I think we've settled on a number. 
 
 Sometime in the last 60 days, it seems almost as if the entire U.S. biodiesel industry has suddenly agreed that 1 billion gallons per year is where the nation's market potential and production capacity ultimately converge. A billion gallon market, we are told, could be achieved with a nationwide B2 mandate alone. But since that isn't a ubiquitous national priority at the moment, I think it's fair to say this brave new market will be split evenly between high and low blend consumption targets. 
 That prediction is rooted in the trends we are seeing today. 

 
 Look at Minnesota, for example, where Renewable Energy Group (REG) is building a 30-mmgy SoyMor facility near the town of Albert Lea, one of two 30-mmgy plants under construction in the state. As we point out in this month's Company profile on REG, "One Stop Shop," page 26, the facility is on pace to begin production this summer, in time to trigger the statewide B2 mandate outlined in Minnesota's trailblazing renewable fuels standard. As we explain in our Legislation feature, "State Bio-Legislation: Summary and Rundown," page 40, Oregon and 
 Michigan are considering similar B2 measures. 
 
 The use of high blends-B20 to B100-is also on the rise. In Maine, for example, state legislators are considering legislation that would require state buildings to be heated with B20 heating oil, and state vehicles to run on B20. On the West Coast, Dr. Dan's Fuel Werks, a Seattle-based biodiesel distributor, is moving 13,000 to 15,000 gallons of B100 per month, according to owner Dan Freeman, the feature of this month's Profile, "Sound of Success," page 22. Freeman is a hardcore advocate of high-level blends-the type of guy who's not easily moved by low-level blend mandates and OEM warranty statements-but his ultimate hope is to make biodiesel "as cheap and accessible as possible." 
 
 And that, if we are really serious about reaching that proverbial 1 billion gallon mark, is a goal we can all rally behind.

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Editor's Note

A new study published in February by the Clean Air Task Force (CATF) is the first to quantify health risks and deaths associated with diesel emissions. Titled Diesel and Health in America: The Lingering Threat, the study used 1999 emissions data with a U.S. EPA-approved methodology to quantify cases of various illnesses and deaths from diesel emissions ranked by state, metro areas and per capita metro area impacts. The study can be found on CATF's Web site at <a target="_blank" href="http://">www.catf.us/publications/view/83.</a>

New study links diesel emissionsto health risks, death

U.K.-based D1 Oils has partnered with Jazeera For Modern Technology (JMT) to create D1 Oils Arabia Limited. The 50/50 joint venture will produce biodiesel from jatropha feedstock planted on 5,000 hectares (12,350 acres) contributed by JMT for the pilot plantation. JMT will make an additional 100,000 hectares (247,000 acres) available upon successful completion of the pilot. D1 Oils will provide the partnership with its proprietary knowledge on jatropha nutrition and its "D1 20" refineries, modular units that produce 8,000 metric tonnes per year. JMT will provide D1 Oils Arabia with working capital.

D1 Oils' joint venture penetrates Saudi biodiesel marke

The Northstar Corridor Development Authority (NCDA) is considering using biodiesel for its proposed Northstar Commuter Rail line. The 40-mle project is waiting for funding to formally begin final design by Kimley-Horn and Associates Inc., according to Tim Yantos, NCDA executive director. A preliminary report is expected by late spring. The Minnesota Prairie Line, a short-line railroad, announced in late 2004 it would use B2 in its fleet on 330 miles of track in southern Minnesota.

NCDA explores biodiesel use in Minnesota

A grand opening ceremony for "the world's first renewable-energy powered biodiesel facility" was held in Denton, Texas, on March 29 at the City of Denton Landfill, where a 3 mmgy plant is "up and running." 
 
 Cooperatively owned and operated by the city of Denton and California-based Biodiesel Industries Inc., the biodiesel plant is novel because it is powered by renewable biogas-methane-extracted from the landfill itself. The biogas is used to fuel the plant's specially designed boilers and an advanced electrical generating system. From an energy balance perspective, the facility comes out highly positive-reportedly in the range of plus-4 to plus-5. 
 
 According to Biodiesel Industries' Corporate Project Manager Jake Stewart, the methane-a potent greenhouse gas-is harvested by "boring through 30 years of garbage" and establishing wellheads. The plant utilizes only 10 percent of the methane recovered from the landfill; the rest is being marketed to other end users in the area. 
 
 "By channeling the methane into a productive use instead of releasing it into the atmosphere, we are helping to mitigate global warming and reducing our dependence on foreign oil," Stewart said. "The municipality is, in essence, creating its own oil well."
 
 Although Biodiesel Industries did not provide specifics on other prospective projects, the Denton plant has reportedly garnered international attention as a renewable model that holds real potential for governments worldwide that are seeking an economical, less polluting, locally produced fuel source. "It is our belief that the facility in Denton is the model for other municipalities moving toward sustainable energy independence," Biodiesel Industries' Denton Project Manager Charles Fiedler said.

 
 The plant, which was on line and in the "calibration phase" in late March, utilizes a proprietary process technology that is feedstock-neutral. The facility is receiving support from Dallas area restaurants that are offering their used cooking oil as a production feedstock; the oil is collected by Biodiesel Industries. 
 
 Dallas area restaurants produce more than 12 million gallons of recyclable cooking oil annually, according to Vance Kemler, director of solid waste for the city of Denton. 
 
 "This project works with participating restaurants to utilize that recyclable resource along with other farm-grown sources to produce this cleaner, Texas-made fuel," Kemler said. "We are proud to be part of the first biodiesel project of its kind that uses entirely renewable and recycled resources as part of the production process." 
 
 According to Stewart, quality control systems are built into the process control automation for the facilities, ensuring that the biodiesel produced at the plant meets stringent U.S. and European standards.
 The city of Denton will fuel its diesel vehicle fleet with B20 made from biodiesel produced at the facility. The fuel will also be sold through regional distribution channels.
 
 "We're excited about this path-breaking venture," said Denton Mayor Euline Brock. "We will be able to resolve some of our major environmental challenges while providing a major service to the public." 
 
 The Denton plant was under development for about a year and erected in just three months. It is the fifth biodiesel production project completed by Biodiesel Industries.

Novel biodiesel plant online in Texas

"Biodiesel is the future of biofuels in Manitoba." Those words from Dave Chomiak, minister of the province's Energy Science and Technology, opened the first-ever Manitoba Biodiesel Seminar. The event held Feb. 28 in Winnipeg brought together more than 130 people interested in creating a biodiesel industry in the province.
 
 Chomiak continued by saying 31.5 percent of the greenhouse gas emissions in Manitoba come from the transportation sector. Biodiesel is seen as a possible way to reduce those emissions, along with creating a value-added economy and weaning the province off of imported petroleum.
 
 Feedstock potential was a key topic at the event. Typically the lowest cost feedstock is yellow grease. However, other low quality feedstocks are an option to displace imported feedstocks, Chomiak said.

 
 Mark Stumborg, region director of Agriculture and Agri-Food Canada, said 140,000 metric tons of possible feedstock is produced annually from the Canadian pulping and paper industry. Stumborg said oil from treated planting seed could be another possible feedstock.
 Ron Wardrop, director of sales and marketing for Rothsay Rendering, said animal fats and recycled vegetable oil would be the feedstock for a 35 million-liter-per-year (9 mmgy) biodiesel plant Rothsay recently began constructing in Montreal (see page16). 
 
 Unlike the United States, soybeans don't hold a solid feedstock potential in Manitoba. Murray Froebe, director and soybean chair for the Manitoba Pulse Growers Association, said the 2004 crop year was devastating to soybean production. Crop acreage was only about one-half of that expected due to cold and wet weather. Froebe also said there is currently only one soybean crusher in the province with a capacity of 200 tons per day.
 
 Canola-based biodiesel provides higher lubricity properties but is higher priced because of demand created by canola's high dietary value, according to Ernie Doerksen, general manager of the Canadian Canola Growers Association. 
 
 Canada is coming closer to establishing its own biodiesel fuel standard. Stumborg said a Canadian standard of B1 to B5 blends might take effect by this spring. The Canadian General Standards Board would create the standard. Stumborg said that any biodiesel level in diesel fuel at 1 percent or less is considered an additive and wouldn't need to be governed by the standard.
 
 Stumborg stressed the possibility of creating a B5 market in Canada instead of focusing on reaching the unlikely production goal of 500 million liters (132 million gallons) annually by 2008. He said Canada could currently produce enough biodiesel to accommodate a B5 blend in all diesel fuel sold in the country without importing feedstock. "The 5 percent market is our market," Stumborg said.
 
 Bob Lee of Bifrost Enviro-Blends discussed the possibility of creating localized production of biodiesel in key areas within the province. He said it is feasible to produce 8 million to 12 million liters (2 million to 3 million gallons) per year of biodiesel if the feedstock is 30 percent off-grade canola mixed with No. 1 and No. 2 grade canola. Bifrost has already produced 1,600 liters (423 gallons) of biodiesel using off-grade feedstocks in a small batch facility. Lee believes that community-based facilities can be set up for less than CAN$200,000 (US$166,000).
 
 Manitoba is also considering incentives to ease production costs. Paul Nichols, senior analyst for Natural Resources Canada's Office of Energy Efficiency said his group is considering a subsidy program that would offset the CAN$3,000 (US$2,500) cost of testing samples of biodiesel to make sure they are on spec.
 
 A final issue was the acceptance of biodiesel in fleets. Officials from the Manitoba Trucking Industry said they are "reserved" about biodiesel use, mainly because of the fuel's cost and the potential damage it may cause, especially when warranties don't cover its use.

Biodiesel Seminar Production and Economics Panel

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Brian Chorney, Biodiesel Association of Canada

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Biodiesel seminar weighs potential in Manitoba

On the same day that the Kyoto Protocol came into effect, South Australia's premier Mike Rann and transport minister Trish White announced plans to convert South Australia's public transportation fuel supplies to biodiesel. By March 1, the state's 535 diesel buses and 95 railcars in the public transportation system were burning B5, with plans in place to incrementally increase the blend to B20. This initiative is part of a larger plan to strategically reduce greenhouse gas emissions in the state.

South Australia's public transport switches to biodiesel

In mid-January, Indiana biodiesel refiner Countrymark Co-op lowered its biodiesel blend prices, causing more than a dozen local member cooperatives to pass the savings on to customers and blend their diesel with 2 percent biodiesel.

 
 The price cut was made possible by the American JOBS Creation Act of 2004, signed in October and effective in January. Cooperatives in Muncie, Anderson, Jasper County, Monticello, Lebanon, Terre Haute, Seymour, Richmond, Dillsboro, Danville, Wabash, Columbus, Shelbyville, Hamlet, Liberty and Crawfordsville are participating, and dozens of other member co-ops in the state are expected to follow suit this spring.
 
 Peter Cremer North America and West Central supply Countrymark Co-op with its soy-based biodiesel, according to co-op representative Steve Thomas.
 
 In January, only one Indiana co-op offered biodiesel fuel for sale in either bulk shipments or at the pump. Now that number is rapidly growing. In Liberty, Union County Co-op had quit selling B2 blends in its road diesel until Countrymark lowered its prices. Now the co-op offers B5 (soy-based biodiesel) in off-road, regular and premium diesel fuels at its Energy Plus 24 station, according to co-op General Manager Dale Walker.
 
 Anderson-based Ag-One Co-op started blending B2 in its bulk diesel fuel shipments in February. The co-op has been selling soy-based B2 at its area biodiesel pumps since July 2003. Ag-One has additional facilities in Brookville, Buck Creek, Cider Grove, Dundee, Dunreith, Elwood, Emporia, Finly, Greenfield, Lapel, Markleville, Mays, Millville, Mount Summit, New Castle, Pendleton, Raymond, Rushville and Summitville.

