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Attribute-based biodiesel marketing

REG began marketing three types of biodiesel last spring based on cloud points, cetane numbers, and other fuel characteristics - not what the biodiesel is made from. According to REG it's the wave of the future in biodiesel marketing.
By Ron Kotrba | December 10, 2008
Since the spring, REG has been marketing its biodiesel based on the attributes of the fuel rather than the feedstock from which it was produced (e.g., Soypower, indicating the biodiesel is from soybean oil). During a webinar hosted by REG last month, Dave Slade said, "As the number of feedstocks increase, and will continue to increase as price becomes such a major factor in how biodiesel can be distributed and sold, we've had to accept the fact that multiple feedstocks are going to be used."

He continued, saying, "In our opinion as we enter to this new market where it's no longer a soy methyl ester or an animal methyl ester, but simply a methyl ester, it's important to recognize that production skill and technology are what's going to determine biodiesel quality – not feedstock. They all come from triglycerides…Cloud point is a major factor from a purchasing decision in our opinion, and this is how diesel fuel is marketed – by cloud point or pour point, No.1 and No. 2 – and we think this is the correct approach to take with biodiesel as well, so long as all other quality specifications are met. Cloud point will be the purchasing specification for biodiesel in the future."

REG offers three different attribute-based biodiesels in its 9000 series. REG 9000-1 has a cloud point of zero to 2 degrees C with a cetane number of 47 to 50; REG 9000-5 has a cloud point of 4 to 6 degrees C and a cetane number of 50 to 53; and REG 9000-10 has a cloud point of 8 to 12 degrees C with a cetane number of 53 to 59.

During the November webinar, blend economics were discussed. Nov. 15 prices from Newton, Iowa, for a gallon of REG-9000-1, REG-9000-5 and REG-9000-10 B99 was $2.35/gallon, $1.80/gallon and $1.20/gallon, respectively; while No. 2 ULSD Chicago rack price was $1.76. Adding 12-cents per gallon rail charge to REG-9000-10 product, the Chicago FOB price is $1.32/gallon. A B10 blend would yield a 5-cent per gallon gross margin for distributors.