By Gavin Gibbon
Karl Feilder may have raised a few eyebrows when he talked about saving the planet and making money at the same time, but Neutral Fuels is doing just that
Serial entrepreneur Karl Feilder is no stranger to a challenge.
After training as an engineer and having an enlightening but less than successful spell as a C and C++ software programmer he started his own software company with six friends in 1990. That company was sold to Microsoft five years later and he would go on to be pivotal as CEO in five trade sales and two IPOs with various outfits.
Feilder then ran DHL’s global climate change programme for three years where he was responsible for 200,000 vehicles’ carbon footprint, as well as that of 423 aircraft and 13,500 buildings – to give an idea of scale, the company’s carbon footprint at that point was the same as 46 countries combined.
After working on sustainability strategies with UK mobile phone giants O2, IKEA, and Marks & Spencer he launched Neutral Fuels in the Middle East. But when he simultaneously came up with the idea of saving the planet and, at the same time, making money, many thought he’d finally bitten off more than he could chew.
He tells CEO Middle East: “In 2010 we helped McDonald’s write their carbon reduction strategy for 37 countries.”
“That led to us realising that McDonald’s could be self-sufficient in fuel if only they could convert all of their waste into biofuel. They wouldn’t need to buy any fossil fuel at all.”
“McDonald’s thought that was a pretty outrageous statement and said “Prove it !”. Luckily I had a few friends in Dubai Government here and in the DED (Dubai Economic Department) and I said to them, we’d like to put together the first biofuels facility in the Middle East.”
“Once they’d stopped laughing and they realised I was serious, they asked me how I was going to do it. I said I think McDonald’s will partner with me and at DHL we’d run two biofuels programmes so I knew a lot about the chemistry and I knew a lot about the way the alternative business plan didn’t work and what the mistakes were that other people had made.”
“I thought, maybe I can do it better, maybe I can come up with a better mouse trap.”
And so, in 2010, with help from DED, they got the first trade license for biofuels in the Middle East. They started to supply McDonald’s, who have to date completed 13.5 million kilometres without a single engine problem.
Indeed, while the efficiency of biodiesel production in Europe averages at around 75 percent, Neutral Fuels, thanks to its new ‘cyclone reactor’, have this year averaged 94.8 percent efficiency.
The company is now working with Del Monte and Nestlé among other big-name brands, taking waste vegetable oils and putting them through a chemical conversion that turns them into vehicle fuel.
The ‘closed-loop system’ operated by McDonald’s – where the supplier of the raw materials is also the consumer of the fuel - sees a special container full of waste vegetable oil dropped off at Neutral Fuels’ Dubai conversion plant in Dubai Investment Park and the truck fuel tank being refuelled with the biofuel produced a day or two earlier.
It’s all part of Feilder’s plan to save the planet.
He says: “The passion for all of that, was essentially the realisation in 2006 that we as a species, have actually backed ourselves into a nasty corner. Our global economy has to keep growing otherwise the stock exchanges will fail and then everybody’s pension disappears, but if companies keep growing and using the earth’s resources the way they were, we’re not going to be able to live on the planet.”
Indeed, Feilder, who is chairman and CEO of Neutral Fuels, points out that back in 1992, world leaders gathered at the Rio Earth Summit, where they pledged to reduce greenhouse gases and yet 27 years later, greenhouse gases have increased by 40 percent.
“As a businessman, if I set a strategy and 27 year later I have achieved 40 percent of the opposite result, I would say my strategy had failed,” he says.
But his own strategy certainly hasn’t failed – and this is where the money comes in.
Feilder says the cost of building the conversion plant stands at around $1 million and that it should be profitable “within the first year or two”.
In the last five years the business has grown 1,000 percent. Neutral Fuels opened up in Bahrain earlier this year and, last month, opened a plant in Delhi, India, with plans to open a facility in South Africa next year.
In April, the company raised the first green bond out of the Middle East on a European Stock Exchange, raising a $50 million bond on the Frankfurt and Dublin exchanges, which will be used to fund further growth.
“My target at the moment is to try to get to ten factories by the end of 2022. I think I’m on track to do it and I think I’ll probably exceed that,” says Feilder, who also plans to launch an IPO on the London stock exchange in 2024 and revealed they have received enquiries “from pretty much every country in the Middle East” for potential partnerships, particularly in Saudi Arabia.
However, regardless of where the expansion takes place, Feilder stressed the business model would remain the same.
“Our model is a local, local, local model. We source our raw materials locally, we produce locally and we sell locally. That is unusual in the fuel business. In fact, I don’t know of anyone else who does that in any type of fuel business, let alone the biofuel business.
“The logic comes from the sustainability movement that’s recognised that most sources of new energy, the renewable energies, are actually a lot better distributed across the planet than the old fossil fuels were and are,” says Feilder.
“If you’re going to build some better source of renewable energy, it’s better to put that conversion facility close to where both the supply of the raw materials and the consumption of the renewable energy are located.”
Neutral Fuels currently sells its blended biofuels at pump price, which with crude oil at around $70-a-barrel, makes its pure biofuel version slightly more expensive.
Feilder adds: “In the beginning, McDonald’s said, if you can make it work in Dubai you can make it work anywhere because you’ve got such low fuel prices here; if you can make this thing profitable in what is a really tough market, then you’ve got to be able to do this anywhere.”
And that’s the plan, which fits in perfectly with the targets of governments, businesses and organisations to become net zero.
“There’s now 60 countries that have pledged a strategy to become net zero. There’s more than 800 corporates globally that have pledged to be net zero and it’s the first time in the environmentalist and the sustainability movement where they’ve actually got a numeric goal,” says Feilder.
“We’ve started this year promoting our fuel as the only net zero fuel in the Middle East.”
This is yet another first for the company as it continues to fuel sustainability, helping the planet and client’s profits.