Latest Imperium Woes Could Spell Trouble for the Biodiesel Market

It’s been a rough year for Imperium Renewables, the Seattle-based refiner of biodiesel fuel. Back in December, CEO Martin Tobias abruptly resigned and left the board, just weeks before the company announced it was canceling plans for a $345 million IPO and reducing its corporate work force. Then last month, Imperium went through another round of corporate layoffs. Now in the past week, Royal Caribbean, Imperium’s largest customer, has confirmed that its contract with the biodiesel maker ended as of July 1, as reported in the Seattle P-I.

What happened? Imperium was once the crown jewel of Seattle cleantech, having raised a whopping $214 million in Series B funding in February 2007, led by investors like Technology Partners and Nth Power, both based in the Bay Area. Renewable biodiesel, made from vegetable oils and waste oils, was touted as a way to reduce both emissions and our dependence on petroleum. Since then, the company has faced protests by a Seattle environmental group over its possible use of palm oil from Malaysia, and some criticism in the business community about its management in the wake of Tobias’s departure. (Reached for this story, Tobias said he couldn’t comment on Imperium.)

I put in a call to the company to get its side of the story. “There’s a lot of things being written and speculation,” said Imperium spokesman John Williams in an e-mail. “But Imperium is solely focused right now on getting through some big challenges facing them as well as the industry as a whole.”

Those challenges would seem to include cash flow, high production costs, and lack of consumer demand. Michael Butler, chairman of Seattle-based Cascadia Capital and a leading cleantech supporter, places the blame for Imperium’s woes squarely on the biodiesel market. “The cost of input—primarily soy and corn—costs too much given the price they get for their biodiesel,” says Butler.

Another energy expert is more blunt about what it all means. “The biodiesel market is in trouble,” says Jesse Berst, managing director of GlobalSmartEnergy, a Redmond, WA-based consulting firm. “The only long-term future for biodiesel is for 18-wheelers, hybrid vehicles, and maybe airlines.” Berst, an Xconomist, says questions remain about the current technology’s conversion efficiency and the “food versus fuel” debate—whether using crops for biofuels may harm the global food supply. “It’s a first-generation technology. You’re squeezing oil out of a plant, versus gasification [which is more efficient],” he says. “I never believed in first-generation biofuels.”

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