As biodiesel becomes increasingly represented in the nation's diesel fuel supplies, quality has never been more important. As production flourishes this year, it's imperative to get onboard with quality-not just quantity-assurance. 
 
 Dr. Randall von Wedel, principal biochemist with CytoCulture International, and California biodiesel pioneer, developed a needed and practical tool for use throughout the entire biodiesel supply chain-a simple, quality-driven B100 field test that's effective and quick.
 
 The kit is called the pHLip (pronounced "flip") Test, and as the name suggests, it is sensitive to pH. Clever enough, the name also provides instructions for how to use the kit-B100 is filled to the indicated level, after which the tester simply flips the sealed sample 10 times and waits 10 minutes to gauge initial quality results. 
 
 To facilitate its use at a terminal or in a plant, the pHLip Test relies on the visual identification of various distinctions in the fuel to be tested and the dyed aqueous solution provided in the test vial-and the interface between-which are then visually compared to an on-spec reference B100 sample provided with the kit. 
 
 The pHLip Test has a variety of applications, but the most practical one is testing aged biodiesel-the older the biodiesel, the more acidic it becomes. As the pH drops, the solution color shifts from its original red to orange and then yellow for the more acidic samples. 

 
 Another practical application for the test is detecting the presence of catalyst in biodiesel. Von Wedel has witnessed some serious engine problems over the years due to traces of the hydroxide (lye) present in the fuel. The indicator solution color changes from red to purple when the B100 contains residues of catalyst.
 
 Soaps, monoglycerides, diglycerides and triglycerides can all be quick-tested too. The presence of these contaminants make the fuel portion of the sample vial (top) look turbid, but the interface between the B100 and the indicator solution accumulates visible residues, rather than having a razor-sharp reflection von Wedel referred to as the "mirror finish." 
 "The accumulation of residues in actuality is a signal amplification that pushes the sensitivity of the assay near the ASTM limits for total glycerin contamination," von Wedel told Biodiesel Magazine. "The focusing of residues at the interface with the signal amplification combine to form the 'lens effect.'"
 
 The main purpose of this test is to act as a "firewall," blocking potentially out-of-spec fuel from getting into the supply chain. "If the pHLip Test reveals a problem, we suggest getting those samples to a lab for testing immediately," von Wedel warned. 
 
 The National Biodiesel Board (NBB) supports this kind of test, although NBB Technical Director Steve Howell said there is no substitution for ASTM D6751. "NBB is currently working with Dr. von Wedel in getting his kit commercially available on the NBB store," Howell told Biodiesel Magazine. Von Wedel said the full kit will come with 10 vials of solution and a B100 reference sample for comparison. 
 
 Until then, von Wedel and CytoCulture International are offering "Beta Kits," free sample kits that contain three vials, order forms and an insert summarizing the technology behind the test. Write to <a href=mailto:"biodiesel@cytoculture.com">Biodiesel@cytoculture.com</a> for more information.

Simple, effective B100 quick field test available

The oxidative stability of biodiesel is by far the most critical issue in vehicle application of the fuel. In association with the National Biodiesel Board, Magellan Midstream Partners LLP will begin its Drum Farm Project in May, which compares accelerated stability methods to actual storage results, where biodiesel has been contained in 55-gallon steel drums for the duration of a year.
 
 The same fuels that were tested at the bench level were also stored for one year in real-world conditions, which include exposure to seasonal temperature variations in Kansas City, Mo., and periodic exposure to air and agitation. Throughout the storage period, samples are drawn from the drums, and the degree of fuel degradation is assessed.
 
 Because temperature cannot be controlled in open-air storage, water can collect in drums or tanks containing biodiesel, causing the growth of fungus. Also, interaction with the air can easily result in the formation of oligmers-gummy, insoluble compounds that result from the oxidation of methyl esters. "In tests where we left the biodiesel tanks outside for two weeks at a time, you could clearly see that the biodiesel had degraded," said Howard Fang, technical advisor for Cummins Inc.'s fuel and lubes group. He consulted with Rod Lawrence, Magellan Midstream Partners vice chairman, on new procedures for the testing of biodiesel. 
 
 Because of the various blends and feedstocks associated with the fuel, increasing stability can be a tedious task. "It is a multi-headed beast we have to slay here," Lawrence said. For instance, there is low-sulfur and ultra-low-sulfur petro-diesel that is blended with biodiesel in different percentages-B5, B10, B20, etc.-and biodiesel refined from different feedstocks also has varying levels of oxidization stability. Fang said the best two agents of promoting biodiesel stability are additization technology and the increased presence of natural antioxidants like vitamin E contained in biodiesel. 
 
 The 2006 project is open to all companies that may be interested in evaluating their normal production, the stability of biodiesel made with various feedstocks, and their interactions with petroleum-based fuels, including ultra-low-sulfur diesel fuel, and the efficacy of stability additives. "The anticipated timeline provides for candidate fuels to be selected in late April and early May," Lawrence said.
 
 All inquiries should be directed to Deanna Angst-Hyland at: <a href=mailto:"Deanna.angst-hyland@magellanlp.com">Deanna.angst-hyland@magellanlp.com</a>.

Magellan Drum Farm Project to address storage, oxidation issues

While the industry is abuzz with talk of what might amount to a biodiesel-specific addendum to the U.S. energy bill's renewable fuels standard (RFS), a myriad of specialized legislative battles are being waged in states across the country. Representatives from Washington to Missouri are displaying their commitment to biodiesel-and their constituents-by supporting measures to increase in-state production and use. These policy-makers are meeting some success, but in some states, they appear to be employing a sort of advance-and-retreat strategy coupled with legislative tactics that resemble a "whatever sticks" approach. 
 
 The sheer number of biodiesel-related bills introduced in state legislatures this year and last speak volumes-literally. In 2005, the National Biodiesel Board (NBB) tracked approximately 170 biodiesel-related bills in 36 states. This year it has already identified over 100 biodiesel-related bills introduced in 28 states (as of press time in mid-March).

 So what, if anything, should industry stakeholders be mindful of as this busy legislative season moves forward? 
 
 On one hand, state legislation can serve as a foundation-along with the federal biodiesel excise tax credit and possible biodiesel-specific add-ons to the RFS-on which the U.S. biodiesel industry will grow. On the other hand, however, state biodiesel legislation can sometimes be uncoordinated and inconsistent from one state to the next. That is, experts say the U.S. biodiesel industry could encounter a major backlash, similar to what ethanol experienced in the 1980s, if it doesn't synchronize policies nationwide and create legislation that emphasizes quality above quantity at any cost. It's something NBB CEO Joe Jobe recently referred to as "managed, but aggressive growth." 
 
 A brush with the type of backlash that is possible when things go awry were exhibited when Minnesota went through some growing pains after implementing its statewide B2 requirement, the first in the nation. Problems, despite actual culpability, led some to wonder if the U.S. biodiesel industry was ready for mandates at all. What became painfully clear was that any public hiccup has the potential to mar biodiesel's reputation nationwide. 
 
 At press time, Minnesota's B2 requirement was effectively running without a hitch. However, the state's trying start with B2 certainly had an impact on legislative efforts in other states. "Almost every state in the Midwest was prepared to have a serious debate [about requiring low blends of biodiesel] until the Minnesota problems happened," says John Kerekes, central region director for the American Petroleum Institute. "Then almost everyone said, let's step back. Most legislators don't mind Minnesota being the guinea pig."
 Being the proverbial guinea pig-the crash test dummy, so to speak-of biofuels implementation is something Minnesota is used to though, and it's a role legislators and biodiesel stakeholders there knew they were taking on when the B2 legislation was created three years ago. Ralph Groschen, agricultural marketing specialist for the Minnesota Department of Agriculture and liaison to the state's biodiesel task force, says, "They say the pioneers get the arrows, and the settlers get the land. Well, we're taking some arrows." 
 
 Still, some say the "land" is still not ready for settling-and those politically incorrect arrows are still flying. That's why industry leaders say it is imperative that the industry learns from its mistakes quickly, and stays unified in its many grassroots campaigns for responsible, consistent legislation. 
 
 Are state legislative mandates the answer?
 Despite the state's highly publicized flaps, the Minnesota B2 requirement has not been particularly bad for biodiesel, either inside or outside the state. In fact, the use of B10 and B20 has been on the rise in Minnesota because the B2 requirement effectively increased the availability of biodiesel supplies statewide, Jobe tells Biodiesel Magazine. 
 Many assert that the early implementation of the mandate, in relation to the age of the industry, actually helped resolve potential issues more quickly by forcing a steep learning curve. "Minnesota learned within literally days that there was a problem, and that problem was quality control," says David Morris, vice president of the Institute for Local Self-Reliance. "It's very good to have learned this lesson. It's not a lesson that's inherently a problem. It's just [part of] the growing experience of an industry." 
 
 Jobe echoed that sentiment at February's National Ethanol Conference, where he said, "Ethanol experienced this [fast growth] in the '80s. … Because we are growing so fast, it is of extreme importance that fuel quality is emphasized."

 
 With a handful of low-blend biodiesel requirement bills going through state legislatures this year (see table, page 45), Jobe also emphasizes the need for unity within the industry in regards to policy. "We do need to look at a comprehensive energy strategy and not have a patchwork quilt of mandated biodiesel blends from state to state," he says, adding that it's already starting to happen. For example, Washington passed a mandate in March that starts the state at B2 but will go up to B5 when the state meets feedstock and capacity requirements. That alone will begin to establish a biodiesel requirement discrepancy among at least Washington and Minnesota. 
 
 Kerekes says the petroleum industry is "very concerned that these state efforts create unique fuel characteristics for smaller marketing areas." He says a lack of fungibility, in addition to any quality or supply issues, position the marketplace for price spikes and supply shortages. In the end, the burden to supply quality fuel to the customer is on the petroleum industry and that results in unique infrastructure expenses. "One company spent at least $2 million in gearing up for the B2 mandate that would not have been spent otherwise," Kerekes comments. Not surprisingly, the petroleum industry is generally opposed to all fuel mandates as an unnecessarily restrictive measure.
 
 Incentives also have the potential to create boutique fuels. For example, Illinois has a large demand for B11 due to a sales tax break on any blend over B10. Nevertheless, incentives rarely encounter opposition like mandates do. Even the NBB, which widely backs and lobbies for biodiesel incentives, is cautious to cast a blanket of support over proposed mandates, preferring instead to support blend requirements on a case-by-case basis. 
 
 "Yes, there are about a half-dozen other states that have filed Minnesota-like biodiesel bills this legislative session, and we are looking at those very closely," Jobe says. "We have said, let's get Minnesota under control and then move forward. However, other states see it differently. They want to see biodiesel brought to their state. They want the plants built, they want the jobs, and so they're moving forward."
 
 An agreement on the issue would probably settle on B2 mandates. Morris' recommendation is to start and remain small, as there is probably enough feedstock to meet a low-blend standard on a national basis, but even that's in question.
 
 The best method to ensure a nationally accepted biodiesel blend would be through a federally designated requirement or standard. Many agree that it has potential, but not before the industry can successfully meet existing B2 mandates in several cold-weather states. Jobe tells Biodiesel Magazine that the industry should focus on growth management and fuel quality before it discusses a nationwide mandate at any blend. 
 
 Morris is optimistic about federal progress. "If two years from now you no longer have any problems and you have hundreds of thousands, if not millions, of miles of operating experience, then we may do it as a nation," he predicts. "I think the major thing that would hold [a federal B2 requirement] back right now would be the premature corporate experience and distribution network. Eventually, what might prevent it would be opposition from existing industries." 
 
 However, the question bears asking, is it possible for the marketplace to develop without help from the state legislatures? The market is currently strong, and the current capacity build-out is being mostly fueled by federal incentives and/or national market appeal. These and other questions are just starting to flow. For instance, where do other renewable fuels come into play when specific biofuels are mandated nationwide? How would it impact existing federal legislation? Will the ultra-low-sulfur diesel requirement be an asset or a liability to biodiesel's cause? Should incentives be coordinated along with mandates? And who's coordinating it all?
 

 One thing is certain. The growing biodiesel industry still has the opportunity to harness the positive attention and take control of its growth.
 
 Anduin Kirkbride McElroy is a Biodiesel Magazine staff writer. Reach her at <a href="mailto:amcelroy@bbibiofuels.com">amcelroy@bbibiofuels.com</a> or (701) 746-8385.

