National VegOil Board

Member Calls for a VegOil Industry Code of Ethics -

We are in the very early stages of what promises to be a long and eventful paradigm shift. The last century saw the complete domination of natural resources by large companies whose mission to "increase shareholder value" has led us to scandals the likes of which have never been seen before. Corporate (ir)responsibility has come a long way, and as they say - the more things change, the more they stay the same.

Those of us involved in the nascent alternative fuels industries generally fall into about three categories. There are the die-hard environmentalists who would rather spend $4 per gallon on biodiesel than $2 per gallon on gasoline. These folks figure out how to take an old power steering pump and adapt it into a makeshift centrifuge, or perfect a method of recovering methanol from biodiesel with a still. Thirty years ago, we would have called them hippies, now they are the Founding Fathers of the grassroots alternative energy movement. On the opposite end of the spectrum, big businesses sense the slow but unstoppable movement of a populace hungry for alternatives to the status quo. Al Gore et al. have done a great job of getting people worked up over going green, which has happened at roughly the same time that peak oil issues have percolated up to the surface, record hurricane seasons, and the increasing interconnectedness of the world via internet and 24 hour news. We even have a serial killer in the name of the environment (Unabomber). Anyone but the most geriatric corporate executive can see that green is the new gold. These businesses are slowly shifting momentum into sectors of the economy such as organic food, alternative energy, and corporate greenwashing. Investment firms are hiring hedge fund managers to find the Next Big Thing - throwing tens of millions of dollars to every MBA who can spell transesterification.

Then, somewhere in between, is an emerging middle class, old enough to see the changes our society's bad habits have created, yet young enough to have the desire and willpower to try something new. These office workers, teachers, farmers, mechanics, and more, are seeing past their day jobs to a future career in alternative energy. The grassroots biofuels movement has reached critical mass and is testing the bounds of cooperative/homebrew/small-scale work models. Enterprising groups and individuals are making biodiesel production kits, hauling grease, giving seminars, building markets, and above all – changing the rules.

As this movement becomes an industry, it is up to those involved at this early stage to help form the structures and standards it will take to keep it from imploding. If we do not carefully and consciously develop a set of ethics and values to stand upon, we risk losing it all to those with deeper pockets. With an organization like the NVOB, we have an incredible opportunity to help frame these core values into a Code of Ethics that we can build on. To this end, I believe we must first define the ethics and responsibilities of the NVOB itself. While the mission statement generically describes what the NVOB aims to achieve, it is the how that needs to be addressed. First and foremost, I believe the NVOB should be a trade organization for businesses to come together on issues, find common ground, establish standards, and define goods and services. With this common platform, the larger goal of educating the public and building the market becomes the next step. If we can't agree on what `VegOil' is, it becomes difficult to promote.

The first step would be a membership application. The application would put the applicant into one or more categories: Fuel Producer, Kit Producer, Consultant, Fuel Distributor/Wholesaler, Fuel Retailer, and End User. These categories would define the supply chain that every industry must have, with clear expectations to qualify and maintain membership. Applicants to the business section would be vetted by the NVOB Membership Coordinator.

With this change, the website would be updated to reflect the new structure, including a forum open to the public. Although every attempt should be made to encourage individuals to grow from hobbyists to entrepreneurs, it is important that the NVOB aim to grow into a trade organization of legitimate businesses. Just like the National Biodiesel Board maintains a Small Producer membership level, the NVOB can foster new businesses and individuals doing important work but perhaps not at a commercial level.

Also, one or more members from each group would participate in a roundtable discussion on issues on a quarterly basis. A yearly conference would be set up to foster good working relationships between members, educate the public, and improve standards. Working committees would be tasked with deliverables such as a standard for VegOil to be used as fuel. Conference calls would be scheduled to coordinate resources, and timelines established to ensure ideas don't stagnate. Similar to the recent airline passenger initiative, a "VegOil User Bill of Rights" would describe rights and responsibilities of producer/seller and consumer in determining how to use the product in an appropriate manner to get good results. In addition to promoting VegOil as a product, the NVOB can play an important role in helping businesses entering this marketplace. With rules that vary from state to state, a complete listing of agencies involved in the regulation of our supply chain will help steer new businesses in the right direction. At this point, there are aspects of this supply chain which are long established industries, as well as brand new aspects involving state and federal agencies slow to recognize VegOil as a fuel, or even as a product. For the industry to gain traction, the legality of each step must eventually be determined and solidified through legislation or other means. VegOil Supply Chain broken down:

1. Oil Collection – laws vary from state to state. Texas, for example, requires a `rendering license' to collect used oil with the purpose of turning it into a material that can be resold. Hauling oil is licensed separately. Oil can be collected by any individual for their own use without license. Obtaining a license can be very costly, and is a high barrier to entry in the market for some states.
2. Kit production – Although the production of kits to alter a vehicle to run on vegetable oil is unregulated, the EPA has requested all kitmakers to have their kits `certified' to meet EPA emissions requirements – a near impossible task.
3. Using VegOil as a fuel – the EPA has said that vegetable oil is not a fuel because it hasn't been tested for Tier 1 and Tier 2 emission compliance. Anecdotal evidence shows positive emissions compared to diesel and biodiesel, but does not satisfy stringent EPA requirements. At this time, we are flying under the radar until either we push for a decision or EPA decides to make a formal ruling. At a state level, a few states have enacted legislation that would permit the use of VegOil as a fuel, and even exempt from state road taxes. Some states define biodiesel to include vegetable oil.
4. Selling VegOil as a fuel – at a federal level, the IRS recognizes any fuel used to power a diesel vehicle as diesel fuel, which makes VegOil subject to the federal 24.4 cent road tax. To pay this tax, a business or individual must file form 637 to register to pay the tax, then form 720 to pay the tax quarterly. Contrary to some opinions, there is no exemption for small producers or individuals. The IRS also doesn't care if the EPA has approved the fuel to determine if taxes are due.

Membership rules
1. Any entity engaging in commercial activity must be licensed in the state they operate in.
2. The National VegOil Board will not list non-licensed individuals in the business section. A separate unmoderated forum for hobbyists will be available
3. For areas in which no regulations exist, anyone can join as a member in that area. For example, individuals who want to make their own conversion kit and sell it would be welcome to do so. This is just the start of a dialog that is long overdue. I hope it's a good starting point and I welcome any opinions and comment. It is my hope that the NVOB become more than a loose knit community of hobbyists. There are plenty of messageboards where people can discuss selling a gallon of grease for a buck from their garage - no overhead, no insurance, no rules. I don't want to read about a fire, a spill, an accident, or other mishap that leaves us all exposed to scrutiny that we can ill afford. Those of us betting our life savings, putting our families and careers on hold to forge into this wilderness deserve to have the support of the NVOB to encourage the fair competition that comes with the free market system. Let's not throw the baby out with the bathwater – we can still learn a lot from the capitalist system without turning into another OPEC.