Battle Looms for Future of Biomass-Based Diesel

By Jason Burroughs | October 14, 2009
Over the past 10 years, biodiesel has emerged as an important part of the national, and international, discussion on renewable fuels. From french fry oil to genetically modified soybeans to slaughterhouse fats, feedstock has been at the core of the discussion. While many options have been brought to the table, some promising leads have not yet had commercial success. Meanwhile, algae looms in the background, waiting its turn.

Big money is now pouring into algae research-but what many people don't realize is that those lipids are more valuable as components of other products such as nutraceuticals and bioplastics. When they do make it to the fuel industry, there will be heavy competition for them. The biodiesel industry is not the only game in town, and we can't assume that its future rests with algae. Web sites of such companies as Solazyme, LS9, and Sapphire Energy make it clear that there will be many other products based on algal oil.

Over the past several years, competition to biodiesel as a diesel replacement has begun to appear. Vendors have announced renewable diesel, gas-to-liquid, biomass-to-liquid, and coal-to-liquid as possible future fuels. These are sometimes collectively referred to as "green diesel" although there is no universally recognized name. Many of these have been proposed or are endorsed by Big Oil. Existing petroleum refineries can be retrofitted to produce these diesel equivalents, and the fuels themselves don't suffer from the materials compatibility issues associated with higher blends of biodiesel. In other words, they act like true hydrocarbons, which can petition into the D975 standard for diesel at higher blends than biodiesel. It's possible that if fatty acid methyl ester (FAME) biodiesel had not come first, "renewable diesel" would be called biodiesel, and transesterification may not have grown to prominence in the first place.

Some examples of this changing landscape: airlines running test flights on biofuels; the movie "Fuel" being promoted by Director Josh Tickell, a long-time biodiesel promoter, driving across country in a Prius powered by algae-gasoline; the Diesel Technology Forum unofficially endorsing renewable diesel; partnerships between renderers and diesel refiners to produce renewable diesel; the U.S. EPA giving 1.7 RINs per gallon for renewable diesel compared with 1.5 for biodiesel; the state of Texas extending biodiesel's exemption for road tax to renewable diesel; and Bosch, supplier of fuel injectors for just about every original equipment manufacturer (OEM) in the U.S., driving a fleet of vehicles powered by 100 percent renewable diesel in partnership with Neste Oil.

So where does biodiesel fit in this brave new world? I'm the guy who bought a 2009 Jetta TDI just to run it on B100, so you can bet I want biodiesel to be THE alternative fuel of the future. However, it has become painfully clear to me that B100 as a major transportation fuel is not in the cards for the near- to medium-term future. I would propose that the biodiesel industry launch two major initiatives: state-by-state mandates for B2 to B5, and full support for B20 by all U.S. automakers. If we could somehow produce the 12 to15 billion gallons of biodiesel we'd need to hit B20 nationally-and manage to keep it in the U.S.-I say let the renewable diesel industry go after the other 80 percent.

At 2 percent, we would get a seat at the table. The supply chain for biodiesel would work its way into the petroleum distribution network, stakeholders would educate their employees and customers, and risk to users would be negligible. At 5 percent, we get back the lubricity lost in ultra-low sulfur diesel (and then some), stay within the diesel spec, and have full OEM support. At 20 percent, we're at the limits of OEM acceptance; we've reduced foreign petroleum imports by nearly the amount received from the Middle East, and are an integral part of diesel fuel. Meanwhile, all those cars and trucks driven by true believers can still run B100, and long-term work can be done by the OEMs to isolate and eliminate the issues related to high-blend biodiesel in future vehicles.

My background is in the data storage networking industry, which is littered with technologies that didn't survive. While the march of progress never stops, one thing is clear-emerging technologies that cannot fully interoperate with existing standards face a tremendous challenge for long-term viability.

Now is the time to take a good look at business plans to consider what impact these future fuels will have on your market, and to think about partnering with or competing against these companies for feedstock, and temper enthusiasm for future feedstocks with the reality of greatly increased competition. With RFS2 further increasing demand for biofuels of all types, the stakes are only going to get higher.

Jason Burroughs is a managing partner for Austin, Texas-based DieselGreen Fuels. Reach him at [email protected].
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