Despite Minnesota's bumpy start with B2, several states are pushing for similar low-blend biodiesel requirements this legislative season. With everything on track-and on spec-in the Land of 10,000 Lakes, the focus of industry leaders has shifted to discouraging inconsistent biodiesel requirements and incentives among states. Nationwide coordination has become an instant necessity.

Time To Sync Things Up

Diesel-fueled generators are a mainstay of back-up power for public and private buildings such as hospitals, police departments, fires stations, public shelters, schools and office buildings. They have also provided standby power and assistance during peak electrical usage-the hottest and coldest days of the year-for utility companies. 
 Unfortunately, these power machines, however essential, are known to emit harmful air pollutants like NOx, sulfur and carbon monoxide. It makes sense, then, that biodiesel is gaining acceptance among those who maintain and rely on stationary power generation. 
 
 In central Tennessee, McMinnville Electric has been testing B100 in a 2 megawatt power generator to produce clean energy. The objective of the project is as simple as it is green, says Rodney Boyd, CEO of the utility. "Our objective [is] to generate power, and for that generation to occur as cleanly and efficiently as possible using biodiesel," he says. 
 
 McMinnville Electric System was founded in 1939 and generates power for the Tennesse Valley Authority. It is thought to be the first municipal electric utility to generate electricity for the grid using B100. So far, the company has logged hundreds of testing hours on its biodiesel-powered generator and continues to tweak the process.
 The machine being used in the project is a Caterpillar D3516 B electric generator-similar in size to a locomotive engine-a model that's been in production since 1998. However, unlike earlier versions of the model, this generator is equipped with an electronic fuel system that presented some challenges in transitioning from petroleum diesel to B100. Because of the reduced heating value per gallon of pure biodiesel compared to diesel, Caterpillar had to calibrate the machine to consume more fuel than it would originally need so that it would crank out 1,640 kilowatts of power. "We had to turn it up," says Tom Stanzione of Thompson Caterpillar in Tennessee, who is working closely with McMinnville Electric on the project. 
 
 Project coordinators say they required the machine to achieve 1,640 kilowatts because they wanted the generator to operate at the height of its horsepower range in real conditions. Before the machine was tweaked for the renewable fuel, it struggled significantly. "It is similar to a tractor-trailer trying to pull an 80,000 pound load up a 75 degree slope," Boyd says. "It's pulling hard the whole time it's running. Since the biodiesel does not quite have the Btu value of the petroleum diesel, we were having problems with the engine shutting down initially. … It was thinking it was starving for fuel." That problem was overcome after an adjustment to the throttle sensory indicator was made. In fact, Boyd says, "I have no hard numbers to prove it, but everyone of my linemen out there in the substation around this project will tell you the engine runs quieter and smoother with the biodiesel than it did with the petrol-diesel." 
 
 Caterpillar has also been pleased with how the testing has progressed. Once the ASTM provisional specification (PS-121) for B100 came out, the company became more comfortable with the use of the alternative fuel in its engines. "Caterpillar has supported evaluating the potential impacts of the use of various biodiesel [blends]," Stanzione says. But, because fuel-related failures are not covered in the warranties from engine manufacturers like Caterpillar, Cummins and Detroit Diesel, these and other companies have not officially endorsed the use of biodiesel in their engines. After a few conversations with Boyd, however, Stanzione was convinced of the project's relevance, even though the experimental nature of the endeavor contained certain elements of risk.
 

 "I am not sure everyone would participate in a test like this," says Stanzione, explaining that the primary concern of most major engine manufacturers is to make sure their products perform with the fuel they are made for. In other words, getting into biodiesel-especially B100-opens up a whole new can of worms. "We need to test the fuel against the metallurgy, against the rubber components and sealants used in an engine to secure it [internally]," says Brian Muncher of Stowers Caterpillar in Tennessee. "In the use of biodiesel, you have to keep an eye on seals and hoses and anything that is rubber, silicone or a non-metal surface to see how it reacts to the particular fuel that you are using." 
 
 Cracking molecules, cleaning exhaust 
 Aside from Caterpillar, there have been several other partners in the biodiesel testing project at McMinnville Electric. EmeraChem, a chemical engineering firm based in Knoxville, Tenn., built the catalyst that is essential to reducing the harmful pollutants emitted in the exhaust from the diesel generator. 
 
 The EMx NOx trap system has two chambers that treat exhaust intermittently in four-minute intervals. The exhaust passes through the platinum-coated trap where the NOx is absorbed, and carbon monoxide and unburned hydrocarbons are absorbed. When one chamber is fully loaded with NOx, the mechanism switches to a second chamber. 
 A plasma reformer produces the hydrogen gas needed to regenerate the catalyst by cracking the biodiesel molecules. The regeneration gas flows out of the plasma reformer and into the chamber of the catalyst undergoing regeneration. "EMx is a continuous process designed to achieve the required emissions reduction at the maximum NOx flow-rate," says Lisa Mitchell, project engineer for EmeraChem and the manager of the McMinnville project. "We have successfully installed the NOx trap in large natural gas turbines [and in] on-road diesel engines, but this is our first foray into stationary diesel applications with this product." Earlier installations of the NOx trap have regenerated the catalyst using natural gas to produce hydrogen. McMinnville Electric, however, was adamant about using the engine's native fuel to regenerate the catalyst and resisting the introduction of another fuel into the process. 
 
 This experimental procedure caused concerns for Boyd and company. "Since this was something new-reforming biodiesel and creating 21 percent hydrogen out of the bottom of that plasma reformer-we are actually cracking the [biodiesel] molecules and producing hydrogen, and we ran into some issues," Boyd says. "Anytime you start cracking an element at that high a temperature- 1,100 to 1,200 degrees Celsius range-you find out things that you didn't know, one being that the biodiesel was creating carbon in there, and that was simply because we had been operating in the 850 to 950 degrees Celsius range." 
 
 After temperature adjustments were made, problems with the purity of the water supply were addressed. This issue caused "plugging simply because when you heat normal tap water to that temperature, you have a lot of mineral impurities that drop out of it as well," Boyd says. McMinnville solved this problem by beginning to use de-ionized water and was able to run the generator for 36 hours straight with only some minor tweaking. The EMx catalyst reportedly achieved the cleanest diesel generator emissions ever reported (based on generator size and type). NOx, carbon monoxide and unburned hydrocarbons were extremely low. "It got to be so boring out at the substation that we were going to go out and get something to eat and grab a shower and come back," Boyd says. "Well, during that time, a little $2 fuel filter that was not the correct filter plugged, starved the system for fuel, and it burned a hole in the side of that plasma reformer. So we are in the process of rebuilding that piece of equipment right now." 
 
 Like many experiments, the McMinnville biodiesel project has required a certain amount of trial and error in order to bring the Caterpillar generator to its peak performance in the use of an alternative fuel source. But as these bugs have been worked out, McMinnville is producing some very clean electricity in central Tennessee. 
 
 Energy crops

 McMinnville Electric had been purchasing its fuel from Biodiesel of Mississippi, but received its first load of fuel from a Tennessee producer, AgriEnergy LLC in Lewisburg, this month. Boyd says he hopes McMinnville will be a leader in developing new markets for Tennessee-grown soybeans. 
 
 Using biodiesel to generate power benefits farmers in several ways other than simply providing a potential new market for soybean oil. John Dodson, a Tennessee soybean producer and an officer of the American Soybean Association, is happy to see McMinnville Electric moving ahead with the project. "I am excited that they chose to use biodiesel instead of natural gas," Dodson says. "The more biodiesel we use to generate electricity, the less natural gas we have to use, and that means that there is more available to make fertilizer-and that keeps the price down." 
 
 Parks Wells, spokesman for the Tennessee Soybean Promotion Council, says that biodiesel will not have an immediate impact on the Tennessee farmer, but increasing demand for the fuel will likely have a big effect over time. "Our biggest issue in soybean production right now is the need for increased acreage for the crop, and biodiesel could help, but this is going to happen over an extended period of time, and it will not be anything sudden," Wells says. Although Wells was hesitant to hail biodiesel as the savior of the Tennessee farmer, he did express excitement in regard to the biodiesel experiment at McMinnville and said he felt Boyd was a visionary in the use of alternative fuels to generate power. "He understands electricity like no one else," Wells says. 
 
 McMinnville Electric, as the first utility company in the United States to generate power using B100, is a leader in the application of biodiesel. "I see the future of biodiesel as one of the saving products of a good energy portfolio, and I don't think we need to rely on any one single energy source," Boyd says. "I have never seen an Army man guarding a soybean field in Tennessee, so we need to learn how to be independent of foreign sources; I certainly see Tennessee moving in that direction, especially when you talk about being able to put Tennessee farmers back to work growing energy crops." 
 
 Nicholas Zeman is a Biodiesel Magazine staff writer. Reach him at <a href="mailto:nzeman@bbibiofuels.com">nzeman@bbibiofuels.com</a> or (701) 746-8385.

As the first utility company in the United States to use B100 in a stationary power generation application, McMinnville Electric in Tennessee has experienced trials, tribulations and, by most measures, good success in its progressive experiment to produce green electricity from a clean and renewable domestic fuel.

Pure Green Power

One of the most significant mistakes that project developers make is to assume that the business plan is being completed for someone else. They fail to see the business plan as an important tool and project guide that not only reflects how well the business strategy and its implementation have been thought out and developed, but also indicates whether the project developer is capitalizing on business opportunities.
 
 Business plans can be consuming in terms of time and money, so start simple. The plan doesn't need to be elaborate but should address the basics: feedstock procurement, processing costs and product sales, and how difficult it will be to penetrate the market. Test the plan as the project is developed.
 
 The business plan should identify production costs, as well as operating costs, including equipment, land, construction permitting, labor, inputs and financing, utilities, and financial projections. It is important that a third party verifies financial analyses contained within the business plan in order to ensure that assumptions reflect current market conditions. With biodiesel projects, projections should contain some contingency analysis projections that both include and exclude anticipated federal and state programs.
 

 When it comes to financing, project developers should determine financing options-both debt and equity-based upon the business plan. Depending on the financing structure, most new biodiesel production facilities are likely to require 40 percent to 60 percent investor equity. Potential lenders, who will indicate the amount of equity needed to support the debt financing, will evaluate each project separately.
 
 Projects must be organized as a legal entity to raise equity or obtain debt, and the business plan should address issues specific to the entity structure. Which entity is best: corporation, limited liability company or cooperative? For a pass-through entity like a limited liability company, for instance, the business plan should call for the capability of making tax distributions.
 
 A feasibility study is not a substitute for a business plan. In general, feasibility studies identify business opportunities that can be implemented. Business plans use a strategy to optimize the opportunities presented by a feasibility study.
 
 The business plan should be a living document that changes and grows with the project. Initially, the business plan may state the goals for the project. For example, it may state that the business will contract with a reputable design/build firm for a lump sum contract at a fixed amount. When the business has entered into a letter of intent, the dollar amount and design/builder will be known. It will also identify other costs and responsibilities that the design/builder will not be responsible for, such as site gradings and borings, costs of bringing utilities to the site, road and rail enhancements, and construction cost escalations. The business plan must then be modified to account for these changes. 
 
 A well-thought-out business plan can be one of the best time management tools for a biodiesel project developer. It can also significantly reduce legal costs. Lawyers rely on the business plan for a view of the overall strategy, and how and where the developers want to take the business. The big picture information and the unique aspects of the project, as well as the strategies to overcome business, feedstock procurement and product marketing challenges, help the attorneys in drafting and structuring organizational documents, prospectuses and disclosure statements to raise money from potential investors. This information also helps with reviewing and drafting contracts for all aspects of the business. For example, a well-written business plan may save 30 percent or more in terms of time and costs involved with drafting a prospectus or disclosure statement.
 There are many points in project development when a well-executed business plan will save the project time and money. The business plan is often underrated but should be the key management tool for the project.
 
 Mark Hanson and Todd Guerrero are members of the Agribusiness and Energy Practice Group of Lindquist & Vennum PLLP, a leading provider of legal assistance on renewable energy projects throughout the country. They can be reached at (612) 371-3211.

The Business Plan: Underrated, But Critical

Legal Perspective

Sitting in my office chair, peering out over the bustling metropolis of downtown Grand Forks, N.D.-the home of BBI International Media-my chin rests upon my thumb and pointer finger in a Thinking Man-like pose as I reflect deeply on issues impacting biofuels and the world's rising petroleum consumption. Then, suddenly, my mind drifts to simpler thoughts … golf … hiking … maybe even trying my hand at fly fishing this summer. 
 
