John Ray & Sons, a more than 100-year-old energy service company based in Troy, N.Y., celebrated the opening of its-and the state's-first retail biodiesel pump June 5. New York Gov. George Pataki helped kick off the celebration. John Ray & Sons' B20 comes by way of Portsmouth, N.H.-based Sprague Energy Corp., which stores and blends biodiesel at its Port of Albany terminal.

Biodiesel comes to New York

In an effort to serve the biodiesel needs of the Chicago area, Western Petroleum Co. has opened a biodiesel truck rack at the Kinder Morgan terminal in Argo, Ill. The facility's close proximity to diesel racks allows customers to splash blend biodiesel of any amount into their trucks. The virgin soybean-oil-based biodiesel sold at the rack will be stored in an above-ground 400,000-gallon storage tank. The tank is insulated and will be heated during cold weather months.

Western Petroleum opens biodiesel rack

This month's cover story, "The 'Peak' Role of Biofuels," which starts on page 56, is largely based on biodiesel highlights from a mid-July conference hosted by the Energy & Environmental Research Center (EERC), an internationally renowned RDD&C (sorry, you'll have to read the story for an explanation of that acronym) facility in Grand Forks, N.D. The conference, titled, "Biomass '06: Power, Fuels and Chemicals," provided a broad and categorically sensible overview of how biomass utilization is fitting into the world's overall energy picture.
 
 In his opening statements, EERC Director Gerald Groenewold spoke of a new study conducted by the Southern States Energy Board (SSEB), a group comprised of governors and state legislators from 16 southern states. The critically acclaimed report, titled, "American Energy Security: Building a Bridge to Energy Independence and a Sustainable Energy Future," focuses on America's liquid transportation fuel options and presents a comprehensive plan for U.S. energy security through the production of clean liquid transportation fuels from domestic resources. The plan sets an aggressive timeline for achieving U.S. energy independence by 2030, and outlines the costs, risks and national security implications of current and future U.S. dependence on imported oil. Most importantly, the report lays out a plan to achieve energy stability and eventual independence.
 

 Interestingly, the study's authors say the widely held belief that America is facing an "energy crisis" is a misnomer. Rather, they claim, the nation "faces the ominous prospect of crippling oil and liquid fuel shortages, and soaring prices." They say the solution to this "ominous prospect" is to, first and foremost, tap into the "trillions of tons" of unconventional fossil fuel resources in the United States-coal, oil and shale, specifically-and complement this cache of energy feedstock with biomass resources. 
 
 Although the initial cost of transitioning to such a program would be steep, I believe the long-term benefits of doing so are hard to dispute. Yes, the idea of heavily reinvesting in the domestic production of fossil fuels does seem somewhat archaic. However, before passing judgment on the idea, visit the SSEB's Web site, www.sseb.org, and take a look at the study. It's a pretty quick read. 
 
 Specifically, the study suggests that the United States should start using gasification or Fisher-Tropsch technology to convert vast quantities of coal and oil shale into crude oil that would, in turn, be made into "ultra-clean" gasoline and diesel fuel. It also proposes that America ramp up its efforts to extract hard-to-get oil from existing U.S. oil fields via carbon sequestration. 
 
 So where does the report leave biodiesel? Well, depending on your own personal views on the potential of biomass utilization, it puts biodiesel in a pretty good spot … with a bit of a caveat. Referring to the SSEB's study, Groenewold said the EERC believes biomass could eventually provide up to 20 percent of the nation's energy needs. Personally, I believe a one-fifth market share for biomass would bode extremely well for biodiesel. As many of you know, however, biodiesel is not a lone contender-and I'm not talking about ethanol. The SSEB's report suggests that the true promise of biomass-derived liquid fuels lies in emergent pyrolysis and thermal depolymerization techniques that produce hydrocarbon fuels from organic wastes. Time will tell how viable these still-novel fuel concepts will be, but some experts say hydrocarbon fuels-even those made from contemporary biomass feedstocks-simply will not stand up to biodiesel in a variety of ways. Like it or not, we'll probably find out in the years ahead.

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How will biodiesel fit into an energy independent America?

Editor's note

The Napa Valley Wine Auction was the beneficiary of more than 1,700 gallons of B20 from Martinez, Calif.-based Golden Gate Petroleum. The fuel was used to run generators and support vehicles at the event, which took place June 1-4. The auction gave the fuel distributor an opportunity to speak with local grape growers and vineyard operators about biodiesel. "We hope it spurs more interest by grape growers in the Napa Valley to use biodiesel," said Pat O'Keefe, the company's vice president.

Golden Gate Biofuels donates B20 to wine auction

Biodiesel made another strong showing in this year's Challenge X: Crossover to Sustainable Mobility, a three-year college engineering competition sponsored by General Motors Corp. and the U.S. DOE. A team from the University of Wisconsin-Madison won second place for its development of a 1.9-liter turbo-charged biodiesel electric hybrid. Third place was taken by Mississippi State University, which built a hybrid electric vehicle that runs on B20. Virginia Tech earned first place with an E85-electric hybrid.

Biodiesel hybrid named runner-up in Challenge X

The Port of Vancouver is wasting no time complying with Washington's renewable fuels standard. The port is easing into the use of B20 in its diesel-powered vehicles and heavy equipment. Washington's renewable fuels standard, signed into law in March by Gov. Chirstine Gregoire, will require state fleet diesel vehicles to use a minimum of 20 percent biodiesel by June 1, 2009. The port plans to increase its use of B20 as ongoing tests are completed.

Port of Vancouver tests B20 in vehicles, heavy equipment

At press time, Western Dubuque Biodiesel was preparing to start construction on its 30 MMgy biodiesel plant in Farley, Iowa. Renewable Energy Group (REG) is handling the development, construction and management of the facility. With equity secured, construction was slated to begin in mid-July. The plant site is about 20 miles from the Mississippi River on a Canadian National Railroad line. Another 30 MMgy biodiesel plant being developed by REG, Southern Iowa Bioenergy in Lamoni, Iowa, kicked off its equity drive June 21.

REG plant in Iowa nears construction

Houston-based TexCom Resources Inc. announced in early June that it had received a $6 million equity investment from famed football coach Barry Switzer. The substantial investment will support the company's plan to build a 35 MMgy biodiesel plant at an undisclosed location in Oklahoma. Switzer is a former coach of the Dallas Cowboys and the University of Oklahoma. TexCom previously announced a plan to build a 35 MMgy biodiesel plant in Seabrook, Texas.

Investment group backs Oklahoma biodiesel project

D1 Oils plc, a UK-based biodiesel producer, imported its first tanker of soy oil from Brazil for refining at its Middlesbrough site. The company expects to import 6,000 metric tons of vegetable oil per month to facilitate a biodiesel production increase from 9.6 MMgy to 21.6 MMgy. D1 has also contracted for jatropha production in India and Zambia. As the jatropha plantations begin to produce oil in volume, D1 will significantly increase its import and refining of "low-cost feedstocks sustainably produced overseas," said CEO Elliott Mannis.

