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Summary:

Propel Fuels, a startup trying to create a brand around alternative fuels, held a grand opening at a biofuel station in Oakland, Calif. on Tuesday and announced a plan to add 75 new stations in California by the end of 2011.

PropelOakland1

Politics and the recession have been a one-two punch for the ethanol industry in recent years. But a sizable project to sell biofuels at branded alternative gas stations in California is now underway. Propel Fuels, a startup trying to create a brand around alternative fuels, held a grand opening at a biofuel station in Oakland Tuesday and announced a plan to add 75 new stations in California by the end of 2011.

Propel said it’s gotten $10.9 million from federal and state coffers to build 75 biofuel stations, starting with the three that have been completed recently (Oakland, Fremont and South San Jose). The three stations marked Propel’s foray into the Bay Area, and the company is working on new stations in downtown San Jose, North San Jose, Berkeley, Palo Alto, Redwood City, Livermore and Concord.  The company is ponying up $16 million for the overall California project, money that comes from the $20 million it raised earlier this year, said Matt Horton, CEO of Propel.

The company also operates six other stations in the Sacramento region, along with six more in Seattle. The California stations peddle both E85 (85 percent ethanol, 20 percent gasoline) and biodiesel. Horton declined to divulge the costs of building and operating these stations, but assured us that they are less than the costs for regular gas stations of comparable sizes. For one thing, Propel leases instead of owns the land. In the Oakland station, for example, the Propel fuel pump takes up a portion of a Chevron station (and the signage for its biofuel prices comes with a “Not a Chevron Product” disclaimer).

The ethanol for Propel’s fuel is coming from states such as Oregon and Idaho, Horton said. California used to have several ethanol production facilities, but they closed because of the rough economy and an overly optimistic belief that consumers would embrace biofuel-enabled vehicles (called flex fuel vehicles) in droves. The federal government mandate to increase the amount of ethanol consumed nationwide through 2022 promised to create a huge market. But the enthusiasm has been tempered by the realization by many ethanol producers and investors that developing and commercializing next generation ethanol at scale is extraordinarily expensive.

Meanwhile, the federal government has devoted a lot of attention and money to plug-in hybrids and electric cars. Just yesterday, the Environmental Protection Agency unveiled two proposed fuel economy labels that would address the rise of electric vehicles and the requirement to include on the stickers information about the car’s tailpipe emissions.

Horton said despite the hoopla, electric cars will not quickly take over the garages across the country, so biofuels remain an important solution for the national goal of reducing gasoline consumption and cutting greenhouse gas emissions.

“The scale of problem is so huge that we are focusing on solutions of the same scale,” Horton said. “There is a huge market today for [biofuel-powered] vehicles.”

California alone has nearly 500,000 cars that can take the ethanol blend; the nationwide number is about 9 million (see a list of car models), Horton said. California also has more than 500,000 of biodiesel cars on the road today. By 2012, half of the models made by American automakers would be able to do flex fuels, he said.

Propel’s investors include Craton Equity Partners, Nth Power and @Ventures.

 

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  1. It disappoints me that they are selling B5 (5% biodiesel, 95% petrodiesel) as “biodiesel”. Feedstock – that is what the biodiesel is made from – is also important. It is quite possible that B5, with the 5% biodiesel component made from virgin palm oil (common), is worse for the environment than pure petrodiesel. Basically, this is very marginally beneficial at best. At worst, just blatant greenwashing. Same can be said about corn ethanol, in general.

    Biofuel Oasis* located in South Berkeley (Ashby / San Pablo) sells B99+ (99%+ pure biodiesel) made from recycled vegetable oil feedstock. If you are in the East Bay and have a diesel vehicle, go there instead.

    *I have no affiliation with Biofuel Oasis except as a loyal customer.

    1. The BioFuel Oasis is on the corner of Ashby Ave and Sacramento Street, actually.
      Yes, B5 is completely different from B99.9 that BioFuel Oasis sells. B5 is 95% petroleum– total greenwashing

    2. Thanks for the comment. I asked Propel why it’s opted for B5, and got an answer, in 2 parts:
      1. The state water board doesn’t allow underground storage of blends higher than B5, though it’s starting to give waivers. You can read more about it here: http://www.swrcb.ca.gov/ust/regulatory/biodiesel_regs.shtml
      2. Many engine warranties don’t cover blends higher than B5.

      The company said it wants to sell a blend that could appeal to the broadest set of drivers for now, but will of course consider higher blends in the future.

      1. Oh, I should add that the waivers from the state are good for up to B20. So I’m guessing that blend still won’t be good enough for some folks.

  2. @ Carl Lenox –

    I agree with you, higher blends are better.

    Given the need for state waivers that Ucilia points out, it sounds to me like the State of California and State Water Board needs to get in front of this issue and allow underground storage of higher blends. Common sense, and I am definitely not an expert, tells me that higher blends of biodiesel are safer to store underground than straight gasoline and petroleum.

    I wouldn’t accuse Propel of greenwashing, I would accuse them of taking advantage of the most commercially viable option currently available given the rules laid forth by the State of California. I would argue that our time and energy would be better spent getting the State Water Board to issue more waivers and/or to reverse the rule altogether. I applaud what Biofuel Oasis is doing, but they are equally hamstrung, like Propel, from doing ‘more good’ by this silly, in my opinion, State Water Board rule.

    As for the second reason, I bet we both can guess why automobile manufacturer’s wont issue warranties on higher blends either nor change some of their engineering to support (thus issue warranties) on higher blends. But if I said anything here I am sure I would be labeled a conspiracy theorist.

    I think we should support biodiesel however we can get it right now and push the State to get a move on and reduce our national dependence of foreign oil.

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