 Those are the trivial thoughts of a magazine editor with cabin fever caught in the warm afternoon sunlight of an early spring day (spring is a relative term in North Dakota, mind you). And it's my way of saying I just don't feel like writing anything controversial, intense or weighty this month. So I won't. 
 
 Instead, I'm going to tell you, first, about our newly expanded editorial team and, second, about the great feature articles in this issue. 
 
 Biodiesel Magazine has three new in-house staff writers-and the way this industry is growing, I'm darn glad they're on board. I'd like to formally welcome Anduin Kirkbride McElroy, Holly Jessen and Nicholas Zeman to the biodiesel industry. I am confident that you'll appreciate their work. Plus, after taking up residence in Fargo, N.D., veteran (that's a relative term, too) editorial staffer Dave Nilles is back on board with us. He's stationed in our new Fargo office. Consider Dave the editorial captain of our "southern" branch. 
 
 Speaking of Dave, he's authored an appealing article this month about a Denver-based biodiesel producer that is, like many ethanol companies, building plants closer to fuel markets than to production feedstocks. And this company is big on quality assurance, too. Check out "Mile-High Quality" on page 32. 
 

 Staff Writer Ron Kotrba, the author of this months cover story, "Seeing the Future in a Week's Time," page 26, has tackled another complex issue. His story elucidates the findings of a study that really has people talking. The Weekend Ozone Effect, the article explains, has government scientists, policy enforcers and biofuels advocates abuzz over data indicating that less NOx does not necessarily equal less smog. Simply stated, it's a study with potentially big implications. 
 
 On page 38, we highlight the Toledo (Ohio) Area Regional Transit Authority's three-year study to determine not only how B20 performs in engines and reduces tailpipe emissions, but how it might also minimize the pollutants bus passengers are exposed to. Following that, we present an important feature about the need to coordinate state biodiesel legislation, especially blend requirements. We round out this month's issue with a feature that looks at a bold project in Tennessee being carried out by an electric utility that's running B100 in a generator the size of a locomotive engine. What's especially cool about the project is that this generator can be used to provide power to the Tennessee Valley Authority during times of peak electrical usage-just when it's needed most. It's another example of the great things that can be done with biodiesel, both at home and abroad. The project also serves as an example of what can be accomplished with B100 in remote "off-the-grid" communities in developing countries. Keep an eye out for stories about that very topic in issues to come. 
 
 Now, where was I? 
 Oh yeah, golf, hiking, fly fishing.

New Writers, New Features...and Summer On My Mind

editor's note

The Web site <a target="_blank" href="http://www.investwords.com">www.investwords.com </a>describes "working capital" as current assets minus current liabilities. Other definitions describe working capital as a measure of how much a company has available in liquid assets to evolve its business. This figure, working capital, can be positive or negative. In general, a plant which has it-that is, has enough of it-will have an advantage to grow quicker than a plant that doesn't. 

 
 That said, however, what does working capital really mean to a new biodiesel plant? To help articulate an answer to that question, I asked Jeremy Wilhelm of Farm Credit Services of America for his input. Wilhelm described a biodiesel plant's current assets as cash, inventory and accounts receivable. On the other hand, he said liabilities include current debts or accounts payable. What is left over, if anything, after deducting liabilities from current assets gives you your working capital, Wilhelm said, adding that most biodiesel plants are financed with 50 percent equity and 50 percent debt. This means that for every dollar of equity the plant sets aside for working capital, the bank will most likely match. 
 
 Given that advice, what is the "right" amount of money to allocate toward working capital? Is there a "right" amount? Every plant will have different equations for this number; however, Wilhelm said Farm Credit Services of America likes to see 15 cents- to 20-cents-per-gallon of capacity set aside for working capital. Therefore, $4.5 million would be a good working capital target for a 30 MMgy biodiesel plant. 
 
 Now that we have established the "how much" question, it is now important to explain why working capital is necessary. In having working capital, a biodiesel plant is able to take advantage of forward pricing (when favorable), protect against price swings and, most importantly, lock in crush margins. Without working capital, a biodiesel plant becomes a "market taker" (i.e., the plant purchases soybean oil or other feedstocks at current cash prices and is either open to biodiesel sales or possibly has sold priced biodiesel out forward). Simply stated, the market decides the plant's margins when it fails to lock in crush margins. Some months will return a high margin, while other months might not return any margin. A biodiesel plant operating like this can experience big swings from month to month. 
 
 With working capital in place, a producer can become a "market crusher" (i.e., establish favorable margins when the markets warrant) and effectively narrow the market swings. Instruments used to help establish margins out forward include exchange-traded futures and options, or derivatives via the over-the-counter (OTC) market.
 What's at risk for producers that don't lock in crush margins? The two major risks which are feedstock prices-essentially virgin oils, animal fats and greases-and the sale of biodiesel. Being two completely different commodities, these ingredients of the crush are disconnected. This places extreme importance on margin management.
 
 As you can see in the chart, "market takers" are at large risk to margin swings. In Example 1 (the black circled area on the left), market takers saw their margins being squeezed. In Example 2 (the black circled area on the right), market takers were very profitable. What if Example 1 had been much longer lived? Would some U.S. plants have had to shut down? Working capital helps establish a steady rate of return and minimizes risks. 
 
 The final question that should be addressed is cost. In other words, what is the cost of establishing margins? The capital to establish margins can vary considerably depending on the market dynamics. Costs fluctuate depending on what strategies are used. It would cost less to buy a "1-cent-out-of-the-money" (OTM) soybean oil call versus an "at-the-money" (ATM) call. Although the OTM call requires less capital than the ATM call, the ATM call offers greater protection (i.e., an ATM call would offer 1 cent more protection than an OTM call). Every biodiesel plant has its own specific margin risks. What are yours-and how will you go about minimizing them?
 
 Nathan Burk is a risk management consultant for Des Moines, Iowa-based FCStone LLC. His primary focus is the renewable fuels industry and processing margins. Reach him at <a href="mailto:nateb@fcstone.com">nateb@fcstone.com</a> or (800) 422-3087.

The Importance of Working Capital and its Relation to Crush Margins

talking point

Wenger's Feed Mill is completing work on a soy-crushing facility in Rheems, Pa., 25 miles southeast of the state capital of Harrisburg. The $3 million plant will convert 1 million bushels of soybeans per year into oil and meal, according to Wenger Vice President Geoff Finch. The facility will feature one crushing line with two mechanical presses instead of using chemical extraction. Finch said the oil will initially be used in food-grade channels, but he has received interest from biodiesel producers.

Pennsylvania soy crusher near completion

Plans for Iowa's largest biodiesel facility announced

In February, PowerShift Energy Company and ReFuel America Inc., the U.S. subsidiary of NewGen Technologies Inc., announced plans to develop a 60 MMgy biodiesel facility in Fairfield, Iowa. Construction of PowerShift BioFuels of Iowa, located on a 5.6-acre site, is targeted to start in late spring and should take 12 to 15 months. The feedstock will be primarily soy oil; there will not be a supplemental soybean-crushing plant, although the company may build one in the future.

NextEnergy, Wayne State partner on biofuels lab

The USDA and U.S. DOE have agreed to coordinate and share resources to further plant and microbial genomics, as recently reported by the DOE. The energy department will take the first step by sequencing the soybean genome, ultimately allowing for enhancements like higher yield or oil content, and resistance to diseases such as Asian soybean rust. The DOE noted the importance of unlocking the soybean genome, not only because it's the "world's most valuable legume crop," as it stated, but also because soybeans play a staple role in much U.S. biodiesel production.

USDA, DOE partner  USDA, DOE partner

Wisconsin Gov. Jim Doyle issued an executive order March 1 to increase the state's use of renewable fuels in its vehicle fleets. Maria Redmond, alternative fuels policy analyst for the Wisconsin Bureau of Energy Efficiency, said the state is looking to lead biofuels usage on an internal level. 'We have about 700 diesel vehicles in the state fleet, so we want to educate employees on where to purchase biodiesel and how to increase its use," Redmond said.

Wisconsin Gov. issues executive order on renewable fuels

Cargill and two Belgian companies have formed a joint venture to construct a 200,000 metric ton biodiesel plant in Ghent, Belgium. The project is conditional to the Belgian government allocating a certain production quota, according to a Cargill press release. Cargill plans to convert the existing soybean crushing facility to accommodate rapeseed, the plant's feedstock. If the proposed project moves forward, the total investment would be $75 million, and 20 new jobs would be created.

Cargill, Belgian firms look at biodiesel plant

The Agriculture and Agri-Food Canada (AAFC) has forecasted total grain and oilseed production to decline by 3 percent in the country due to lower yields. Art LaForge, senior marketing and trade officer for the Agri-Food Trade Service regional office in Regina, Saskatchewan, said a slight decline could be from less application of fertilizer to acreage. The eight major grains and oilseeds include canola, flaxseed, soybeans, wheat, oats, barley, corn and rye. The full AAFC market analysis can be viewed at <a target="_blank" href="http://">www.agr.gc.ca/
 mad-dam/e/sd1e/2006e/feb2006_e.htm</a>.

Canadian oilseed, grain production down

Prairie Pride Inc., a new generation agricultural producer cooperative, raised approximately $32 million in its eight-week equity drive to build a 30 MMgy biodiesel facility outside of Nevada, Mo. It was so successful, the company extended the equity drive through April 10. Membership was only open to agricultural producers who are residents of Arkansas, California, Iowa, Kansas, Minnesota, Missouri, Oklahoma, South Carolina and South Dakota. The co-op anticipates a groundbreaking in late summer and production to start in fall 2007.

Prairie Pride extends equity drive

A group of 14 various academic and research experts recently collaborated on and published an article in Science called, "The Path Forward for Biofuels and Biomaterials," which reviews the group's research and policy plans to further biofuels' role in U.S. transportation markets. In the report, the authors affirm a USDA-DOE study that states biofuels can replace up to 30 percent of transportation fuels in the United States. "Most people believe we are about a decade away," Georgia Institute of Technology Professor Art Ragauskas said. "But this will require a dedicated research effort."

Think tank sees major role for biofuels

The North Dakota Agricultural Products Utilization Commission (APUC) awarded $52,500 to Dakota Skies Biodiesel LLC, a North Dakota Farmer's Union proposed project in Minot, N.D., formerly called North Dakota Biodiesel Inc. The money is to be used for accounting and legal costs, according to John Schneider, APUC executive director. The organization awards grant dollars to projects that add value to North Dakota agricultural projects. Nearly $315,000 were passed out to a total of seven projects at the APUC quarterly meeting Feb. 23.

APUC approves $52,500 grant for Dakota Skies LLC

Gary Willoughby, a research specialist at North Dakota State University's (NDSU) North Central Research Extension Center (NCREC) in Minot, N.D., has been testing canola-based biodiesel in three tractors since June 2005. So far, results have been positive, and he's letting area farmers know. "We've had no measurable differences in horsepower (using biodiesel)," Willoughby said. "After talking with farmers, I've found they are willing to use it, and they want to start growing canola."
 
 He initially started using B20 in a four-cylinder Case IH CX80, a 29-horsepower New Holland compact utility tractor and a 170-horsepower John Deere 4840. Then, he gradually upped the CX80 to B100. Willoughby said he's experienced no problems while running all three pieces of equipment under operating conditions ranging from yard work to field cultivation.
 

 The NCREC conducted engine dynamometer and oil sample analyses on the equipment prior to introducing biodiesel. A second oil sample, with no noticeable changes, was taken from the CX80 following 184 hours of operation. 
 
 The feedstock for the NCREC's biodiesel was donated by Archer Daniels Midland Co.'s (ADM) Enderlin, N.D., facility and transesterified at NDSU's Agricultural and Biosystems Engineering lab in Fargo, N.D.
 
 Willoughby plans on using the NDSU-produced biodiesel until two planned nearby biodiesel plants are brought on line and can provide a steady supply of fuel. Dakota Skies Biodiesel LLC is planning a 32 MMgy biodiesel facility in Minot, while ADM is planning a 50 MMgy facility in Velva, N.D., located 20 miles southwest of Minot. Willoughby said despite North Dakota farmers planting an expected 1 million acres of canola in 2006, twice that would be needed to meet demand for the two proposed plants.
 
