Eleven years after helping to start up Biox Corp., Kevin Norton has moved into the top job, moving up from his chief operating officer position to become CEO on Sept. 1. The ex-navy engineer will now be responsible for making Canada's largest biodiesel producer even bigger. The first step will be to build a new plant in the United States to complement its large production facility in Hamilton.
Biox has piggybacked on the shift to renewable fuels, taking advantage of production subsidies and quotas established by governments in Canada and the United States. Just this summer, Ottawa introduced a rule that requires 2 per cent of all diesel sold in Canada to be made up of biofuel.
The company's competitive advantage is its technology – originally developed at the University of Toronto – that allows almost any type of fat, from vegetable oil to kitchen grease, to be converted to biodiesel.
Is it hard to adjust to the CEO job after a decade as second in command?
I may have been in the background, but [I was]very much involved in all the day-to-day decision making. What is new for me is doing the government relations work, and being the face associated with investor relations. But I've got a lot of knowledge of where the industry is and where it is going. I've been part of the that growth.
What does a founder bring to the CEO job that an outsider can't?
There is not a job within the company that I haven't had my fingers in or wasn't actually directly involved in. I have the knowledge of how the industry has evolved over time. I understand what has happened with the early developments out of the University of Toronto through the pilot plant stages. I have great rapport with the operators and the mechanical components of the company.
Did your navy background affect the way you managed employees when you were chief operating officer?
I was always known for being right in the thick of things with the troops - getting my hands dirty, staying late, actually doing what their jobs entailed. In our company, [employees]know that I've been to the plant and climbed inside the distillation column, cleaned out the centrifuges, and shovelled the yellow grease out of the parking lot.
Being CEO is an extension of that. It is about establishing a direction, a vision, a focus, and communicating. That was extremely important in the navy. I don't think it is any different in a public or corporate organization. [Employees]need to know what they are doing, why they are doing it, and what has changed.
Why is your technology unique?
Traditional feedstocks such as soybean oil and canola oil are very expensive, as are olive oil and cotton oil. But rendered products, tallows, recycled restaurant oils, and yellow greases [are priced]at about a 30-per-cent discount. Our ability to use any permutation and combination of raw material provides us with a competitive advantage over traditional producers that are limited to those [more expensive oils] We can even accommodate new raw materials that potentially could become available, such as algae oils.
What would have to happen to see biodiesel become more common?
If algae turns out to be a real significant contributor to the overall fats-and-oils matrix, it could be a real game changer. There are interesting research programs that are growing algae in very controlled environment, where you can actually produce protein and a fat. Whether or not those fats could be used for fuel production is still being investigated.
Do you foresee a day when traditional fossil fuels will be eliminated.
In my lifetime I don't believe that I am going to see the end of petroleum or fossil fuels.
Your technology originally came out of the University of Toronto. What should be done to make technology transfer to industry work better?
Most universities now have a mechanism or an organization that looks at the development work of the academics, and tries to put them in contact with industry. The government [should]provide support once those relationships are established.
Your industry has benefited from both production subsidies, and rules that require a certain proportion of biofuels to be mixed with standard petroleum products. Why do you need both?
The government needed to support us [with production subsidies]to create a supply [of biodiesel] We needed that because we are actually turning a relatively high-value raw material into a low-value petroleum product. Otherwise you wouldn't do it.
Now that [fuel blenders]have to buy the product, we can price it up to the value of what it actually costs to produce and transport it. The subsidies will disappear [and]the market mandates will then establish what that new commodity price will be.
Why should governments force people to use biofuels?
Because of the environmental benefits. [It can help]reduce CO2 emissions and particulate emissions. [We are]competing against a petroleum-based product, so we need governments to step up to the plate.
[Market prices for traditional fuels]don't take into consideration the true costs of petroleum products, [including]research and development and [the military costs of]defending the foreign supply of petroleum products.
If you want environmental benefits, but you are not going to penalize organizations that are actually putting out polluting components, then you need to give incentives to the ones that are not.
Why are you building your new plant in the United States?
The United States market is more established. They came out with their renewable fuel obligations a couple of years ahead of Canada. They are forecasting increasing volume requirements. So the value of the product is just so much more in the United States than it is in Canada.
Where do you stand on the food versus fuel debate?
I think it is a little bit far-reaching to blame the renewable fuels industry for the high price of food. There are lot of other influences on the high price of food, including high energy prices, logistics, and political situations within certain geographical areas.
Still, I am very excited about new technologies that are coming down the pipeline that are using non food-grade components [to make biodiesel] At Biox, all of our raw materials are non-edible material.
Will diesel use in North America catch up to its penetration in Europe?
I think so. People are starting to recognize that the old diesel engines of latter days, with the smoke and emissions, [are long gone] There's a significant increase in the number of cars that you can buy in North America that run on diesel. And a diesel engine is 40-per-cent more efficient than a gasoline engine.
To me [shifting to diesel]is part and parcel of reducing our greenhouse gas footprint, and reducing the environmental impacts that motor vehicles cause.
What does the Canadian government need to do to encourage the renewable fuels industry?
A clear, well-defined [policy]picture is extremely important. We've struggled with changes in political parties, [and uncertainties over]renewals of credits. You have to have a clear picture. Ambiguity and uncertainty slow us down and delay decisions.