Turning waste to fuel: How one company is reducing the UAE’s carbon footprint

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Karl Feilder, chairman and CEO of The Neutral Group (TNG), a cleantech company, sold his first company to Microsoft in 1995. Over the next decade, he founded, expanded, and sold four more companies in the UK, and took a fifth public in South Africa. All five were technology businesses.

In 2006, while mulling over his next move, Feilder watched An Inconvenient Truth, the Oscar-winning climate change documentary. Recognizing that the world wasn't doing enough to combat global warming and related ills, Feilder shifted his entrepreneurial ambitions to helping the planet.

Karl Feilder, chairman of The Neutral Group (Image via Karl Feilder). 

Biodiesel reduces carbon footprint
A few months later, he set up the TNG office on an empty floor at DHL headquarters in the United Kingdom, where he began helping the logistics company reduce its carbon footprint worldwide. Feilder came to Dubai in 2009 on behalf of DHL to work with the Dubai Economic Department (DED) on identifying and quantifying carbon reduction strategies for the Emirate. In 2010, Feilder launched Neutral Fuels specifically to help reduce Dubai’s transportation carbon footprint.

“In order to have massive and quick impact on the carbon footprint, the only way forward was biofuels…biodiesel was quick, and could be very easily adopted. It can also run in existing vehicles without making any changes to them,” Feilder said.

Biodiesel is an alternative fuel typically produced through converting vegetable oil, animal fat, or waste cooking oil. This fuel can either be used in a blend with regular diesel or as a standalone product.

In sync with UAE Vision 2021, the United Arab Emirates is moving towards more sustainable economic practices. In the matter of biofuels, the companies leading the charge are Tawdeer, Lootah Group, and, of course, Neutral Fuels.

“Many people thought I was completely mad to move to the fossil fuel capital of the world to try and drive a non-fossil fuel strategy, but it seemed to me like a big opportunity,” Feilder recalled.

Working with McDonald’s

In 2010, Neutral Fuels obtained special permission from the Dubai Department of Petroleum Affairs (in the form of a DED trade license for fuel production) to create fuel from waste in Dubai. McDonald’s UAE came aboard as a supplier of waste cooking oil. Since then, all McDonald’s delivery trucks in the UAE have run on 100 percent biofuel. With each liter of cooking oil yielding one liter of biodiesel, the McDonald’s fleet drove an average of 5,647 kilometers per day on biodiesel in June 2017. Since switching to biodiesel, the company has slashed its annual CO2 emission rate by 99 percent.

“In support of a low-carbon, sustainable future, we are committed to protecting and preserving the environment for future generations,” said Walid Fakih, general manager at McDonald’s UAE. “In fact, we usually pay a higher price for biodiesel than we would for traditional diesel.”

Walid Fakih, general manager at McDonald’s UAE (Image via Walid Fakih).

Fakih added that the biofuel initiative is not about saving money for McDonald’s, but about “giving back to the environment and cutting the company’s carbon emissions.” Since biodiesel is now an integral part of the business, McDonald’s has optimized operational productivity by altering its logistics management system accordingly.

“Our product pick-ups and drop-offs are a part of the biodiesel route,” Fakih explained. “So the only incurred cost is the higher price point of biodiesel versus normal diesel, which is a price worth paying, given the positive effect it has on our carbon footprint.”

McDonald’s and Neutral Fuels worked together to arrive at a high-level auditing process that ensures quality control for the biodiesel. Feilder pointed out that, in order to guarantee that the product passes muster, sample tests of the biodiesel are conducted daily, weekly, and monthly under the oversight of internal and external authorities.  

Delmonte, and Multiplex are some of Neutral Fuels’ other clients. Once on board, each client is directed to a filling station where GSM-enabled fuel pumps transfer and record fuel consumption per vehicle. The data is sent to the Neutral Fuels cloud service, which automatically generates monthly bills. On an average, each customer consumes 50,000 to 100,000 liters of biodiesel and blends every month.

Engaging with customers

Feilder believes the UAE is still way from replacing fossil fuel private-use vehicles. After six years in the business, he still fields questions about the efficiency of converting waste to fuel, how it works, and whether biodiesel would ‘break the engine’.

In Feilder’s opinion, one way to ensure that people observe sustainable practices is to effectively take them out of any conscious decision-making and do it for them. “The customers who are going to [McDonald’s] and buying a Big Mac and fries haven't had to do anything [different] at all in order to help McDonald’s reduce its carbon footprint in transportation by 100 percent,” he said.

An alternate solution would include putting in place a system that ensures that all fuel on the market is at least five percent biofuel in content, thereby “making it impossible to buy any fuel that doesn't include biofuel.” For reference, Feilder pointed to the European Union, which plans to have 10 percent of the transport fuel in every EU country come from renewable sources by 2020.

The role of governments

Government support is also key, though it does not need to be monetary.  “The UAE government’s been fantastic in providing us with support and encouragement,” Feilder said. “But no direct money, [and] I’m quite happy about that, to be honest.”

Citing the deep links between government subsidies and clean energy in most countries, Feilder noted that “the biofuel industry is so addicted to government subsidy that...[when] there’s a change in government, all of the biofuel businesses have a massive problem, and that has a major effect on their profitability.” If governments do not include climate change in their agendas, then subsidies might risk getting lost and related businesses will might get hit.

The lack of government funds spurred Neutral Fuels to hone “a more efficient business, because there are no subsidies to support inefficiency,” Feilder added.

Upcoming plans

Neutral Fuels has been self-funded since its launch, with an investment reaching around $ 3 million over five years. The company became profitable in its 11th month and deals with 25 clients in total. Expecting to grow over 90 percent in 2017, the company is now raising money to build a third production line in its factory. The third line will add 250,000 liters per month to the overall production capacity.Instead of the traditional investment round, Feilder is using Eureeca, a global equity crowdfunding platform targeting “sufficiently sophisticated” investors to invest up to $500,000 in each company.

Expansion is also in discussion with countries like Oman, Jordan, Egypt and Lebanon as potential markets. In a press release, Feilder said that the Eureeca model “allows a larger number of small and medium sized investors to acquire an actual shareholding in our company. This will expand our shareholder base internationally, and hopefully open the way to future opportunities beyond our Dubai home.”

 
Feature image via Pixabay.

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