First NY-produced biodiesel cargo heads to Europe

NEW YORK (Reuters) - A private U.S. biodiesel producer said it is sending the first cargo of the alternative motor fuel to Europe from a New York-based producer.

The 15,000 barrel cargo of biodiesel produced by Innovation Fuels in New York is bound for Rotterdam.

Europe has been a large market for biodiesel because of its large number of diesel-fueled cars EU mandates for alternative fuels. Traditionally U.S. supplies of biodiesel have been sent from the West Coast.

Innovation CEO John Fox said the company's biodiesel is made from multiple feedstocks, including vegetable oils, oils from rendering and food processing facilities, and used restaurant grease.

U.S. biodiesel capacity has risen as the government offered incentives to help wean the country off foreign oil. But the industry has suffered as producers lost money on surging prices for soy oil, one of the industry's main feedstocks.

Fox said Innovation's margins are strong because its mix of feedstocks. "Our ability to process lower priced feedstocks helps us to make margins significantly above 20 cents per gallon," he said.

Fox said he expects the U.S. Northeast to be the company's biggest market in the future as state and city governments pass mandates to blend biodiesel into heating oil and motor fuel.

Innovation, which was launched nearly two years ago, recently closed on a $15.5 million financing round led by Credit Suisse Customized Fund Investment Group on behalf of the New York Common Retirement Fund, RNK Capital, and Lyrical Partners.

(Reporting by Timothy Gardner)