Z Energy, headquartered in Wellington, New Zealand, has broken ground on a production plant that converts meat waste into biodiesel.
The Kiwi energy company has expressed interest in biofuel for some years. Now, the hammer has struck. Z Energy expects its South Auckland Wiri biofuel refinery to be completed by the end of summer 2015.
The plant will convert used cooking oil and animal tallow into high-grade biofuel, which will be blended at five percent with mineral diesel. “For the plant to be economic all the way through it’s probably one cent to two cents a liter more,” says Chief Executive Mike Bennett.
Those few paltry cents will make the difference between Z Energy’s success and failure. In the industry, the latter is more common. Since the New Zealand government has phased out biofuel incentives, the ruthless economics of production has fallen on the shoulders of the private sector. Green Fuels, based in Christchurch, sells 500,000 liters of biodiesel made from recycled cooking oil. Headquartered in Western Australia, Gull Petroleum sells gasoline with a 10 percent biofuel blend made with whey, a byproduct from cheese processing.
Z Energy plans to produce 20 million liters of biodiesel fuel, used in small diesel engines, every year. Rather than investing in a feedstock supply, the company chose animal tallow fat, an inedible byproduct from the meat processing industry. Z Energy plans to secure tallow using long-term supply-chain contracts to reduce price fluctuations. Tallow would otherwise likely be exported to China for use in soap and candle-making.
Z Energy boasts that its biodiesel fuel will have a carbon footprint less than 10 percent that of mineral diesel. “We recognize that the products that we sell actually cause climate change,” says Bennett. “We think companies like ourselves should do something about that, and we’re prepared to be a leader in that space.”
The decision, however, is only half theirs. Customers must pay the price premium for the biodiesel blend. Z Energy plans to market its product first to commercial customers. Bennett says, “We expect strong customer support for a high-quality, genuinely sustainable biodiesel.” Already, the company claims signed letters of intent for 11 out of its 20 million liters.
Z Energy also hopes to boost adoption by promoting B20 biodiesel blends. “As far as New Zealand fuel legislation is concerned, a blend of five percent of biodiesel to mineral diesel is completely fine,” says Z Energy biofuels manager, Steve Alesech. “What we’re working on is how we can increase those blends.”
The company hopes to sell its biodiesel fuel to the mass transportation sector by 2016 if the public wants it. That all rests upon whether average Kiwis, driving with small diesel engines, will pay the price premium of one or two cents extra per liter, or about one percent of what a customer pays total at the pump. “What we’re saying to New Zealanders is we want to make a difference here, and we’re prepared to invest,” says Bennett. Retailers of small diesel engines like Diesel Parts are hoping to see an increase in demand for their product once this kind of technology is successful.
If demand meets supply, the company believes an additional $2.5 million investment could expand annual output to 40 million liters.