Indiana co-ops start offering B2 blends

Magellan Midstream Partners LP has completed the construction of a pilot biodiesel injection-blending system at its terminal in Alexandria, Minn. Blending and distribution of biodiesel blends at the terminal began in January 2005. The new injection-blending infrastructure includes an insulated, heated 2,000-barrel tank and insulated, heated lines to the loading rack, said Bruce Heine, director of government affairs. 
 The primary objective of the pilot unit is to analyze results from a variety of cold weather tests to ultimately determine the best temperature at which to blend various biodiesel proportions with its petroleum counterpart "during Minnesota's coldest months," Heine said. Once testing is complete, the company plans to install similar injection-blending units for biodiesel in its four other Minnesota terminals and two terminals in North Dakota. Magellan's goal is to maximize dispensing and distribution efficiencies to meet Minnesota's demand once the B2 mandate goes into effect.
 
 Once Minnesota's B2 law becomes effective, state testing to ensure the consistency of the biodiesel blend would occur at the retail level. Heine said Magellan's decision to invest more than $5 million into its Minnesota and North Dakota terminals will assist to meet those standards. Since biodiesel and petroleum diesel have different gravities, splash blending the biodiesel with diesel in the tanker invariably leads to inconsistent blending, more often than not resulting in a higher biodiesel ratio at the bottom of the tanker. Injection blending, however, provides a more accurate blend by injecting the biodiesel into the petroleum diesel line as the petroleum diesel is filling the tanker. "The other benefits of having blending inside the terminal gate are that we can load both [biodiesel and diesel] at the same location, which is more efficient, and it eliminates the additional stop charges," Heine said.
 
 If the Minnesota mandate were to be repealed or halted for any reason, the company's investment in the biodiesel blending infrastructure throughout its regional terminals would be reimbursed by the state. "One of the issues that we looked at in our decision to invest in this infrastructure was the provision in the statute called the DERD-the Distributor's Expense Reimbursement Decision," Heine said. This provision acts as a mechanism to protect the distributors' investments should the mandate get struck from state law. 
 
 agellan is a transportation company in the pipeline and terminal distribution business, with no stance on any renewable fuels standard. Magellan provides services that its customers desire, so affiliations with biodiesel or any renewable fuel is, as Heine said, "to maximize the efficiency and fungibility of our system."

Magellan begins injection blending biodiesel

Presenters at the USDA's Outlook Forum projected 73 million bushels of soybeans to be planted in 2005. Of that, nearly 72 million bushels will be harvested with a national average yield of 40 bushels per acre. Including imports and last year's carryover, total domestic supply is expected to be just over 3 billion bushels. According to USDA baseline projections released in February, U.S. soybean oil production will continue to increase and top 20 billion pounds by 2008.

USDA announces soybean projections

Citing additional customer demand, Archer Daniels Midland Co. (ADM) plans to expand its softseed-crushing capacity at its German facility, according to Brian Peterson, ADM senior vice president of corporate affairs. The expansion at Oelmuhle Hamburg AG will increase rapeseed crushing capacity while continuing to serve both rapeseed and soy product customers. A growing demand for biodiesel factored into the decision. ADM expects the doubling of capacity to be completed by 2006.

ADM plans to expand German seed crucher

Philadelphia Fry-o-Diesel LLC was awarded a $369,696 grant from the Pennsylvania Department of Environmental Protection to design and build a pilot plant for trap grease-to-biodiesel conversion. The project will demonstrate cost-effective conversion of trap grease, encourage feedstock diversification, showcase urban biodiesel production and model pollution-prevention by innovative re-use of waste products. Fuel production is slated for August 2005. Fry-o-Diesel plans to develop a 3 mmgy plant facility in Philadelphia. For more information, visit <a target="_blank" href="http://">www.fryodiesel.com.</a>

Philadelphia Fry-o-Diesel receives grant

The $40 million, 30 mmgy biodiesel plant proposed in Wall Lake, Iowa, finished its equity drive, raising more than $22 million in 11 days. The group canceled the remaining two-thirds of its equity drive meetings and will now negotiate the remaining $18 million from lenders.

 Construction could begin in early April, and the facility could be operational in early 2006. When finished, it will be the largest biodiesel production plant in the United States.
 
 estern Iowa Energy LLC Project Manager Jim Venner credited the success of the equity drive on three things. "First, timing," Venner said. "The federal legislation that passed last year gave us a boost. Second, high oil and gas prices … the war in Iraq. We could pick up the newspaper any given day and point to any number of reasons to invest in biodiesel. Above all though, it's simply a good product, and the business plan is sound. We were well prepared and we presented the plan well."
 
 The Wall Lake facility will be built by Renewable Energy Group and create 24 permanent jobs. The facility will be 70 percent farmer-owned with in excess of 600 total investors. Only Iowa residents were allowed to invest in the company. "I think we covered almost the entire state as far as subscriptions," Venner said.
 
 The facility will take in multiple feedstocks: primarily soybean oils but also animal fats. West Central, along with several Iowa soybean-crushing facilities, will supply the soybean oil. Iowa also has a number of rendering facilities that will supply the animal fats.
 The soy-based process will produce glycerin that West Central will sell as crude. Biodiesel from animal fats will produce waste fat that can be sold as feed. Most coproducts will be sold locally, depending on the market, Venner told Biodiesel Magazine.
 
 The project started in July 2004 with consulting done by Venner's Ag Visions in conjuction with Sac County Rural Electric Cooperative. Frazier, Barnes & Associates LLC conducted the feasibility study, which revealed positive results for the project. The equity drive started March 7.
 For more information about Western Iowa Energy, visit www.westerniowaenergy.com.

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Western Iowa Energy progresses

Month to month, Biodiesel Magazine brings interested readers the latest information from on diesel fleet conversions to biodiesel across North America. Here's a look at the most recent municipalities, businesses and universities that have switched to the clean-burning domestic fuel:
 
 The city of Chattanooga, Tenn., has begun using a B5 blend in its entire city fleet of more than 400 vehicles, from dump trucks to its smaller passenger vehicles. The city's fleet manager Brian Keische said the city will soon increase the blend to a 20 percent mix. Outside of Chattanooga, in Ooltewah, the Stafford Bus Service also runs its eight buses on Benton Oil-supplied biodiesel, and the owners of the bus service said power and mileage have never been better.
 
 A $5,000 grant from North Carolina State University will help initiate a trial use of biodiesel in the 25-truck diesel fleet in Forsyth County, N.C. Environmental technicians will be testing the diesel fleet's emissions over the next several months while running the B20 blend. Provided the county gets favorable test results, Forsyth could use the renewable fuel in its county diesel trucks regularly.
 In Indiana, two diesel hybrid buses were added to IndyGo, the Indianapolis Public Transit Corporation. The hybrids will burn B20, joining 

 
 IndyGo's five eBuses already in use. In addition, Fort Wayne Mayor Graham Richard said his city's fleet of diesel trucks will soon run on blended biodiesel. Boone County's Zionsville School District has also converted fuel supplies for its 60-bus diesel fleet to run on B20 supplied by Frontier Co-op. 
 
 The University of Wisconsin in Madison announced plans to convert its diesel fleet to a B20 blend with 80 percent ultra-low sulfur diesel. The university's senior transportation planner, Rob Kennedy, said his university was the first in the state of Wisconsin to blend biodiesel with the ultra-low sulfur petro-product. 
 
 With teamwork from the Biodiesel Initiative, Laidlaw buses, Corvallis Biodiesel Cooperative and Oregon State University, diesel bus shuttles servicing Oregon State students have begun burning B50, using biodiesel feedstock of recycled yellow grease collected on campus from the university's cafeterias. 
 
 For a month, Chippewa Valley Ethanol Company (CVEC) near Benson, Minn., has been running its diesel-powered fleet-including a front-end loader, forklift and skid steer tractor-with B5 distributed by Glacial Plains Cooperative, CVEC General Manager Bill Lee said.
 
 In Nova Scotia, the city of Moncton has launched a pilot program to investigate the use of biodiesel in its fleet, starting with the city's use of B20 in six of its vehicles. Fish oils will constitute the methyl ester feedstock, produced by Ocean Nutrition of Canada and retail-supplied to the city by the Esso station, owned by Halifax-based Wilson Fuels. The city plans to run the pilot program through next winter, testing the fuel's cold flow performance and storage properties before making the decision to convert its entire 150 diesel-powered vehicles to the blend, which would also include any city-leased transportation.

Chippewa Valley Ethanol Co.'s skid steer tractor burns B5.

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Seven fleets convert to biodiese

Fortum, a Finland-based energy company, announced plans to build a biodiesel plant at its Porvoo oil refinery on the southern coast of the country. It will produce approximately €170,000 tons of biodiesel per year and cost 100 million. In February, Fortum said construction would start as soon as possible. The plant is slated to come on line in summer 2007, utilizing a process developed by Fortum Oil that would produce high-quality diesel fuel from vegetable oils and animal fats.

Fortum to build Finnish biodiesel plant

Biodiesel Solutions Inc., a Nevada-based manufacturer of small-scale biodiesel production units, has donated biodiesel production equipment to the University of Neveda, Reno (UNR). The equipment will be used in a lab setting by chemical engineering students to conduct biodiesel production research. "Having the equipment in our labs exposes the students to the actual manufacturing process, providing them with the hands-on experience of producing biodiesel from start to finish in the classroom," said Hatice Gecol, assistant professor of chemical engineering at UNR. "The equipment connects our research to business and real world applications."

Biodiesel Solutions donates equipment to UNR

Ron Wardrop of Rothsay, the largest rendering company in Canada, spoke at the Manitoba Biodiesel Conference on Feb. 28, where he announced Rothsay's construction of a 35 million-liter-per-year (9 mmgy) biodiesel refinery in Montreal. Construction on Rothsay Biodiesel began in January with operations expected to begin as early as July, Wardrop said. 
 
 Rothsay has operated a small-scale 4 million-liter-per-year (1 mmgy) biodiesel pilot plant in Montreal for the last three years. "Biodiesel chemistry is extremely well-known," Wardrop said. During this time, the company has "refined current knowledge" into its own functional model. The plant's construction is taking place on the same site where the pilot plant exists in an industrial sector of Montreal. The site was home to an old rendering site, but after rendering operations ceased, Rothsay began using the spot as a depot. Wardrop said the facility will be the first full-scale biodiesel plant for the Canadian rendering giant with a second plant to follow in either Manitoba or possibly Ontario. 
 Rothsay will use 100 percent animal fats and yellow grease as feedstock for the separation of the methyl esters in a batch system, the size and flow technology of which came from the company's own experience with its pilot plant. Wardrop divulged that Rothsay renders enough animal fractions to establish four or five full-scale biodiesel plants, although this would cut into the supply for its current non-fuel product stream. 
 
 The total cost of the project is $14 million, including the pilot plant and existing infrastructure. Approximately 20 people will operate and administer production at the facility. 
 
 According to Wardrop, Rothsay has arranged preliminary agreements with a few small distributors to manage the marketing and distribution of its biodiesel, but he could give no further details at press time.

 
 Wardrop said that, with the pilot plant, the company was "dipping its toe in the water." Already a major player in the North American rendering industry, Wardrop said Rothsay's progression into biodiesel production is an opportunity for the company to take advantage of a "value-added process to existing raw materials."

