Can a fuel additive be green?
Jonathan Burst thinks so. The chief executive of International Fuel Technology claims his product -- a renewable materials-based fuel additive called DiesoLift10 -- offers railroad companies, fleet managers and utilities a 3 to 7 percent boost in fuel economy that translates to fewer greenhouse gas emissions and a smaller fuel bill.
Last month, the company landed a deal with British railroad company East Midland Trains -- a division of British light rail giant the Stagecoach Group -- to provide it with the additive, which it claims saved it some 92,000 gallons of diesel fuel over the course of a year.
I spoke with Burst from his office in sweltering St. Louis, Mo. about how adding something extra to the gas tank can reduce what comes out of the tailpipe (and the corporate fuel budget).
SmartPlanet: By its very definition, a fuel additive can't be very green. How can yours be?
JB: It is interesting when you talk about additives because, let's face it, most additives are made of fuel. You can't add a lot -- you're putting fuel in fuel.
There are a lot of claims [about additives] out there that are inaccurate. That's why it's taken so long for IFT to gain credibility in the industry.
[For] our additive technology, we've created a non-petroleum molecule going into hydrocarbon fuels. We have a breakthrough technology to help fleets reduce emissions and save money. It's a pretty simple process to burning less fuel and emitting less emissions. For us, there's a direct correspondence between burning less fuel and emitting less carbon.
We really do believe that economics is going to be the driver. We don't believe fleet companies will buy something that won't save them money. They won't buy something that makes them green, but they will buy something that makes them money. We're in a hot space.
It takes a long time as an R&D [research and development] company to properly validate your technology. There aren't a lot of companies willing to provide the data we produce. As a company, we continue to be surprised how long it takes to get commercial with a new technology.
SmartPlanet: So how does putting more into a gas tank translate to less?
JB: We improve lubricity, which contributes to improved efficiency within the engine, which contributes to needing less power to do work. Detergency is also important. The biggest contributor is improved combustion.
With surfactant chemistry...let's say you're going to start a fire. You have two options. One is three big logs you need to light. The other is those logs, splintered, in tiny pieces. With the splintered pieces, you get a bigger combustible event in less time. That's really what it's all about. You're creating more surface area. You have more complete combustion. You get less emissions.
SmartPlanet: So why don't gas companies or engine manufacturers do a better job? Why does it take a third party like you to achieve more efficiency?
JB: Well look, they do a pretty good job. But it's just not that efficient. There are a lot of ways to improve efficiency. We have IP [intellectual property]. The oil companies predominantly don't put additives in their fuel. They're in the E and P -- exploration and production -- and wholesale business.
At the terminal, there are lots of additives put in diesel fuel.
In some cases, we sell to some fleets, and they're actually putting our additive in their central fuel tanks. We can go upstream as far as the terminal.
We are bulk distributors. Our business model doesn't call for putting bottles on shelves. That's why we're focused on the big industrial users of fuel.
Our business model basically calls to be a technology company. We outsource our manufacturing capabilities at cost plus, and we work through distributors. We're in the process of moving away from being an R&D company to being a commercial entity. We will continue to develop the technology and let it evolve as we can improve it, enhance it as the industry changes.
SmartPlanet: You mentioned fleets. Which industries do you sell your product to?
JB: For us, rail is at the forefront of everything. It's one of the largest industrial users of diesel fuel. They're big for us. That's not to say road transportation won't be a bigger market for us, it will. But the industry really doesn't change much.
- Tier 1 railroads. They're our optimal client.
- Road transportation, but only centrally-fueled fleets. We have no distribution for long-haul. Clients like regional supermarkets. Ultimately, we'd like to be able to distribute to long-haul transportation, but you need to have distribution at truck stops.
- Stationary power generation.
- The marine industry. A huge opportunity, as long as they're burning No. 2 diesel, and not bunker fuel, which is No. 6 diesel.
- We don't work normally with the aviation industry, because that's turbine engines, not diesel.
It does take a long time to develop a fuel additive technology because the end user is putting our technology in very expensive equipment. East Midland Railroad is putting our technology in 90-plus railcars that they own. It's like getting FDA approval for a drug -- not only do you have to prove that it works, but that it doesn't cause harm to the body, the engine.
Ultimately we'd love to have our additive in all the fuel at every truckstop in America and all over the world.
Once one railroad gets your additive and figures out they can save 5 percent on their fuel costs, it gives them a competitive advantage. It's the start of a snowball rolling down a hill to getting commercial.
SmartPlanet: Some environmental evangelists say that anything that continues our reliance on fossil fuels is unacceptable. How do you respond?
JB :The amount of fossil fuels [burned each day] is immense. The amount of vehicles that are going to run on fossil fuels for the next 50 years (See note at bottom --Ed.) is going to do nothing but increase. The relative encroachment by alternative energy is insignificant. It's a sad commentary, but it is what it is.
The marketplace for hydrocarbon fuels is immense, massive, growing.
Biodiesel fuel for us is a good opportunity because it's a less-efficient diesel fuel. A B20 fuel loses about 4 percent economy compared to a straight No. 2 diesel. With our technology, we can run a B20 at par with a No. 2. We can really help contribute to the adoption to a lower-emitting, renewable fuel like biodiesel.
The value proposition is improved efficiency. That improved efficiency is a contributor to saving money, and burning less fuel and emitting less emissions. Part of that equation is helping to allow a fuel that is less efficient to get into the market at less disadvantage.
But biodiesel isn't competitive with straight No. 2 diesel. In the U.S. where fuel taxes are low, you need a government subsidy -- people don't want to buy biodiesel.
Efficiency, efficiency, efficiency. Economics, economics, economics.
The ROI [return on investment] is huge. If you look at a model where we reduce consumption by 5 percent, and you assume diesel fuel at $3 a gallon, you're talking about a $0.15 savings per gallon. We can deliver the product for a fraction on that -- pennies to the gallon.
Your ROI is on every inventory turn -- every tank of fuel. Even the most expensive models we look at, if we deliver product at $0.04 a gallon...
The 'no harm' hurdle is a much lower hurdle than the convincing of the value proposition of the end user. What we tell ourselves day in and day out is that we have a breakthrough technology that works and you cannot deny it forever. We're just going to be putting one foot in front of the other.
SmartPlanet: Has the economic downturn placed a higher value on economics, versus environmentalism?
JB: An economic downturn is helpful, higher fuel prices is helpful, everything going green is helpful.
It is hard, in some cases, for a fleet manager to run a trial. There are lots of variables involved. You need a lot of professionalism.
We purchased the technology on May 28, 2002. It's been a lot of testing, a lot of work and a lot of money since then. We think we're at the cusp of breaking through.
Editor's note: The original version of this post quoted Burst as saying that "the amount of vehicles that are going to run on fossil fuels for the next 1,500 years is going to do nothing but increase." Though he was quoted accurately, Burst intended to say 50. It has been corrected.
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