 The NCREC is studying techniques to make canola planting and harvesting more productive. For example, it will plant canola in a tighter crop rotation in order to study disease management and yield.
 
 Information on the NCREC's canola rotation study can be found online at <a target="_blank" href="http://">www.ag.ndsu.nodak.edu/minot/rotation/index.htm</a>.

NDSU tests canola oil-based biodiesel

Biofuels Corporation, which intends to be "Europe's leading biodiesel producer," began production Feb. 28 at its newly built facility near Seal Sands, Middlesbrough, on the northeast coast of England. Sean Sutcliffe, chief executive officer of Biofuels Corp., said the plant has an expected production capacity of nearly 250,000 metric tons per year. This site offers a deepwater port and a well-established infrastructure for transport and distribution. 
 
 The Middlesbrough plant uses process technology designed by Energea, an Austrian technology and design firm, Sutcliffe said. Energea developed the Continuous Trans Esterification Reactor (CTER), which transforms biogenic fats and oils into biodiesel with unprecedented speed. 
 
 Biofuels Corp. markets its own product into wholesale with nearly 50 percent of its expected output already sold under contract. The new plant will be "one of the largest facilities in Europe and certainly the largest in the U.K.," Sutcliffe said. Biofuels Corp. will use a combination of feedstocks, including canola, soybeans and palm oil, and will manage its own facilities. 
 
 Sutcliffe told Reuters News Service the firm has also agreed to a 30-year contract with Simon Storage, which will store and handle biodiesel near the plant at Teesside. Simon Storage invested 3.5 million pounds (US$6 million) on equipment at the facility. A sizeable amount of biodiesel will also move to a nearby refinery owned by Dutch oil refiner Petroplus after it agreed to buy around 350,000 metric tons in a five-year deal. Petroplus markets "Bioplus," a 95:5 blend of ultra-low-sulfur diesel and biodiesel.

Biofuels Corp. starts production

An expansion project at American Biorefining Inc., a soy-based biodiesel plant in Bloomington, Ill., was nearing completion in March. At press time, production was expected to begin by mid-March, according to company President Tim Lee. "Everybody will be happy to see the thing fired up, that's for sure," he said.

 
 The plant has been producing biodiesel since 1994. With the $2 million expansion, capacity will increase from 10 MMgy per year to 30 MMgy when running 24 hours a day, seven days a week. Fifteen more workers will be hired to work in the biodiesel plant, bringing the total number of employees to 25.
 
 The company is searching for a biodiesel marketer, Lee said. In the past, American Biorefining marketed its own product. However, with the additional capacity, a professional marketer is needed. 
 
 The plant is one of few facilities that produces biodiesel using soybean oil and ethanol, rather than methanol. The company believes there are several advantages, including reduced water waste. "We took a brand-new approach to it, a much more environmentally friendly approach," Lee said. 
 
 American Biorefining began the expansion project in July 2005. Costs for the privately financed project were driven up due to Hurricane Katrina, Lee said. Although things progressed more slowly than the company would have liked, everyone was pleased the project was coming to an end. "We're looking forward to getting up to speed and getting it going," he said.

Illinois plant completes expansion

Arkansas recently welcomed its second commercial-scale biodiesel producer. Patriot BioFuels, a 3 MMgy biodiesel facility located in Stuttgart, Ark., began initial production in early March.
 
 Patriot BioFuels President Tommy Foltz said the project took approximately 11 months from initiating the business plan to start-up. The Greenline-Industries-designed production unit began construction in October 2005. The biodiesel production unit is located in a small section of a vacant 31,000-square-foot rice warehouse. Foltz said the building would allow for several additional lines of production up to approximately 25 MMgy. The company plans on expanding, either at the existing facility or a different site. "Three million gallons is not where we want to be," Foltz said. "This is just the beginning."
 
 Expansion relies mainly on the demand for biodiesel in the region. Stuttgart is approximately one hour southeast of Little Rock, Ark., and two hours from the Memphis, Tenn., market. Foltz expects strong demand from agriculture and trucking interests throughout the state. 
 
 The plant is multi-feedstock capable, although Patriot BioFuels will initially use soybean oil purchased from Riceland Foods Inc.'s Stuttgart soy processing facility. Rendered animal fats, primarily from poultry, will also be used.
 
 Patriot BioFuels raised funds for the project by targeting a wide array of investors, including venture capitalists and those in the agriculture and fuel industries.
 Foltz, who has served as the director of the National Clean Cities Program and staff director for the U.S. DOE's Federal Fleet Conversion Task Force, recognized the importance of fuel quality as well. Patriot BioFuels plans to apply for BQ-9000 accreditation once the plant is at nameplate capacity.

Patriot BioFuels reaches start-up

Just weeks after announcing plans to increase production capacity of its existing facility and expand operations to the East Coast, the American Biofuels biodiesel plant in Bakersfield, Calif., was destroyed by a fire caused by a methanol spill Feb. 17.

 
 "The fire did not happen in the plant," said Joe LaStella, president of Green Star Products, a majority stakeholder in American Biofuels. "It had nothing to do with the plant whatsoever. We're very safe at this plant. We have methanol detectors that are state-of-the-art and can detect even a quarter of a percent of methanol in the air. This happened outside of the plant."
 
 Reports on the fire from a variety of sources have blamed static electricity as the cause of the blaze. However, LaStella did not agree with this assessment. He said a methanol-transporting tote, weighing nearly a ton, slipped from its carrier leading to the outbreak of the fire. "[A tote] has aluminum bars on it, and one of these dragging along, hitting the concrete with 2,000 pounds … it could have easily caused a spark and ignited less than a gallon that had spilled and created a fireball that went back to the tote and set 250 gallons on fire," LaStella said. "This happened outside the plant and then spread into the plant."
 
 Methanol is a volatile chemical used in the biodiesel refining process, which transforms fats or oils into the fuel and liberates triglycerides as a marketable coproduct.
 
 Although the entire plant was destroyed as a result of the fire, five biodiesel tanks (approximately 30,000 gallons) and 6,000 gallons of methanol were saved. Also, nearly 90,000 gallons of corn oil were saved with only some minor damage to the exterior of the railcar where it was stored. The Bakersfield plant, in full operation at the time of the fire, was negotiating several marketing opportunities expected later this year.
 
 American Biofuels will rebuild the Bakersfield plant and continue with its plans to construct a new facility on the East Coast. "We're going to rebuild-East Coast, West Coast," said LaStella, who was preparing to survey sites in Pennsylvania and North Carolina.
 
 Since American Biofuels handles all of its operations from process technology, facility design and construction to site management, LaStella said the company can recuperate quickly from its losses. "The whole world knows that it takes 12 to 16 months to build a biodiesel plant, but if we can get this thing back on line in about 18 weeks, we can show that our technology can build a plant in record time," LaStella said. "In 18 weeks, we'll be back in production, and I think the world is going to take notice of that one."

Fire destroys American Biofuels facility in Bakersfield, Calif.

Just weeks after announcing plans to increase production capacity of its existing facility and expand operations to the East Coast, the American Biofuels biodiesel plant in Bakersfield, Calif., was destroyed by a fire caused by a methanol spill Feb. 17.
 
 "The fire did not happen in the plant," said Joe LaStella, president of Green Star Products, a majority stakeholder in American Biofuels. "It had nothing to do with the plant whatsoever. We're very safe at this plant. We have methanol detectors that are state-of-the-art and can detect even a quarter of a percent of methanol in the air. This happened outside of the plant." 
 
 Reports on the fire from a variety of sources have blamed static electricity as the cause of the blaze. However, LaStella did not agree with this assessment. He said a methanol-transporting tote, weighing nearly a ton, slipped from its carrier leading to the outbreak of the fire. "[A tote] has aluminum bars on it, and one of these dragging along, hitting the concrete with 2,000 pounds … it could have easily caused a spark and ignited less than a gallon that had spilled and created a fireball that went back to the tote and set 250 gallons on fire," LaStella said. "This happened outside the plant and then spread into the plant."

 
 Methanol is a volatile chemical used in the biodiesel refining process, which transforms fats or oils into the fuel and liberates triglycerides as a marketable coproduct. 
 Although the entire plant was destroyed as a result of the fire, five biodiesel tanks (approximately 30,000 gallons) and 6,000 gallons of methanol were saved. Also, nearly 90,000 gallons of corn oil were saved with only some minor damage to the exterior of the railcar where it was stored. The Bakersfield plant, in full operation at the time of the fire, was negotiating several marketing opportunities expected later this year.
 
 American Biofuels will rebuild the Bakersfield plant and continue with its plans to construct a new facility on the East Coast. "We're going to rebuild-East Coast, West Coast," said LaStella, who was preparing to survey sites in Pennsylvania and North Carolina.
 
 Since American Biofuels handles all of its operations from process technology, facility design and construction to site management, LaStella said the company can recuperate quickly from its losses. "The whole world knows that it takes 12 to 16 months to build a biodiesel plant, but if we can get this thing back on line in about 18 weeks, we can show that our technology can build a plant in record time," LaStella said. "In 18 weeks, we'll be back in production, and I think the world is going to take notice of that one."

NBB, Spitfire green National Biodiesel Conference

The Ag Processing Inc. (AGP) board of directors announced plans for a new soy biodiesel plant in St. Joseph, Mo. The cooperative, which is headquartered in Omaha, Neb., plans to have the facility completed by fall of 2007. "We're already working on the site," said John Campbell, senior vice president of Industrial Products and Government Affairs. 

 
 The 28 MMgy biodiesel plant will employ about 24 people. It will be located adjacent to AGP's current soybean crushing plant and vegetable oil refinery, according to an AGP press release. 
 
 In 1996, AGP became the first company in the United States to build a purpose-built biodiesel plant, which is still in operation in Sergeant Bluff, Iowa, the press release said. With the new plant in St. Joseph and expanded production planned at the Sergeant Bluff facility, AGP will have the capability to produce more than 55 MMgy of soy biodiesel.
 The cooperative is also expanding its St. Joseph soy processing plant, increasing crush capacity by 60 percent to 120,000 bushels per day. When the multi-million dollar project is completed, the St. Joseph facility will be one of the largest AGP processing plants in the Midwest.

AGP starts biodiesel plant construction

While Alabama Biodiesel Corp. is currently producing 10 MMgy of biodiesel in Moundville, Ala., the company doesn't plan to stop there, according to company Vice President Richard Campo. Located in a partially converted former resin plant, the company has plans to keep growing. "As the demand for biodiesel goes up, we'll continue to convert it," he said.
 
 The company began producing biodiesel using refined soybean oil in July 2005. For the first two and a half to three months, the renewable fuel was used to run tractors and other equipment for its development business. Then Alabama Biodiesel began marketing its product elsewhere, including to country singer Willie Nelson for his BioWillie brand. "We just wanted to know all the ins and outs before we started selling it," Campo said. Work to convert the plant began in October 2004. The company built the plant based off its own design, with some consultation from Superior Process Technology, according to Campo.
 
 Alabama Biodiesel Corp. has sent out samples of its glycerin and is currently exploring a market for the coproduct. Testing is also being done to determine if it will be used in a steam boiler to generate heat to make biodiesel.
 
 Because of its location on the banks of the Black Warrior River, the company would like to build a barge on-site, Campo said. Company officials are working with the Army Corps of Engineers on the project. The hope is that a barge facility would be up and running within about a year.

Alabama company grows with biodiesel industry

Public policy is playing an increasingly important role in the development and growth of our industry. Passage of the volumetric biodiesel fuels credit is but one example. Congress will be making decisions over the next couple of years that could have a dramatic impact on the industry for the next decade. Policy makers will want the National Biodiesel Board (NBB) and other industry leaders to be involved in these critical discussions. The NBB is answering this call by ramping up its governmental affairs program and opening an office in Washington, D.C.
 
 The NBB's federal governmental affairs team has a wealth of industry knowledge and Washington-based governmental affairs experience. This diversity positions the team to be well prepared to represent the common interests and needs of the biodiesel industry. The governmental affairs team is structured to supplement the ongoing work with the American Soybean Association (ASA) and to even more effectively coordinate the overall legislative effort.
 
 Top legislative priorities to be addressed include the extension of the federal volumetric biodiesel fuels tax credit beyond 2008, funding for the federal Bioenergy Program in 2007 and reauthorization in the upcoming Farm Bill, and the extension of the Small Agri-Biodiesel Producer Tax Credit program, to mention a few.
 
