A Southern Transformation

Tennessee Gov. Phil Bredesen's bold leadership has unlocked the state's potential to become a biodiesel producer and user.
By Bryan Sims | January 17, 2008
Country music, Graceland, American war history and wholesome southern hospitality are just a few of the things that come to mind when people think of Tennessee. Today, the Volunteer State is in the midst of making its name synonymous with biofuels.

Rich in farmland that produces a variety of crops, a transportation industry and a desire to augment its rural and urban economic development efforts, Tennessee is an ideal location for establishing a biofuels industry. The state government has realized this potential and has responded by providing solid legislative support. Although evolving from an agricultural-based state to a bioeconomy takes time, political support is a good first step for any advancement in this arena.

In February 2006, Tennessee Gov. Phil Bredesen signed Executive Order 33 to stimulate the biofuels movement across the state. His first act was to form the Interagency Alternative Fuels Working Group (IAFWG) to develop a comprehensive state renewable fuels strategy. The working group consists of representatives of six major state agencies, including the commissioners of the Department of Agriculture, Department of Economic and Community Development, Department of Environment and Conservation, Department of General Services, Department of Health and the Department of Transportation. The IAFWG was tasked to take immediate steps to establish interim state standards for biodiesel to provide an adequate level of quality assurance for biofuels blending and distribution. "We're creating a whole new industry in the state," says Andrea Arnold, spokeswomen for the Tennessee Department of Economic and Community Development. "It's not only a brand new industry it's a higher skilled tech-based industry, which is something that many states, particularly those in the South, are trying to switch to, and Tennessee is in the middle of that transition."

In 2006, Bredesen included $4 million in his budget to fund the state's alternative fuels initiatives, which was approved by the General Assembly. The funding laid the groundwork to increase the visibility and availability of biofuels at retail stations, to produce more biofuels, to assist local governments in making biofuels available to their fleets, and to establish education and outreach resources for Tennesseans to learn more about the benefits of biofuels.

The state is expected to kick in an additional $5 million in 2008 as an auxiliary fund to boost projects that have been put on hold or that have not yet applied for the first portion of the funding. The state funding in support of biofuels has brought out the entrepreneurial spirit of residents, according to Jon Overly, executive director of the East Tennessee Clean Fuels Coalition, one of three nonprofit organizations tasked to facilitate and endorse the use, production and distribution of biofuels in the state. "I've got more funding than I have time to work on," Overly says. "What a terrific predicament to be in. We are certainly going in the right direction for establishing a sustainable biodiesel future."

With continued support from the state and acceptance of biofuels from its residents, Tennessee is heavily involved with several biodiesel projects that are working in tandem to meet the governor's goals.

Producer to End-User Progress
As a means to encourage instate biodiesel production, Tennessee implemented a statewide producer subsidy where, as of Sept. 1, 2007, any indigenous biodiesel producer that sells biodiesel to an instate fuel supplier/distributor receives a 20-cent per gallon credit. The incentive is a six-year program passed by the General Assembly during the last session. The subsidy is a tremendous boost for local biodiesel producers who are dealing with soy oil prices that have nearly doubled in two years, according to Diane Mulloy, president and chief executive officer of Milagro Biofuels LLC, a 5 MMgy biodiesel facility in Memphis, Tenn., that has been producing since 2006. "If it wasn't for the subsidy, we probably would've all given up by now," she says, noting that prior to the subsidy several proposed projects shut down due to unfavorable market conditions. "Soy oil prices are just so high right now; it's difficult to break even."

With incentives promoting increased production, the state's commitment to biodiesel has opened new "Green Islands" or biocorridors along Tennessee's interstates. The Green Island program is being deployed across the state as part of a joint effort by the governor's office and the departments of Environment and Conservation, Transportation, Economic and Community Development, General Services and Agriculture. The goal of the $1.5 million project is to create 70 new alternative fuel retail outlets with E85 and B20 pumps that are no more than 100 miles apart. The BP stations in Riverside and Somerville are among the retailers that started offering B20 in July 2007. "The Green Islands are certainly a great way of promoting the benefits of biofuels to the general public," says Andrew Couch, executive director of the West Tennessee Clean Cities Coalition.