D1 Oils to import feedstock from Brazil, India, Zambia

Houston-based market analyst Jim Jordan & Associates plans to release an in-depth analysis of the biodiesel industry in a report titled, "Biodiesel: A Market Study," due out in July. The study is expected to be between 150 and 200 pages long, including maps, charts and graphs. The purpose of the study is to provide various interest groups with impartial, accurate information across a number of targeted categories, including biodiesel supply and demand, available technologies, feed stocks, logistics, and regulatory developments.

Analysts to release biodiesel market study

Tees Valley Biofuels, a privately owned business in the United Kingdom, plans to build a rapeseed processing facility near the River Tees in the country's northeast region, according to a press release. The facility would crush 500,000 metric tons of rapeseed per year to be supplied, in part, to biodiesel manufacturers. In May, the company announced that construction would begin late this year and start up in early 2008.

Rapeseed crushing facility planned for UK

The U.S.-based Engine Manufacturers Association (EMA) has developed a test specification for B20 that could be a positive signal for adherents of higher biodiesel blends. 
 
 The association, which represents engine manufacturers and sponsors scientific and technical research to improve engine performance and testing, established the B20 test spec at the urging of its members, according to Joe Suchecki, the EMA's director of public affairs. To date, several engine and vehicle manufacturers have approved the use of biodiesel blends up to B5. Few have stepped beyond that threshold, however, and growing interest in higher blends-particularly B20-has pushed manufacturers to evaluate how those blends affect engine durability, performance and emissions. 
 
 Specifically, the EMA test specification establishes a baseline for B20, and with that, manufacturers can start or continue tests and evaluations of various blends below 20 percent biodiesel. "The specification provides a good set of characteristics and properties that we think are needed for biodiesel fuel," Suchecki said, adding that it's important to know how compatible higher biodiesel blends are with today's clean-burning diesel vehicle engines. The spec will help experts determine that, he said. 
 
 An EMA press release stated that biodiesel should meet BQ-9000 production standards, the voluntary biodiesel quality management program overseen by the National Biodiesel Accreditation Commission (NBAC). Fuel quality mishaps happen for various reasons but are typically associated with fuel leaving a production facility off-spec, or falling off-spec downstream. Suchecki said the B20 spec, along with the BQ-9000 program, will help stop those mistakes from happening. 
 

 Like BQ-9000, the EMA B20 test spec is not required on any sort of state or federal level. However, the EMA would like to see its spec spur the development of a national biodiesel blend standard, Suchecki said, adding that the organization's leaders believe there is a clear need for such a fuel quality benchmark. 
 
 Leland Tong, chairman of the NBAC, was encouraged by the appearance of a B20 test spec, and he applauded engine manufacturers for the effort. "I think it's a step in the right direction," he said, explaining that it is especially encouraging that the spec is tailored for blends as high as B20. 
 
 Possible changes to the ASTM biodiesel standard, D 6751, were examined during a June ASTM meeting, Tong said (see page 15). The changes being considered could mark the beginning of harmonization between U.S. and European biodiesel standards. 
 
 Jeep Liberty CRD no longer for sale in the U.S.
 The EMA's B20 test spec came not long after DaimlerChrysler stopped offering its diesel-burning Jeep Liberty CRD-a vehicle that came factory-filled with B5-for sale in the United States. The decision came, in part, because the vehicle-under its current configuration-didn't meet 2007 emissions standards, according to Max Gates, a spokesman for DaimlerChrysler. 
 
 Jeep Liberty CRDs will still be manufactured in the United States but will be shipped to Europe where the diesel market is more established. The company is still testing the U.S. market for diesel vehicles, Gates said. DaimlerChrysler won't immediately release large numbers of diesel vehicles in the United States until it has a good understanding of emissions regulations and confidence in the customer base, Gates said. 
 
 In place of the Jeep Liberty, DaimlerChrysler is releasing a diesel version of its Jeep Grand Cherokee in 2007. Like the Liberty, these vehicles will leave the factory with B5 in their tanks, Gates said. The company will work with the same partners, biodiesel producer Peter Cremer North America and BP, for blending.

Engine manufacturers create B20 test specs

Maryland Biodiesel began production June 20, a day after the company's grand opening ceremony, said owner James Warren. 
 
 The June 19 grand opening ceremony hosted several state and local dignitaries, including Maryland Gov. Robert Ehrlich. "The [state] Secretary of Agriculture pushed the button, filling the reactor tank with soy oil," Warren told Biodiesel Magazine. He and his wife Ginger also own Cropper Oil & Gas, a fuel distribution company in operation since 1968. 

 
 The plant in Berlin, Md., began construction in March. The production facility is conveniently located on the site of Cropper Oil & Gas' tank field, which makes cocktailing any biodiesel blend a breeze for the new producer. Cropper Oil & Gas has been selling biodiesel for three years, Warren said.
 
 At the 2004 National Biodiesel Conference (NBC) in Palm Springs, Calif., Warren said he talked with another couple that was big into biodiesel-Bob and Kelly King, owners of Pacific Biodiesel Inc., based in Hawaii. It was this meeting that precipitated the development of Maryland Biodiesel. 
 
 From there, it took two years to push the permits through, according to Warren. This was a first-of-its-kind project in Worcester County-in the whole state of Maryland, in fact-so the Warrens' biodiesel project was a guinea pig of sorts when it came to establishing a process for permitting a methyl ester refinery. "There was no zoning for this at all," Warren said. "Now, the [county and] state are behind us 100 percent." 
 
 Soybean oil is the plant's feedstock, which Warren said it procures from Perdue Inc., the famous chicken company that has a crush facility 20 miles away in Salisbury, Md. 
 
 Warren said an expansion of the Berlin plant may begin by late this summer. "Our goal is to be producing 5 million gallons within a couple of years," he said. Currently, however, the East Coast facility is pushing out approximately 1,500 gallons per day at a 500,000 gallons-per-year pace. If expansion occurs late this summer as planned, Warren said the result of this immediate expansion would add between 500,000 gallons and 1 million gallons to its annual production capacity, reaching between 1 MMgy and 1.5 MMgy this year. 
 
 Maryland Biodiesel is currently looking into BQ-9000 certification. In fact, Warren said he's been discussing this with a New Jersey-based consulting firm.

Maryland Secretary of Agriculture Louis Riley gives thumbs-up

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The completed facility was built in 3 months.

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Maryland Biodiesel starts production

BBI International hired two employees and opened an office in Australia, according to company CEO Mike Bryan. Bill Elliott will act as director, while his wife Janice will be operations manager of BBI Biofuels Australia in Coorparoo, Queensland.
 The office will conduct feasibility studies, business plans and project development. It also plans to develop a political climate conducive to biodiesel and ethanol, Bryan said.

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BBI opens Australian office

A second biodiesel plant in months has been destroyed by fire, and this most recent catastrophe in New Plymouth, Idaho, was deadly.
 
 Personnel at Blue Sky Biodiesel had been retrofitting a formal fruit-packing plant over the past few months and were just beginning full-scale production. The plant would have produced 1 MMgy of biodiesel from multiple feedstocks.
 

