A slow burn for the long haul

Northeast Biodiesel plant keeps it in the community

  • Lynn Benander, CEO of Northeast Biodiesel in Greenfield, and Philip Cherry, the general manager, in front of the plant's biodiesel processor.

  • The $4.2 million Northeast Biodiesel plant in Greenfield. Recorder Staff/Paul Franz

  • Northeast Biodiesel plant in Greenfield with General Manager Phil Cherry in the proccessing center that turns used cooking oil into biodiesel fuel. Recorder Staff/Paul Franz

  • The fuel storage area at Northeast Biodiesel plant in Greenfield. Recorder Staff/Paul Franz

  • Northeast Biodiesel plant in Greenfield with General Manager Phil Cherry and the processing equipment. Recorder Staff/Paul Franz

Recorder Staff
Published: 4/6/2016 10:10:13 PM

GREENFIELD — If you think there’s alchemy in turning waste french-fry oil and stir-fry oil into fuel for diesel vehicles and home heating, consider the magic of building a biodiesel factory in the Greenfield Industrial Park — and ensuring that it is a locally owned, co-operative venture.

Northeast Biodiesel LLC hopes to begin operating its 1.75 million gallon a year plant in the next month or so and double its output after a year to 3.5 million gallons of fuel annually, all of it produced from recycled vegetable oil from restaurants and catering facilities around the state.

The $4.2 million factory would be the first operating biodiesel plant in the state and first American biodiesel plant from a technology developed by Green Fuels Ltd., a British company with biofuel processors in 30 countries. It is ready to run but still awaiting Environmental Protection Agency registration — a process that could take months — as well as American Society of Testing and Materials certification.

But what makes Northeast Biodiesel’s story incredible is that it’s been powered entirely by grassroots energy rather than Wall Street, venture capitalists or even banks. And for anyone who was there at a September 2004 press conference at Cooperative Development Institute’s Federal Street headquarters, the plan to build it was first announced by then-Congressman John W. Olver — who brought a $300,000 National Renewable Energy grant to get the project rolling.

To further study the feasibility of such a plant, CDI helped get a $340,000 U.S. Department of Energy business planning and development grant the previous year for the consumer-owned alternative energy cooperative Co-op Power, which today owns 74 percent of Northeast Biodiesel.

Most of the other plant investors are members of the co-op, which has about 500 families, farms, businesses and institutions like Greenfield Community College and Smith College.

The announcement that day was that a factory with an initial capacity of producing 500,000 gallons a year would be built the following year and employ a dozen people in an existing building “a stone’s throw from Greenfield.”

USDA was also to provide $250,000 for what was to be a roughly 8,000-square-foot factory, according to Thomas Leue, an Ashfield biodiesel pioneer who had already been distilling biodiesel in his Ashfield backyard for about six years but stopped after a batch caught fire.

Northeast Biodiesel LLC was formed and plans for a factory — making diesel from vegetable waste oil by adding methanol and removing the byproduct glycerol — began moving forward. But hardly at a rocket-fuel pace.

That’s just not the way any manufacturing enterprise takes off, says Co-op Power and Northeast Biodiesel President and CEO Lynn Benander.

And it’s certainly not the way a grassroots venture is launched, especially one being built around a renewable energy technology.

As she and the local investors await final Environmental Protection Agency permit to begin operating the new $4 million plant, Benander says, “We’re going to have a tremendous impact on community-based energy here in the region. We have patient investors who for the most part knew going in what the story was, who supported us going forward, as we had alternatives, and stayed true to it.”

Of the $5 million spent on the plant, she says, 19 percent came from grants from DOE’s National Renewable Energy Laboratory and the state Department of Energy Resources; 18 percent from local Co-op Power investors and 63 percent from Co-op Power member loans. More than 70 percent of the plant is owned by people who live within a 60-mile radius of Greenfield.

The only bank that expressed an interest in working with the organizers, in the project’s second year, The Bank of Western Massachusetts, went out of business in 2008, so working with more than $1 million in equity from The U.S. Department of Agriculture and Department of Energy, Northeast Biodiesel began looking for other investors. The U.S. Small Business Administration refused to grant a loan unless the co-operative reliquished all ownership.

And the original $250,000 USDA grant to build the factory was withdrawn because the project failed to meet a deadline in raising other money to launch the project.

Then along came news of other biodiesel manufacturing projects: one in northern Vermont, another in Pittsfield. Benander shrugged and said she was hardly impressed by what some saw as potential competitors.

“That’s a long distant memory. No one even remembers that,” says Benander of the 50-million-gallon-a-year Berkshire Biodiesel plant announced for Pittsfield and Dalton in 2007 but never finished. “It came and went and spent more of other people’s money than we ever spent.”

