By Nigel Hunt and Ikuko Kurahone
LONDON (Reuters) - Major British independent oil firm Greenergy sees its future as an exploration company, but one that hunts for fuel in piles of stale pork pies and cakes rather than under the ground or from food crops.
The refined oil product wholesaler is still investing in the embattled European Union biodiesel sector, aiming to utilize ever more challenging waste products after abandoning, at least for now, the widely criticized use of virgin vegetable oils.
"We are investing more and more so we can take harder and harder wastes to process. By late spring or early summer next year we will be able to take almost any liquid you can imagine," Greenergy founder and chairman Andrew Owens said in an interview on Wednesday.
The European Union's biofuels industry has struggled to attract funds and expand during the eurozone's economic crisis, hurt not only by a challenging investment climate but also questions about the sector's environmental credentials.
Biofuels had been seen playing a central role in helping the EU achieve its target of meeting 10 percent of road transport fuel needs from renewable sources by 2020.
Political support has wavered as scientists raised concerns about the environmental impact of diverting food crops to biofuel production.
Greenergy's biodiesel plant at Immingham in eastern England was built to use vegetable oils but in the last couple of years the company has built units to pre-treat and post-treat production to allow use of waste such as used cooking oil.
The plant now has the capacity to produce nearly 200,000 tonnes of biodiesel from waste products.
"We get pork pies, crisps, cakes, dairy products that are not suitable for sale anymore because they have got too old or been damaged in the factory and we can extract fats and oils to make biodiesel," Owens said.
The move to waste was prompted partly high vegetable oil prices, which made it hard to process them into biodiesel profitably, potential extra regulatory benefits from processing waste and a company target to achieving 70 percent greenhouse gas savings across all its biofuels.
"We are focused on trying to broaden the feedstock base. We are becoming an exploration company but we are not exploring oil fields, we are exploring pies," he added.
Owens said the EU's biodiesel sector faced two main challenges, a massive over investment in capacity across Europe and continuous political tinkering and uncertainty.
He said investment decisions had to be made based on "intuition and common sense" in the absence of a clear future framework for the industry.
"The problem with political decisions is that common sense isn't always one of the biggest drivers toward the decision," he said.
But Owens said he remained hopeful about the future of the EU's biodiesel industry.
He said bioethanol, a substitute for gasoline that is generally produced from grains and sugar crops, was now the cheapest way for oil companies to comply with obligations to blend biofuels into motor fuel.
But the EU overall had too much gasoline and not enough diesel.
"The point that people should not forget is that Europe remains short of diesel. This remains an absolutely pivotal issue," he said.
"Biodiesel fills a strategic hole in the energy balance which bioethanol doesn't do to the same extent."
(Reporting by Nigel Hunt; Editing by Anthony Barker)