The availability of biodiesel has also been welcomed by Tennessee's fleets and municipalities, according to Overly. About 100 organizations in east Tennessee are currently using biodiesel in their fleets. "Thanks to that funding you're going to see more and more B20 stations pop up," Overly says. "When biodiesel costs the same as diesel about 100 plus fleets in East Tennessee use biodiesel."

Innovative Efforts
Bredesen dedicated about $880,000 of the $4 million provided by the state to Alternative Fuel Innovation Grants, which went to 14 local governments and public universities to increase the alternative fuel use in their fleets and measure positive impacts to state air quality, particularly in areas that are not currently attaining federal air quality standards.
Among the recipients, the University of Memphis received $99,998 to build a biodiesel production unit. The unit would be designed, built and operated by students and faculty, and produce enough biodiesel to replace conventional diesel in campus vehicles. The unit would also be utilized as a testing resource for commercial biodiesel producers facing challenges related to feedstock variability, product quality and operational efficiency.

In addition, Cleveland State Community College in Bradley County recently received $84,000 to develop an Alternative Fuels Learning Lab in the newly proposed Cleveland/Bradley Energy Business Incubator that will house the college's Biodiesel Education Program. The college will develop a variety of programs and classes in alternative fuels production for students and small businesses. Funding will also be used to help purchase necessary equipment to convert food waste products to biodiesel that will fuel campus vehicles. "I see the biofuels arena as just kind of a small part of this much bigger picture of trying to meet the claim that agriculture can participate fully in the petroleum products industry," Couch says. "For every petroleum-based product there is a biobased substitute or replacement. That's a huge claim and I think we're in an area of the country where we can really figure that out."

Education is Key
For Tennessee to successfully meet the challenges set by Bredesen's biodiesel initiatives, educating consumers is paramount, according to Arnold. "Educating the consumers about biodiesel and biofuels in general is a critical component to accomplish these goals," Arnold says. "We're ready for that public education component so that will be a key next step in this plan for long-term sustainability. I think 2008 is the right time to start talking to Tennesseans about what we've done and how it affects them and what they can do."

Because biodiesel is relatively new to Tennessee residents, state agencies and governmental bodies banded together to establish an education and outreach campaign entitled "BioTenn," to provide information and resources to consumers about biodiesel. The program is also available on the Internet. Additionally, as part of the Southeast Alternative Fuels Task Force, people from across the state can participate in calls to discuss alternative fuels actions and needs. Once a month, the task force participates in a call involving the entire multi-state network (about six states) then each state can hold its own call during the next month. "I think in general we have good efforts moving forward to try and make a difference here in the Southeast," Overly says. "I think we have to start dreaming a little bigger if we're going to realize the full potential of the governor's goal."

Near-Term Challenges
Amid the proactive approaches the state has undertaken and the ambitious goals set forth, short-term hurdles remain that are being addressed. One of the areas of concern lies in the research and development areas regarding improvements in biodiesel production operations, Couch says. "One of the biggest challenges we have here is that we don't have any soybean crushing facilities," he says. "We import all of our soy oil for biodiesel production in Tennessee. Right now, with soybean prices the way they are it's prohibitive to keep producing." In light of its short-term acceptance, it's the long-term that Tennesseans are concerned about, according Couch. "We've seen tremendous growth in biodiesel in the state," he tells Biodiesel Magazine. "Most of the technical questions are already addressed and people feel okay about [biodiesel]. It's mostly just the future that people are questioning now. They're just worried if it's going to stick around."

Although Tennessee is confronted with immediate challenges, the new Energy Bill with its 36 billion gallon renewable fuels standard should make it easier for biodiesel advocates such as the clean cities coalitions to reassure Tennesseans that the federal government is encouraging more involvement. "This was an auxiliary benefit that gives us the opportunity to be in the national spotlight and to share best practices and to get on peoples' radar to discuss with other states and private entities doing this as well," Arnold says. "The potential is just limitless."

Bryan Sims is a Biodiesel Magazine staff writer. Reach him at bsims@bbibiofuels.com or (701) 738-4962.
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