By Kate Lim
BIODIESEL may sound like a technologically advanced fuel, but the green alternative to pump diesel can be produced from something as simple as cooking oil.
And since June 2007, Alpha Biofuels has been collecting used cooking oil from local businesses and refining it to produce biodiesel.
What comes out the other end of its facility at Tanjong Penjuru is way ahead of other fuels in terms of environmental credentials and significantly cuts black smoke, greenhouse gases and carcinogenic emissions from vehicles.
Alpha Biofuels' manufacturing plant currently produces 300 tonnes of the fuel per month, which it distributes to local businesses and consumers.
The firm claims it is the first Singaporean company to bring biodiesel to local consumers via a retail network.
Alpha Biofuels chief executive Allan Lim set up the company in 2004 with Mr Tan Hai Woon, its chief technology officer and his coursemate from Nanyang Technological University.
The pair, both 37, started and failed at four start-ups before striking gold with Alpha Biofuels.
'We believe that sustainable energy is the next thing to come,' said Mr Lim.
Mr Tan added: 'It may be a relatively novel venture in Singapore, but the idea is not new to the world. Firms in the United States, Europe and Australia have been collecting used cooking oil as part of community waste management programmes.'
After a two-year incubation at ITE College East, where they perfected the biotechnology, they managed to amass $1 million from their own bank accounts and from angel investors to pay for the manufacturing facilities at Tanjong Penjuru and a fleet of trucks.
While they were incubating their business at ITE College East, the partners were convinced Singaporeans would embrace their environmentally friendly business - but they were wrong.
'We had a hard time even convincing businesses to let us have their leftover oil,' Mr Tan said, telling of how they had to pay for used cooking oil.
As there is no official waste management programme here for cooking oil, it is common for third-party firms to purchase used oil and re-export it as raw material for use elsewhere.
In fact, public awareness of biodiesel was so limited that Mr Lim and Mr Tan initially had trouble marketing their product.
'Nobody knew about biodiesel, so we had to sell what was essentially 'Liquid X' - a golden liquid with additional benefits that will enhance the power of your vehicle,' quipped Mr Tan.
Despite this tough start-up period, the business has managed to attract a small but loyal following as its go-green message filters through. One of Alpha Biofuels' first walk-in customers, Mr Jack Ling, even joined the firm as its chief operations officer in April last year.
To promote the benefits of its biodiesel, the firm has embarked on a slew of public education campaigns and regularly gives talks and workshops on biodiesel for schools and businesses.
Some students have been so inspired by these initiatives that they intern at the firm during vacations, said Mr Ling.
The partners believe that they are winning hearts and minds, with most businesses buying in to the green message, provided the fuel does not cost too much. But their business continues to face challenges - most notably, the volatility of oil prices.
Explaining their strategy of deliberately pricing biodiesel cheaper than pump diesel - despite the high costs involved - Mr Lim said: 'Every tonne of waste recycled cuts our carbon footprint by 2.5 tonnes, but most Singaporeans do not appreciate this and will not pay a premium for it.'
This means that Alpha Biofuels has to sell biodiesel at prices that yield little profit when conventional fuel prices are low. Retailers like Shell and ExxonMobil can still profit by adjusting pump prices in line with rises and falls in the price of crude oil, but Alpha Biofuels is at a disadvantage because it has to match the price of conventional fuel when the cost of its raw material is relatively static.
Alpha Biofuels is currently selling its biodiesel at a promotional price of 85 cents a litre.
Mr Lim says the firm is now in 'rapid expansion' as a result of sharply increasing sales. It has six retail points islandwide and four more are expected to open by the end of this week.
He expects Alpha Biofuels to make between $1 million and $2 million in sales revenue this year, but admits the firm is not profitable yet. He expects to cross the break-even point by the end of the year.
The company's green message is slowly but surely winning converts, and Alpha Biofuels' founders think the more motorists see of it, the more likely they will be to use its fuel.
With this in mind, Alpha Biofuels is getting involved in this year's National Day Parade by supporting 'backroom logistics'. It will supply biodiesel to power a range of support services, for example, the Old Chang Kee mobile kitchen and cleaning equipment from Purechem Veolia.
Alpha Biofuels expects the use of its biodiesel to cut the volume of carbon emissions from the parade by up to the equivalent of four Olympic-size swimming pools.
The company is looking to supply fuel to more large-scale events in the future, and is currently in discussions with the organisers of the Youth Olympic Games set to be held here next year.
It is also designing and constructing a micro-refinery in the Marina financial district which is expected to produce about 1,000 litres of biodiesel daily to power the site.
'This is not a business that will flourish in a year or two,' said Mr Lim. 'Our vision is to become a bread-and-butter company eventually, by changing the perception of energy.'
This article was first published in The Straits Times.