Rothsay's Montreal site where construction for Rothsay Biodiesel's first full-scale plant is ongoing

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Rothsay begins full-scale biodiesel plant construction

On the heels of being awarded $250,000 in grant funds in 2004 to help retrofit school busses with emissions control equipment and fund high blend biodiesel usage for bus fleets, Iowa's Bus Emission Education Project (BEEP) recently announced that it will receive another $250,000 to be used for the same purposes in 2005. The first grant was awarded by the U.S. EPA's Clean School Bus USA program; the second, through Congressionally earmarked funds. According to Brian Button of the Iowa Department of Natural Resources, the vast majority of the $500,000 is being used to retrofit the state's school buses with diesel oxidation catalysts

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Iowa's BEEP receives more funding

A project two years in the making is expected to give North Dakota the largest biodiesel production facility in North America once completed, according to officials with North Dakota Biodiesel Inc. A $50 million, 32 mmgy biodiesel plant is expected to begin construction this August at a greenfield site near Minot, N.D.
 
 The announcement was made at the Energy Security Summit held March 21-22 at the University of North Dakota's Energy and Environmental Research Center in Grand Forks, N.D. "This is the beginning of something big," Sen. Kent Conrad said. "This is something that could make a profound difference for the energy security for our nation and the economic security of our state."
 
 Skip Hauth, executive director of BioEconomy Partners, said funding is in place for the project that could begin producing biodiesel in late 2006. He said the plant would use about 355,000 acres of canola. The North Dakota Farmers Union (NDFU) will be involved in procuring canola supplies for the plant, said Ken Astrup, NDFU's director of cooperative services.
 
 North Dakota Agriculture Commissioner Roger Johnson said the state raises more than 90 percent of the nation's canola supply. The plant is expected to use roughly one-third of the state's canola production. Bordering Canadian provinces will fulfill additional demand. "I think this is an industry poised for explosive growth for lots of reasons," Johnson said.
 
 Hauth told Biodiesel Magazine the plant would use a continuous flow design based on European rapeseed-to-biodiesel technology. Grand Island, N.Y.-based Biodiesel Management Inc. will construct the facility. Uhde, a ThyssenKrupp Technologies company in Germany, has been retained as the general contractor.
 
 The plant is expected to produce biodiesel that meets German DIN standards, which are more stringent than current ASTM standards, according to Hauth.
 
 "This will be the biodiesel hub of North America," said Falk Beindorff, representative for Biodiesel Holding Ltd., a Delaware-based investor group. He said the group is considering pursuing other plants in the state. Hauth told Biodiesel Magazine that an additional plant would likely be around 30 mmgy.
 
 "I hope this is the first announcement of many," Conrad said.

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32 mmgy proposed North Dakota plant to use canola

April 15 is tax day … as if you needed one more reminder. Unless you're one of the lucky ones who has learned that procrastination has painful consequences, you may be joining millions of other Americans who wait until the last minute to do their taxes.
 

 Lately, my life has been consumed by tax law, tax code and tax forms … and it has nothing to do with the Jobe family 1040 form. Rather, it is in guiding the biodiesel federal excise tax credit regulations into place and maximizing their impact for the growth of the industry. Although great progress has been made (the forms for the blender credit are now available at www.biodiesel.org), the process of working with the Internal Revenue Service for final regulations is ongoing. 
 
 It is during this process of implementation that we begin our next great task: seeking an extension. As I have been traveling around the nation during the past few months talking to biodiesel stakeholders, a lot of people have asked why the new tax credit for biodiesel only lasts two years. They ask, how could a production facility get financing and start operations on a two-year program when they can't even get a plant built in that amount of time? Or barely get a plant built, only to have the extension expire? 
 
 My answer to them is that the industry's intention has always been that this would run much longer than two years. But our supporters in 
 Washington, D.C., told us that two years is what we could expect initially, and that it could be followed by an effort to seek an extension. That advice has become our course of action. Although nobody can be certain about the prospects of future legislation, one certainty is certain is that getting the tax credit extended is now our No. 1 priority.
 
 What we accomplished last fall was a real triumph. Most people are not aware of how difficult it is to change the United States tax code. We were successful in doing so within three years of our first attempt-a sprint by most standards. Even when the energy bill failed two years in a row, our leaders and champions found another bill to attach the legislation to and drove it home. 
 
 In some ways, it is good that the process of changing the tax code is so difficult. The establishment of the biodiesel incentive was a great success for America. Now that the tax credit has been established, it will take a similar amount of hard work, communication and support from all stakeholders to make it a long-term investment in helping biodiesel succeed-and start making a dent in our dependence on foreign oil. 
 
 I believe that we will ultimately be successful. But stakeholders considering investing in a biodiesel plant should not bank on my conviction alone. Rather, they must all rise to the challenge and talk to their Congressional delegates. If you are a biodiesel supporter, we look to you to do the same. Please ask your senators and representatives to support an extension bill; explain how important it is to you as a constituent and to the future of the nation. It will take everyone working together to get this done.
 
 The market will decide who should invest in a biodiesel plant and where. It is the National Biodiesel Board's to challenge everyone who is a biodiesel supporter to make sure that our No. 1 priority is achieved. 
 
 The result will be a sustainable, successful biodiesel market that will help our country down the vital path to where energy independence is almost as certain as Uncle Sam collecting our taxes on April 15. 
 

 Joseph Jobe
 National Biodiesel Board
 Executive Director

We've Got the Tax Incentive … Now What?

NBB In Sight

The week of April 4-8 saw a fleet of vehicles driving cleaner and greener across the state of Missouri. The Missouri Department of Natural Resources coordinated an alternative-fueled caravan with the drive to educate school and university students, among others, about the option and benefits of using these vehicles. "Drive Clean and Green Across Missouri" was sponsored by the Missouri Department of Natural Resources Energy Center, St. Louis Regional Clean Cities and Kansas City Clean Cities coalitions. 
 
 This caravan of alternative-fueled and hybrid vehicles started on the east side of the state at the St. Louis Science Center. Other stops included the Gateway Arch, Wentzville General Motors plant, various universities and schools, the state Capitol, and the Kansas City Discovery Center.
 
 The crowds learned the benefits of biodiesel, including fuel economy, money savings, oil import reduction and the reduction of greenhouse gas emissions.
 
 Vehicles included Chevrolet Silverado, Toyota Prius and Honda Insight hybrids, a biodiesel-fueled Jeep Liberty, a clean natural gas bi-fuel Chevrolet Silverado, a propane bi-fuel Ford 150 series pick-up truck, an E85-capable Chevrolet Avalanche, a Ford Taurus and Explorer, and a Dodge Ram.
 
 The National Biodiesel Board sponsored the event with the National Ethanol Vehicle Coalition, Missouri Soybean Association, Missouri Corn Growers Association, Laclede Gas, Missouri Propane Gas Association and various automobile manufacturers and cosponsors.

Drive Clean and Green Across Missouri

Farmers, engineers, environmentalists and biofuel enthusiasts had reason to celebrate in March. These leaders commemorated National Biodiesel Day on March 18, which is the birthday of Rudolf Diesel, the inventor of the diesel engine. Festivities included a birthday party hosted by the Vermont Biofuels Association at the Statehouse in Montpelier, Vt., for state legislators and other supporters.
 
 President Bush led up to this industry holiday the week before by showing his support for efforts afoot in Washington, D.C., to encourage the use of biodiesel. In mid-March, he said one objective of energy policy "… is to diversify our energy supply by developing alternative sources of energy." The president went on to say, "Congress needs to continue strong support for ethanol and biodiesel. We're going to continue to figure out ways to grow our way out of dependence on foreign oil. Someday, somebody is going to walk in and say, 'Well, we got a lot of soybeans, Mr. President. And we're less dependent on foreign sources of oil because of biodiesel.'"
 
 The biodiesel industry chose Diesel's birthday as National Biodiesel Day to honor him for his foresight in recognizing the valuable role of vegetable oil-based fuel. In the late 19th century, Diesel ran early versions of his engine on peanut oil. In a 1912 speech, Diesel said "the use of vegetable oils for engine fuels may seem insignificant today, but such oils may become, in the course of time, as important as petroleum and the coal tar products of the present time."

National Biodiesel Day celebrated in March

More than 120 biodiesel bills have been introduced in 31 states this session. Four states have already passed bills into law this year:
 
 -Kentucky-State income tax credit for biodiesel producers and 

 blenders
 -Mississippi-Per-gallon grant to producers of ethanol and biodiesel
 -South Dakota-Tax benefit for biodiesel production facilities
 -Virginia-A study on biodiesel development authorized in the state States to watch:
 -Illinois-11 biodiesel bills would provide infrastructure assistance, enhance state and school fleet use, and provide incremental cost
 assistance
 -Indiana-Seven bills encourage production, blending and retail sales of biodiesel fuel, investment in production facilities, state fleet 
 use and electricity generation from renewable sources
 -Iowa-Six bills seek to enhance the use of biodiesel by state and local government fleets, and provide funding for biodiesel distribution 
 and storage infrastructure
 -Missouri-Six bills would enhance to the Missouri Qualified Biodiesel Producer Incentive Fund, propose a B2 requirement and 
 extend the incremental cost assistance program for school districts 
 -North Dakota-Legislation would provide funding to encourage biodiesel production in the state
 
 Other states with considerable activity include Michigan, Oklahoma, Oregon, Tennessee, California, Texas, Washington and Wisconsin.

State legislative update

The world's largest user of diesel fuel is taking a proactive stance in reducing its consumption of petroleum. Recently, the U.S. Department of the Navy announced a new policy that will lead to greater use of biodiesel. Principal Deputy Assistant Secretary (Installations and Environment) Wayne Arny issued a memorandum that establishes a policy that most U.S. Navy and Marine non-tactical diesel vehicles shall operate on a blend of 20 percent biodiesel fuel (B20) no later than June 1, 2005.
 
 "B20 was an ideal choice for the Navy and Marines because it's easy to use, performs as well or better than diesel and is a safe, sensible way for us to meet our federal requirements to reduce petroleum consumption," said Don Schregardus, deputy assistant secretary of the Navy (Environment). "But we decided to take it a step above and beyond what the military is required to do. By bringing B20 to virtually every Navy and Marine base nationwide, we are significantly decreasing reliance on fossil fuels." 

 
 Reducing dependence on foreign oil is something Chief of Naval Operations Admiral Vern Clark directed this past August, more recently in his CNO Guidance for 2005 for the fleet. The Jan. 18 Navy memo provided guidance for biodiesel use including that it can be supplied by the Defense Energy Support Center (DESC) and used where adequate fuel tanks are available. The policy does not apply to tactical military equipment or deployable commercial equipment intended to support contingency operations.

U.S. Navy calls for broad use of biodiesel at Navy, Marine facilities

BBI International has consolidated two of its Colorado offices-the head office in Cotopaxi and the accounting office in Salida-into a newly leased building that will serve as corporate headquarters. According to BBI CEO Mike Bryan, more than two-thirds of the Cotopaxi office's employees live in Salida, so the move makes logistical sense. The new location also has "more services available to us," Bryan said. The more than 100-year-old office sits on the banks of the Arkansas River and is spacious enough to accommodate the growing company's needs. 
 
 The new address is: PO Box 1146, 220 North F Street, Suite 1, Salida, CO, 81201. Phone: (719) 539-0300. Fax: (719) 539-0301.

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BBI consolidates, relocates head office

Green Energy Resources (GER) announced the opening of new offices in Hong Kong, headed by Andrew Tong; Tokyo, led by Graham Syme; and Singapore, headed by Victor Yan. The China office will coordinate operations in both regions. GER will market its wood fiber fuels-environmentally certified under the Urban Tree Certification System (UTCS)-to those areas for various uses, including biomass-to-ethanol applications.
 
 GER also announced its new trading symbol "GRGR," formerly "NYIL" on the NASDAQ stock exchange, effective March 8. Shareholders are advised to redeem share certificates for updated ones. GER is a renewable energy company that provides wood biomass to the power utility industry.

