W2 Fuel believes in environmental benefits of biodiesel
Like a cat with nine lives, a biodiesel production plant in Adrian, Michigan, faced down multiple business and economic challenges over the years. Thanks to W2 Fuel, it’s now a thriving operation that brings sustainable, renewable biodiesel fuel to Midwest customers.
“W2 Fuel believes in alternatives to fossil fuels. Our mission in producing biodiesel is to achieve energy independence, clean air and environmental responsibility,” says Roy Strom, the company’s president and CEO. W2 Fuel has capacity to produce 15 million gallons of biodiesel at Adrian. Another W2 Fuel plant in Crawfordsville, Iowa, has a 10-million-gallon capacity.
Previous owners built the Adrian facility in 2007, during an era Strom calls the “wild west” of biodiesel production. At that time, the industry had not yet established specifications and standards that today ensure high biodiesel quality and consistent performance.
“Back then, biodiesel got a bad reputation due to the lack of quality controls. There were reports of biodiesel clogging fuel filters and causing trucks to shut down,” Strom says. An economic downturn didn’t help. The Adrian plant operated for only a year before closing in 2008.
With improved economics and higher quality standards, the biodiesel industry rebounded in 2011, stimulating new investment. A private equity investor with interest in alternative fuels saw opportunity in the Adrian plant.
Rebirth of biodiesel plant
The investor breathed new life into the facility, purchasing the distressed assets and retooling operations to meet industry standards. W2 Fuel is now BQ-9000 certified for biodiesel quality assurance.
“We replaced old equipment to prevent breakdowns and reduce downtime, installed better separation and filtration systems for product consistency and made process improvements for faster and more efficient production needed for us to remain competitive,” Strom says.
Strom joined W2 Fuel as controller in 2014 and was promoted to CEO when the previous company leader left in 2016. He’s a self-described “finance guy” with no prior experience in the fuel industry or the chemical engineering required to produce biodiesel. “I flunked chemistry in college,” he admits wryly.
What Strom did bring was the ability to keep the business viable by applying manufacturing and quality control processes that he learned from past experiences in the automotive industry. And he understood problem solving and how to hire and manage the right team of technical experts to operate the plant.
Market uncertainty in 2019
Despite the owner’s investments and Strom’s business acumen, W2 Fuel was forced to shut down for nine months in 2019, due to uncertain federal policies related to renewable fuels.
“We had no biodiesel tax credits for two years. On top of that, a record number of small refinery exemptions were handed out under the Renewable Fuel Standard. The combination killed biodiesel demand and we couldn’t run profitability with those disruptions,” Strom explains. “After Congress renewed the biodiesel tax credit, the market became more viable again.”
Today the W2 Fuel plant in Adrian runs at 100 percent capacity, producing biodiesel primarily for customers just across the state line in Toledo, Ohio. The company’s Iowa plant serves customers in Chicago, Iowa and Minnesota. “There is a lot of demand for biodiesel in Minnesota because there is a B20 mandate there in the summer,” Strom notes.
“Many states offer incentives to use biodiesel, but Michigan currently has no incentives for fuel suppliers to blend biodiesel. So, even though we are producing biodiesel in Michigan, there is not much used here.”
Biodiesel benefits for Michigan
Strom would like to change that dynamic, which is why W2 Fuel joined the Michigan Advanced Biofuels Coalition (MiABC). The organization, established in 2022, aims to promote biodiesel use through education, networking and technical expertise.
Strom sees many benefits from using biodiesel in Michigan, including maintaining the state’s valuable tourism industry. “Our clean lakes and beautiful forests drive people to Michigan as tourists,” he says. “We need to protect the environment so people can continue to enjoy our natural beauty.”
Decarbonization is another benefit. “Biodiesel can reduce carbon emissions now, while we are waiting for electric vehicles to become viable alternatives to petroleum diesel.” Strom says. “There are a lot of soybeans grown in Michigan. Let’s use a fuel product manufactured here versus using oil from other parts of the world.”
While weathering the ups and downs of biodiesel markets and policies, W2 Fuel remains steadfast in its mission to provide sustainable, renewable biodiesel fuel.
“Biodiesel can be a volatile business but it’s a mission we believe in,” says Strom. “Although W2 Fuel is in business to make money, the investment also pays off socially, globally and environmentally. Biodiesel is a fuel we should support.”