Des Moines Register
01-04-07
Web marketplace to unite producers, users of biofuels
Green Fuels Exchange will establish pricing for all parties involved and collect a
fee for preparing contracts.
By S.P. DINNEN
REGISTER BUSINESS WRITER
Normally, Chris Draper works as a consultant to NASA, calculating risk for the
nation's space program.
Converting pig manure to methane isn't rocket science, but for Draper it holds
promise of entrepreneurial glory as he launches a national online exchange to
determine prices on biofuels.
Green Fuels Exchange Inc., at www.gfex.org, goes live Oct. 15 as an electronic
marketplace dedicated to what the startup company calls "the first marketplace in
North America dedicated to green fuels and their raw materials."
The idea behind the exchange is that producers of the raw material - everything
from animal fats to switchgrass to manure - might not know the best price they
can get for their output, nor even where to sell it. Ditto for end-users, who might
not know where supplies are located, or what quantities are available and at what
price.
"There are massive informational inefficiencies" in the growing biofuels industry,
Draper said.
Green Fuels, which Draper owns with business partner J.P. Bonin, aims to
establish pricing knowledge for producers and consumers alike. Their Web site
provides an electronic platform where the two parties can reach a deal that will
then be sealed with a contract prepared by Green Fuels, which collects an
unspecified fee for its services.
It may be an idea whose time has come, said Chad Hart, an agricultural
economist at Iowa State University.
"It's rather inventive," he said. "It's specializing in the smaller biofuels."
Draper, 28, was a football player at Van Meter High School who earned a
doctorate in mechanical engineering from the University of Glasgow in Scotland.
He has worked on space programs since early in his educational career, but
struck upon the notion of Green Fuels when he and Bonin were discussing how
they could participate in the green revolution.
The two originally had considered a business venture that involved digesters.
The devices take livestock manure and extract its methane content, which can
then be burned to produce energy that is either used at the source or sold. That
idea didn't work out, because they couldn't satisfy themselves that they could
gather sufficient data about how methane is priced by smaller produces and
users.
That spawned discussions about how farmers or other methane producers would
price their product, or know they're receiving a fair price for it. That led to the
exchange.
"Our goal right now is to have an exchange that allows everyone to understand
the price," he said.
There could be problems. For instance, ISU's Hart said manure is not typically a
product that people tend to haul to central collection points.
Draper conceded that a manure sellers' market may be limited to 15 miles in any
direction from a facility that can process it into methane. Still, producer and user
could rely upon the Green Fuels site to meet.
Draper also said he's uncertain of how many people will use the Web site.
"We don't know whether on the 15th we'll have 1,000 customers or one," he said.
For that reason, the company hasn't yet bought its own computers.
Green Fuels is a virtual company. Draper continues to live in Houston, near
National Aeronautics and Space Administration facilities, while Bonin lives in
Washington, D.C. A lawyer who will draft contracts is in Georgia, while the
computers that will host the site are in Iowa City.
Draper said the company's first full-time staffer would be an administrator who
can handle phone calls and e-mails. That person will be based in Des Moines,
the official headquarters for the Iowa-incorporated company.
Someday, Draper may have to move to Des Moines, which is an important hub
for alternative energy sources, particularly ethanol. But he said the exchange
would work anywhere there are producers and end-users of green fuels.
Dana Weber, executive director of the Florida Biofuels Association, welcomed
news of the exchange. Waste from sugar cane and citrus fruits is increasingly
converted to energy that is sold to local utilities in Florida.
"We need to come together nationally, because this isn't a statewide problem,"
Weber said.
Reporter S.P. Dinnen can be reached at (515) 284-8543 or sdinnen@dmreg.com