Ethanol Folks Talk Biodiesel In Vegas

By | March 01, 2006
What happens in Vegas stays in Vegas unless, of course, Biodiesel Magazine is on the scene.

Fresh off emceeing the largest biodiesel conference in U.S. history, National Biodiesel Board (NBB) Executive Director Joe Jobe took the stage again for the "Washington Insider's Roundtable" at the 2006 National Ethanol Conference: Policy & Marketing in "Sin City" on Feb. 20-22. Jobe was among four trade association representatives brave enough to field questions from Renewable Fuels Association (RFA) front man Bob Dinneen, a man largely credited with helping push last year's renewable fuels standard (RFS) into the energy bill and through the U.S. Congress. Entertaining a question from one inquisitive attendee who hinted that the RFA and NBB were at odds over RFS implementation, the jovial RFA leader asked Jobe, "Are we feuding?" The NBB leader answered wittily, "I certainly hope not Bob I don't think I could take you."

Dinneen also quipped that Jobe has the luxury of laying claim to celebrity friends like Daryl Hannah, Willie Nelson and Neil Young, while the less-than-sexy ethanol industry attracts few famous backers. "We got Corn Cob Bob," Dinneen grumbled.

All jokes aside, Jobe said it's being rumored that more than 1 billion gallons of biodiesel production capacity will be on line in the United States in the next 18 months. Dismissing those claims, Jobe said there's a real danger in over-promising and under-delivering. He said the NBB estimates that 150 MMgy to 200 MMgy of production will be on line by the end of 2006. "We're looking at managed, but aggressive growth," he explained. "[The NBB foresees the industry ramping] up production to 1 billion gallons by 2015. The truth is, it doesn't matter if policy is good, efforts are good and economics are good. There is just no replacement for good business planning."

Earlier in the conference, U.S. Rep. Stephanie Herseth, D-S.D., indicated that there may be specific efforts underway to create a federal biodiesel volumetric mandate, as opposed to trying to maintain-or boost-the RFS credit for biodiesel in the existing RFS, which Dinneen called "essentially a gasoline program."

"Does [the NBB] look to that?" Dinneen asked Jobe. "Do you support that notion, and what do you give its chances?"
"Yes, we are looking at that," Jobe responded. "We continue to try to take in the full scope of the picture. We just passed the RFS, and we're looking at implementation, working with all of the groups represented here. There was a question earlier about 1.5 credits versus 1 credit for biodiesel in the [existing] RFS. We've been in communication about that from the beginning. We felt that the [EPA's] default rule had to go forward. That was our first priority. A renewable diesel requirement is hypothetical and just beginning to be talked about. It took us five years to get an RFS in place, so this isn't just something that turns on like a light switch."

Jobe said the urgency of the issue is compounded by the fact that petroleum companies are already making decisions about how they are going to formulate ultra-low sulfur diesel. "The lubricity additives are going to have to be put in place starting in June of this year," Jobe said. "Those companies are making investment decisions right now. We have a task force looking into a renewable diesel provision and looking at kind of the whole scope of both national and state mandates, and how they impact the market."

Marc Meteyer of the American Petroleum Institute said the refiners he represents are busy right now trying to figure our how to get on-spec ULSD "from point A to point B" without "contaminating" the fuel-something that's never been done before. "At 15 parts per million, it is unprecedented. Our challenge at this point in time is to make sure this product can get through the entire system and still make the 15 parts-per-million cut. We've done some studies. We've done some test runs and so forth, and there are problems that we've found, and we've been working on them. Frankly we've been working with the U.S. EPA to give us some flexibility to be able to provide that fuel 24/7 on spec."

Meteyer said he had no idea whether biodiesel would be used by refiners to meet the lubricity needs of ULSD. In fact, he said he was unsure of how well the petroleum industry in general would do in getting ULSD on the market by the Oct. 15 deadline. "We think there'll be enough," Meteyer said. "Whether or not biodiesel will play a role in that, I can't predict that."
"How about state mandates?" Dinneen asked Meteyer.

"The problem is that when you mandate a product in an individual state, you create a unique fuel," Meteyer said. "We've been through the boutique fuels debate for years, and we already have a significant problem with all the other fuels that are required, primarily to deal with air-quality problems in individual states. On top of that is the RFS. Then you lay state mandates on top of the RFS, plus mandates for ethanol content or biodiesel content or whatever, and then a federal energy bill that doesn't deal with [biofuels] mandates in individual states. Our problem lies with trying to deal with these layers-these different flavors, different colors. It all creates more and more complexity in the system, inefficiencies and when we get into a big hiccup-Hurricane Katrina or a pipeline burst, for example-you've seen what can happen.

Aside from Minnesota, which has a B2 mandate in place already, Jobe said there are about a half a dozen other states that have filed Minnesota-like biodiesel requirements this legislative session. He said the NBB would like to see Minnesota's challenges squared away before other states throw their hats into the ring, but that might not be possible. "They want to see biodiesel brought to their state," he said. "They want the plants built. They want the jobs and so they're moving forward [with biodiesel mandates]."

If that happens, if other states move forward with low-blend requirements, Jobe said it is vital that they coordinate efforts. "We need to look at a comprehensive energy strategy and not have a patchwork quilt of mandated biodiesel blends from state to state," he said. "We need to reduce that to the maximum extent possible, so you don't have B2 in one state, and B5, B11 and other blends in other states. We need to look at unifying these policies."

Meteyer agreed, saying, "The last thing we need to have happen when we have a major diesel change going into effect in June-and ultimately at the pump in October-is to have a biodiesel quality problem in the midst of having a potential problem in getting ultra-low product to the consumer.
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