 Reports indicate that Blaise Black, 25, was welding on top of a storage tank when an explosion ignited a blaze that would destroy part of the plant and take his life. According to the local fire department, a minor evacuation of local residents occurred when officials became concerned that the thick black smoke generated by the fire might be toxic. "It was about six or seven residents on the northeast side of the building [who had to leave the premises]," said New Plymouth Fire Chief Allen Blevins. 
 
 The Associated Press wire service reported that Rob Black, father of the victim and managing partner of Blue Sky Biodiesel, was on-site and tried in vain to rescue his son, meanwhile sustaining second degree burns and suffering from smoke inhalation. The storage tank where Blaise Black was welding contained an unknown quantity of fuel, and the explosion set off another blast of flames that rapidly enveloped the building, causing tanks containing glycerin, among other flammables, to explode. The tank room and boiler rooms of the plant were destroyed, but some of the other rooms were salvageable, Blevins said. 
 
 "Most of the main fire [happened] when the glycerin tank exploded," Blevins said. "That set the roof on fire. [The building] was an old, cold storage facility, and the ceiling was about a foot thick with foam and different kinds of insulation. That was what really got burning."
 
 Twelve area volunteer departments, consisting of 75 to 90 firemen, responded to the fire because of a cooperation agreement between several communities in the area. "It was so hot, we would have to take [one] crew out, put them in rehab and put a new crew in," Blevins said. 
 
 The American Biofuels plant in Bakersfield, Calif., burned to the ground in February when a spill from a methanol-filled transport tote was ignited. Both Blue Sky Biodiesel and American Biofuels handled their own construction, engineering and process design.

Plant fire proves deadly in Idaho

ASTM International's Committee D02 on Petroleum Products and Lubricants convened in Toronto at its semiannual meeting in late June, where two changes to the ASTM standard D 6751, the standard specification for biodiesel fuel blend stock (B100) for middle-distilate fuels, were approved.
 
 According to Steve Howell, chairman of the ASTM Biodiesel Task Force, ASTM will publish a new version of D 6751 on its Web site within two or three months of passage; once published, the standard will supersede the current version, ASTM D 6751-06e1. The National Biodiesel Board recommends adoption and use of updated ASTM D 6751 versions as soon as they are published, Howell said.
 
 The first ballot passed by the main committee combined calcium and magnesium-five parts per million maximum-using method UOP 389. The second ballot provided a scope change, allowing biodiesel to be blended with diesel fuel not meeting lubricity and cetane prior to blending. Blending with D 975 out of specification for aromatics and sulfur is already allowed in the current scope. All finished blends must meet pertinent local and state regulations.
 
 The fall meeting of the D02 main committee will have seven new ballot items, which were passed in June by Subcommittee D02.E. Ballot results will be discussed at the December D02 meetings scheduled for Dec. 3-7 in Lake Buena Vista, Fla.
 
 Two of the subcommittee items related to flashpoint. One added an Alcohol Control Parameter to Table 1, which provides for either a percent of methanol by gas chromatography of 0.2 percent maximum, or a flash point of 130 degrees Celsius. Another changed the flash point line in Table 1 to a value of 93 degrees Celsius (200 degrees Fahrenheit). "With methanol controlled via other means, the purpose for flash point is strictly safety and handling issues," Howell said. "Producers can use the flash point for methanol control if the flash is over 130 degrees Celsius." A 200 degree flash point coincides with the National Fire Protection Association (NFPA) non-hazardous rating.

 Another ballot put more emphasis on incorporating biodiesel into finished fuel specifications. It is a scope change that removes references to D975, and turns D 6751 into a blend stock specification, which can be used for any fuel. The current scope limits blending biodiesel into on- and off-road fuel only, Howell explained. This change was needed to allow the use of D 6751 for inclusion of biodiesel into the heating oil specification, D 396, and potentially other ASTM distillate fuel specifications.
 
 Another item made the Ignition Quality Tester (D 6890) an allowable option for the cetane number using the cetane engine, D 613. The Automatic Cloud Point method D 5773 was also allowed as an option for the manual cloud point D 2500. 
 
 Finally, the last ballot requires Rancimat stability-a measurement of an oil's degree of resistance to oxidation-for a minimum of three hours. The passage of the stability in D 6751 is needed prior to moving forward on B5 and B20, according to Howell. He added that passage through D02 by August would allow voting on subcommittee ballots of B5 and B20 in December.
 
 For more information on participation in Committee D02, visit www.astm.org or contact David Bradley, D02 staff manager at ASTM International, at dbradley@astm.org.

ASTM biodiesel standards undergo changes

Thirty-two miles east of Salt Lake City, the historic town of Park City, Utah, is merging the old with the new. The ski resort community of roughly 7,000 residents has a rich history of silver mining and remarkable resilience after several fires in the 19th Century almost caused its demise. Now, Park City joins other forward-thinking municipalities by burning B20 in all of its compression ignition vehicles, driven by the contemporary push to lessen dependence on petroleum-based fossil fuels. Nearing press time, the switch was scheduled to officially occur June 30, according to Eric Nesset, manager of the town's vehicle fleet. 
 
 Park City began B20 trial runs in some fleet vehicles last summer. The town's pilot demonstration program utilized the community's Main Street trolley for initial evaluations of the blend. Maintenance costs, vehicle reliability and consumption rates-compared to regular No. 2 diesel-were assessed. The municipality found no evidence of increased maintenance intervals, interruptions in vehicle performance or increased fuel consumption in the B20-burning trolley trials. When the city first started this pilot demonstration last June, however, the trolley was only two months old, Nesset said. "We didn't experience any filter pluggings, but we anticipate the older vehicles using B20 will require more frequent [fuel] filter changing for the first couple of months," he said, explaining that the solvent properties of biodiesel may naturally strip buildup in vehicles' fuel systems deposited by petroleum diesel. 
 
 With positive pilot demonstration results in hand-and the desire to become a more sustainable and environmentally friendly community-the city decided to use B20 in all of its vehicles. Nesset told Biodiesel Magazine that the city's diesel-powered fleet consists of 32 transit buses, and approximately 30 more pieces of on- and off-road equipment such as snow plows, front-end loaders and backhoes. Approximately 215,000 gallons of fuel per year is consumed by the city's diesel fleet, most of which is used by the transit buses. 
 
 Jardine Petroleum is distributing the B20 blend to Park City, Nesset said.

Park City is using B20 in many of its fleet vehicles after a successful trolley pilot test last summer.

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Historic Utah town burns B20

In response to customer demand, the Kramers Lane diesel terminal in Louisville, Ky., owned by Marathon Petroleum Company LLC, will store and blend biodiesel, according to Angelia Graves, director of public and state government affairs. It will be the company's second U.S. terminal to handle the renewable fuel.
 
 Marathon Petroleum will install a 30,000 gallon heated tank and a blending arm to service one lane of the terminal with B2 and B5. "If we have more demand than one lane can cover, we will look at expanding," Graves said.
 