 In addition to our focus on policy priorities, the NBB continues to be vigilant in our regulatory efforts. With industry growth and our further integration into the nation's fuel pool, biodiesel is facing an ever-increasing volume of regulation impacting sales and use. The NBB's governmental affairs team will be immersed in these critical proceedings. Priority regulatory issues include the development of a final rule for the federal volumetric biodiesel fuels tax credit, implementation of the federal renewable fuels standard and determining the credit value for biodiesel, implications of the new ultra-low-sulfur standard for biodiesel producers and marketers, development of a final rule determining if blenders must utilize mechanical dye injection for tax-exempt blends, and implementation of the alternative fuel refueling infrastructure credit.

 
 Biodiesel's momentum is equally strong in state capitals. In 2005, the NBB tracked approximately 170 biodiesel-related bills in 36 states. This year's state legislative sessions are starting off at a fast pace for biodiesel as well. To date, just over 100 biodiesel-related bills have been introduced in 28 states. State initiatives can and will play an important role in helping maximize the benefit of federal policies while also putting in place additional policies to further spur the production and use of biodiesel. The NBB and others in the biodiesel industry place a high value on state efforts, and will continue to work closely with state stakeholders to assist them in these efforts. 
 
 <ul>The NBB's federal governmental affairs team includes:
 <li>Scott Hughes (director of governmental affairs)-Scott brings over 15 years of governmental affairs, public service and political experience to the position, including having worked on Capitol Hill. In addition, Scott has worked for the NBB for over three years in regulatory affairs.</li>
 <li>Gordley and Associates-Gordley and Associates is a Washington, D.C.-based government relations firm specializing in legislation and regulatory policies affecting agriculture and related industries. Gordley and Associates has a successful, long-standing relationship with the ASA, NBB and others in the biodiesel industry. Gordley and Associates has been at the center of biodiesel policy efforts since the NBB's beginning.</li></ul>
 
 John Gordley, founder of the company, has extensive experience working in both the legislative and executive branches of government. John's areas of expertise include farm policy, agricultural trade policy and biotechnology. He has played a major role in every national farm bill since 1981. This experience will be invaluable as agriculture policy incorporates several programs critical to the biodiesel industry.
 
 Mark Palmer has served as the primary federal contact for the biodiesel industry over the past two years. Mark has extensive Hill experience and a renewable fuel policy background. Mark was the point person for the industry in its successful efforts to pass the volumetric biodiesel fuels tax credit in 2004. 
 Janet Kopenhaver (Eye on Washington LLC)-Janet has over 20 years experience in the governmental relations field. Janet has been serving as the Federal Regulatory Consultant for the NBB for over two years. In this capacity, she closely monitors federal agency proposed regulations and grant programs for their impact on the biodiesel industry. 
 <ul><li>Alan Weber (Marc-IV)-Alan is a founding partner of Marc-IV, a consulting company that specializes in the development of industrial products from agricultural resources. Alan has been associated with the NBB and the biodiesel industry for over 10 years. He specializes in advising the NBB on economic and technical activities. Alan has significant experience in federal regulatory affairs and has played a central role in every major federal initiative proposed by the NBB. <li>
 <li>Tim Urban (Washington Council Ernst & Young)-Tim is a partner with Washington Council Ernst & Young. Tim's areas of expertise include tax and budget issues. Tim has been advising the biodiesel regulatory team since the beginning of the campaign for the biodiesel tax credit in 2002. He has extensive experience in this field, having worked for the tax writing committee in the U.S. House of Representatives (Ways & Means). </li>

 <li>Karen Coble Edwards (KCE Public Affairs Associates)-KCE will continue to provide public affairs services from Washington, D.C. Since 2000, KCE has counseled the NBB on public, government and media relations. Karen handles Biodiesel Alliance and Backers outreach, and sits on the Transportation Energy Partnership board.</li></ul>

Biodiesel industry ramps up government affairs efforts

NBB In Sight

Imperial Western Products, Inc., of Coachella, Calif., has achieved its BQ-9000 accreditation. This producer of Biotane-branded biodiesel is now a BQ-9000 Accredited Producer under the National Biodiesel Accreditation Program-a cooperative and voluntary fuel quality program adopted by both the National Biodiesel Board (NBB) and the Canadian Renewable Fuels Association. 
 
 "We have watched BQ-9000 become the quality program recognized as the industry standard," said Curtis Wright, manager of Biodiesel Operations. "Imperial Western wanted to help give confidence to prospective buyers and current customers alike. We are proud to be a BQ-9000 accredited producer, and I believe we're the first of such that uses yellow grease and animal fats as feedstock." 
 
 BQ-9000 is a quality assurance program that includes procedures for fuel storage, handling and management aimed at ensuring fuel quality throughout the distribution system. The program creates a comprehensive quality system whereby fuel is consistently produced in accordance with ASTM specifications and maintains its quality all the way to the customer's fuel tank.
 
 "With such rapid industry growth, ensuring that only a quality product reaches every consumer is more critical than ever," said Leland Tong, chairman of the National Biodiesel Accreditation Commission (NBAC). "The NBAC and NBB commend the first five companies who took the initiative to become BQ-9000 accredited." 
 Accreditation under the BQ-9000 program is open to all companies that produce, distribute or market biodiesel either in its pure form or for use in blending with petroleum diesel fuel. There are two types of designation under the program: Accredited Producer and Certified Marketer. Peter Cremer North America was the first company to become an accredited producer under the program. West Central, Dow Haltermann and Eastman Chemical are the other accredited producers. More information on the BQ-9000 program is available at <a target="_blank" href="http://www.BQ-9000.org">www.BQ-9000.org.</a>

Imperial Western joins BQ-9000 accredited producers

In addition to the opening of the Washington, D.C., office (see previous page), the National Biodiesel Board (NBB) is pleased to announce other staff changes. Donnell Rehagen, formerly NBB director of operations, has been promoted to chief operating officer, taking a more active role in overall management and administration of the organization. April Yaeger, formerly chief financial officer (CFO) of the Special Olympics of Missouri, has been hired as the new CFO of the NBB. Anne Klempke, a retired personnel sergeant with the U.S. Army, has accepted a new support staff position at the NBB and will help manage the Biodiesel Store.

NBB announces  new staff hires

The biodiesel community mourns the loss of one of its earliest advocates. Dennis Weaver, actor, and environmental and biodiesel supporter, died Feb. 24 at his home in Colorado. Weaver, the notable Gunsmoke and McCloud actor, was one of biodiesel's pioneering public faces.
 
 Weaver's legacy of environmental service will continue through the works of The Institute of Ecolonomics (www.ecolonomics.org) of which he was a founder, and EcoSense Solutions (www.ecosensesolutions.com) of which Weaver was a partner. Biodiesel will continue to enjoy its growth, thanks in part to his efforts, and we at the National Biodiesel Board will keep the Weaver family in our thoughts.
 
 During the National Biodiesel Conference held Feb. 5-8, Bill Mack's XM radio show was broadcasted live from the event. Weaver, who was unable to be there, was recognized by the audience and show guest Willie Nelson for his dedication to biodiesel. Weaver listened in to the show and was very excited and honored, said his Ecolonomics and EcoSense partner and close friend Peter LaVaute.
 
 Memorials can be made to:

 Institute of Ecolonomics
 Webster Hall
 Missouri Southern State University
 3950 East Newman Road
 Joplin, MO 64801

Actor, biodiesel advocate Dennis Weaver dies

The popular rock band Guster will be touring on biodiesel as it heads out for the first annual "Campus Consciousness Tour." It's a project of its environmental non-profit group Reverb. The tour, featuring Guster as the headlining act, starts this spring. The National Biodiesel Board is a sponsor of the tour. 
 Guster (<a target="_blank" href="http://www.guster.com">www.guster.com</a>) started out on an independent label, and word of mouth quickly spread, making them one of the most popular unpromoted bands of the late 1990s. Since then, Guster has become even more renowned with several recent top hits like "Amsterdam" and "Careful." It is known for its sold-out shows, especially in college markets.
 The Campus Consciousness Tour (<a target="_blank" href="http://www.campusconsciousness.org">www.campusconsciousness.org</a>) aims to educate, inspire and activate students, and above all, leave a positive impact on each community and college/university that the tour reaches, according to the band.
 In addition to biodiesel use, the tour will feature other eco-friendly practices, such as NativeEnergy's wind power credits, a Clif and Luna Bar pavilion with information on renewable energy and fuels, and clean energy demos and discussions featuring members of Guster. In addition, community "give-back" activities and fun promotions will take place at each venue.
 Reverb (<a target="_blank" href="http://www.reverbrock.org">www.reverbrock.org</a>) is a project of the nonprofit organization Artistic Resources In Action Foundation (ARIA). Reverb's aim is to raise awareness and support for the environment by connecting touring bands and their fan-base to environmental issues and organizations via an interactive eco-village.
 Born from the success of the "Green Highway" eco-village created by musician/activist Bonnie Raitt (<a target="_blank" href="http://www.bonnieraitt.com">www.bonnieraitt.com</a>) and executive producer Kathy Kane, Reverb seeks to spread its eco-village model to new tours and audiences throughout North America. Raitt also tours on a blend of biodiesel.

Guster spreads biodiesel consciousness

The National Biodiesel Conference & Expo came to those who couldn't come to it. The first ever National Biodiesel Board (NBB) blog debuted at the annual conference in San Diego. You can still see the sights and listen to the sounds at <a target="_blank" href="http://blog.biodieselconference.org">http://blog.biodieselconference.org</a>. 

 
 In less than a week, the blog published well over 100 pictures, 54 articles (or posts), 21 audio files and eight video clips-all during the event. Audio recordings of speeches and press conferences were posted immediately after they took place. Chuck Zimmerman, president of ZimmComm New Media, was the bio-blogger who provided the on-site coverage.
 
 According to the latest statistics, over 6,000 people visited the blog an average of two times each. The blog received domestic and international comments from those visitors, ranging from general biodiesel information to comments from the U.S. DOE.

Biodiesel blog brings biggest industry event to all

Joining other biodiesel plants set to start operations shortly in Indiana, Louis Dreyfus Corporation announced in March plans to build an 80 MMgy biodiesel plant in Claypool. The company, a member of the National Biodiesel Board, is also constructing an integrated soybean processing facility adjacent to the plant. Plant officials said it will crush nearly 50 million bushels of soybeans per year and produce over 1 million tons of soybean meal. The biodiesel plant would be the largest to date.
 
 "The Claypool project represents a significant and timely investment in the expanding U.S. biofuels space," said Erik Anderson, CEO of Louis Dreyfus Commodities North America. "We believe that biofuels will be a key and increasingly important driver in U.S. commodity markets."
 
 The plant, located in northern Indiana, will be situated to source soybeans locally and from neighboring states. The company says competitive truck and rail access to feed markets in Indiana and the Southeast will provide a consistent outlet for soybean meal. Further, Claypool sits in the center of Indiana and surrounding Midwestern states.
 Louis Dreyfus Corp. is the agribusiness arm of The Louis Dreyfus Group, which has merchandised and traded bulk agricultural commodities in international markets for more than 150 years.

Louis Dreyfus Corporation to Build 80 MMgy plant in Indiana

Energy expert and author Josh Tickell details how America can break its dependence on Middle East oil in Biodiesel America, a new book launched during the National Biodiesel Conference & Expo. Tickell shows how biodiesel could bring over 1 million jobs back to rural America, invigorate our economy and create a stable domestic fuel supply, while leaving our lifestyle and food supply untouched.
 
 "Biodiesel America is an engaging look at an issue that is front and center in our country-energy supply," said Joe Jobe, CEO of the National Biodiesel Board. "This is an extremely well-researched, thought-provoking book that documents the past, present and future of the bourgeoning biodiesel industry." 
 
 	In simple language, Tickell explains issues such as why America is more dependent on oil than any other nation; why Saudi Arabia's oil empire will soon crumble, sending energy prices skyrocketing; and why everyday vehicles that get 80 miles per gallon are already sold in Europe, but not in the United States.
 
 Tickell also authored the book From the Fryer to the Fuel Tank: The Complete Guide to Using Vegetable Oil as an Alternative Fuel, of which he sold more than 50,000 copies. His tour around the country in the "Veggie Van" helped jumpstart biodiesel education in America in the early 1990s. 

 To order this book, please visit <a target="_blank" href="http://store.biodiesel.org/">https://store.biodiesel.org/</a>.

