The problem with corn oil biodiesel
Over the past two years, the use of nonfood-grade (NFG) corn oil for biodiesel production has grown tremendously. Corn oil biodiesel is eligible for a D4 RIN under the renewable fuel standard (RFS), and California's low carbon fuel standard (LCFS) has assigned it a carbon intensity (CI) value of 4. The combination of these two credits can potentially add another $1.26 (at $0.45/D4 RINs & $50/metric ton/LCFS credit) of value to each gallon of biodiesel made from NFG corn oil feedstock. However, the definition of NFG corn oil eligible to claim credits under the RFS and LCFS is very narrow (more so under the LCFS than the RFS). Without meeting the strict regulatory requirements, it is questionable whether the final fuel is eligible for the credits.
Under the LCFS, biodiesel made from NFG corn oil is eligible for a CI value of 4 because the energy required to dry the distillers grains at the ethanol plant after the corn oil is extracted is considerably lower, and this energy saving is credited to the corn oil and subsequently to the biodiesel made from it. However, there are several important assumptions that validate the low CI value for NFG corn oil biodiesel. One, it assumes distillers grains is dried fully at the ethanol plant, for if it was not dried, there would not be any energy savings allocated to the corn oil. Two, it assumes that the ethanol plant selling the corn oil is not submitting a Method 2 pathway and lowering the CI of its ethanol based on lower energy consumption, as this would be double counting.
Finally, California Air Resources Board, while modeling the corn oil biodiesel pathway, only utilized data provided by Greenshift Corp. for its oil extraction technology. If an ethanol plant is using another technology to extract the oil, it creates uncertainty whether the energy emissions related to its extraction process are less than those used in the model. According to the LCFS, all applicants must be able to demonstrate that they are getting better or equal energy savings than the estimates in the published pathways—or they should not use the published CI values.
Federal rules are not quite as restrictive as California’s LCFS; however, they also have a strict definition of what does and does not qualify. Under the RFS, biodiesel from NFG corn oil qualifies for federal credits if the oil is produced at a dry-mill corn ethanol plant by extraction from the distillers grains coproduct. There are no credits for renewable fuel from corn oil derived by fractionation at a dry-mill ethanol plant, or corn oil derived from wet milling.
Both the RFS and LCFS are very clear in placing the responsibility of compliance on regulated parties who use the credits. If the corn oil used to produce corn oil biodiesel does not meet the requirements detailed above, then the credit values associated with the final fuel can potentially be disputed. Most regulated parties who take the LCFS or RIN credit for corn oil biodiesel don’t trace the origin of the corn oil when they purchase biodiesel. They probably should.
Author: Shashi Menon
Managing Partner, EcoEngineers