Viewpoints

Biodiesel Offers Retailers a Way to Make a Green Statement

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One of the more interesting debates taking place in the environmental arena is the role that biofuels should play.

On the surface, as an alternative to fossil fuels, biofuels such as ethanol would appear to be at least a partial cure for such ills as global warming and overdependence on foreign oil. But critics point to the huge spike in corn prices driven by the demand for ethanol, the massive cost of government subsidies supporting biofuel development, and the prospect that farmland will be deployed to feed cars rather than people.

Food retailers such as Kroger and H.E. Butt Grocery have entered the fray by making ethanol available at some of their fuel pumps. Late last month, Kroger announced that it will sell E85, a blend of 85% ethanol and 15% gasoline for flexible fuel vehicles, at 20 Kroger locations in Ohio and Kentucky.

But another biofuel — biodiesel — could turn out to have an even larger immediate impact on food retailers and wholesalers. As an article beginning on Page 51 explains, a small group of retailers, including Safeway, Hannaford Bros. and Tesco, are using biodiesel as fuel for parts of their trucking fleets. One food wholesaler, DPI Specialty Foods, has converted the entire 30-truck fleet serving its Midwest Division to biodiesel fuel.

Why are these companies using biodiesel? The primary motivation appears to be environmental, rather than economic. Safeway, which is using B20 biodiesel, a 20% biodiesel/80% petroleum-diesel blend, in its Arizona division, said the fuel will reduce its annual output of carbon dioxide by 3,603 metric tons. This dovetails with Safeway's strong corporate commitment to reduce its “carbon footprint.” Last year, the retailer became the first food retailer to join the Chicago Climate Exchange, promising to cut its carbon dioxide output by 390,000 tons from the base year 2000.

Andrew Kramer, president of DPI's Midwest Division, acknowledged to SN that his company is using B11 biodiesel “because it is the right thing to do for the environment.” However, because DPI pays no sales tax for its biodiesel fuel, the company will end up saving between 12 and 18 cents per gallon compared with conventional diesel. But biodiesel is not known to improve the fuel economy of trucks, roughly breaking even with conventional diesel at blends of B20 and lower.

Biodiesel's overall environmental credentials appear more solid than ethanol's. A University of Minnesota study reported that soybean-based biodiesel returns 93% more energy than is used to produce it, compared to 25% for ethanol. On the other hand, using soybeans for fuel may ultimately raise the same agricultural concerns that using corn has, though biodiesel can be made from other sources, including recycled cooking grease.

Fueling up with biodiesel is certainly not the only way that food retailers can improve the environmental performance of their trucks. Indeed, other strategies, such as using fuel additives or deploying more efficient trucking equipment, offer an economic payoff without tax breaks as well as an environmental benefit.

But for those retailers and wholesalers who put numerous large fuel-guzzling vehicles on the road every day, using biodiesel to help the environment — and support energy independence — makes a very important statement about their commitment to a greener future.

Contributors

Julie Gallagher

Julie Gallagher’s delicious foray into coverage of the food industry was purely accidental. With a background in technology, she joined Supermarket News as associate editor of its Technology...

Mark Hamstra

Mark Hamstra is the editor of the Retail/Financial section of Supermarket News covering mergers and acquisitions, quarterly earnings reports, executive changes and other significant events and trends...
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