Biodiesel America illuminates biodiesel's role in alleviating energy woes

Biodiesel Industries, a technology provider and member of the National Biodiesel Board, has expanded to India. The company, based in Santa Barbara, Calif., will be working with the nation's government on use of their newly patented technology-a modular biodiesel processing unit.
 
 Russ Teall, president and founder of Biodiesel Industries, recently visited India. He said Biodiesel Industries has an agreement with Labland Biotech in Mysore, India, to establish the first biodiesel plant in the country. A Model Biodiesel Production Facility and International Jatropha Technology Center will produce and research jatropha biodiesel there. 
 
 The Indian government has made hundreds of thousands of hectares available for the purpose of growing jatropha in the country. "It is important that when these lands are planted, that it be done in a sustainable and socially responsible manner, which is why this collaboration with Labland Biotech is so important," Teall said.

Biodiesel Industries takes patented technology to India

Minneapolis-based agri-giant Cargill Inc. has taken a 25 percent shareholding in Greenergy Biofuels Ltd., the subsidiary of U.K. biofuels company Greenergy Fuels. Cargill has been working with Greenergy to manage the supply of rapeseed and to provide the crush facilities for its conversion into oil for biodiesel production.
 
 Greenergy Biofuels Ltd. is building a 114 MMly (30 MMgy) biodiesel plant, which is slated for start-up in late 2006, at Immingham on Humberside, U.K.

Cargill buys shares in U.K.-based biodiesel producer

In early February, biodiesel plant developer Mean Green BioFuels Corp. announced a joint venture agreement granting Veridium Corp., a New Jersey-based industrial waste recycling company, exclusive worldwide rights to Mean Green's patent-pending corn-oil extraction system. The technology, which extracts corn oil from ethanol coproducts, will be provided by Veridium to ethanol producers as a turnkey oil extraction system.
 
 Mean Green BioFuels also announced plans in late 2005 to build a 30 MMgy biodiesel plant in northeast Indiana. The company plans to build up to five large-scale biodiesel plants in the eastern United States.

Veridium signs agreement with Mean Green BioFuels

Golden Hope Plantations, a Maylasian biodiesel producer has entered into a marketing and distribution agreement with Godiver Austria, a firm that handles clearing and trading of oil products, petrochemicals and a variety of organic chemicals. Ulrike Bender, who handles logistics and biodiesel projects for Godiver, said the letter of intent with Golden Hope had been signed, and a biodiesel plant is now under construction in Zwijndrecht, Holland, to meet the growing demand for biodiesel in Europe. Golden Hope will provide operational and managerial on-site services as well as the raw material for this facility, whose primary feedstock will be palm oil, an abundant resource in Malaysia.

Golden Hope, Godiver partners in biodiesel project

Minnesota Soybean Processors (MnSP) received a $16,000 energy conservation grant from Nobles Cooperative Electric, according to Steve Still, plant manager. MnSP operates a soybean crushing facility and a 30 MMgy biodiesel plant in Brewster, Minn. The biodiesel plant, which has been in operation since July 2005, will use the funds for high efficient lighting, motors and adjustable speed drives. It will save the plant an estimated $16,000 in energy costs per year. The crushing facility received a similar grant for $36,000 in 2004.

Minnesota Soybean Processors receives energy grant

In February, Piedmont Biofuels of Pittsboro, N.C. was named the new fuel distributor for the Whole Foods Market North Carolina Distribution Center in Morrisville, N.C. Piedmont Biofuels will deliver 600 to 800 gallons of B20 per week as part of a pilot project in which Whole Foods will determine the feasibility of using B20 in all distribution trucks in its South Region. Whole Foods has been using B20 at its Midwest distribution center since October 2005. Piedmont Biofuels is currently building its own 1 MMgy biodiesel plant in Pittsboro; it is scheduled to begin production in August.

Piedmont Biofuels provides B20 to Whole Foods

Biodiesel Industries of Greater Dallas-Fort Worth was awarded the U.S. EPA Landfill Methane Outreach Program's (LMOP) 2005 Project of the Year award Jan. 18 for helping to clean Texas skies. Biodiesel Industries' Denton, Texas, facility uses methane from the public municipal landfill as energy for the plant's processors in its unique hybrid landfill gas recovery system. Biodiesel Industries harnesses 1 million Btus of energy from landfill gas every hour, which mitigates uncontrolled releases of the greenhouse gases said to be 21 times more destructive than CO2 in the atmosphere and offsets the plant's need for fossil-fuel-derived energy

Biodiesel Industries receives EPA award

The Illinois Institute for Rural Affairs' Value-Added Rural Development Center recently added a tool to its Web site www.value-added.org. The Illinois Pre-Feasibility Evaluator allows Illinois residents to enter information about feedstock availability and costs, coproducts, location, transportation and other important aspects of a project. "[These are] things that are critical to bottom-line profitability at a plant," said Roger Brown, interim manager of the center. The program evaluates three- or five-year projections for return on investment. Visitors register through the site to access to tool.

Illinois organization offers pre-feasibility tool

The regulation of nitrogen oxides, or NOx, has been increasing for years and, according to rules already on the U.S. EPA's books, will continue to do so for some time. In the March issue of National Geographic, senior editor Tim Appenzeller's article, "The Coal Paradox," highlights this agency-driven curbing of NOx. "With much government prodding, coal-burning utilities have cut pollutants such as sulfur dioxide and nitrogen oxides ...," Appenzeller writes. The operative phrase there is, "with much government prodding," emphasizing the EPA's drive to regulate the emissions of NOx. 
 
 Cutting NOx and sulfur dioxide emissions from power plants and other high-emission sources sounds like a responsible thing to do, considering their purported contributions to the formation of acid rain and other unfortunate environmental consequences as a result of their emission. Atmospheric chemistries are complicated phenomena though, and the EPA has placed certain bets on NOx reductions from stationary and mobile sources to improve urban air quality. But not everyone agrees with that wager.
 
 A collaborative analysis called the Weekend Ozone Effect, conducted by the National Renewable Energy Laboratory (NREL), the Coordinating Research Council (CRC) and the California Air Resources Board, and funded by the CRC and U.S. DOE's Office of FreedomCAR and Vehicle Technologies, is uniquely compelling. Its persuasion is rooted in the ambient, real-world emissions data the researchers collected, as opposed to data from predictive modeling studies. NREL principal scientist Dr. Douglas Lawson, who's been an integral part of the Weekend Ozone Effect study, which began more than five years ago in southern California, says the data that's been collected points to a need for a new approach to a not-so-new problem.
 
 Eastern Texas has been battling with deteriorating air quality in places like Houston, Dallas and San Antonio for years. To help these metropolitan regions meet the EPA's ozone attainment status, the Texas Commission on Environmental Quality (TCEQ) implemented Texas Low-Emission Diesel (TxLED) in a 110-county zone in east Texas. Until a recent reprieve for biodiesel was issued, TCEQ had outlawed biodiesel blends not certified by the state. To certify a blend of biodiesel for sale or use in the area, testing had to show the fuel had been formulated to lower NOx, making it comparable with TxLED standards. "This is a NOx-control strategy," says the TCEQ's Morris Brown. "In Texas, in the three areas in non-attainment status, our modeling shows NOx as the primary driver [of ozone formation]." 

 
 In early February, Texas gave biodiesel a free, one-year bypass of the TxLED regs, in part due to having only one approved formulation, but also because the renewable fuel simply isn't used widely in the state. "Biodiesel is not a significant contributor to the NOx inventory here yet," Brown tells Biodiesel Magazine. 
 Despite the TxLED timeout in Texas, industry observers say the state has placed the same wager on NOx reductions to improve its urban skies that the EPA has anted. The wager entails is regulating NOx to control ozone in hopes of stymieing its contribution to smog, increased respiratory problems and the high cost of medical care to treat those unfortunate side effects of dirty air in polluted American cities. 
 
 Grasping the effect
 All of this might be a little difficult to sort through without some background information on what has been observed prior to and during this study. 
 The Weekend Ozone Effect looks at ground level ozone (O3) formation as a significant health threat and contributor to the pollutant-filled smog hovering over most metropolitan areas of the United States. 
 
 "The two main precursors to ozone formation are hydrocarbons (VOCs) and nitrogen oxides," Lawson says. "There's been a debate for years and years as to which of those two pollutants, or both, should be controlled to reduce ozone." Some industries have asserted that the best way to control ozone is to reduce hydrocarbons without reducing NOx. Others have pushed the idea that the best ozone control is gained by reducing NOx, not hydrocarbons. "And the (environmental) agencies have said you've got to reduce both," Lawson tells Biodiesel Magazine. 
 
 The Weekend Ozone Effect really quantifies what has been experienced for some time now, especially in the L.A. Basin region, which experiences higher ozone levels on weekends, even though significantly less NOx is emitted on weekends compared to weekdays. Less NOx is emitted on weekends because fewer diesel trucks and buses are on the roads Saturdays and Sundays, with even fewer diesels operating on Sundays relative to Saturdays. 
 
 "It's really quite complex because there are literally hundreds of chemical reactions that are taking place because of all the different types of hydrocarbons being emitted," Lawson explains. In urban settings, Lawson says it really boils down to one basic equation: O3 + NO = NO2 + O2. According to him, this is the single most important equation in understanding the Weekend Ozone Effect. 
 
 Approximately 95 percent of the NOx emitted from any combustion process is NO-whether from a diesel engine or a power plant-while NO2 makes up the remaining 5 percent, Lawson says. "That NO molecule combines with ozone in the atmosphere very rapidly, and forms NO2 (nitrogen dioxide) and O2 (oxygen)," he says. "So if you have more fresh NO emissions emitted in the morning, it means that any ozone that's around in the atmosphere-or that's being formed-is very quickly quenched, or gobbled up, to remove the ozone and form those two products, NO2 and O2." 
 

 Because of this "natural" reduction of NOx on the weekends due to much lower diesel traffic on the roads Saturdays and especially on Sundays, there's less NO around to titrate the ozone, thus, the ground-level ozone begins forming approximately an hour earlier on Sundays relative to Wednesdays. "It's like getting an extra hour of sunlight for the photochemistry to take place," Lawson tells Biodiesel Magazine. Because ozone starts forming an hour earlier, more of it can form during the day. 
 
 A more detailed look
 Lawson is openly sharing data that shows NOx emissions in the L.A. Basin on Sundays are approximately 50 percent less relative to the emissions of NOx on Wednesdays. Conversely, ozone formation in the L.A. Basin on Sundays is approximately 50 percent higher compared to Wednesdays, and, again, it starts forming an hour earlier on Sundays, relative to Wednesdays. 
 
 In that important equation-O3 + NO = NO2 + O2-there are no hydrocarbons or VOCs on either side of the equation, Lawson points out. However, the role of hydrocarbons in the formation of ground-level ozone is important. "Hydrocarbons are responsible for the rapidity with which the reactions take place," Lawson explains. Hydrocarbon reductions also take place on the weekends, but not to the extent that NOx reductions are seen. 
 
 To reiterate, one main factor of the Weekend Ozone Effect is that, with less NO around to titrate the ozone on the weekends, ozone formation occurs earlier. The second factor governing higher ozone formation on the weekends is the hydrocarbon-to-NOx ratio. In other words, the larger the hydrocarbon-to-NOx ratio is-the largest of which is seen on the weekends-the faster ozone forms. 
 
 Lawson says there's not a lot of data on ambient hydrocarbons, but carbon monoxide is a great "surrogate." Although hydrocarbons have many sources, one source for both carbon monoxide and hydrocarbons is gas-powered automobiles. "If you've got carbon monoxide around that's coming from cars, then intuitively you know the hydrocarbons from cars are lower as the carbon monoxide drops," Lawson says. 
 
 But Lawson notes that the L.A. area has had probably the most aggressive hydrocarbon regulations in the country, going so far as micromanaging things like the use of barbeque fluid, for instance. 
 
 Getting answers, assessments 
 With such a stranglehold on hydrocarbons in the L.A. Basin, and with "natural" reductions of NOx on the weekends due to less diesel traffic on the roads-and remembering that both hydrocarbons and NOx are precursors to the formation of ozone-why then are ozone levels as much as 50 percent higher on Sundays compared to Wednesdays? 