 The company hopes the Louisville terminal will be operating by the end of 2006. At press time, most of the engineering was complete; next, the company will prepare for the equipment acquisition and construction phase. Graves mentioned that these phases are on hold until the funding is finalized.

 
 Graves said engineering, equipment and construction could cost between $500,000 and $1 million. To help with the cost, the company partnered with the Kentucky Clean Fuels Coalition (KCFC) to obtain two federal grants. The Kentucky Soybean Board awarded the company $50,000, and National Clean Cities Inc. in Washington, D.C., gave $36,000, according to the KCFC. The Commonwealth of Kentucky also awarded Marathon Petroleum with a $149,000 grant, which was being finalized at press time. 
 
 Marathon Petroleum plans to acquire its biodiesel from biodiesel production facilities in the region. Marathon Petroleum will also "have a product quality procedure in place to ensure that the blended product meets our standards," Graves noted.
 
 The company's first biodiesel blending terminal, located in St. Paul, Minn., was necessary to provide the mandated B2 blend in Minnesota. Graves said the terminal began blending biodiesel in fall 2005.

Marathon Petroleum to install biodiesel terminal in Louisville, Ky.

Quietly flying under the radar, yet another 30 MMgy biodiesel plant is being developed in Iowa. Freedom Fuels LLC is under construction near Mason City.
 
 Initial construction of the facility began in late April, according to project secretary Charity Miller. The foundation and floor of the process building were complete in early July, and equipment was arriving. Start-up is tentatively slated for late February or early March 2007.
 
 Miller said the project's developers considered several design/build teams before settling with relative industry newcomer NewMech Companies Inc. as general contractor. The St. Paul, Minn.-based company has seven divisions related to project development and construction. Minneapolis-based Crown Iron Works is building the plant's equipment. SSOE Inc., an architectural engineering firm in Toledo, Ohio, is the engineering firm.
 
 The facility will be able to use soy oil and animal fats as feedstock. Miller said plant officials have had discussions with Ag Processing Inc. (AGP), Minnesota Soybean Processors and other groups regarding soy oil availability. They've also contacted Tyson and Hormel regarding animal fats. There are five meat processing facilities in close vicinity to north central Iowa that could supply feedstock to the plant.
 
 Core Ventures will assist the project during construction and provide a management team after start-up. The company will provide biodiesel off-take and feedstock procurement capabilities for Freedom Fuels.
 
 Freedom Fuels has an ideal location, according to Miller. Besides being located in a soy-abundant area, the plant site is located near two railroads. The plant is along the Iowa, Chicago & Eastern Railroad and has access to the Union Pacific Railroad via the Iowa Traction Railroad. In addition, Interstate 35 is just west of Mason City. "It's all about location," Miller said.

 
 Miller said the project was spearheaded by Chairman Ed Dannen, who previously worked with the SoyMor project in Glenville, Minn. Seed stock was raised in two mid-December meetings. The primary equity drive concluded June 30 with over $18 million raised, according to Miller. She said there are 415 investors, a majority of which are farmers from southern Minnesota and northern Iowa.
 
 More information on Freedom Fuels can be found at <a target="_blank" href="http://www.freedomfuelsllc.com">www.freedomfuelsllc.com</a>.

Freedom Fuels moves ahead smoothly

In June, the Saskatchewan Biodiesel Development Task Force presented a report and recommendations for advancing the province's biodiesel industry to provincial lawmakers. The task force met with stakeholders to look at challenges and opportunities facing the biodiesel industry in order to compile it, according to a press release.
 
 "We're pretty excited by the work that the task force has done," said Jacquie Gibney, assistant deputy minister of Saskatchewan Agriculture and Food. "I think it will provide a pretty solid foundation for the biodiesel industry for Saskatchewan."
 
 The report contained a total of 10 recommendations for the Saskatchewan government. Those recommendations included: 
 
 -A Canadian renewable fuels strategy with a target of 2 percent by 2010 and 5 percent by 2015 specific to biodiesel
 -The development of programs and policies to encourage consumption, production and technology development, as well as increasing public awareness
 -Funding for research and testing on standards, and a program to help producers meet the standards
 -Development of a national Bio-Products Center
 -That all biodiesel sold in Canada meets standards and is certified
 -Support for limited liability corporations to facilitate primary producers' investment 

 -The evaluation of options for a blending and distribution system
 
 The report concluded that a national renewable fuels strategy and incentive programs were critical to allow biodiesel to "catch up" to ethanol. Standards and quality issues must also be a priority. "It will take the efforts of all the stakeholders-including industry, primary producers and all levels of government-to develop a harmonized, 'made-in-Canada' biodiesel," the report said. "Only then can Saskatchewan be assured of a long-term, sustainable biodiesel industry with opportunities for rural development."
 
 Canada's federal government is talking about a renewable fuels standard of 5 percent by 2010. "We feel that is just a start, and that could move to 10 percent or even higher," Gibney said. 
 
 The task force's report takes the idea of a mandate or standard even further by recommending a specific standard for biodiesel. Currently, the federal government's renewable fuels standard combines ethanol and biodiesel, Gibney said. 
 
 The report focuses mostly on canola as a possible feedstock. Canada is a significant producer of grains and oilseeds, including canola, Gibney said. In addition, Saskatchewan has a large land base of 43 percent of the country's arable land to plant crops. "We're really sitting on a huge opportunity here," she said. 
 
 Barb Isman, president of the Canola Council of Canada, said the report was positive. She said recognition of the need for a mandate for biodiesel, separate from ethanol, was particularly important. The Canadian biodiesel industry is about five to six years behind ethanol, and biodiesel producers could find it difficult to break into the market.
 
 The need for stringent quality standards for biodiesel was also a positive of the report. The Canola Council of Canada supports that, Isman said. 
 
 However, something that could have been made clearer in the report was the information on incentives. There is a need for Canadian incentives that are on the same level as U.S. incentives, she said. 
 
 To access a full copy of the report, check out <a target="_blank" href="http://www.agr.gov.sk.ca">www.agr.gov.sk.ca</a>.

Canadian task force releases report on biodiesel

Gaining momentum with a significant number of projects over the past year, Renewable Energy Group (REG) of Ralston, Iowa, is building another biodiesel refinery near Washington, Iowa.

 
 In mid-June, Iowa Renewable Energy LLC broke ground on the 30 MMgy facility, which will utilize soybean oil and animal fat as feedstocks. While founding partner West Central, also of Ralston, often has a stake in the biodiesel facilities REG builds, Iowa Renewable Energy is owned mostly by a group of local investors, said Bill Raney, sales and marketing manager for REG. A representative of Iowa Renewable Energy was not reached by press time.
 
 Iowa Renewable Energy will be the fourth 30 MMgy facility that REG has built; it is expected to start up next July, Lappe told Biodiesel Magazine.
 
 "When it's up and operating, it will put us at about 132 MMgy of production capacity," Lappe said, referring to the amount of estimated product that will be sold by REG when its projects become fully functional. West Central, a founding partner of REG, markets biodiesel under the brand name Soy Power, which the company claims represents 45 percent of all the biodiesel sold in the United States. 
 
