Producer Speaks

by Sam Gray
Director of Operations
Smoky Mountain Biofuels

To say the condition of North Carolina's biodiesel producers is "critical" would be an understatement. There are four main producers of biodiesel in our state: Smoky Mountain Biofuels, Foothills Bio-Energies, Piedmont Biofuels, and Blue Ridge Biofuels. We can be labelled as small producers, capable of producing in excess of one million gallons a year per location, with extra capacity available from each producer as market conditions allow. However, with the strength of South Carolina's already passed legislation concerning biodiesel, many of our state's "producers" are encouraged to act more like "distributors" by buying their product out of South Carolina. It is no coincidence that Carolina Polymer out of Taylors, South Carolina, profits with our state's dollars as they leave North Carolina to purchase their fuel. This type of atmosphere, while it may increase public access to biodiesel, does nothing to promote the manufacturing jobs associated with biodiesel factories. This atmosphere will do nothing to push our state closer to its "Strategic Plan for Biofuels Leadership," which envisions OUR STATE meeting OUR CREATED DEMAND.

Sustainable energy is not a commodity that North Carolina should allow to be outsourced to South Carolina, or even Iowa, Nebraska, and Illinois. We have the feedstock for renewable fuels by virtue of incredible amounts of soy oil (Fayetteville), high grade chicken fat, waste vegetable oil, and experimental sources such as sunflower oil throughout the state. We have businesses in place to handle the anticipated demand called on by our "Strategic Plan."

We have petroleum distributors willing to purchase our renewable fuels such as biodiesel, and we have legislators that must understand by now the leadership role that sustainable energy production portrays to their constituents.

The biodiesel legislation sponsored by Senator Snow, most notably Senate Bill 1451, along with recently introduced legislation (House Bill 2003) sponsored by Rep. Pricey Harrison to refund the state's excise tax per gallon to biodiesel producers monthly (simply a zero interest government loan, since we first pay the tax before it is returned weeks later), is responsible legislation that needs action NOW. The Biodiesel Incentive Fund provides production based incentives to North Carolina Biodiesel Producers linked to yearly production. The incentive is received yearly, and while it does not alleviate cash flow concerns of producers waiting for a "refund," it does solidify the vanishing margins seen across the board by biodiesel producers. Rep. Harrison's legislation (the biodiesel portion) allows a producer to make payment on their state excise taxes to the NC Department of Revenue, and then receive the equal refund weeks later.

The cash flow implications are enormous, and allow the increased cash flow to be available immediately for feedstock purchases or equipment upgrades. Both Sen. Snow and House Rep. Harrison have an eye toward the future, as this landmark legislation would launch our state to the forefront of the "Sustainable Energy" movement on the east coast. This legislation would discourage North Carolina dollars migrating southbound to purchase a biodiesel product that is currently cheaper thanks to legislation passed years ago. This legislation encourages smaller biodiesel production facilities throughout the state, which in turn creates more local jobs than the giant biodiesel facilities throughout the Midwest.

When considering such progressive legislation, one must consider the resulting effect on our state's revenue stream before the proposed legislation sunsets. In a time of squeezed budgets and increasing state costs, many legislators might overlook the significance of aiding our existing biodiesel producers. However, I stress that this oversight is akin to negligence, and is incredibly short sighted in nature.

Besides the jobs our industry offers in economically depressed areas, and besides the incredible gains seen by farmers by creating a consistent cash crop, we are reducing our state's dependence on foreign oil sources. We are also improving our air quality, which attracts the out of state people to our area and aids economic growth. They either purchase a primary residence here (for our state's biological diversity and beauty), or they purchase a second home to retire later in life. Either way, the tax base is grown because newcomers see North Carolina as an environmental steward in the south, capable of spurring small business while keeping an eye to the future. The coming years must have sustainable fuels along with conservation oriented measures just to keep our promise to future generations that they, too, can visit the Great Smoky Mountains National Park and have views BETTER than those that exist now, with these smog laden views a shameful reminder of the short sighted nature of industry. Our company's factory resides by these great mountains, and we, through our distributor Mountain Energy, are doing everything in our power to better our region by distributing our locally produced biodiesel.

I challenge this current grouping of NC House Representatives and Senators to promptly review, and enact passage of Rep. Harrison's and Sen. Snow's pieces of legislation. A failure to do so, while seemingly unimportant in the face of teacher pay raises, medical care improvements, etc., would submit to the residents of our great state that sustainable energy is simply ahead of its time, and unable to deliver the gains that we promise are possible. Neither this, nor is the outsourcing of sustainable energy jobs to South Carolina, Iowa, Nebraska, etc. is acceptable. The biodiesel producers in this state are ready to accept the challenge posed by our NC Strategic Plan. We are simply asking for some help and leadership along the way, and are hoping to see such vision this year.