Why you should care
Because when a top-down change strikes a market, new opportunities arise.
The entrance to Smart Recycling’s warehouse is flanked by two huge plastic vats, both filled with dark brown, slightly viscous liquid. One vat contains leftover vegetable oil that, 30 years ago, would have been trash. The other contains that oil’s more valuable future self: biodiesel. This building, on the outskirts of Puebla, Mexico, is the new home of the biodiesel plant run by 28-year-old Moisés Flores.
In January, Mexico was hit by protests more numerous, violent and vehement than those against its neighbor’s new president. Government-owned oil company Pemex had hiked its prices by 20 percent, in a move known as gazolinazo, making many of the country’s most important products, including food and water, more expensive. Major cities were swarmed with protesters. Children in their mothers’ arms bore signs calling for President Peña Nieto to resign. Nuns and priests chanted, “Christ is calling for freedom … the church is fighting for you.” Months later, even while prices have more or less returned to where they were in 2016, signs reading “No al gasolinazo” still speckle cars and homes.
Now, people are looking for alternative energy sources. Of the five or six Mexican companies producing biodiesel, Smart Recycling is emerging as one of the most important. Flores reports that production has grown by more than 150 percent since January; it now produces upwards of 400 gallons a day. His was the first biodiesel company in Puebla, the fourth-largest city in Mexico, and is the closest to Mexico City. Before biodiesel, Flores’ father, Victor, ran the company as a recycling business — today, biodiesel is the company’s chief focus, but those years of energy and waste-industry contacts have simplified procuring raw materials, one of the main challenges in the Mexican biodiesel industry.
Until 2013, companies like Smart Recycling were illegal in Mexico: For the previous 73 years, Pemex was a government-enforced monopoly. Pemex never traded in biodiesel, a broad term encompassing any fuel made from natural products such as cooking oil, soybean oil or animal fats. But any producer of that fuel would have been viewed as a competitor, and therefore illegal.
Bound by no such regulations, the U.S. began experimenting with biodiesel fuel as early as the 1970s amid its own fuel crises. Still, Kaleb Little, the senior communications manager of the National Biodiesel Board, says the first commercial gallon wasn’t sold in America until the 1990s. The soybean industry initially financially supported research, hoping to profit from its excess oil. The companies selling and producing, explains Little, were small and independent at first, much like those now sprouting up in Mexico. Many of those small fry have remained the leaders in the American biodiesel industry — a market that’s grown from 25 million gallons in the early 2000s to 2.8 billion gallons last year.
Procuring raw materials will be one of Smart Recycling’s biggest challenges.
Now, Flores has a chance to turn Smart Recycling from a small experiment into a permanent industry leader. He’s doing so with family by his side: His two younger brothers assist with physical production, and his father, previously Wal-Mart’s regional director for Mexico, started Smart Recycling while Moisés was in college and remains heavily involved. “He does the numbers, and I do the production,” says the younger Flores of his dad, who quickly counters, “He works, and I watch him.” When asked to take a picture together, the former Wal-Mart executive protests, insisting that the spotlight should be on his son alone.
Moisés began working on biodiesel almost immediately after the Pemex monopoly was lifted. It took six months to perfect the first machine, and he says he “learned a lot more online than [he] did in school” about how to make it, despite his degree in chemical engineering from Mexico’s prestigious Ibero-American University.
The work is a natural fit for the tinkerer: “I was always doing these little experiments,” Flores recalls of his childhood growing up in Puebla. Every time he got a new toy, “I’d break it open to see what was inside or combine [it with] old toys to make new ones.” In more devious moods, he enjoyed redirecting the controls of the house remotes or delaying class by tampering with the classroom lights. Now, Flores thinks of his work with biodiesel as similarly rebellious, though he presents as a good-boy business prodigy in his clean, wrinkle-free outfit.
Unfortunately, even as both production and prices have gone up for the Flores family, profits have remained mostly flat (they won’t specify numbers), because gasolinazo has increased the prices of their sources. Flores says he’s keen to keep his prices below Pemex’s to keep their customers, aware that the appeal of going green isn’t incentive enough.
Procuring raw materials will be one of Smart Recycling’s biggest challenges, says Alfredo Martínez Jimenez, a senior researcher at the Biotechnology Institute of the National Autonomous University of Mexico, who focuses on renewable energy. Algae, Flores says, “is probably the future of all this” — but water isn’t plentiful in Puebla. “In Mexico,” Martínez Jimenez explains, “for cultural and financial reasons, people cook a lot in their homes … and don’t often fry their food” — meaning there’s less excess oil than, for example, in America. Luis Felipe Barahona, principal researcher at the Yucatán Center of Scientific Investigation, claims that “the biodiesel industry needs the support of the government,” including regulations on pricing and quality.
But another kind of pressure is on the minds of the father-son duo. Perched above the plant in their small office, one wall acting as a blackboard marked up with the calculations used to create their first machine, the two mourn the time when they could see snow on the nearby mountains. “The world isn’t going to last much longer if we keep consuming it at this rate,” says the younger Flores.