The Sawnton, Vt., biodiesel plant, which had been planned to make 8 million gallons a year from virgin soybean oil and used cooking oil, started operation in late 2009 and operated less than a year.

“We don’t have bank loans,” says Benander. “We’re pretty much able to start on our own timeline and do what we need to do. There are not a lot of outside threats on the business because we raised that money ourselves. … That’s why we’re still here.”

She explained, “If we were looking for $15 million, some banks would have been interested in what we were doing. But because we were looking for $4 million, it was kind of in the middle of what small, local banks were looking for and what regional banks were looking for. A lot of people were involved, there was a lot money, a lot of risk. It didn’t fit anybody’s ‘sweet spot.’”

Well, ultimately, the investment did appeal to Co-op Power’s members, specifically its Franklin County, Hampshire County and southern Vermont coordinating councils. (The cooperative also has councils in metropolitan Boston, the Worcester-Providence, R.I., area, and Hampden County.)

“I do know we tried everything,” reflects Benander, who as an adjunct professor at Massachusetts Institute of Technology has taught graduate courses on community-owned enterprise, civic participation and cooperatives. “What worked was raising money directly from members and from friends. ... Five hundred friends put this all together!”

At one point, in 2005, the project’s developers even turned to a Boston-area venture capital firm.

With $1.5 million in hand from an offering to local investors, and a state grant secured by the Town of Greenfield, Benander says, the venture firm “said they would put in the rest. After six months of negotiation, they tried a takeover of the project. We asked why they thought we would let them take over our project, and they said, ‘Because you ran out of grant money. We’ve been negotiating with you for six months, watching your grant money go. Now that it’s gone, we figure you have to give us your project.’”

Instead, co-op members, who hadn’t been committed to the idea of owning the project before, decided they needed to claim ownership to keep it in the community. There was some backsliding, with private investors pulling about one-third of their money out because “they didn’t want to take that level of risk,” in Benander’s words.

The state grant also expired as a deadline passed in trying to secure a bank loan, she said.

That, said Benander was “the only time that money’s come in then gone back out again,” and the project’s backers were left with just $830 and a renewed determination to make this a local project.

Now she’s “really glad” the venture capitalists kept their hands off the project.

“We could have had the plant built in 2005 and had it dead in 2008,” she says. Instead of building a plant with the intention of selling it, she says, the same firm bought a biodiesel plant in Clayton, Del., that shut down in 2009, a few months after it opened.

“We could have had an out-of-business biodiesel plant in this industrial park right this very minute if we had wanted to, so we’re really proud we’re doing it the slow-money way,” said Benander, who has twice been a speaker at Brattleboro’s annual Slow Money Summit, encouraging community investment by people who are more interested in the success of a project that helps their neighbors and the environment than in turning a quick profit.

“What members decided when the venture capital firm tried to take us over is that who owns it matters, and that we will own it even if it takes us a long time to make it work. And we want to do it the right way,” Benander said. “We want to own this plant for generations.”

With $830,000 in loans from local people to Northeast Biodiesel, $1.7 million in loans from Co-op Power, $131,000 in private foundation money and $200,000 from The Society to Benefit Everyone/Common Good Finance, and a $$540,000 state Department of Energy Resources grant to make completion of its plant possible, Co-op Power is also looking ahead to add a second processor to the plant after the first year of operation to double production, and to even help replicate the community-owned biodiesel plant elsewhere around New England.

For now, though, Benander says, the plant is just at the “starting gate.”

Leue, the Ashfield engineer who began making biodiesel in his backyard in 1999 and served as a technical adviser and board member of Northeast Biodiesel — and remains an investor and supporter of the project, says, “Part of our ability to persist is that we have not gone with some big venture capitalist operation, but we’ve gone with community support. There are many owners, and people are not necessarily in it for making a profit. They’re in it because they believe we have to do something (to respond to climate change) and this is something that’s in scale with the community — using local resources to meet a long-term local need, and a method that doesn’t cause as much harm as the conventional way of doing it. Luckily, it’s a combination of patience and having so many supporters that we’re able to persist until we overcome all of the technical and regulatory hurdles.”

Unlike Leue and other small-scale local investors who see “a long arc of where our society and the world is going, and … an ability to change that arc a little bit,” he said most banks “are looking at how fast you can turn an investment into a positive cash flow, and they’re not really so concerned about future benefits for humanity. They saw the benefit as very theoretical and the risk as much more real. To a large extent, we’ve done it without them. It took longer, but it is happening.”

You can reach Richie Davis at
or 413-772-0261, ext. 269


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