And we
think we have a better, faster, cheaper way to make biodiesel that we can
replicate all over the country and internationally."
The recent financing will be used for expansion, with plans to open a new
biodiesel refinery and canola-crushing oil facility this summer. Tobias declined
to comment on the new plant's location or size, though he said it would be
significantly larger than the company's 5 million-gallon
"Demand is so high that we still have not been able to meet it with our
current facility," Tobias said. Seattle Biodiesel signed a deal late last
year to provide up to 1 million gallons of biodiesel to the
and SSA Marine.
The company's new crushing facility will be in
Washington
variety of the rapeseed plant, into oil.
Currently, Seattle Biodiesel imports soybean oil from the
a costly endeavor that Nth Power managing director Nancy Floyd said can add as
much as 50 cents to the cost of a barrel of biodiesel. "It is hugely
expensive," Floyd said.
By shifting to locally produced canola oil, Tobias hopes to get a better handle
on costs and help
farmers discover a new cash crop. Canola oil also produces a higher grade of
fuel.
"The corporate goal is to make biodiesel cheaper than petroleum
diesel," said Tobias, who ran his VW Beetle on
need to invest a lot in process technology and scale in order to do that."
The idea of setting up smaller production facilities near key markets on the
coasts made sense to Floyd, whose
Francisco
companies.
There are large biodiesel producers in the
But Floyd said their distance from key markets -- eco-friendly places such as
Francisco
The biodiesel market is booming, with state and federal programs offering
incentives to producers. The state Legislature is considering a bill requiring
that all diesel motor fuels in
contain at least 2 percent biodiesel if certain criteria are met. The bill also
would require that a "predominant portion" of the biodiesel be
derived from crops grown in the state.
That could be a huge boost for companies such as Seattle Biodiesel, the largest
producer in the Pacific Northwest, said Patrick Mazza, research director at the
nonprofit
environmental group Climate Solutions.
"The standard is 2 percent, going up to 5 percent later," Mazza said.
"That guaranteed market is really going to help Seattle Biodiesel, and it
is going to create incentives to produce biodiesel in the state."
Biodiesel legislation has been adopted in other states, including
And a federal biodiesel excise tax, which went into effect a year ago and was
recently extended to 2008, has boosted demand throughout the country.
The involvement of celebrities in the biodiesel crusade -- including country
singer Willie Nelson, who is marketing a biodiesel fuel called BioWillie --
also is driving interest.
Mazza believes that Seattle Biodiesel, while relatively unknown and small at
just 19 employees, can make some waves in the industry.
"Being a small company itself is not an overwhelming challenge -- about
everyone in the field is pretty small," he said. "There is no Exxon
of biodiesel yet."
Seventy-five million gallons of biodiesel fuel were produced in the United
States last year, triple the amount in 2004, said Jenna Higgins, a spokeswoman
for the National Biodiesel Board.
Still, 75 million gallons is just a drop in the bucket when compared with the
67 billion gallons of diesel fuel consumed annually in the
But Tobias, a 41-year-old venture capitalist, sees opportunity in those
numbers.
"Biodiesel is a one-for-one replacement for diesel, so the theoretical
market for biodiesel is the market for diesel," Tobias said.
"The great thing about biodiesel is that you can start small and just mix
it in a little bit to get some of the environmental benefits and to reduce some
of your petroleum usage. Then you can increase the mixture, and the diesel
engines don't know any different."
Posted by Martin at February 11, 2006 09:20 PM
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