 According to Lawson, the Weekend Ozone Effect provides an answer to that question: Reducing only hydrocarbon emissions-and not limiting NOx-is what's needed to effectively regulate metro-area ozone formation. NO from NOx emissions is needed to quench ozone, so if ample amounts of NO are present while hydrocarbon levels drop to minimize or invert the hydrocarbon-to-NOx ratio (remember the larger the hydrocarbon-to-NOx ratio, the faster ozone forms), then more of the ozone gets titrated while the rate at which the formation of ozone occurs is slowed down. In other words, lowering hydrocarbons while not regulating NOx would help reduce ground-level ozone in urban areas and regions downwind of those locations. 
 
 Sure, the L.A. Basin has aggressive hydrocarbon controls in place, but the biggest source of hydrocarbon emissions is from a very small portion of the existing gasoline automotive fleet on the roads-those out-of-tune cars with ineffective or no emissions control systems, including critical sensors and catalytic converters. Lawson says these represent about 5 percent of all the cars on the road but account for about 75 percent of all mobile-source hydrocarbon emissions. It's these dirty "beaters" still in circulation that are holding hydrocarbon levels up compared to NOx reductions on the weekends relative to weekdays. There are less gas-powered cars operating on Sundays compared to Wednesdays, but that decrease in gas-powered traffic on Sundays is far less than the drop of NOx-emitting diesels.
 
 For biodiesel advocates like Anne Tazewell, the alternative fuels program manager at North Carolina State University, it's critical that this discrepancy in NOx's role in ozone formation is reconciled. "I'd like to see the 'weekend effect' research more widely understood. Especially as it relates to the NOx disbenefit attributed to biodiesel," she says. "Air quality planning puts a premium on NOx reduction that, frankly, could be undeserved. Consequently, the disbenefit associated with using biodiesel creates a challenge to folks that are tracking, and held accountable for, the emissions benefits of alternative fuels use." 
 
 National trend, outlook 
 One might naturally respond to the findings in this study by arguing, "The Weekend Ozone Effect is unique to southern California" and that different measures are needed for unique areas around the country. That's not true according to new research that has analyzed ambient emissions data in ozone problem areas in 23 states.
 
 "We did the work first in southern California because that's the mecca for ozone in the United States," Lawson tells Biodiesel Magazine. "Sunday ozone is much higher on average in L.A. than it is on Wednesdays. In other parts of the country, it isn't as extreme." 
 
 Weekend ozone increases in other parts of the country might only be 5 percent, or 2 percent, but because it's not as extreme as L.A.'s 50 percent increase in ozone, Lawson says people were convinced that their particular region of the country didn't suffer from the effect. Whether ozone levels remain the same or rise slightly on the weekends in various metropolitan regions of the United States, urban areas all across the country experience NOx reductions of 50 percent on Sundays relative to Wednesdays, Lawson says. If NOx reductions lowered ozone formation, then significant reductions of weekend ozone should have been observed. However, that wasn't the case anywhere in the United States, including Dallas/Ft. Worth, Houston, Atlanta and the Northeast. 
 
 Aside from reducing ozone levels, EPA supports NOx reductions nationwide because the agency also believes particulate matter (2.5 microns and smaller), of which particulate nitrate is a component, will be reduced. However, the Weekend Ozone Effect research shows that the presence of these nitrates is hardly changed at all on weekends, despite drastic cuts in NOx emissions. 
 
 All of these findings are of great immediate and near-term concern, but what's even more compelling is what the data says about the future, a decade or more out. 

 "The thing that's most intriguing about our study is that changes taking place today on the weekends, in terms of emissions reductions that naturally happen every weekend relative to weekdays, are similar in magnitude to the changes that are mandated by the EPA nationwide over the next 10 or 15 years," Lawson says. "That's probably the biggest red warning flag of all of this work. The regulations that are in place suggest that in the next 10 or 15 years we'll have about a 50 percent reduction in NOx emissions nationwide and maybe a 35 percent reduction in hydrocarbons." Thus, there would be more ground-level ozone in the future, not less. 
 
 Again, proponents of this study believe that the quantification and projection of this data is indicative of the future-provided EPA regulations stay their present course.
 Whether or not the EPA's NOx-limiting decisions, which continue to burden consumers who ultimately pay for these regulations, will ultimately dissuade the agency from changing its course is hard to say. "The issue of NOx control for ozone attainment is an issue we, and others, have worked on for some time," the EPA's John Millet tells Biodiesel Magazine. "We are aware, as the National Renewable Energy Lab's work states, that 'disbenefits' can exist. However, our conclusion is that despite localized disbenefits, NOx control is a major tool in reaching ozone attainment, and we analyzed that issue carefully in the [on-road] diesel rulemaking." Millet also says the EPA will continue to look at all available data in the context of drafting the nation's renewable fuels standard rulings. 
 
 Are these atmospheric changes observed between weekends and weekdays truly indicative of what's to come in the future? More specifically, although the percentage of reductions in NOx on weekends is comparable to the full-force NOx reductions the EPA expects to achieve within a decade, is there something different about these drastic short-term reductions that take place in a matter of days and what's to be gradually implemented over the course of several years?
 
 "We don't know what's going to happen over the long term," Lawson admits. "But over the short term it's very obvious what's happening, and without any modeling whatsoever, our studies provide a very good snapshot of what's likely to occur."

It's generally accepted that biodiesel blends, while reducing almost all harmful diesel vehicle emissions, lead to slightly higher levels of NOx. Now, a 
breakthrough study-the Weekend Ozone Effect-has government scientists, policy enforcers and biofuels advocates abuzz over data indicating that less NOx is precisely what's not needed to control the formation of ground-level ozone in urban areas.

Seeing the Future in a Week's Time

Sited adjacent to an expansive rail yard in the north metro reaches of Denver likely isn't the idyllic site for a biodiesel plant. After all, the clean air and wide open spaces synonymous with biodiesel are perhaps more appropriately represented by the scenic Rocky Mountains reaching skyward on the western horizon. But for biodiesel producer BioEnergy of Colorado, there couldn't be a better location. 
 Taking advantage of simple access to feedstock and a market thirsting for solutions to its air quality issues, the industrial area on Denver's north side provides the perfect location for a biodiesel company with a vision.
 For over a year, BioEnergy of Colorado has produced high-quality biodiesel that meets the mile-high expectations of its users. Through its focus on building production facilities located near -and serving-end-users, the company hopes to fill the biodiesel void near population dense regions.
 
 Finding the starting point
 BioEnergy of Colorado President Tom Davanzo came upon the biodiesel industry almost by chance. He was part of an investor group that purchased a loan from a Chicago bank. The assets included in that loan helped pave the way for Colorado's largest commercial biodiesel producer. 
 
 Included in the deal was property consisting of a vacant asphalt railcar cleaning facility. Besides offering immediate rail access-up to 100 lines are adjacent to the property-the site holds a vast tank farm of approximately 400,000 gallons of storage, mostly in 25,000-gallon tanks. With the ability to park 15 railcars on the spur, the site offered everything needed for a mid-sized biodiesel production facility, finally giving Davanzo the chance to make an entrance into the business. "Sooner or later, biofuels were going to become increasingly important," he says. "It was a chance to get involved before the marketplace was mature."
 

 Going from investment to production took some time, however. After nearly eight months of painstaking cleaning and preparations, the facility was finally ready for full-scale biodiesel production. In the meantime, the group, already operating under the BioEnergy of Colorado name, was experimenting with small batches of biodiesel. Over the course of a year, Davanzo's engineers focused on a production technique of their own design.
 
 Construction commenced in January 2005 on the final full-scale 10 MMgy biodiesel facility. The plant began producing large levels of biodiesel in April. By taking the time to develop a precise production technique and slowly ramping production, BioEnergy of Colorado had the opportunity to focus on another important factor in its current success-quality.
 
 Setting stringent standards
 Developed through experience, BioEnergy of Colorado's quality control program has persistently evolved. The plant's original layout had the final product going directly into railcars, which didn't create the ideal situation for maintaining quality control. "At first, we didn't understand the importance of checking the quality before we loaded the railcars," Davanzo tells Biodiesel Magazine. "We've grown to realize there are some small variances including moisture pickup that can occur. I think that the issue of quality cannot be overstressed both at the production location and as it moves into the distribution and marketer programs."
 
 With all eyes in the biodiesel industry on the issues that afflicted Minnesota's B2 requirement in the program's early weeks, it became even more apparent to BioEnergy of Colorado that its biodiesel must be produced at the highest quality. The facility, which already had its own quality control capabilities, including flash, glycerin, free glycerin and moisture tests, began testing every daily product flow from the plant, according to Davanzo. The storage tanks are also checked prior to shipping. A monitoring system keeps track of all relevant information at each stage of the process, including speed, temperature, flow rate and pressure. "We guarantee quality before we load into railcars or trucks," Davanzo says.
 
 Davanzo expects the end result to be BQ-9000 accreditation. In order to prepare for implementation of the quality assurance program, BioEnergy of Colorado is hiring one full-time person to bring the rest of the plant's staff up to speed. After all, quality programs pay off in increased productivity and better acceptance in the marketplace.
 "The single most difficult thing is that it's not enough that you get it right at your own shop," Davanzo says. "It's an investment that fuel distributors have in place … The job that marketers have is very large-educating the public."
 
 Working with distributors
 Davanzo is quick to recognize those that blazed the biodiesel trail before him. "World Energy and West Central Soy single-handedly carried the banner for the past decade or so," he says. "We owe them a thank-you for getting that marketplace interested."
 

 However, Davanzo feels there is an ideal place for smaller biodiesel producers to interact with like-sized distributors. That's why BioEnergy of Colorado works with local fuel distributors, so they understand the requirements that make biodiesel successful in the market. That work helps shorten the learning curve for the distributors, something that BioEnergy of Colorado National Sales Manager Monte Malone had to do. "Quite frankly, not having any knowledge of biofuels in the past, I dove right into it and started studying the markets," Malone says. 
 
 With more than 25 years of sales experience, it didn't take Malone long to realize he was part of a good thing. It allowed him to understand and alleviate the issues local distributors faced on a daily basis. That's harder for larger producers to do from a long distance, Davanzo says, explaining that it's difficult to get intimate with a fuel distributor's environment from a remote location.
 
 "It's one of the great things about the U.S. entrepreneurial system," Davanzo says. "Everyone has a profit incentive to understand a new product and get it into the marketplace. The vitality of the whole system drives us to work as partners to get new production into the marketplace."
 
 Most of the company's biodiesel is concentrated in the Rocky Mountain region. They sell biodiesel to any state that borders Colorado, according to Malone. "We've sold as far east as Alabama and as far west as California," he says.
 
 While the company's reception in the end-user market is growing, it still relies mainly on the infrastructure of its fuel distributors. "We are focusing on selling some blends locally, but 95 percent of our sales go right to our jobbers," Malone says.
 
 With more jobbers and fuel distributors jumping on board, it became time for Davanzo and Malone to look at expansion.
 
 Expanding the plan
 Once the quality standards were met, BioEnergy of Colorado ramped up production steadily at its facility through September 2005, when it hit peak production levels of approximately 700,000 gallons per month. Winter eroded demand in the local marketplace, forcing the company to decelerate production.
 
 With spring now firmly in sight, the plant is again ramping production. The company also recently hailed the introduction of a second facility: a 5 MMgy plant located three miles from the initial facility.

 
 Starting up in February 2006, the new plant, operating as Biofuels of Colorado, is a culmination of all that was learned at the first facility. After securing the new site in September 2005, the facility was constructed in approximately six months. Facility engineers played an important role in designing the new plant through engineering the heat transfer systems and designing movement of product through the complex, Davanzo says.
 
 Both facilities are multi-feedstock capable. While degummed soy oil is the primary feedstock, locally grown canola oil has also been used. "We want to get more and more locally produced crops to process in our plants," Davanzo says.
 
 Both plants use a batch front-end process on a continuous flow plant, which takes approximately 24 hours for a gallon of feedstock to become a gallon of finished product. The plants operate 24 hours per day, five days per week.
 
 Both plants are also located near distribution terminals, making it possible for trucks to come into the biodiesel plant for the renewable fuel and then go straight to nearby racks to splash blend it with diesel. 
 
 The plants' glycerin is sent to chemical companies to be refined into higher-quality products. Others are using the glycerin as a fuel.
 
 With a new facility offering increased efficiency, it's time for BioEnergy of Colorado to consider expansion once again.
 