 According to the Iowa Renewable Fuels Association (IRFA), the state has 11 biodiesel refineries with a combined annual capacity of nearly 200 MMgy either in operation or under construction. "Iowa is quickly becoming the leader in biodiesel production," said Monte Shaw, executive director of the IRFA. "Large, new-generation biodiesel facilities like Iowa Renewable Energy are changing the face of the industry."

Representatives of Iowa Renewable Energy break ground on the plant in mid-June.

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Iowa Renewable Energy starts construction

A facility touted to become Kentucky's largest biodiesel plant recently broke ground, and two more projects may not be very far behind.
 
 Owensboro Grain Biodiesel broke ground on a 50 MMgy plant in mid-June near Owensboro, Ky. The plant is located adjacent to a large soy-crushing facility owned by Owensboro Grain Co., a family-owned firm founded in 1906. Owensboro Grain already produces 75 MMgy of soy oil, according to John Wright, vice president of strategic planning and development.
 Desmet Ballestra is the design/build firm on the project, which is expected to start up in mid-2007.
 
 Owensboro is located in northwest Kentucky, along the Ohio River border with Indiana. The biodiesel project received funding assistance in the form of a grant from the Kentucky Agriculture Development Board and a low-interest loan from the Agriculture Finance Corp.
 
 Owensboro Grain already has a significant foothold in the soy industry. The company produces edible oils and soy products including meal, hull pellets, oil and lecithin for human consumption and animal feeds. The company's trademarked SoyMax, a soybean meal product, was developed alongside specialists at Tyson Foods and two universities. 

 
 Owensboro is on pace to become the second commercial biodiesel plant in operation in the state. Griffin Industries produces 2 MMgy in a multi-feedstock facility in Butler, Ky. Griffin's plant is located approximately 30 miles south of Cincinnati.
 Two more biodiesel projects are springing up in Kentucky. Green Earth Bio Fuels is a planned facility near Irvine. Spokesman Duane Starr told Biodiesel Magazine at the end of June that his company is negotiating the rights to use an existing facility. Once the decision on the building is made, Starr said his company will move ahead quickly. "We already have plans drawn up to construct a plant," he said. 
 
 Green Earth BioFuels has received financial help for its project. In a May ceremony, the group was presented with a $500,000 check from John Clay, Kentucky deputy secretary of Environmental and Public Protection. 
 
 A second proposed facility is in the planning stages near Hopkinsville, which is already home to a 33 MMgy ethanol plant. A spokesman for the 5 MMgy project said the biodiesel plant was in the design phase. He said tanks and equipment were being lined up, but no firm start date was set as of late June.

Representatives of Owensboro Grain Biodiesel break ground on the project in June.

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Kentucky plant breaks ground; others planned

The call for fuel quality in the biodiesel industry continues to intensify as more production comes on line virtually every week. The real concern about poor-quality fuel entering the market and sullying the reputation of biodiesel is not just theoretical. Fuel quality issues were experienced during similar periods of rapid growth in the European biodiesel industry and in the U.S. ethanol industry. The marketplace and competition eventually dealt with the fuel quality problems in both cases, but not before the reputation of the product's reliability in those markets sustained long-term harm. 
 
 Simply relying on the marketplace and competition alone to weed out poor-quality product is not enough. That would mean that customers would have to have failures in substantial numbers over several years in order to condition the market to select only quality fuel. The problem with this process is that many-if not most-customers who have failures because of poor-quality fuel will never come back to biodiesel. Plus, they will spread their stories of biodiesel failures far and wide.
 
 Engine and equipment manufacturers continue to withhold support and caution customers against using biodiesel blends primarily because of their concern over fuel quality. Original equipment manufacturers (OEMs) and other stakeholders continue to ask the National Biodiesel Board (NBB), "What is the biodiesel industry doing to enhance fuel quality in the market?" 
 NBB Chairman Darryl Brinkmann appointed a task force to examine this issue and make policy recommendations. The task force was chaired by Gary Haer of West Central and included a cross-section of highly respected industry leaders. The group spent hundreds of hours examining this issue. The result was a comprehensive fuel quality policy recommendation. The recommendation was approved by the NBB Governing Board and discussed again at length among all NBB members on a Web conference in June. At the June NBB meeting in Washington, D.C., the policy was passed unanimously. 
 
 Fuel Quality Policy: What is it and what does it mean?
 The Fuel Quality Policy can be viewed on the NBB Web site home page and serves as a written document to answer the question of what the biodiesel industry is doing to enhance fuel quality in the marketplace. This includes further promotion of the BQ-9000 quality assurance program; heightened education of fuel distributors, customers and other stakeholders; and aggressive outreach with government fuel regulators to encourage proactive testing and enforcement.
 

 The policy also includes a written compliance and enforcement guide that provides step-by-step instructions on procedures for a stakeholder to report non-compliant fuel and suppliers to appropriate state and federal fuel regulators and enforcement officials.
 The federal tax code is specific about the need for the product to meet ASTM D 6751 in order to be eligible for the tax incentive provided under the JOBS Creation Act of 2004. Manufacturers or blenders taking the tax credit on this off-spec fuel may be in violation of tax law and subject to Internal Revenue Service penalties under the law. This is one example of a federal agency that has the responsibility and authority to regulate fuel quality. 
 
 If fuel goes into a vehicle that is operated on-road, the U.S. EPA requires that fuel to meet EPA registration requirements, as well as conform to regulations related to ultra-low-sulfur diesel fuel (ULSD). After ULSD is fully phased-in later this year, any diesel fuel which exceeds the 15 parts per million sulfur spec will be illegal. 
 
 The EPA will enforce sulfur regulations through the policy of "presumptive liability." That means that if on-road fuel is found to be non-compliant for sulfur requirements, including biodiesel blends, any supplier of fuel anywhere in the chain is presumed liable for the non-compliance-and potentially liable for the corresponding civil and criminal penalties. This is unless they can prove that they are not responsible for the violation. Defenses against presumptive liability include a proactive testing and documentation program, and regimented quality control/quality assurance. 
 
 Throughout 2006, the NBB has been conducting a specific outreach program with the state divisions of weights of measures. Agri-Fuels is the contractor that has been implementing the project on behalf of the NBB and will continue to collect information, educate state fuel regulators and encourage proactive compliance testing. 
 
 Not all states regulate fuel, and of the ones that do, not all have adopted ASTM D 6751. The NBB has started a fuel quality section on the Members Only section of its Web site, which includes the fuel quality policy, enforcement guide and information regarding fuel regulations for each state. Once the state database is more fully populated, it will be moved to a public section of the Web site. 
 
 Violation of state and federal fuel regulations is a serious matter and could involve serious consequences. Provisions of the Sarbanes-Oxley Act of 2002-passed as a result of corporate and accounting scandals, such as Enron and WorldCom-make corporate executives personally responsible for the criminal actions of their companies. Therefore, providing quality fuel is not just a matter of good business, it is a matter of law.
 
