Title
Biodiesel Proposal - Biodiesel Production Facility (NB)
Explanation
At the May 7, 2009 City Commission meeting, Commissioner Lauren Poe mentioned a proposal from Mr. Jack Metheny for the City to establish its own biodiesel production facility. The City Commission referred the item to the Recreation, Cultural Affairs & Public Works (RCAPW) Committee to review the feasibility of General Government and GRU establishing a biodiesel production facility. At the June 11, 2009 RCAPW Committee meeting, staff made a presentation and recommended the following: 1) RTS continue its pilot program with UF for an additional year to gather information on fuel consumption cost relative to 100% Ultra Low Sulfur Diesel (ULSD) fuel; and 2) depending on the result of the pilot program, staff at that time could be directed to conduct a feasibility study on the production of biodiesel.
RTS completed the pilot program and decided to expand the program as the differential cost between fuels was funded through a grant. Our local fuel supplier is the current source for the biodiesel used by RTS. Staff's opinion, which shares popularity with other Fleet operators, is that biodiesel will serve as a bridge fuel along with several other alternatives, CNG, Ethanol, Hydrogen, Electricity and continued combinations of Hybrids seem to be the unanimous choice of power for the future. The only question is when; some say as early as five (5) years while other optimists say ten (10) years.
Several organizations have attempted to produce biodiesel. Some have been successful, usually the larger organizations producing multi million gallons per year with a good transmission and distribution network. Others, whose goal is to produce enough to be self sufficient, are still facing challenges, some after (3+) years and after major capital expenses. Major capital expenditures include the procurement of property (perhaps not in our case as current space could be identified), construction of plant, procurement and installation of processing, storage and dispensing equipment, procurement of vehicles and materials. Operating costs includes labor, transportation, utilities and raw materials. Staff does not believe that the demand locally will provide the opportunity to make a profit with such a venture. Furthermore, efforts by other local agencies to produce enough fuel to be self sufficient at a price lower than the market have not yet been successful.
Staff provided an update at the September 13, 2010 RCAPW Committee meeting. RTS had been very pleased with the biodiesel but the cost differences between the biodiesel vs the diesel were substantial. The costs have risen to $4.02 per gallon compared to the cost of ultra low slfur diesel at $2.30 per gallon. Currently, staff is not buying biodiesel. One of the problems staff is seeing with production is that the vendors are not getting tax breaks and the grant was specific in that there could only be a 30 cent to 50 cent difference in price. Given the City's current fiscal challenges and the risks involved with so many uncertainties; staff does not recommend initiating a biodiesel production facility.
Fiscal Note
No fiscal impact if recommendation is approved.
Recommendation
The RCAPW Committee to the City Commission: The City Commission not pursue biodiesel manufacturing at this time and remove this item from the referral list.