Green Energy Resources opens new offices in Asia

DOE, has announced that its official publication will now be available online. Clean Cities Now provides the latest information on alternative fuels and vehicles, hybrids, fuel blends, idle reduction, fuel economy and Clean Cities coalitions. Copies of the newsletter will no longer be mailed. Instead, those interested in the publication can sign up for e-mail notification when a new issue is posted online at <a target="_blank" href="http://">www.eere.energy.gov/cleancities/
 ccn/subscribe.html. </a>

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Clean Cities Now goes online

On March 9, GreenFuel Technologies Corp. announced the appointment of Cary Bullock as the company's new CEO. According to GreenFuel principal and founder Jenny Laden, Bullock has an in-depth knowledge of GreenFuel already, because he has spent the last several months as an advisor to the Massachusetts-based biotech company. Bullock was named one of the top 100 most influential leaders in the gas and electric industry by Harts Energy Markets' Century of Power Review 2000

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GreenFuel appoints new CEO

On March 1, Washington-based Venable LLP announced the addition of Richard Powers Jr. and Steven Adducci as partners to the firm's Regulatory Group. Both men previously worked for Dorsey & Whitney LLP, where Powers served as partner-in-charge and co-chair of the Environmental, Natural Resources and Energy Group.

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Venable adds partners

Northeast Biodiesel Company announced March 10 the appointment of Rex D'Agostino as president and CEO of the company. In the newly created position, D'Agostino will provide strategic direction and oversee all company operations aimed at building the biodiesel market and business in Massachusetts and the Northeast. Previously, D'Agostino was vice president of sales and marketing for Evergreen Solar of Marlboro, Mass.

Northeast Biodiesel Company appoints CEO

The Manitoba Biodiesel Advisory Council released a report to the government of Manitoba in February. "Biodiesel in Manitoba" researches the opportunities and challenges related to producing biodiesel in the province. In the report, the council addresses issues and provides recommendations to the government regarding the technical, social, environmental and economic considerations associated with the development of a biodiesel industry in Manitoba. Specific issues include possible end-users, barriers to production, feedstock availability and various markets for biodiesel. The report can be found online at<a target="_blank" href="http://"> www.gov.mb.ca/est
 /pdfs/energy/biodiesel.pdf.</a>

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Manitoba Biodiesel Advisory Council releases report

Apollo Resources International Inc. announced Feb. 25 a stock purchase agreement with Earth Biofuels Inc., a producer and distributor of biodiesel fuel. Apollo Resources will own 50 percent stock in Earth Biofuels and offer 169 of its service stations nationwide for Earth Biofuels to distribute its fuel.
 
 Johnson told EPM that Earth Biofuels will narrow down the service stations to 150, which could include up to 15 truck stops. After two years, the company would sell the stations through franchise agreements, keeping 10 percent for test stations.
 

 In addition to the merger, Apollo Resources named Earth Biofuels CEO Tommy Johnson as vice president of Powerball Alternative Fuels Company LLC, an alternative fuels subsidiary of Apollo Resources.

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Apollo Resources, Earth Biofuels Inc. merge

A team of international experts is presenting the findings of its research on the effects of using specified risk materials (SRMs) to produce biodiesel. Advanced Technologies & Fuels Canada Inc. and the expert panel is holding "SRMs to Biodiesel: a BioSafety Workshop" on June 21 at the Delta Hotel in Ottawa. Animal tallow tainted with transmissible spongiform encephalopathies (TSE) is considered to be a SRM. The Canadian Food Inspection Agency will also host a separate workshop on environmental decontamination and the disposal of TSE-tainted materials on June 22. For more information, please e-mail info@atfcan.com or visit<a target="_blank" href="http://"> www.atfcan
 .com. </a>

BioSafety Workshop to discuss biodiesel

The American Soybean Association (ASA) presented a Special Meritorious Award to Sen. Blanche Lincoln, D-Ark., on March 21 for her support of biodiesel. Lincoln was honored at the ASA's awards banquet at the Commodity Classic in Austin, Texas, on Feb. 25. She was unable to attend the banquet in person so the organization gave her the award at the Senate Reception Room at the United States Capitol by ASA President Neal Bredehoeft and board member Doug Hartz.

Sen. Lincoln receives ASA award

Dan Freeman, owner of Dr. Dan's Alternative Fuel Werks in Seattle, Wash., stood before more than 350 attendees at the local Northwest Biodiesel Forum on March 19, saying the state of Washington has the highest concentration of biodiesel users in the nation.
 
 It's a distinction resident energy conservationists can be proud of, and a milestone Dr. Dan helped the state chalk up.
 
 Freeman created Dr. Dan's Alternative Fuel Werks in 1990 with the intent of selling compressed natural gas (CNG) after an acquaintance made the suggestion. He saw it as a chance to make a difference in the world-and a way to make a living at the same time. So he added a CNG pump to his existing auto repair shop on Seattle's 50th St. N.W., and also became a member of the Puget Sound Clean Cities Coalition (PSCCC), an organization that protects air quality, public health, energy security and economic development by promoting the implementation of policies and practices that reduce petroleum consumption.
 
 "The PSCCC approached me about handling biodiesel, and at first I said no way," Freeman admitted. "It was just another way to perpetuate 
 
 diesel. But they were persistent, and I eventually listened."
 
 In October 2001, Freeman decided to give it a try. He added ASTM-certified biodiesel, B100, to his company's list of products. Less than three and half years later, Dr. Dan's Alternative Fuel Werks goes through 13,000 to 15,000 gallons of B100 per month. Meanwhile, CNG sales range from 300 gallons per week in the offseason to 1,000 gallons per week during the summer. Pacific Northwest Energy is the company's biodiesel supplier.
 Although Freeman couldn't confirm it, he believes Washington is the birthplace of widespread B100 use, and he's certain the state still ranks No. 1 in B100 consumption. At his station, more than 900 customers regularly fill up on biodiesel. More than 95 percent of them use B100, including commercial consumers like Earthwise Excavation, Seattle Tree Preservation Inc., Four Season Tree Care and Symbiosis Tree Care. "Every vehicle you can imagine comes through here, from 80,000-pound semis to bulldozers, excavators, boats and tractors," Freeman said.

 
 Dr. Dan's business works slightly different from a traditional public fueling station. Customers must set up an account in advance and pre-purchase their fuel, at a minimum of 40 gallons. Those who pre-pay for more than 100 gallons receive a discount. "Our goal it to make biodiesel as cheap and accessible as possible," Freeman said. "The prepayment makes it possible to [control] inventory. It also cuts down on transaction costs."
 
 When asked if any conversion was needed for vehicles to run on B100, he laughed. 
 "The oldest vehicle [that comes to the station] is a 1959 Mercedes," Freeman said. "No conversion necessary. As far as hose replacement, the only ones are hoses that are already leaking from regular diesel use or had been replaced with incapable hoses. Almost 1,000 vehicles are filling up here, and maybe 10 vehicles have needed hoses replaced."
 
 Freeman identified early-model Chevrolets and Fords with low mileage as vehicles that would need parts (i.e., the fuel lift pump) replaced to run on biodiesel. 
 
 Freeman said he doesn't hear many negative comments about biodiesel at his station. "Some people complain about diesel prices, and they think running a car on French Fries and diesel should be cheaper," he said. "I've got answers for them. But generally those aren't going to be our customers. When the [Iraqi] war started, it was all we could do to answer the phone."
 
 Of course, Freeman drives his own vehicle on B100-a new Volkswagen Golf that averages 38 to 47 miles per gallon. He said some customers, mostly fellow Volkswagen owners, sometimes get more than 50 miles per gallon. "The local Volkswagen dealers love us, and now the local Daimler Chrysler dealers love us," Freeman said.
 
 In fact, at the Northwest Biodiesel Forum, Volkswagen AG (VW) and Archer Daniels Midland Co. (ADM) announced the vehicle manufacturer's decision to extend warranty protection for the use of biodiesel (up to B5) in all of its U.S. market diesel-powered automobiles.
 
 "Our decision to extend warranty coverage for diesel engines fueled by the B5 biodiesel blend is driven by the shared desire of VW and ADM to capitalize on the significant environmental, economic and quality-related benefits of increased biodiesel usage," said Frank Witter, CEO of Volkswagen of America. "Volkswagen and ADM are now focused on jointly testing a blend of 20 percent biodiesel or B20 in order to provide ever-cleaner alternative and sustainable fuel choices."
 
 Despite such a landmark decision by a major automobile manufacturer, hardedged B100 advocates like Freeman were not ecstatic about the announcement. "It's nice they said something," he said. "But I'm disappointed it's only B5, especially since we probably have 700 TDIs running B100 through my station." TDIs are Volkswagen models with turbo direct injection diesel (TDI) engines.

 
 Freeman said the Northwest Biodiesel Forum was a success overall. The hall was filled to capacity, and the parking lot outside was packed with attendees and various biodiesel-fueled vehicles, including buses and heavy machinery. "Pretty good considering it was cold and rainy," he said.
 
 Freeman attributes the state's biodiesel success and acceptance to the event's coordinator, the Northwest Biodiesel Network (www.nwbiodiesel.org). One of the network's founding members, Aaron Kahn, told Biodiesel Magazine the organization was created when members of a TDI Club decided to hold an event mainly focused on cars but eventually focused on biodiesel. Now the group tackles a variety of advocacy, education and outreach issues dealing with biodiesel.
 
 Kahn said he had an equally blasé reaction to Volkswagen's B5 warranty announcement. "To me, the whole discussion about warranty is a red herring," Kahn said. "In the research I did when I bought my car for B100, I found [automobile manufacturers] don't warranty the fuel period, whether it be petroleum or vegetable oil. The bottom line is consumers are responsible for putting fuel in their car."
 
 Still growing
 Despite the successful sale and use of biodiesel in the state, Dr. Dan's Alternative Fuel Werks isn't satisfied with current biodiesel consumption. Freeman told Biodiesel Magazine the company is in the process of applying for a grant to build four more B100 stations in the Puget Sound area: Vashon Island, Roosevelt, Snohomish and Bellingham. "We'd very much like to see it go the same way as organic food has gone in the area," he said. "Locally grown, produced and used. Our goal is to have Washington State grow and produce fuel. We think that'd be a tremendous boon for the economy, environment and quality of life."
 
 The state's demand is certainly strong enough to support an increase in supply. Pacific Northwest Energy goes through approximately 100,000 gallons of B100 per month in the Puget Sound area, thanks to the state's high concentration of military bases and ferries. Freeman said Tacoma uses 20 percent biodiesel blends in the city's garbage trucks and Lacey uses 40 percent biodiesel blends in its buses. According to Freeman, Washington was using 4 percent of the nation's biodiesel last summer. "I'm sure it's probably up to 8 percent now," he said.
 In addition to Dr. Dan's, nine other fueling stations in the Puget Sound area sell biodiesel. That number is sure to grow in the near future.
 
 Web site savvy
 Six months before Freeman started selling biodiesel, he decided to create a Web site to promote his business. Now, www.fuelwerks.com is a wealth of information for anyone interested in the renewable fuel. Aside from basic information about CNG and biodiesel, a "Frequently Asked Questions" link dispels several myths about biodiesel fuel. The phone numbers and address of area biodiesel fueling stations are listed on the site, including a map of how to get to Dr. Dan's. Other links offer information about grant opportunities and direct visitors to the PSCCC, Natural Gas Vehicle Coalition and TDI Club Web sites, among other organizations.

 
 This amount of useful information must have been a challenge to collect. However, Freeman said it wasn't hard at all. "Putting it together was actually pretty easy," he said. "I lucked out and had a former tenant put it together for me. After that, I was getting phone calls asking when the fuel was coming every day, mostly from the VW Diesel Club and the TDI Club."
 
 As of March 22, more than 55,750 hits were recorded on the Web site. It includes a "Biodiesel Users Survey," asking questions like: Why do you use biodiesel? How many miles have you driven using biodiesel? Have you had any vehicle problems associated with using biodiesel? What did your car dealer say about biodiesel? Who is your mechanic?
 
