Juan Carlos Uriarte Amann
President
Grupo ADO
/
Insight

Merger Between Goals for Transportation and Biofuels

Wed, 02/19/2014 - 08:46

The energy needs of companies fluctuate depending on the industry in which they operate. In the particular case of the transportation industry, the cost of fuel is naturally the most important expense, emphasizing the importance of developing fuel-saving strategies.

Such is the case of Grupo ADO, a Mexican transportation leader that has been in the market for more than 70 years and has always closely monitored its energy expenses. “Fuel expenses are the main costs of Grupo ADO’s operations. In the recent years we have observed monthly increases in the price of diesel of approximately MX$0.11 per liter,” says Juan Carlos Uriarte, President of Grupo ADO. “We are very concerned about the use and price of fuel. We are conducting research in order to consider the best projects to increase fuel saving within the company.”

The transportation industry is also one of the main contributors to greenhouse emissions in Mexico and developing new solutions is needed to mitigate its environmental impacts. The cooperation between Grupo ADO and its providers has demonstrated that it is possible to develop alternatives that not only increase the efficiency of the engines but also reduce emissions. “By using a substance called AD Blue we have considerably reduced NOx emissions,” explains Uriarte. “However, efficiency and emissions depend on the manufacturer of the engines and the buses. We are complying with EPA and Euro norms, which are accepted in Mexico.” Grupo ADO has also found that the fuels supplied by PEMEX are below the company’s efficiency standards, and that the oil giant has not reduced sulphur levels in its diesel and gasoline in line with its commitment to do so five years ago.

Biofuels have demonstrated that not only do they reduce emissions, but are also a highly efficient fuel that can be used without requiring any modifications to engines. Grupo ADO has been testing biofuels in their Turibús – the company’s bus service aimed mainly at tourists in different cities across the country – in order to rate the performance of the buses when using this fuel. “Emissions are greatly reduced but the main problem is that there is not enough production of biofuels in Mexico so they are very difficult to get,” says Uriarte. “There should be agreements between the producers and the consumers of biofuels. The consumer, such as a transportation company, could commit to creating a minimum demand that would allow for investment in larger production schemes to supply needed biofuels.” He suggests that, even though the transportation industry has not been actively involved, biofuels producers could approach CANAPAT, a body that regroups a very important number of transportation companies.

Communication between industries could become a very important platform to guarantee a minimum consumption of biofuels, thus increasing their competitiveness. “The challenge is that in the transportation industry, these topics have not been addressed homogeneously and there might be a lack of interest in trying such alternatives,” Uriarte argues. Nevertheless, CANAPAT could become a very important channel to raise awareness of the benefits for the transportation industry. This is an example of the alternatives that the biofuels industry has besides PEMEX in order to boost its development, rather than waiting on the national oil company to drive biofuel demand.

The second most important cost for Grupo ADO is electricity, due to the large amount of facilities owned by the company including bus terminals, maintenance warehouses, and corporate buildings. Renewable energies become competitive to provide energy for the facilities that work under the Tariff 2 scheme. “We must evaluate and analyze the proposals of the companies that offer clean energy at a more competitive tariff,” says Uriarte. “However, it is important to compare them to the projects that we are planning on implementing internally and select those projects that offer the highest return on investment,” he explains. As a result, several PV energy projects have been developed internally with bidirectional gauges taking advantage of the energy bank scheme. Nevertheless, the solution is not only to increase renewable energy generation but also energy efficiency performance. “It is important to cover an important amount of facilities so that the savings generated become substantial for the company. Grupo ADO is focusing on PV technology as well as potential energy efficiency gains in air conditioning and lighting among other equipment. We need to create a plan for the next three to five years,” says Uriarte. “We were invited to invest in a wind park in Tamaulipas called Los Vergeles; we analyzed the project but it did not reach the profitability that we consider adequate since it required a heavy investment and the returns were not attractive,” comments Uriarte. “These projects are still expensive and have very long term payback periods but we will be waiting for a good project. We are very willing to become part of the right one,” he adds.