Des Moines Register
10-13-07
Web exchange to unite biofuel makers, users
Site is first marketplace in U.S. used to establish pricing for all parties involved
By S.P. DINNEN, The Des Moines Register
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 of biofuels.
Green Fuels Exchange Inc., at www.gfex.org, goes live Monday as "the first
marketplace in North America dedicated to green fuels and their raw materials."
The idea is that producers of the raw material -- 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.
The company's Web site provides an electronic platform where two parties can
reach a deal that will 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, who has a doctorate in mechanical engineering, has worked on space
programs since early in his career, but struck upon the notion of Green Fuels
when he and Bonin were discussing how they could participate in the green
revolution.
There could be problems. For instance, Hart said manure is not typically a
product that people tend to haul to central collection points.
Draper conceded that a manure seller's market might 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, he said.
Draper also said he's uncertain of how many people will use the Web site.
"We don't know whether [Monday] we'll have 1,000 customers or one," he said.
For that reason, the company hasn't yet bought its own computers, and Green
Fuels is a virtual company. Draper continues to live in Houston, near NASA
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, Iowa.
Draper said the company's first full-time staffer would be an administrator who
could handle phone calls and e-mails.
That person would 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.