 "We started that survey at the end of 2003, and since then, we have documented over a million trouble-free miles with B100," Freeman said. "We ask them for their success story. It would pretty much have to be, otherwise we couldn't continue." The Web site still receives five to six completed surveys per week.
 
 Another link helps visitors who wish to start or join a biodiesel co-op. Co-ops already exist in Tacoma, Olympia, Beacon Hills and Port Townsend, soon to be joined by a co-op in Duval. For $1,900, Dr. Dan's Alternative Fuel Werks supplies customers with a B100 fuel pump, 275-gallon storage tote and 275 gallons of B100. Installation is included. "People can get biodiesel on their farm or their home and share with neighbors," Freeman said. The PSCCC has included the link on its Web site at <a href="mailto:www.pugetsoundcleancities.org.">www.pugetsoundcleancities.org.</a>
 
 Dr. Dan's Alternative Fuel Werks can deliver EPAct credits, which is also advertised on the Web site although not many groups utilize this link, according to Freeman. EPAct credits stemmed from the Energy Policy Act of 1992, which required city, state and federal fleets in noncompliance areas to use biodiesel fuel. Buying 450 gallons of biodiesel earned users one EPAct credit. However, these days, it is more common to trade energy credits than collect them.
 
 "Usually what happens, for example, is somebody needs to put a natural gas power plant somewhere," Freeman said. "They will add pollution to the area. Instead of reducing their pollution, it's cheaper to reduce someone else's pollution [and trade for their EPAct credits.]"
 Freeman said his company has a similar contract with Seattle City Light because it is cheaper for Seattle City Light to invest money in another company's EPAct credits than to clean up their own emissions. "They are sponsoring biodiesel in Washington State ferries and part of the metro bus fleet," Freeman said. 
 
 Even though Dr. Dan's Alternative Fuel Werks didn't set out to sell biodiesel in the beginning, Freeman is certainly behind the cause now that minimal auto repair is being done at his shop. He said he's too busy selling biodiesel.

 
 "Our typical story is a person comes in on Thursday in their Subaru, asks a couple questions [about biodiesel] and comes back the next week with a new Volkswagen Jetta," Freeman said. "They're paying less money per mile, not contributing to global warming, not buying foreign oil and supporting American farmers. Even though right now [biodiesel] is $3.57 a gallon, it's still cheaper than gasoline." n
 
 Jessica Williams is associate editor of Biodiesel Magazine. She can be reached by e-mail at<a href="mailto: jwilliams@bbibiofuels.com "> jwilliams@bbibiofuels.com </a>or by phone at (701) 746-8385.

Dr. Dan's Alternative Fuel Werks on 50th St. N. W., in Seattle is an auto repair shop in addition to a biodiesel and CNG retailer.

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Dr. Dan's Alternative Fuel Werks is spreading the benefits of biodiesel throughout Washington's Puget Sound. Business is booming, and expansion is on the horizon.

Sound of Success

It's no secret that the U.S. biodiesel industry holds the potential for exponential growth. The transition to ultra-low sulfur diesel all but secures a more robust near-term market. In fact, establishing just a B2 blend nationwide would create a demand for more than 1 billion gallons of biodiesel annually. It's a far-reaching goal for a youthful industry that produced less than 30 million gallons of fuel in 2004. But it's a mark Iowa-based Renewable Energy Group (REG) believes is not only attainable, but well within sight. 
 
 REG was formed in 2002 by merging the strengths of West Central Soy, engineering and construction firm Todd & Sargent Inc., and an alliance with process equipment builder Crown Iron Works. West Central combines its technology and marketing expertise with the construction background of Todd & Sargent to develop commercial-scale biodiesel production facilities. "If you come to us and say 'We want to build a plant,' we can provide everything from construction to marketing," said Myron Danzer, REG sales production manager. 
 
 Danzer joined West Central 20 years ago and helped forge REG. West Central's early success with biodiesel was a major factor in the creation of REG. West Central Soy, the manufacturing division of West Central Co-op, opened its first batch process biodiesel plant in 1996. 
 
 The plant quickly began to produce more than 1 mmgy of biodiesel. 
 
 However, the co-op felt that it could produce biodiesel more efficiently, and in larger quantities. West Central continued to redesign the biodiesel process in its batch plant while studying other production techniques. Eventually the company settled on its own design and in 2002 unveiled its pioneering 12 mmgy plant in Ralston, Iowa.

 
 While REG's technology-an energy efficient continuous flow process that recovers excess methanol and produces no process wastewater stream-is successful in its own right, it's what the company is doing with that technology that could push the biodiesel industry to the next level of large-scale production.
 
 "Looking at the growth of biodiesel and the industry, there was a need in the marketplace for a reliable commercial-scale production system and technology," said Gary Haer, West Central soy products sales manager and National Biodiesel Board (NBB) executive committee member. "That vision drove [REG] into formation."
 
 Forming a partnership
 West Central's partnership with Todd & Sargent was a natural progression. The companies were involved with mutual projects long before REG. The Todd & Sargent team constructed West Central's Ralston plant. Todd & Sargent also completed a large soy processing facility for Harvest States in Fairmont, Minn. The company is currently constructing the grain handling, and distillers dried grains storage and handling facilities for the 100 mmgy VeraSun Energy ethanol project in Fort Dodge, Iowa. These abilities made the company a natural fit with West Central in REG.
 
 "What we needed was a good solid construction company," REG President Nile Ramsbottom said. "I knew from my background that they were exactly that firm." Ramsbottom joined West Central in 2000 after serving as an officer of Purina Mills for 18 years.
 
 Todd & Sargent has more than 60 years of engineering and construction experience, according to Todd & Sargent estimate coordinator Allan Tedrow. He is currently leading part of the team that is building REG's newest biodiesel facility in Albert Lea, Minn.

 
 Providing the total package
 Simply put, REG builds biodiesel plants and provides start-up services. However, the full scope of possibilities available to investor groups is much more. 
 
 REG builds the turnkey plant, trains the operating staff and provides start-up assistance. The plant can be start-up ready nine months after all construction and environmental permits have been approved. The process begins with site assessments and developing basic infrastructure including roads, the tank farm and layout of the site. Space requirements include one acre for process equipment and a control room, and 20 acres for tanks, process, rail, a support building and roadways.
 
 REG then provides a unique training program. Plant operators undergo classroom and hands-on training at West Central's Ralston plant. Once the new plant is near completion, REG provides a core group of operators to aid in start-up and help make sure the plant runs smoothly before turning complete control over to the new operators. REG also provides operating and safety manuals for the plant.
 From there, West Central can provide input procurement for feedstocks and marketing for the biodiesel and glycerin. The company can also provide plant management including a general manager and operations manager. "We can also provide all administration and human resource needs," Danzer said.
 
 The biodiesel world is as ever changing as it is growing. Therefore, there will always be advancements in the production process, some of which are being initiated by REG's own research and development team. The benefit of that research for REG-aligned plants is they will have access to that new technology.
 
 REG also provides lab set up and equipment, making sure the plant does all of the testing for the biodiesel and the training that goes with it. It's an important step in ensuring the biodiesel produced is of the highest quality.
 
 Quality plants producing quality biodiesel
 In today's fuel market, quality and availability are the foremost concerns for biodiesel consumers, according to Ramsbottom. "It's all about making standards for biodiesel that are upheld and made even more stringent for the future than today," he said.

 
 That is why West Central's Ralston plant is currently undergoing BQ-9000 accreditation. Danzer, a member of the National Biodiesel Accreditation Commission, believes the plant will soon become the second producer to become accredited. 
 
 For REG projects, those standards come as part of the REG package. "All of the REG plants are going to be BQ-9000 certified plants," Haer said. "They will meet that level of quality measurement in production, storage and handling so [the fuel] gets to the distributor without compromising quality."
 
 Haer provides an additional step in ensuring biodiesel remains on spec once it leaves an REG facility and reaches the distributor. He often sits down with a distributor to discuss biodiesel-handling issues. There is an education process on how to store and handle biodiesel during blending, Haer said.
 
 SoyMor plant ready to trip mandate
 REG's first plant, the 30 mmgy soy-based SoyMor facility near Albert Lea, Minn., is on pace to begin production this summer, in time to supply the 8 mmgy of in-state production capacity needed to trigger the Minnesota B2 mandate. The mandate calls for 2 percent biodiesel in nearly all diesel fuel sold within Minnesota.
 
 In effect, the SoyMor facility represents a full circle of ideas for REG. "Back in 1998, Roger Peterson was the SoyMor president and a member of the National Biodiesel Board," Danzer said. "He came and talked with West Central and encouraged us to keep pursuing biodiesel. West Central followed Roger's recommendation. We started to convert the process to meet ASTM standards. Little did I know that he would come back in four or five years to ask us to build a plant."
 
 As vice chair of the NBB, Peterson purchased biodiesel from West Central because they provided a consistent and quality product. He now refers to REG as a "one stop shop" for biodiesel construction because they are the most "experienced with a full-sized biodiesel plant."
 REG is acting as general contractor for SoyMor. Tedrow said the process is based upon West Central and Crown Iron Works' transesterification biodiesel technology. Interstates Electric is providing electrical and control system work, and Peoria, Ill.-based M&W Contractors is doing process piping. Miller Mechanical of Des Moines, Iowa, is the provider of instrumentation for the plant.

 
 Danzer said REG is proud of its role in triggering the Minnesota B2 mandate. He points out that at the time SoyMor was considering building the plant, the 2 percent mandate was in effect, but there was no blender's tax credit, which was eventually included as part of the JOBS bill last fall.
 
 "[SoyMor] took a leap of faith like West Central did when we built a 12 million-gallon plant in 2001," Danzer said.
 
 At a 2 percent blend, Minnesota creates a 16 mmgy market for biodiesel, according to Haer. Danzer feels the distribution infrastructure is in place. Magellan Mainstream Partners has tank distribution capabilities set up in Alexandria, Minn., and has plans to expand to other cities in the region. It's the first proving ground for proper blending of biodiesel at a terminal, Danzer said.
 
 Looking to the future
 In addition to SoyMor, REG has five biodiesel projects in varying stages of development, according to Ramsbottom. Western Iowa Energy LLC in Wall Lake, Iowa, is moving quickly. The group has completed a successful equity drive for the 30 mmgy plant capable of using vegetable oil and animal fats as feedstock. Danzer said that project could start construction this spring and be near completion later this year.
 
 Ramsbottom expects REG to build 20 plants in the next five years. He believes the industry itself is preparing for a major expansion. The low sulfur diesel fuel standards taking effect in 2007 will create a large market for biodiesel as a lubricity additive, Ramsbottom said. He said depending on feedstock availability and demand, there could be a 1 billion gallon market for biodiesel in the United States. A B2 market in the United States' 55 billion-gallon-per-year diesel fuel market would create a demand of approximately 1.1 billion gallons of biodiesel annually.
 
 Such production will naturally require an expanded distribution network. That is something REG will provide its future partners as part of its complete biodiesel package. "That distribution network is growing," Haer said. "In the future, it is going to evolve. We're actively putting together future distribution for biodiesel. That will provide nice market access to producers currently and into the future."
 
 Ramsbottom said the U.S. distribution network is still in its infancy. The goal for West Central this year is to market 40 million gallons of biodiesel nationwide.
 

 The biodiesel industry could easily provide the United States with a B2 market, Peterson said. "We need at least 10 to 12 plants in the next two years," he said. "REG is in the best position to provide that kind of growth." n
 
 Dave Nilles is a Biodiesel Magazine staff writer. Reach him by e-mail at <a href="mailto:dnilles@bbibiofuels.com ">dnilles@bbibiofuels.com </a>or by phone at (701)-746-8385.