 Filling the niche 
 "We can have fabulous stainless steel palaces throughout the Midwest," Davanzo says. "There is room for guys like us around population centers." Davanzo's approach to the biodiesel industry makes sense. His new plant can be considered a prototype of what he hopes to replicate in other cities. "We think the industry is going to carve itself into two spots," Davanzo says. "There will be these fabulous, marvelously engineered 40 to 50 million gallon plants. Those plants will require 15 to 20 acres of space and have enormous demands." The second type of plant involves smaller plants built primarily to serve end-users in metro areas. The ethanol industry equivalent is called "destination facilities." It's becoming more common in both industries, probably more so in the biodiesel industry, according to Leland Tong, business specialist with consulting group Marc-IV. "We are seeing kind of a geographical dispersal of biodiesel plants," he says. "Politically it's good. They can reach out to everyone outside the corn and soybean legislators." Feedstock supply can be an issue to end-user plants. "The key thing is access to feedstock," Tong says. "That is the trend as much as anything. Feedstock supply located near an urban area is a win-win." BioEnergy of Colorado has found both. With that, they're finding a marketplace steadily becoming more interested in biodiesel. Davanzo feels a large portion of that marketplace already understands the fundamental value of biodiesel. "I hope that market finds that American-made biodiesel may not always save them money, but it's always good for the United States and recirculating domestic dollars," he says.
 

 More information on BioEnergy of Colorado can be found at <a target="_blank" href="http://www.bioenergycolorado.com.">www.bioenergycolorado.com.</a>
 
 Dave Nilles is a Biodiesel Magazine staff writer. Reach him at <a href="mailto:dnilles@bbibiofuels.com">dnilles@bbibiofuels.com</a>or at (701) 373-0636.

As the biodiesel industry continues to explode throughout the soy-oil-rich Midwest, some plant developers are 
considering a different approach. Producing high-quality biodiesel near high-demand metro areas continues to be the game plan for BioEnergy of Colorado

Mile-High Quality

After years of biodiesel research and testing, studies comparing the renewable fuel to its petroleum counterpart no longer leave industry professionals waiting in breathless anticipation for results. That's shouldn't detract from the fact that studies completed to date-hundreds of them perhaps-have added to the industry's collective knowledge base, particularly in the area of emissions reductions, performance, engine compatibility and operating costs. And by and large, the work has only begun. 
 
 Now, the University of Toledo's Intermodal Transpiration Institute (ITI) and the Toledo Area Regional Transit Authority (TARTA) in Ohio are partnering up to take a closer look at utilizing a relatively high biodiesel blend-B20. Although it's not the first study of B20, the institute is venturing into new territory in a couple of key areas. 
 
 For the next three years, ITI will examine B20 use in certain TARTA buses. Specifically, the study will examine emissions, engine performance, engine wear, operating costs and in-bus air quality for passengers, says Stephen Atkinson, director of marketing for TARTA.
 
 A total of 48 TARTA buses have been identified for the study, 24 of which will be fueled with ultra-low-sulfur diesel (ULSD) and the remaining 24 with B20 (a ULSD blend). 
 
 Funding from the grant was also used to install an on-site biofueling station at TARTA, which went into use March 6. The study is funded through a $1.5 million U.S. Department of Transportation grant awarded through the efforts of Rep. Marcy Kaptur, D-Ohio. "I have a very clear goal of helping America and my community become energy independent as quickly as possible by replacing imported petroleum with renewable energy, especially biofuels," Kaptur tells Biodiesel Magazine. 
 
 The congresswoman backs biodiesel-and the TARTA endeavor specifically-for a variety of reasons, although, reducing emissions that impact air quality is perhaps her chief concern. "Toledo has been under a clean air warning for a number of years and we're looking at different ways of cleaning the air," Kaptur says. 

 
 Of course, TARTA's motivation for using and evaluating B20 is the hope that the fuel will reduce in-bus pollution, increasing passenger health and safety. "We have the answer, and it's growing out there," Atkinson says of biodiesel production. "We have it, and we just have to put it to best use." Officials at TARTA, which serves nine communities in the Toledo area, also know the United States can't forever depend totally on petroleum, much of which is imported. To that end, TARTA officials view biodiesel as a fuel extender that may be a vital necessity to the nation's mass transit needs of the future. "We're very exited about taking part in this," Atkinson says. "Of course, we're not the first to do it and we're not the only one doing it, but in my mind biofuels are the answer to the woes of other fleet owners or other transit authorities." The city of Toledo is also participating in the study to a lesser extent. However, Bill Franklin, the city's director of public service, says using biofuels is something city officials are interested in pursuing on a larger scale. For now, five refuse packers and five dump trucks will be fueling up with B20 at TARTA's fueling station. 
 
 If the pilot project is successful, the city could expand its B20 use to all of its 1,000 diesel vehicles, which make up about half of the city's total fleet, Franklin says. To increase the economic viability of such a project, it could be expanded to include Lucas County, area school district vehicles and others interested in joining up. In general, the more people using biodiesel, the more impact it will make, both environmentally and economically. "We assume, with greater demand for [biodiesel blends], the cost will come down," Franklin says.
 
 Fuel specifics
 The biodiesel TARTA is using in its B20 is derived from both soybean oil and yellow grease, primarily from recycled cooking oil from restaurants. Utilizing cooking oil from area restaurants is something Kaptur has been pushing for. Some restaurants currently pay to have the used grease hauled away, not realizing they have something that could be a valuable asset. By including the use of what is a relatively high blend of biodiesel made from waste vegetable oil in the study, researchers and participants will get a better picture of the feedstock's viability. "The question would be, could we collect it more systematically? Could we reprocess it more systematically and use it for the public benefit?" Kaptur says. 
 
 The fact that ULSD will be blended with biodiesel jumps ahead of a U.S. EPA rule that phases out low-sulfur diesel by 2010. Beginning June 1, at least 80 percent of all highway diesel produced by refineries must contain less than 15 parts per million sulfur, with the deadline for terminals and retail outlets set for Oct. 15, according to an EPA spokeswoman. By May 31, 2010, all highway diesel must fit those requirements. 
 
 It just made sense for TARTA to make the changeover early with the buses selected for the study, Atkinson says, explaining that the transit authority didn't want to initiate the switch under pressure. 
 
 Comparing ULSD to ULSD-based B20 is significant, according to Mark Vonderembse, ITI director. It distinguishes the study from others he's seen, which look at low-sulfur diesel and biodiesel. 
 
 Steve Howell, National Biodiesel Board technical director, says there are other fleets already using ULSD. However, he confirmed that there just isn't a lot of hard data yet on what that means for the transportation industry. 

 
 Environment and economics 
 On the emissions side of the equation, the study will look at tailpipe emissions as well as internal air quality in the buses. Students will use equipment to take readings of the levels of emissions such as NOx, carbon monoxide and particulate matter, Vonderembse says. A minor part of the study includes an analysis of how biodiesel made from different feedstocks effects emissions data. 
 
 The larger focus of this part of the study will be emissions readings inside the buses. The hope is that blending biodiesel with diesel will add up to a quality-of-life benefit for those in the vehicles. "Clearly if that's the case, then this makes it very attractive not only for transit authorities, but also for school districts and other transit activities that burn diesel and haul people," Vonderembse says.
 
 Kaptur, for one, is particularly excited about the air quality portion of the study, calling it a first of its kind. While biodiesel has a more pleasant cooking oil smell, diesel creates air quality issues for both bus passengers and city residents. Breathing diesel fumes over a long period of time also negatively impacts the health of workers at TARTA and city garages. "So the air-quality issue is important from the standpoint of passengers, from the standpoint of city residents [and] surely for those people who service these vehicles," Kaptur says. 
 
 Howell confirms that there really aren't any strong scientific studies out there on in-bus air quality. "That's new," he says. "That's never been done."
 Researchers will spend an equal amount of time looking at the economic factor, or how using a biodiesel blend will impact engine performance, engine wear and operating costs. "On the surface, you still have a cost penalty for using [B20]," Vonderembse says. "It costs more per gallon than diesel [and particularly] ultra-low-sulfur diesel. So what we're trying to determine is, are there offsetting savings associated with it, such as extending the life of the vehicle, [or] extending maintenance. [For example, maybe] you don't have to do engine rebuilds as quickly … [or] have as much money in maintenance costs."
 
 A local company, Shrader Tire and Oil, will complete free oil testing after each oil change. ITI will analyze the data to determine what impact, if any, B20 has on engine wear when compared to diesel.
 
 Ultimately, one of the chief goals of the study is to determine the total lifecycle costs of a vehicle powered by B20. To that end, 10 of the buses that will be running on biodiesel blends are new. Those vehicles, 10 Blue Bird buses powered by Cummins engines, will run on B20 from the beginning, with virtually no straight diesel used in them. "So we can have a pretty accurate estimate of what the costs of maintenance would be and what the engine life would be between those biodiesel vehicles and the regular diesel vehicles," Vonderembse says. 
 
 The other buses in the study, 38 DaimlerChrysler buses with Mercedes Benz engines, are not new. The fact that those buses have been powered by diesel and are now going to be using B20 is interesting to researchers. ITI has heard anecdotally that switching to biodiesel blends initially means higher emissions as the engines get cleaned out, leading to increased filter changes and higher costs, he says. However, this study will take into consideration the longer-term impacts, something that isn't currently known. 

 
 Overall, the results of the comprehensive study on biodiesel could have far-reaching affects. If the results show that B20 is an economically and environmentally sound solution, private organizations such as trucking companies or other transportation companies may be more interested in jumping on the biodiesel bandwagon. "If we can demonstrate in this kind of application that, in total, the cost of using biofuels … is the same or possibly less than using straight diesel fuel, then we can convince commercial applications," Vonderembse says.
 
 Injecting power
 In another partnership, ITI and TARTA have also teamed up with H2 Engine Systems, a small Ohio-based company, to learn more about using hydrogen as a power source with biodiesel blends. One TARTA mini-bus has been modified so hydrogen can be combined in the air intake system of the bus engine. "What we're looking at is showing the benefits of using hydrogen in conjunction with B20," Atkinson says. "The expectation is to show improved performance and improved miles per gallon." 
 
 Though it's a small part of the overall study, John Everton, president of H2 Engine Systems, says looking at the results of burning hydrogen and biodiesel in conventional engines is cutting edge. Previous studies have focused on the use of hydrogen and straight diesel. "To my knowledge, nobody has taken that and put it into biodiesel applications," he says. 
 
 The company, which was set up originally to develop hydrogen engine applications, expects an estimated 2 percent to 4 percent of hydrogen will be burned along with the B20. The results of the study will be best applicable to fleet vehicles rather than retail passenger vehicles due to the logistics of utilizing hydrogen as fuel. 
 At some point in the study, Everton hopes to increase the biodiesel ratio to B50 and B100. Since burning B100 means a reduction in power, the hope is that adding hydrogen to the mix will have a positive effect on power output. "It may have no effect at all on B100," he says, "We'll have to wait and see." 
 
 Holly Jessen is a Biodiesel Magazine staff writer. Reach her at <a href="mailto:hjessen@bbibiofuels.com">hjessen@bbibiofuels.com</a>or (701) 746-8385.

April 2006

Business Briefs

Cargill buys shares in U.K.-based biodiesel producer

Veridium signs agreement with Mean Green BioFuels

Golden Hope, Godiver partners in biodiesel project

Minnesota Soybean Processors receives energy grant

Piedmont Biofuels provides B20 to Whole Foods

Biodiesel Industries receives EPA award

Illinois organization offers pre-feasibility tool

Columns

Legal Perspective

editor's note

talking point

NBB In Sight

Featured

Time To Sync Things Up

Pure Green Power

Seeing the Future in a Week's Time

Mile-High Quality

A Real Biodiesel Insider

April 2006.css-7jxktu{position:absolute;bottom:0px;left:0px;right:0px;height:3px;border-radius:3px;background-color:var(--chakra-colors-brandBlack);}

Business Briefs

Cargill buys shares in U.K.-based biodiesel producer

Veridium signs agreement with Mean Green BioFuels

Golden Hope, Godiver partners in biodiesel project

Minnesota Soybean Processors receives energy grant

Piedmont Biofuels provides B20 to Whole Foods

Biodiesel Industries receives EPA award

Illinois organization offers pre-feasibility tool

Columns

Legal Perspective

editor's note

talking point

NBB In Sight

Featured

Time To Sync Things Up

Pure Green Power

Seeing the Future in a Week's Time

Mile-High Quality

A Real Biodiesel Insider

April 2006