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Frequently Asked Questions (FAQ)

FAQ 1:  Large biodiesel companies are better off.  Isn’t it true that larger more established companies enjoy economies of scale as they are able to lower their production costs just by their sheer size with resilience and continuous reallocation of resources to achieve efficiency in productions. Small companies always begin operating with high costs and usually incur losses during the first five years of their operations, which may inevitably lead to their demise.          

Evaluation/Response: This IS NOT the case, as BTP’s commercially viable Second Generation technology provides BTP with a competitive edge (i.e. much lower production costs, ROI by the 3rd quarter/3rd year of operation, IRR > 40%) not readily available to larger, more established companies.

Contingency: Not required.

FAQ 2:  New biodiesel companies are prone to failure.   BTP may find it difficult to enter markets where established players already exist. 

Evaluation/Response:  The fall-out / insolvency of 1st Generation biodiesel refineries as a result of continued cost-restrictive operating costs (i.e. high feedstock costs and tax burden) coupled with the incremental increasing demand for mandated Renewable-Biodiesel/biodiesel from non-food feedstocks will all but dissolve this risk providing BTP with entry to existing Renewable-Biodiesel/biodiesel markets. Furthermore, on Dec 17, 2008 the EU Parliament / Commission reinforced/favored (emphasis added) BTP’s biodiesel business model, specifically, the new EU biodiesel mandate ruling states that "non-food second-generation biofuels” are double credited towards petroleum refiners/blenders mandate target. For example: when a refinery/blender purchases 1 liter of biodiesel from BTP it is double-counted as if the refinery/blender purchased 2 liters of biodiesel; a win-win for both BTP and the petroleum refineries/blenders. In summary, the new EU Parliament ruling enables BTP to easily secure market share where established players already exist.

Contingency:  We will nonetheless secure Offtake agreements for a fixed volume and short-term supply agreements of our Renewable-Biodiesel production output.

FAQ 3:  Low price of Petroleum Oil causes a negative impact on biodiesel profits  Will a decline in the price of Petroleum Oil have a negative impact on the Renewable-Biodiesel sales/operating revenues of BTP if Petroleum Oil price drives lower than $80, $60, $40 etc… ?                                                                          

Evaluation/Response: No - a decline in the price of Petroleum Oil will NOT have a negative impact on the Renewable-Biodiesel sales/operating revenues of BTP if Petroleum Oil price drives lower than $80, $60, $40 etc..  Specifically, the Petroleum Oil price does NOT impact the sales/operating revenues of BTP given the fact that EU based biofuel mandates require/demand blending of Renewable-Biodiesel/biodiesel with diesel regardless of Petroleum Oil price fluctuations. Additionally, Petroleum Oil price fluctuations do not impact the price of Renewal-Biodiesel/Biodiesel. 

Contingency: Not required.

FAQ 4:  Reasons for price fluctuation in Biodiesel  What causes the price of Renewable-Biodiesel/biodiesel to fluctuate?                                                                                                                                                                      

Evaluation/Response: Notwithstanding demand, the fluctuation in the price of vegetable oil causes the price of Renewable-Biodiesel/biodiesel to fluctuate which causes the primary feedstock (i.e soapstock) used by BTP to fluctuate. For example: if the price of vegetable oil goes up so does the price of biodiesel and the vegetable oil waste/residue by-product (i.e. soapstock). Basically, Vegetable oil, biodiesel and the soapstock are all directly price linked. Therefore, any price increase in the edible/food oil commodities will have a direct price impact on soapstock and on the market price of Renewable-Biodiesel/biodiesel.

Contingency: Not required.

FAQ 5:  Decrease in Biodiesel market price will negatively impact operating revenue    Will a decrease in the market price of Renewable-Biodiesel/Biodiesel have a negative impact on the operating revenues of BTP?

Evaluation/Response: No - a decrease in the market price of Renewable-Biodiesel/Biodiesel will NOT have a negative impact on the operating revenues of BTP.  The reason for the reduction in the marketplace price of Renewable-Biodiesel/biodiesel is a result of one or more of the following market conditions:
1. the reduction in price of feedstock (i.e. soapstock); OR
2. as a result of the spring/summer Renewable-Biodiesel/biodiesel market season in which case operating costs are reduced as a direct result of halted/decreased use of expensive winter based feedstocks/additives.
Note: The EU Renewable-Biodiesel/biodiesel mandates will increase from year to year reaching at least 10% by 2020. Therefore demand for Renewable-Biodiesel/biodiesel will only intensify. Furthermore, the demand for diesel will increase from year to year on average by upto 3% per annum thereby increasing the demand for Renewable-Biodiesel/biodiesel.

Contingency: Not required.

FAQ 6: European Union revokes / rescinds Biodiesel Mandates What if the European Union revokes / rescinds Biodiesel Mandates?

Evaluation/Response: Highly unlikely. According to the EU Commission/Parliament the cost of not acting on climate change reforms such as biodiesel mandates will ultimately cost 10 times that of climate change reform expenditures (aka biofuel mandates).

Contingency:  Not required