Originally created 09/14/03

Aiken man aims to expand alternative-fuel efforts



Red Roberts, president of United Energy Distributors Inc., an alternative-fuel distributor in Aiken, isn't out to save the country.

He just wants to do what he can.

"In a small way, I've cleaned up the environment and helped stimulate the farm economy," Mr. Roberts said. "And as an American, I think that's what we should strive to do."

Mr. Roberts gained attention two years ago when he opened the country's first retail alternative-fuel station, where he sells biodiesel, a blend of 20 percent soybean or other oils and 80 percent diesel, and E-85, a blend of 85 percent ethanol (distilled from corn) and 15 percent gasoline.

With gasoline prices going ever higher, Mr. Roberts said he hoped to reduce the country's reliance on foreign oil by making alternative fuels more available.

His facility, on Toolebeck Road in Aiken, is one of two biodiesel distribution centers in Georgia and South Carolina, and the only one within 125 miles of Augusta.

Now he wants to expand his business by building a $16 million soybean refinery to increase his production of biodiesel, which is a blend of traditional diesel with animal or vegetable oils. The fuelcan be used in any diesel engine.

For the proposed refinery, United Energy purchased a 30-acre tract on U.S. Highway 78. It has four 85,000-gallon storage tanks, a small office and railroad access. Mr. Roberts said the refinery would increase his company's biodiesel production capacity from 7 million gallons a year to almost 100 million gallons and create 30 jobs.

Most of what Mr. Roberts sells is consumed by commercial or government vehicle fleets - such as Savannah River Site and Santee Cooper Power - which are required by the Environmental Protection Agency to have certain percentages of alterative-fuel vehicles in their fleets.

"We are using the environmental programs when we can and really trying to get away from fossil fuels," said David Vanosdoll, Santee Cooper's fleet manager.

Any diesel engine can run on biodiesel, but only special, flexible-fuel vehicles can take E-85. United Energy's biodiesel is derived from soybeans, but the fuel can be made with many types of fat, including cooking oil.

There's just one problem with Mr. Roberts' plan to build a biodiesel refinery: cost.

Biodiesel costs about 16 cents more per gallon than regular diesel because of the higher cost of soybean oil. United Energy marks up biodiesel only 7 cents per gallon - a 9-cent loss.

Ethanol refiners get a federal 52-cent-per-gallon tax credit for producing the fuel. Under the nation's existing energy plan, no such subsidy exists for biodiesel producers, making Mr. Roberts' venture too risky.

"Why should ethanol be subsidized by 52 cents and soybeans by zero?" he asked.

Also, the EPA gives government agencies and utility companies more credit for using vehicles running on alternative fuels other than biodiesel because biodiesel vehicles also can burn regular diesel.

That means fleet operators do not have to purchase biodiesel to meet EPA requirements, even more reason why the government should offset the cost of the fuel, Mr. Roberts said.

"Money has to be spent outside the private market to promote this product," Mr. Roberts said.

So Mr. Roberts is pinning his hopes on a change in federal law. The Senate recently passed a new energy bill that would give a one-cent tax credit for each percentage of soybean oil added to diesel fuel, up to 20 percent.

The government also is considering allowing biodiesel to receive full EPA credits, such as other alternative fuels.

"Nothing is guaranteed yet," said Jenna Higgins, a spokeswoman for the National Biodiesel Board. "But, biodiesel is fortunate in that it has bipartisan support. Everyone likes what they see."

The Senate bill still has to go through a conference committee because the House of Representatives' energy bill does not include any tax incentives for biodiesel.

Still, Rep. Kenny Hulshoff, R-Mo., introduced a free-standing bill offering tax incentives for biodiesel producers in a move to shore up support in the House for biodiesel, Ms. Higgins said.

The National Biodiesel Board said it expects the Senate's bill to pass and be signed by the president in the next month.

Support for biodiesel comes in part from the fact that it reduces the country's reliance on foreign oil and in part from the environmental advantages of the product.

"Really, it only makes us a little less dependent on foreign crude, but somebody's got to be the first one to start," Mr. Roberts said.

A 20-percent blend of biodiesel can reduce carbon dioxide emissions by 15 percent and lower carbon monoxide and sulfur dioxide emissions, according to the Alternative Fuels Data Center.

Biodiesel is less flammable that regular diesel, burns cleaner and has better lubricating abilities.

"What we found is, we could extend our oil-change intervals from 15,000 to 20,000 miles using conventional engine oil," Mr. Roberts said.

An energy plan supporting the use of biodiesel would secure United Energy's investment. Mr. Roberts said he would begin construction tomorrow if he had a guarantee of support for biodiesel use today.

The proposed energy plan would cover the difference between the actual cost of the biodiesel and the price at which United Energy is selling it. Greater cost reductions also would come from having his own refinery.

Currently, Mr. Roberts is purchasing raw soybean oil from a plant in Estill, S.C. He then ships the raw oil to a refinery in the Midwest, where glycerine is removed from the oil. The refined oil is then shipped back to his Aiken facility.

A refinery would eliminate the need to ship the oil to the Midwest, saving Mr. Roberts 13 cents per gallon in transportation costs, and it also would give him glycerine as a byproduct, which he can sell.

"Everybody in my business wants to talk about it, but not one wants to do anything about it, except us," Mr. Roberts said.

BY THE NUMBERS

Fuel Consumption in 2001:*

BIODIESEL: 25,431

GASOLINE: 127,916,000

DIESEL: 38,843,150

E-85: 8,736

OTHER ALTERNATIVE FUELS: 351,254

*Fuel consumption numbers represent Thousand Gasoline-Equivalent gallons. A gasoline equivalent gallon represents the amount of fuel needed to equal the energy of 1 gallon of gasoline.

Source: Energy Information Administration

FUEL PRICES

BIODIESEL:** $1.469

REGULAR GASOLINE:* 1.602

MIDGRADE GASOLINE:* 1.701

PREMIUM GASOLINE:* 1.797

DIESEL:** 1.3999

E-85:** 1.419

*Source: Energy Information Administration survey of fuel prices in lower Atlantic states from Sept. 8

** Source: United Energy Distributors pump prices from Sept. 10

Reach James Gallagher at (706) 823-3227 or james.gallagher@augustachronicle.com.