 The new comprehensive fuel-quality policy is a dramatic stand by the biodiesel industry on the side of fuel quality. It is an unusually powerful statement when an industry association unanimously votes to use its own membership dues to solicit the government to more strictly regulate its members. These measures are especially important during the current period of growth to protect consumers and the reputation of biodiesel as a high-performance, reliable fuel. Some stakeholders may argue they cannot afford to implement fuel quality measures. The fact is, they can't afford not to implement them.

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Biodiesel industry approves comprehensive fuel quality policy

NBB In Sight

Biodiesel champions on Capitol Hill have been making inroads into greater integration of biodiesel nationally. Reps. Kenny Hulshof, R-Mo., and Earl Pomeroy, D-N.D., introduced the Renewable Fuels and Energy Independence Promotion Act, which would make the federal excise tax credit for biodiesel permanent.
 
 The tax credit is set to expire in 2008. The incentive is a volumetric-based tax credit aimed at helping to lower the cost of biodiesel to consumers who pay road taxes, such as truckers, and in tax exempt markets, such as school districts.
 

 The Hulshof-Pomeroy bill removes sunset provisions for ethanol and biodiesel incentives that accompanied the Volumetric Ethanol Excise Tax Credit (VEETC), which took effect Jan. 1, 2005. It also makes permanent a small agri-biodiesel producer credit. In the following week, thanks to the leadership of another biodiesel champion, the Senate Appropriations Committee approved its version of the Energy and Water Appropriations legislation. It includes $1.5 million for critical testing of biodiesel in future advanced diesel engines. Sen. Jim Talent, R-Mo., took the lead in working to get funding included for the Biodiesel Engine Testing Program, which Congress authorized in the Energy Policy Act of 2005. "Missourians want to buy American fuel-grown by our farmers-and research is a key factor in making biofuels more accessible," said Talent, co-chairman of the Senate Biofuels Caucus. "For years, our farmers have been feeding the nation. Now they are in a position to fuel the nation."
 
 If the Energy and Water Appropriations bill passes Congress with the funding recommendations intact, it will increase the likelihood of major U.S. automakers' approval of the use of biodiesel blends in 2007 engines and beyond. Auto and engine makers are stepping up to meet the challenges presented by U.S. EPA regulatory standards, which take effect in model years 2007 (on-road) and 2010 (off-road). Goals of the biodiesel industry include B20 testing in post-2007 engines, and funding for research and outreach on biodiesel quality, emissions, compatibility with advanced engines, and emission control systems.

Lawmakers' efforts could yield significant biodiesel advancements

The rock band Pearl Jam uses RoadShow Services trucking company for its 2006 tour because of the transporter's biodiesel usage. The trucks refueled in the National Biodiesel Board's hometown of Jefferson City, Mo., at Jefferson City Oil this summer. Starting in August, the band will be playing shows in Europe, followed by November dates in Australia.

RoadShow Services employees filled up with biodiesel in Jefferson City while transporting Pearl Jam concert equipment.

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Pearl Jam trucks fill up on biodiesel

As a valuable supplement to Biodiesel Magazine, www.BiodieselMagazine.com is now online. It provides many useful resources from an industry perspective, according to Matthew Spoor, BBI International Media sales director. Magazine articles are archived at the site, and visitors can search by keyword or category. The site also includes a biodiesel plant list, Web exclusive articles, a commodities page and more. In addition, the Web site provides a new venue for advertisers, Spoor said.  n

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Biodiesel Magazine launches new Web site

Peter Cremer becomes first BQ-9000 certified marketer Another company has validated its quality control measures through the BQ-9000 program. Peter Cremer North America has become the first Certified Marketer under the industry-standard quality program. Peter Cremer, based in Ohio, was already an accredited producer under the voluntary program. 
 
 The National Biodiesel Accreditation Program is a cooperative and voluntary fuel quality program adopted by both the National Biodiesel Board and the Canadian Renewable Fuels Association. BQ-9000, www.BQ-9000.org, includes procedures for fuel storage, handling and management aimed at ensuring fuel quality throughout the distribution system. The program creates a comprehensive quality system to help assure biodiesel is consistently produced in accordance with ASTM specifications and maintains its quality all the way to the customer's fuel tank. 
 
 "By becoming the first BQ-9000 Certified Marketer, Peter Cremer is demonstrating that ensuring biodiesel quality doesn't stop when the biodiesel leaves the production plant," said Leland Tong, chairman of the National Biodiesel Accreditation Commission. Peter Cremer was the first BQ-9000 accredited producer, followed by West Central, Johann Haltermann, Arkansas Operations Eastman Chemical Company, Imperial Western, Ag Processing Inc. and SoyMor Biodiesel.

Peter Cremer becomes first BQ-9000 certified marketer

A city known for its live music is now also renowned to the nation's biodiesel enthusiasts. Eighteen Shell stations in the Austin, Texas, area have opened pumps that carry B20 blends. This makes Austin the No. 1 city in the nation for B20 retail availability. 
 
 Austin Biofuels, a biodiesel distributor and marketer, teamed up with Triple S Petroleum, a local petroleum distributor, to roll out B20 to its Shell-branded "Signature Austin" convenience stores in July. 
 
 "We've had a B99 and B100 presence in town since 2003, but adding these B20 pumps will really expand our customer base," said Jeff Plowman, president of Austin Biofuels. 
 
 One other pump in Austin carries B20, bringing the total to 19. The National Biodiesel Board estimates that there are more than 800 retail pumps with varying blend levels of biodiesel across the nation. 
 
 About 1,700 petroleum distributors, like Triple S, carry biodiesel nationwide. This news is music to the ears of diesel drivers, in Austin and the rest of the country.

John Zamora, owner of King Daddy Ice, uses B20 to deliver ice in the Austin area.

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Austin opens 18 pumps to lead nation in biodiesel stations

Las Vegas diesel car and truck drivers will no longer have to gamble on finding biodiesel fuel. Sinclair Oil Corporation has opened B5 pumps throughout the city, giving more fuel choices to motorists. 
 
 Sixteen of Sinclair's 30 southern Nevada stations have offered B5 to the public since June 21. "We feel the retail customer is ready for biodiesel," said Bud Blackmore, senior vice president for marketing of Salt Lake City-based Sinclair. "Offering biodiesel for public consumption makes good sense for environmental reasons." Blackmore added that biodiesel also lessens America's dependency on foreign oil. 

 
 Las Vegas-based Haycock Petroleum will supply the Sinclair locations with the B5 blend. The biodiesel will be produced at Biodiesel of Las Vegas, a National Biodiesel Board member. Sinclair is one of the largest independent American-owned oil companies and uses predominantly North American crude oil. 
 
 Representatives from Nevada's Congressional delegation, along with city and county officials, attended the kickoff of this line of pumps in Las Vegas.

Large oil company pumps up biodiesel

As state legislative sessions drew to a close for 2006, some significant laws came to fruition for biodiesel. A few of the states breathing easier-with the close of session and with laws promoting biodiesel-are New York, Louisiana and Florida. 
 