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West Central's Matt Schultes examines biodiesel process equipment

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West Central employees check control system instruments

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West Central's truck and rail load out in Ralston

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The partners in Renewable Energy Group share a vision of a 1 billion-gallon-per-year biodiesel market in the United States. REG is charging toward that goal by creating a network of successful and innovative biodiesel production facilities capable of helping the industry meet its work.

One Stop Shop

Quality assurance. 
 I
 t is perhaps the biodiesel industry's highest priority. As the industry expands and the number of U.S. producers climbs, it will become simultaneously more important and difficult to guarantee the quality of each gallon of biodiesel entering the system. Establishing a double-layered safety net-a quality management program integrated at two crucial levels along the supply chain-simply may be the industry's best opportunity to protect and cultivate its product. 
 
 Enter BQ-9000, a program representing the quality system management requirements of the National Biodiesel Accreditation Commission (NBAC), an autonomous and independent committee of the National Biodiesel Board. The program's purpose is to cultivate the commercial success and build public acceptance of biodiesel by recognizing producers and marketers that demonstrate compliance with it. 
 Simply stated, BQ-9000 is designed to help assure that biodiesel is produced to, and maintained at, the industry standard, ASTM D 6751. But that's not all. BQ-9000 is also a quality systems program that includes checks on storage, sampling, testing, blending, shipping, distribution and fuel management practices. 
 
 The program was developed by an objective, feedstock-neutral industry task force that includes representation from all levels of the biodiesel supply chain, from producers and marketers to the petroleum industry and consumers. "We have a diverse group of people on the 
 commission," said Danny Norton of Ohio-based Peter Cremer North America LP, the first company to become an active BQ-9000 participant. "We've got a good mix from all sides of the business. When you create that sort of commission-when you establish an environment where people really feel comfortable throwing in their 2 cents on the issues-you have immediately taken a step in the right direction." 
 
 Norton is one of nine current commissioners with the responsibility of awarding accreditation to companies following successful formal reviews and audits of the applicants' "capacity and commitment" to produce-or market-biodiesel that meets ASTM D 6751 specification. The accreditation process is comprehensive and includes a detailed review of the applicant's quality program documentation, followed by a formal review of the applicant's conformance to its program (i.e., its follow-through). 
 
 Accreditation is available to two groups within the biodiesel industry: producers and marketers. Producers that successfully meet the accreditation criteria become "Accredited Producers." Marketers that successfully meet the accreditation criteria become "Certified Marketers." 

 
 A certification logo, or badge, is available to marketers that meet the requirements of BQ-9000. 
 
 It's important to note that the program does not evaluate facilities or process technologies used for producing biodiesel, but rather it evaluates the ability of organizations to comply with quality management system requirements tailored to fit the program. 
 BQ-9000 is designed to eliminate redundant testing while making it easier to track biodiesel in the distribution system and identify product that meets standards. It also reduces the probability of out-of-spec biodiesel reaching the market.
 
 "Without BQ-9000, other people down the line would be expected to perform [ASTM certificate of analysis] testing," said NBAC commissioner George Kopittke of Griffin Industries, one of two producer-representatives. 
 
 Early bird gets the worm 
 In late September, Peter Cremer North America became the first BQ-9000 Accredited Producer of biodiesel. It was an investment that yielded a quick-and high-profile-return. Almost immediately, the company was named as the biodiesel supplier of choice for DaimlerChrysler's B5 factory fill of its Jeep Liberty Common Rail Diesel sport utility vehicles. 
 
 At the time of the announcement, Mack Findley, sales and marketing manager for Peter Cremer and a former NBAC commissioner said, "The BQ-9000 program is a natural extension of our existing biodiesel quality program here at Peter Cremer North America. We hope that BQ-9000 will go a long way toward instilling confidence among potential biodiesel users that the fuel meets not only ASTM specifications, but strict quality standards as well." 
 
 Norton told Biodiesel Magazine that the publicity Peter Cremer North America received after the Jeep B5 factory fill announcement was, in itself, worth the investment in BQ-9000. "That has probably been the biggest part of what it has done for us," he said. "It's been a huge marketing tool. When DaimlerChrysler decided to put B5 in its Jeeps, it turned straight to us. It has been great for Peter Cremer and great for the program. When that announcement was made, it really spiked interest in BQ-9000. I think you'll see more of these types of demands as the program grows." 
 
 According to Norton, it took Peter Cremer between four and six months to incorporate the program into its operations. "We were fortunate because we already had all of those ISO-9000 (internationally recognized quality management standards) organizational elements in place," he said. "It was more of a matter of going through the operational elements and getting the program on track."

 	
 Expect more companies to sign on
 At a BQ-9000 restructuring meeting in January, 62 companies reportedly expressed an interest in participating in the program. In fact, Norton said several companies have already submitted applications. However, Peter Cremer remained the only company formally participating in the program at press time.
 
 Why? According to Kopittke, many companies felt the original program, which was fashioned in a manner that mirrored several aspects of ISO-9000, was too cumbersome. Recently, however, the NBAC has taken steps to adjust certain aspects of the program. 
 
 "The extent of documentation was probably the primary stumbling block for most producers and marketers," Kopittke said. "The program was initially created to be on a level with ISO-9000, and that was probably too extensive for most. You might have a producer that is doing everything just right, but adding the organizational aspects of BQ-9000 might not be something a company like that could simply jump into." 
 
 The old adage, "If it's not broke, don't fix it," might describe the lack of enthusiasm some companies initially had for BQ-9000. "If you have customers in place-customers that have been doing the same thing for years and have not suggested a change-then there is really no motive there to make the investment," Kopittke said. "However, I think we will start seeing more and more [end users] starting to demand product coming from BQ-9000 Accredited Producers and Certified Marketers. We have already witnessed this with DaimlerChrysler turning to Peter Cremer for its Jeep Liberty factory fill. The whole thing is so new that you just have to give it time for the demand to be created from a [consumption side]."
 
 According to Norton, companies that are not currently running an ISO-9000 type format, tend to be a little overwhelmed by the idea of transitioning to BQ-9000. "I think there's a general misconception that the paperwork and documentation is overwhelming, but that's really not the case," he said. "In a basic sense, it is simply a matter of, as the saying goes, 'Say what you do and do what you say.' But I think a lot of people hear the word 'audit' and feel as though they are being crushed by a big weight. So we have to keep educating people on this … we have to keep tearing away those misconceptions." 
 
 Serving its purpose 
 Strip away all of the technical documentation and procedural jargon associated with BQ-9000, and the program is really about one thing: promoting the commercial success of biodiesel. The question, then, is how effectively is the program serving its intended purpose? 
 

 "I think BQ-9000 absolutely does, and will continue to do, what it was created to do," Kopittke said. "The program will continue to gain support, not just in the United States but throughout North America. In fact, it looks like the [Biodiesel Association of Canada] is on the verge of adopting it."
 
 Kopittke said as the number of U.S. producers continues to grow, the industry's greatest fear is that non-ASTM biodiesel is going to hit the market and be attributed to widespread engine failures. "That, of course, would create a lot of negative press," he said. "You've got some small producers-the home brew types-that might try to squeeze product into the marketplace. Remember, we're talking about a fuel that many Americans are still unfamiliar with, so we have to make sure we continue to do things right." 
 
 Norton said increased participation is the key to making the program work the way it is intended to work. "What we need, and this is the real bottom line, is broader participation," he said. "That's really how you will maximize the effectiveness of the program. That's where you will truly be able to make those public assurances."
 
 When it comes to fuel quality standards, Kopittke said, simply look to the oil industry as an example. "The petroleum industry is a mature industry, but that doesn't mean it has stopped working hard to promote quality," he said. "And these days you hear very few incidents of poor product reaching the market. When you buy gasoline from BP or Shell you expect good performance, and invariably you get it. We need to get to the point where we are offering the exact same general assurances with biodiesel. It has to be a matter of, 'No matter where you buy biodiesel or biodiesel blends, you will get a quality product every time.'"
 
 Norton said he believes broader participation in the program will open doors to important new market opportunities. "The Big Three automakers (General Motors, Ford and DaimlerChrysler) see it as a step in the right direction," he said. "I think it will grow the market. It will grow opportunities. So, generally speaking, broader participation is where I think it needs to go-and I think we are seeing that happening already." 
 
 For more information on BQ-9000, visit<a target="_blank" href="http://"> www.biodiesel.org/bq9000/ </a>or call the NBB at (573) 635-3893. 
 
 Tom Bryan is editorial director of Biodiesel Magazine. Reach him by e-mail at<a href="mailto: tbryan@bbibiofuels.com "> tbryan@bbibiofuels.com </a>or by phone at (701) 746-8385.

It didn't happen overnight, but the program known as BQ-9000 is beginning to take root in the U.S. biodiesel industry. Following the lead of the first accredited producer, Peter Cremer North America, other companies are expected to opt in soon

Getting with the Program

udolf Diesel developed the concept for the peanut oil-based diesel engine and obtained the German patent in 1892. Over a century later, the movement Diesel helped launch, is playing an increasingly important role in America's drive toward greater environmental responsibility and energy independence. 

 
 As biodiesel production and use grows nationwide, producers, distributors and retailers in the Northeast have positioned themselves on the leading edge of the industry. Many retailers in the region operate with the understanding that biodiesel contributes to America's national security by lessening the nation's dependence on finite, foreign sources of oil in a volatile world economy. Many are also aware of the environmental benefits of biodiesel use-drastic reductions in carbon dioxide and carbon monoxide emissions as well as sulfur output. 
 Put all that aside, however, and retailers must fairly be expected to ask: "Is biodiesel good for business?" A growing number of them believe it is, and with state and federal tax incentives now a reality, renewable fuels possibilities are starting to seem more like probabilities. 
 
 Taylor Oil Co. Inc., a retailer and provider of on-site fueling services to construction crews, contractors, trucking fleets and marinas along the 
 East Coast, has taken it a step further, turning possibilities into realities. The company ventured into the biodiesel field a couple of years ago and is looking to expand its share of the market. John Cusack, head of biodiesel operations at the company's Williamstown, N.J., office, and Bob Phillips, the company's general manager, described both successes and challenges they encountered in launching the company's biodiesel venture. The challenges, they said, could be tallied up on a very short list: Finding bonded, reliable suppliers of ASTM specification biodiesel was the first bump in the road, and they overcame it quickly.
 
 Their successes with biodiesel, it turns out, aren't so easily encapsulated into a simple statement. 
 
 Taylor Oil Co. was founded approximately 85 years ago. In the 1960's, CEO George Taylor became among the first to develop an on-site delivery process for fuels and lubricants to construction sites. Continuing to see the potential for alternative paths, Taylor Oil Co. ventured into kerosene and ethanol, and today provides kerosene for a major Northeast telecommunications company's backup power generators. From New England to Baltimore, Taylor Oil Co. began to supply more and more construction sites, trucking companies and government projects with a variety of fuels.
 
 With other successful ventures under its belt, Taylor Oil Co. leaped into biodiesel. Cusack and Phillips both indicated that the company's biodiesel venture has steadily improved since its inception. Taylor Oil Co. is now listed as a supplier on the National Biodiesel Board's Web site (www.biodiesel.org) and offers its customers biodiesel blends ranging from B5 to B100. Last fiscal year alone, Taylor Oil sold an estimated 20,000 gallons of biodiesel. Due to the passage of the American JOBS Creation Act of 2004, which gives tax relief to biodiesel blenders, companies like Taylor Oil Co. are able to turn greater profits on biodiesel, especially oilseed-based fuel. Cusack and Phillips expect their biodiesel venture to prosper in 2005 due to the combination of normal commercial growth, expanded marketing and the tax incentive, which they said allows Taylor Oil Co. to compete on a slightly more even playing field with petroleum-based diesel.
 
