US biodiesel major REG looks to move into chems, away from fuels

16 February 2011 01:03  [Source: ICIS news]

SAN DIEGO, California (ICIS)--US biodiesel major Renewable Energy Group (REG) is seeking to limit its exposure to fuel markets by diversifying its portfolio into biochemicals, an executive with the company said on Tuesday.

About 90% of REG’s present sales are in biodiesel, said Eric Bowen, executive director of corporate business development and legal affairs for REG.

But the company would like to transition soon into bio-based specialty chemicals, Bowen said at the Next Generation Bio-Based Chemicals Summit in San Diego, sponsored by Infocast.

“We’re looking to leverage our success into renewable chemicals, using co-products and by-products,” Bowen said. “It’s a natural part of our evolution.”

“We want to move from where we are today, with 90% of sales in biodiesel, into a world with a diversified product mix, so that we’re not just tied straight into fuel markets,” he added.

REG announced layoffs in 2010 amid a then-stalled US biodiesel tax credit, which ground the industry to a near-halt.

REG’s initial focus will be on specialty chemicals, rather than bulk chemicals, it said.

“Our belief is that there will be higher margins in renewable chemicals, where that would particularly appear to be true within specialty chemicals,” Bowen said.

“The bulk chemical markets would probably have margins very similar to fuel markets, and we have enough exposure there,” he added.

The bio-based specialty chemical markets would also better fit the scale of what REG can produce, Bowen said, given limited capital expenditures.

“This has always been understood about our development process,” Bowen said. “It’s not a matter of why, but when and how.”

The Bio-Based Chemicals Summit lasts through Thursday.

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By: Ben DuBose
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