 New York Gov. George Pataki had already signed a residential bioheat credit that took effect in July. The state income tax incentive allows homeowners to receive 1 cent per percentage of biodiesel blended into heating oil, not to exceed 20 cents per gallon. Provisions of New York's transportation-related biodiesel legislation include: 
 
 -A biofuel production tax credit that kicks in after the first 40,000 gallons produced -Elimination or reduction of motor fuel taxes on alternative fuels such as B20 
 -Grants awarded by New York State Energy Research and Development Authority to encourage more pumps (the governor's directive of opening B20 pumps at New York's 27 rest stops is already underway) 
 -An alternative fuel refueling tax credit equal to 50 percent of costs of refueling property 
 -Allowing "clean energy" companies to operate free of taxation
 
 Louisiana Gov. Kathleen Blanco recently signed legislation that establishes a minimum biodiesel requirement for diesel fuel sold in the state. Once annualized production volume in Louisiana reaches 10 million gallons, 2 percent of the total diesel sold by volume in the state must be biodiesel. This law requires the biodiesel to be produced from domestically grown feedstock. Blenders and retailers are required to meet this requirement within six months of the production volume being met. Retailers are not required to sell biodiesel, and it is not required to be sold in ozone non-attainment areas. There are currently no plants operating in the state. 
 
 Across the gulf in Florida, Gov. Jeb Bush signed the Florida Energy Act to diversify fuel supply, conserve resources and promote energy independence. The act provides for sales tax exemptions and investment tax credits for costs associated with renewable energy technologies, which include biodiesel. The provision defines "costs" as equipment, machinery, capital costs, operation and maintenance costs, and research and development. A grant program has also been established for research and development projects associated with renewable energy technologies.

States make strong commitments to biodiesel

Biodiesel supplier World Energy, through Data Transmission Network (DTN), is now offering daily pricing notifications to its customer network. 
 
 DTN provides real-time transaction data management services to the petroleum industry, among others. World Energy has adopted using the trademarked DTN DataConnect in order to efficiently provide daily pricing information to its diverse customer base. DTN provides electronic supplier pricing data for the downstream petroleum industry.

 
 "We made the move to DTN DataConnect to better serve our customers and the larger marketplace," said Gene Gebolys, president of World Energy. "As biodiesel becomes a part of the mainstream distillate pool, it must be priced and supplied in the same manner as other distillate products."
 
 World Energy, <a target="_blank" href="http://www.worldenergy.net">www.worldenergy.net</a>, provides biodiesel via multiple supply points and is a member of the National Biodiesel Board. DTN, <a target="_blank" href="http://www.dtn.com">www.dtn.com</a>, based in Omaha, Neb., is a business-to-business provider of real-time market, news and weather information services for agriculture, energy trading markets and other weather-sensitive industries

World Energy to post daily customer pricing using DTN

The American Oil Chemists' Society (AOCS) is accepting orders for its newly revised book titled Physical and Chemical Characteristics of Oils, Fats and Waxes. According to the AOCS, this publication is an essential reference tool for anyone interested in the quality, trade and authenticity of oils and fats. Information included in the book covers specific gravities; refractive indices; iodine and saponification values; titers; and fatty acid, tocopherol, sterol and triglyceride compositions of various fats and oils. The book's list price is $145 and has a tentative release date of Sept. 1. A CD-ROM will accompany the softbound publication.

AOCS offers revised book of interest

Chevron Corp. announced in early June that it has formed a biofuels business unit to advance technology and pursue commercial opportunities related to the production and distribution of ethanol and biodiesel in the United States. The announcement was made just prior to the groundbreaking ceremony of Galveston Bay Biodiesel, a 100 MMgy Galveston, Texas-based biodiesel facility Chevron has invested in.
 
 The biofuels business will operate within Chevron Technology Ventures, a corporate subsidiary dedicated to developing and commercializing energy technologies.

Chevron forms biofuels unit

Imperial Petroleum Inc. has signed an engagement agreement with investment financial group Empire Financial. The group will provide a broad range of securities-related services for raising $12 million through a private placement of convertible debenture, according to a press release. With a convertible debenture, the holder can convert it into stock at a specified date in the future, according to Jeff Bishop, managing partner and editor of Beacon Equity Research, an independent research provider. The money will be used, in part, to fund the initial requirements of an Imperial Petroleum agreement with Domestic Energy Partners to market biodiesel, as well as additional growth in the biodiesel, oil and gas sectors, Bishop said.

Imperial Petroleum partners with financial group

Expanding its ability to produce biodiesel from waste, oil and grease, Bio Solutions Manufacturing Inc. has entered into a transaction to acquire BioExtraction Services, owner of the proprietary BioExtractor System. The BioExtractor system is made up of three compartments through which waste travels before reaching grease traps of restaurants or other cooking facilities. Using patent-pending technology, this machine is said to remove 99.9 percent of usable fats, oils and greases from waste for biodiesel production. Bio Solutions, based in Hattiesburg, Miss., develops microbiological solutions for waste remediation, and services a number of municipal collection systems and food service facilities.

Bio Solutions Manufacturing acquires BioExtraction Services

Wilks Enterprise Inc. is offering a new, versatile infrared spectrometer (IR) when spectral, quantitative or qualitative analyses of biodiesel are needed in the field or at/near line use, or wherever it's impractical to use more cumbersome instrumentation. The InfraSpec Variable Filter Array (VFA) IR Spectrometer has a wide range of applications, including measuring the percentage of biodiesel present in blends, from a half percent to 100 percent biodiesel with 0.05 percent accuracy. 
 
 Simple to use and only 3.5 pounds, this portable device can be operated by virtually anyone anywhere. For more information, visit www.wilksir.com.

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Portable IR spectrometer available

The European Commission Biofuels Research Advisory Council (BIOFRAC) held a conference June 8 to present its report, "Biofuels in the European Union-A Vision for 2030 and Beyond" and to launch the European Biofuel Technology Platform. According to the commission's Web site, the report outlines the current situation of biofuels and presents a long-term view on how to overcome the technical and non-technical barriers for biofuel deployment in the European Union and worldwide. The platform is a focused initiative intended to address all issues that are relevant to the large-scale implementation of biofuels in the European Union (EU) transportation sector while enhancing competitiveness of the EU industry worldwide.

European Commission launches Biofuels Technology Platform

One of the nation's largest grain companies is planning on expanding from biodiesel feedstock procurement to actually becoming a biodiesel producer itself. Maryland-based Perdue Inc. has formed Perdue BioEnergy LLC to explore opportunities for equity positions in biofuel plants, through strategic partnerships or building its own biofuel plants.
 
 The company already partners with biodiesel producers to provide feedstocks and market coproducts. Following a successful trial, Perdue also uses biodiesel in part of its vehicle fleet.

Perdue Inc. creates Perdue BioEnergy LLC

Flowserve Corporation has updated its training labs at the Learning Resource Center (LRC) in Irving, Texas. The hands-on technical facilities offer pump, valve and seal system optimization and maintenance training. Course participants now spend almost half of the training time in operational labs designed to simulate real-world scenarios. The sophisticated technology includes pumping systems with transparent piping and housings, so participants have a real-time view of fluid motion and typical pumping system failures. The instructors can also recreate and solve real-world problems. Courses are specifically designed to increase participants' skill levels in equipment selection, installation, repair, failure analysis and troubleshooting.