 "As increases in the cost of petroleum production continue, alternative fuels will become more feasible for commercial customers, and demand will grow," Taylor Oil Co. President Rick Workman said when asked about the company's expansion into biofuels. "We want to be positioned to take advantage of that niche market." 
 
 When discussing the federal legislation, which President Bush signed into law in October, Cusack expressed anticipation at being able to achieve price parity with the petroleum diesel market. Having to sell a new product at a higher price is not an easy task, he said. States have also begun to recognize the benefits of providing incentives for biodiesel, but from the other side of the marketplace. Pennsylvania demonstrated this on Nov. 30, when Gov. Edward Rendell signed the Alternative Fuels Incentive Act, giving incremental grants to schools, municipalities, non-profits and corporations that use alternative fuels such as biodiesel in their fleets. This incentive potentially opens the door for many vehicle fleets-schools, shipping companies, public transport and construction-simply by providing the consumer with a bottom line reason to be environmentally sound.
 

 Anna Gomez of the Pennsylvania Department of Environmental Protection said, "This is great change. We are hoping biofuels will start to be used as transportation fuels. [Biofuels] not only help the environment but also the economy of the state and make us less dependent on foreign oil."
 
 So who is looking to benefit from these tax incentives? Cusack described Taylor Oil Co.'s retail biodiesel customer base as a broad demographic. Individuals interested in a "green" lifestyle make up a significant percentage of the company's customers. Because biodiesel can be used to power generators, automobiles and even sailboats, the opportunity to have an environmentally sound fuel appears to be gradually becoming more desirable to consumers throughout the region. 
 
 On March 16, Taylor Oil Co. proudly announced that new biodiesel pumps would be installed at the company's Williamstown, N.J., and Philadelphia locations, extending the company's reach with biodiesel even more. It is these customers that Taylor Oil Co. will soon be primarily targeting with Web site and link promotions on the Internet, according to Workman.
 
 While retail sales are expected to grow, Taylor Oil Co. will continue to build sales to one of its largest customers: the U.S. government. On a regular basis, companies can place bids for government fuel contracts via the Internet at the defense energy site for federal fuel supply needs. The nation is broken up regionally, and companies bid for contracts in areas where they can guarantee supply. 
 Taylor Oil Co. has been supplying the government with fuel for decades. The company began providing the military with deliveries of biodiesel as large as 4,000 gallons in 2003. The government's interest in non-petroleum based fuel has provided Taylor Oil Co.'s biodiesel venture with the financial strength to grow. Federal government and federally regulated agencies in the Northeast, including the U.S. Postal Service, represent huge financial opportunities, now that these agencies have begun to come under pressure to find and use alternative fuels. From individuals to governments, providing a practical alternative that few others offer is the type of niche marketing on which Workman believes Taylor Oil Co. must focus. 
 
 After 113 years, the vegetable-oil based diesel engine has developed from a German professor's idealized invention to a recognized realistic alternative throughout Europe and North America. Today, through increased pressure from biofuels advocates and tax incentives coupled with increased petroleum prices, the viability of alternative fuels has been strengthened. While there is no such thing as business without risk, for niche companies like Taylor Oil Co., there has never been a more practical time to grow its business with biodiesel. n 
 
 Jeff Adler is a freelance writer living in Pennsylvania. He can be reached at <a href="mailto:adlJeff@netscape.net. ">adlJeff@netscape.net. </a>

Taylor Oil Co. Regional Manager Robert DiLullo

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Taylor Oil Co.'s Williamstown, N.J., staff

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The 85-year-old fuel supplier, Taylor Oil Co. Inc., ventured into the biodiesel field just over two years ago, and has been looking to 
expand its presence in the renewable fuels marketplace ever since.

Growth Opportunity

Minnesota's trailblazing B2 renewable fuels standard (RFS) is a tough act to follow, but that certainly hasn't stopped legislators in other states from moving ahead with a variety of incentives aimed at encouraging the production and/or use of biodiesel. Below, Biodiesel Magazine reviews the more prominent, current biodiesel incentives in various states' statutes, in addition to looking at key proposals of the 2005 state legislative season.
 
 Key proposals in the West and South Central

 In Washington, three biodiesel bills-House Bills (HB) 1645 through 1647-have overcome their first legislative hurdle. HB 1645 seeks to establish a 28-cent-per-gallon (cpg) special fuels tax exemption on the biodiesel portion of biodiesel blends higher than B20 for school districts and other specified public domains. HB1646 proposes additional tax incentives for production. HB1647 intends to provide tax incentives for the installation of biodiesel storage and dispensing facilities. All three bills, although amended, have made it out of the first House committee review. 
 
 The Oregon Environmental Council has been instrumental in launching a package of bills to the forefront of Oregon lawmakers' agendas. This package includes HB3032 aimed at offering a 5-cpg tax credit for biodiesel projects. Other packaged bills provide additional crop and use incentives. HB3033 would establish an RFS requiring B2 in all retail diesel sales by mid-2006, increasing to B5 by 2010. At press time, the bills had been introduced, read and referred to committees for further action.
 
 Montana Rep. Gail Gutsche put forth HB756, which would offer a tax credit up to $500,000 or 25 percent of property investments to oilseed crushing facilities for biodiesel production. The bill would also provide a 10-cpg tax credit for producers. A tax committee heard the bill March 22.
 
 The Oklahoma state House passed HB1398, which would offer qualified biodiesel producers a 20-cpg tax credit. At press time, the Senate finance committee had the bill under review. 
 
 Big initiatives in the Midwest 
 After killing some major ethanol legislation this session, the North Dakota House amended Senate Bill (SB) 2217-previously passed by the Senate-to establish a two-year state soybean checkoff program to help fund the construction of a biodiesel plant in the state. SB2217's sponsor, Sen. Jerry Klein, said an investor from New York City was "shopping around the country" for the best place to initiate a biodiesel project, and the amendment was initiated to assist such a venture. Subsequently, plans were announced March 22 to construct a $50 million, 32-mmgy canola-fed biodiesel plant in Minot, N.D., which would be the largest biodiesel production facility in North America (see Industry News on page 17). SB2217 also looks to establish tax credits for suppliers and tax exemptions for retailers. The House-amended bill awaits action from an appropriations committee, after which the Senate would need to vote again to approve the amendments.
 
 South Dakota had an active legislative season with regard to biodiesel. The House passed HB1237, which sought to give biodiesel a 2-cpg excise tax reduction. The Senate later killed the bill, 19-14, according to state Rep. David Sigdestad. "There were a lot of [skeptical] numbers out there," Sigdestad said, which were over-inflating the loss of revenue that would occur as a result of the measure passing. 
 
 SB214, passed and signed by the governor, will allow for new or existing agricultural processing facilities over 4.5 mmgy to get a tax refund on contractor's excise taxes paid, so long as the new facility or expansion is constructed for the production of biodiesel. Even though the bill was severely "hoghoused," or changed, Sigdestad said, "With the price of energy, we need to get [biodiesel production] going here."
 
 The Iowa legislature is reviewing House File (HF) 623, which would establish a cost-sharing program to establish off-site biodiesel distribution terminals. The bill proposes to share 50 percent of the costs associated with building these terminals. The program's total financial limit is $325,000 per year for three years, beginning in July 2005. The bill has passed through House and Senate committees, according to Bernie Punt of the Iowa Renewable Fuels Association, and awaits full House and Senate votes. "This has good bipartisan support, and I'd be surprised if it doesn't make it through," Punt said. 

 
 Missouri legislators already have a solid production incentive on the books, but funding has not yet been appropriated. If passed, SB147 will appropriate money to the existing grant program, wherein producers are to be paid a 30-cpg producer payment for the first 15 mmgy, followed by an additional 10-cpg payment (added in SB147) for the next 15 mmgy. The bill would allow the incentive to be paid from the general fund, according to Robin Perso of the Missouri Department of Agriculture. The Senate passed the bill, and at press time SB147 was under its second House reading. Perso said the bill's passing looks likely, and the governor is also expected to sign the bill. 
 
 In a 48-0 vote, Indiana senators passed an expansion of tax credits for already enacted biodiesel production incentives to the House. SB378 would increase the program cap on tax credits to biodiesel, in addition to offering tax breaks to blenders, distributors and retailers. 
 The bill passed through the first House committee just before press time.
 
 Michigan is considering HB4235, a statewide B2 mandate modeled after Minnesota's cutting-edge RFS, said Dulcey Simpkins of the Michigan Biomass Energy Program. The bill was originally put forth last year, calling for a B20 mandate with 50 percent of the biodiesel coming from in-state production, "but this was too traumatic for the system," Simpkins said. The bill was since redrafted to a B2 standard, and HB4235 was resubmitted this legislative season. "With the JOBS bill and federal recognition, the bill is easier to support," Simpkins said. "Our prospects are better this year." At press time, the House ag committee still had the bill under review.
 
 Biodiesel bills pending in the East
 Ohio state Rep. Steve Reinhard is working with Ohio's Clean Fuels Coalition, the Ohio Soybean Council and others to draft legislation providing grant and tax incentives for producers, said Mindy Bowen, Reinhard's legislative aide. Bowen said that Reinhard is a farmer, and he is working closely with agriculture groups in drafting legislation that would offer production and use incentives to promote the biodiesel industry in Ohio. The draft was to be complete by the end of March, Bowen said. 
 A
 t least two Northeastern states, Maine and New Hampshire, are considering unique bioheat RFS requirements. In Maine, the director of energy independence in the governor's office, Beth Nagusky, said legislators in her state proposed Legislative Draft (LD) 197, an RFS bill requiring state buildings to use, at minimum, B20 bioheat. The bill would also require state diesel vehicles to burn at least B20. Nagusky said although not yet required, last year the state ran six buildings on B20 with no problems. This year, the state heated 20 buildings with B10, she said, and some of the furnaces experienced filter clogging. Despite a couple of operational hurdles and the higher cost for biodiesel, Nagusky said Maine is "committed to biodiesel as [the state's] resources allow." She also said LD197's passing doesn't look promising. 
 
 New Hampshire legislators put forth HB0152, another bioheat RFS, which would require all home-heating oil sold in the state to contain 1 percent biodiesel (B1), said Kym Hall of the New Hampshire Department of Environmental Services. Hall said the bill had very modest support in mid-March, possibly due to its wording. Legislators are looking into redrafting the measure. HB0152 remained under committee review at press time. 
 
 Ron Kotrba is a Biodiesel Magazine staff writer. Reach him by e-mail at<a href="mailto: rkotrba@bbibiofuels.com "> rkotrba@bbibiofuels.com </a>or by phone at (701) 746-8385.

The passing of the federal JOBS bill remains an encompassing boon for the biodiesel industry, but state incentives ultimately provide strong influence over where biodiesel projects may geographically take root.

State Bio-Legislation: Summary and Rundown

April 20-22, 2005

 Walt Disney World Swan
 Orlando, Florida
 The convergence of biotechnology, chemistry and agriculture is causing several innovations that could change industrial manufacturing, production of chemicals and consumer goods, and environmental protection. According to McKinsey and Company, the value creation stemming from new industrial biotech applications in the chemical industry alone could reach $160 billion by 2010. This conference will be geared toward a diverse base of participants from biotechnology, chemical and other industries to government and academia. It is meant to provide a unique forum for interdisciplinary interaction and networking. 
 (202) 962-6641 . www.bio.org/worldcongress

World Congress on Industrial Biotechnology & Bioprocessing

May 1-3, 2005
 Palm Springs Convention Center
 Palm Springs, California
 The U.S. DOE's Clean Cities program is a national leader in identifying viable petroleum displacement mechanisms and working with partners to facilitate market acceptance. Today, alternative fuels continue to blossom. To fill the country's petroleum displacement toolbox, the program has an additional emphasis on idle reduction, hybrids, blends and fuel economy. Themed "Guiding Transitions," this conference will discuss the latest regulations, court challenges, product availability and trends. Tours, presentations, a Ride-n-Drive, a vehicle auction and memorable social events will allow participants to meet the people who are helping the industry move forward.
 (702) 254-4180 Ext. 23 . <a target="_blank" href="http://">www.afvi.org/palmsprings/</a>

11th Annual Clean Cities Conference & Exposition

May 1-4, 2005
 Marriott City Center Hotel	 
 Denver, Colorado		
 The 27th Symposium continues this highly successful series with a great opportunity for experts from around the world to gather and discuss the latest research breakthroughs and results in biomass utilization and conversion. Researchers from academia, government and industry will meet to discuss numerous approaches for improving the economics of fuel and chemical production. A variety of formal technical sessions, poster sessions and informal discussion groups will stimulate the exchange of new information.
 (303) 384-6861 . <a target="_blank" href="http://">www.eere.energy.gov/biomass/

 biotech_symposium</a>

The Symposium on Biotechnology for Fuels and Chemicals

May 1-4, 2005
 Salt Palace Convention Center
 Salt Lake City, Utah
 The American Oil Chemists' Society (AOCS) Annual Meeting & Expo is for the world's leading professionals in vegetable oils, fats, soaps, surfactants, detergents and related fields. Several technical sessions will be introducing the latest research and industry advances in 12 interest areas. Delegates visit the Expo Hall to network with industry suppliers from around the world, allowing them to stay current with business trends and innovations. It also includes 125 quality exhibits, poster presentations, the AOCS Press Bookstore, the AOCS Foundation's Silent Auction, a Special Exhibit on the Evolution of Oilseed Processing and the Expo Café. 
 (217) 359-2344 . <a target="_blank" href="http://">www.aocs.org/meetings/annual_mtg/</a>

96th AOCS Annual Meeting & Expo

May 2-5, 2005
 Las Vegas Convention Center
 Las Vegas, Nevada
 This year's WasteExpo conference program covers the latest trends, topics and technologies in the solid waste and recycling industries, and includes sessions on alternative fuels. Business operations, safety, technical information and landfill operations are some of the issues to be covered. The WasteExpo show floor has expanded to two levels and more than 425 exhibitors, featuring the latest in solid waste technologies and recycling equipment. 
 (203) 927-5007 . <a target="_blank" href="http://">www.wasteexpo.com</a>

WasteExpo

May 22-27, 2005

 Aberdeen Exhibition and Conference Centre
 Aberdeen, Scotland
 This conference will provide an explicit link between renewable energy, the environment and sustainability. Along with the All-Energy Opportunities Conference and Exhibition, it brings scholars, policy makers, industry representatives and business consumers together, and stimulates synergy and cooperation between groups. It also brings together top international specialists and researchers, industrialists, manufacturers, financiers, policymakers and government officials. Congress participants will share the latest ideas and innovations, establish valuable contacts and develop new collaborations in renewable energy and the environment.

World Renewable Energy Conference

"Bringing the Minds of the Industry Together"
 June 28-July 1, 2005
 Kansas City Marriott Downtown Hotel and 
 Kansas City Convention Center
 Kansas City, Missouri
 Register online today to receive a $10 discount. The International Fuel Ethanol Workshop & Expo (FEW) provides a one-of-a-kind opportunity to learn about the latest information on ethanol production and operations through technical workshops, trade show exhibits and one-on-one networking with industry peers. The purpose is to share and discuss ideas to further improve the efficiency and economics of ethanol production. The FEW Expo is an excellent opportunity to share information on your company's equipment, services and technology with current and potential clients. Current and future ethanol producers; industry vendors of products, equipment, technology and services; researchers and academia; feedstock producers and other industry stakeholders are encouraged to attend the industry's largest event. 
 (719) 539-0300 . <a target="_blank" href="http://">www.fuelethanolworkshop.com</a>

21st International Fuel Ethanol Workshop & Expo

The boardroom has changed more in the last four years than in the previous 50. The swift pace of change has a direct effect on directors and their relationship with the board. We've all heard of the Enrons, WorldComs and Disneys, but it is becoming increasingly important that directors at small and mid-cap companies understand the expanding liability issues.
 
 As discussed in the February Legal Perspective, directors need to discharge their duties in good faith and in the best interests of the company. They have the duty of care and loyalty to the company, and are entitled to rely on the business judgment rule in making decisions. A director must also devote the time necessary to govern the business and affairs of the company. Given a director's importance, and his or her responsibility to the company and its shareholders, we wanted to further expand on these issues.

 
 Board authority, director responsibility and liability 
 The authority to govern the company and make decisions relating to that governance lies solely with the board. The concept is important but frequently misunderstood.
 -A director represents the company, not individual shareholders. 
 -Only the board is authorized to act, not individual directors.	
 -A director has the responsibility to carry out the duties associated with the position, regardless of how the board proceeds collectively.
 -A director has personal liability for not discharging his or her duties in good faith, regardless of how the board acts.
 
 Conflict: director duties, board actions
 On certain issues, directors will find themselves at odds with a majority of the board. If there is fraud or illegal activity on the part of management of the board, directors have an obligation to object and have their objections noted. If the action or decision is one of business judgment-where there is no one right answer, which is frequently the case-directors should discuss and analyze the issue until the majority of the board is in agreement. A director must support the governing authority of the board to make business decisions, even though the director may not personally support it. Finally, directors must not undermine the authority of the board by repeating confidential board discussions or business information outside the boardroom.
 
 There may be actions and decisions by the board that the director believes threaten the company. A dissenting director has a duty to present his or her view to the board, have the dissenting views and vote noted in the minutes, and, if the director believes other directors are derelict of their duties, the dissenting director should consider resigning from the board. 
 
 The position of director continues to change, with more responsibility and greater potential liability for mistakes. The first issue for a new director is to evaluate the company and the job of being a director. This means the person must: 
 -Understand the strategic business plans of the company and fundamental structural changes in the company's industry

 -Understand the nature and type of the company's competition
 -Understand and monitor the company's business plan, management's implementation of the business plan and the operations of the company.
 -Review and understand the financial information of the company.
 -Act in good faith on each transaction and comply with the law.
 -Use good faith reliance on consultants, advisors and management.
 -Understand the limits and limitations of liability and indemnification under the company agreement and under applicable director and officer (D&O) insurance policies. 
 
 Three primary challenge areas for producer-owned businesses likely will be areas of potential liability: capital, liquidity and enterprise value. Producer-owned businesses are less accustomed to assessing enterprise value, and thinly traded equity interests reflect disparate unit holder and shareholder assessment of value compared to how the market would assess enterprise value. These different views of value are a prime driver in unit holder or shareholder suits and present vexing problems for directors and management. 
 
 In summary, directors should carefully evaluate the demands, responsibilities and liabilities that the position requires, understand the limits of D&O insurance, insist on good corporate governance practices and use good faith reliance on consultants, management and advisors.
 
 Mark Hanson and Todd Guerrero are members of the agribusiness and alternative energy practice group of Lindquist & Vennum PLLP, a leading provider of legal assistance on bioenergy projects throughout the country. They can be reached at (612) 371-3211.

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Director Liability: Be Aware of the Risks

Legal Perspective

Following passage of the biodiesel tax incentive last fall, the U.S. biodiesel industry now faces more challenges than ever. That is, the industry is currently dealing with implementation of the tax incentive through the U.S. Department of Treasury and the Internal Revenue Service (IRS); extension of the biodiesel tax incentive beyond 2006; the prospects of a federal renewable fuels standard (RFS) in a comprehensive energy bill; appropriations projects and other important issues. Together, all of these items have made biodiesel a hot, and exciting issue on Capitol Hill, setting the tone for the 109th Congress, which got underway in January. The industry is poised to continue working with its key champions: lawmakers like Senate Finance Committee Chairman Chuck Grassley, R-Iowa; Sen. Blanche Lincoln, D-Ark.; Reps. Kenny Hulshof, R-Mo., and Earl Pomeroy, D-N.D. 
 

 To assure that the biodiesel industry continues to grow, legislative priorities have been established for 2005, specifically including: 
 
 Extension of the Volumetric Ethanol Excise Tax Credit (VEETC): Our aim is to extend the biodiesel tax incentive at the existing levels of $1 per gallon for "agri-biodiesel" and 50 cents per gallon for other biodiesel. Extending this legislation would give biodiesel investors confidence that the industry will continue receiving federal support over the long term; it would also maximize benefits for U.S. producers, the economy and the environment. The existing incentive is scheduled to expire at the end of 2006.
 
 VEETC feedstock list clarification: VEETC lists 11 specific vegetable oils, as well as animal fats, as feedstocks eligible for the agri-biodiesel tax incentive. This list was intended by VEETC's Congressional sponsors to be exclusive (i.e., that non-listed vegetable oils such as palm oil should not be eligible). However, it may be determined that the VEETC list is not exclusive, and non-listed vegetable oils are eligible. This issue needs to be addressed in the VEETC extension legislation. 
 
 Congress approved the biodiesel tax incentive to achieve three goals: 1) to enhance domestic energy security; 2) to provide additional markets for domestic agricultural products; and 3) to improve air quality by creating an incentive for an environmentally beneficial alternative to diesel fuel. Permitting non-listed vegetable oils, including imported oils, to qualify as agri-biodiesel feedstocks would defeat both the domestic energy security and agricultural market expansion purposes of the VEETC legislation.
 
 The statute defines agri-biodiesel as: "biodiesel derived solely from virgin oils, including esters derived from virgin vegetable oils from corn, soybeans, sunflower seeds, cottonseeds, canola, crambe, rapeseeds, safflowers, flaxseeds, rice bran and mustard seeds, and from animal fats." A modification is required specifying eligible virgin oils are derived solely from the listed feedstocks, and to clarify the word "including" means "including only" rather than "including but not limited to." One option would be: "biodiesel derived solely from virgin oils, including only esters derived (i) from virgin vegetable oils from corn, soybeans, sunflower seeds, cottonseeds, canola, crambe, rapeseeds, safflowers, flaxseeds, rice bran and mustard seeds, and (ii) from animal fats." 
 
 Establish a biodiesel offsetting import tariff: With VEETC in place, it is now imperative that an offsetting tariff on imported biodiesel be established, similar to the duty in place for imported ethanol. Otherwise, U.S. taxpayers will be subsidizing foreign biodiesel producers, which was not intended by the sponsors of the legislation, and the objectives of the VEETC program will not be served. 
 

 Passage of an RFS: The RFS must be enacted as soon as possible to reflect and encourage expansion of biodiesel and ethanol production and demand. 
 
 Biodiesel appropriations projects: The Commodity Credit Corporation (CCC) Bioenergy Program and Biodiesel Education Program should be fully funded for the fiscal year 2006 appropriations cycle.
 
 -Supporting the CCC Bioenergy Program at the originalauthorization level of $150 million annually, as outlined in the 2002 Farm Bill: The program is critical to new and existing biodiesel facilities because it allows a more affordable purchase of inputs for a start-up company. Due to the risk of running a new multimillion dollar energy company, the CCC Bioenergy Program is a make-or-break program for biorefineries in their first year of production. 
 
 -Supporting full funding of the Biodiesel Fuel Education Program at the current authorization level of $1 million annually, as outlined in the 2002 Farm Bill: This program is vital to the biodiesel industry. The education program was developed to educate, research and promote growth in the biodiesel industry. 
 
 Mark Palmer is a Washington, D.C., representative of the American Soybean Association. He can be reached by e-mail at <a href="mailto:mpalmer@gordley.com.">mpalmer@gordley.com.</a>

Working on a big-and very important-Capitol Hill agenda

April/May 2005

Business Briefs