The Learning Resource Center offers various industrial training opportunities in Irving, Texas.

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Flowserve labs offer technical training

Concerns about global warming have received considerable attention lately, especially after the release of Al Gore's movie "An Inconvenient Truth." The U.S. Supreme Court recently accepted review of a case in which the U.S. EPA was asked to regulate greenhouse gases (GHG) as "air pollutants" under the Clean Air Act, and Congress continues to discuss legislation directed at regulating GHG emissions.

 
 According to the U.S. Energy Information Administration (EIA), U.S. man-made GHG emissions come mostly from the combustion of fossil fuels for energy use, including petroleum, natural gas and coal. Of all the GHG, carbon dioxide makes up about 82 percent, while nearly 42 percent of all carbon dioxide emissions originate from the combustion of petroleum, which mostly occurs while powering our vehicles. 
 
 Biodiesel, of course, is part of the strategy to end our country's "addiction to oil," and by effect, our country's contribution of GHG emissions. As reported by the National Biodiesel Board (NBB), a recent federal study found that for every unit of energy needed to make biodiesel, 3.2 units of energy are gained. In contrast, the NBB reports that society currently uses 1.2 units of energy to produce one unit of petroleum diesel. Each gallon of biodiesel has the potential to displace four gallons of petroleum.
 
 Regulating GHG, however, is a complicated and controversial matter. First, the greenhouse effect is a natural phenomenon; carbon dioxide and other GHG concentrations in the atmosphere (e.g., water vapor) occur naturally. Second, by definition, GHGs are "global emissions," and therefore it is difficult, if not impossible, to conclude that reduced local emissions would have truly local benefits. Some question the wisdom of attempting U.S. reductions in greenhouse emissions when most of the future increases are expected to come from expanding countries, such as China and India. Nonetheless, pressure continues to mount to implement some sort of GHG regulation. 
 
 In 2001, concerned that motor vehicle emissions of GHG contribute to global warming, a dozen states and several environmental organizations asked the EPA to regulate the emissions under the Clean Air Act. The EPA declined, stating that it didn't have the jurisdiction under the act, and even if it did, the EPA would not attempt to do so, given the scientific uncertainty of any linkage between man-made GHG emissions and global warming. In July 2005 in a 2-1 decision, a U.S. Court of Appeals ruled that the EPA was justified in deciding not to regulate carbon dioxide. Several states appealed. This year, on June 26, the U.S. Supreme Court decided to review the lower court's decision. The court will examine whether the EPA has the authority to regulate GHG under the Clean Air Act, and if so, whether it has discretion in doing so.
 
 A Supreme Court determination that the EPA has authority to regulate GHG emissions without any further congressional action would undoubtedly have ramifications on GHG legislation currently being discussed in Congress. One example is a bill sponsored by Sen. Jeff Bingaman, D-N.M. Bingaman's bill, which incorporates the recommendations of the National Commission of Energy Policy (December 2004), would reduce the U.S. carbon intensity, allowing (emissions per unit of gross domestic product) by 2.4 percent per year from 2010 to 2019 and by 2.8 percent per year thereafter. The program would be applied to all fossil fuels and other non-fuel GHG emitters. Based on EIA projections, the emissions targets would require a cumulative 10.5 billion metric tons of carbon dioxide reduction between 2010 and 2025, or 8 percent of covered emissions. The bill also proposes to establish a cap-and-trade program for the trading of carbon dioxide allowances, as well as "safety valve" carbon trading value of approximately $6 per ton. This means any entity needing allowances could purchase them at the maximum price of $6 per ton. Overall, the EIA estimates that the bill would lower the overall national gross domestic product by 0.4 percent by 2025. This bill-as with other similar GHG proposals, including a bill proposed by Sens. John McCain, R-Ariz., and Joe Lieberman, D-Conn.-hasn't come close to enactment, primarily due to economic concerns. 
 
 Any sort of GHG regulation will have significant ramifications throughout our energy-dependent economy, including the transportation and heating industries, and other applications in which biodiesel's presence continues to grow. Stay tuned.
 
 Mark Hanson and Todd Guerrero are members of the Energy and Agribusiness Practice Group of Lindquist & Vennum PLLP, a leading provider of legal assistance on bioenergy projects throughout the country. They can be reached at (612) 371-3211.

Legal Prespectives

In a commodity-based business, it is imperative to look for ways to differentiate and improve the value of your brand and product when compared to that of your competition. Changes that bring more flexibility, diversification and leverage by capturing economies-of-scale benefits can add new value to a plant and help establish a competitive advantage. One emerging approach in the biofuels industry is an integrated bio-refinery strategy that combines the refining of ethanol and biodiesel on one site. This approach enables plants to better capitalize, capture and leverage its core set of assets; diversify its risk and revenue streams; develop new market opportunities; and deliver enhanced shareholder value to its investors.
 
 The integrated bio-refinery strategy delivers numerous synergies and advantages to its shareholders and management when compared to stand-alone projects:

 -Enhanced scale efficiencies and cost savings
 -Capital cost savings by optimizing upfront costs for initial project development
 -Rail, road, natural gas, water, waste water and electricity capital costs
 -Potential for storage synergies 
 -Minimized development costs for project
 -Labor savings between facilities through the sharing of resources
 -Administrative savings through elimination of overhead, which is geared around a single management team 
 -Improved freight rates from moving more gallons of renewable fuel coupled with the opportunity to develop unit train capabilities at the facility
 -Diversification of revenue and risk while providing greater flexibility 
 -Instead of one major feedstock and one major product and coproduct, the bio-refinery has double the feedstocks and products, thus diversifying risk and its revenue streams
 -A Midwestern location can be an advantage because of the relatively large soybean and corn production coupled with crushing assets and rendered plants in the region. If feedstock oil prices for biodiesel materially appreciate, the bio-refinery could add oilseed processing assets. This would allow the venture to manage feedstock oil risk and capitalize on the high returns from oilseed processing. 
 -Capture of higher-value opportunities
 -Corn oil from the ethanol process can be utilized as a feedstock to make biodiesel. This process converts corn oil, a low-value feed ingredient, into biodiesel. A 100 MMgy ethanol plant could supply up to 20 percent (5 million to 6 million gallons) of the feedstock needs for a 30 MMgy biodiesel plant. 
 -Opportunity to leverage unutilized carbon dioxide from the ethanol plant to crush soybeans on-site, thus minimizing the biodiesel plant's feedstock exposure in the market 
 -Longer-term opportunity to transition into other ag, alcohol and petroleum derivatives
 
 These represent very real examples of ways that a self-contained and integrated business platform can help create a more sustainable business and enhance shareholder value. Instead of depending on new and potentially riskier technology, the bio-refining strategy mitigates risk by bringing together proven business models in a manner that enhances shareholder return. In fact, by taking the integrated bio-refinery approach, shareholders can conservatively expect to improve returns on initial investment 8 percent to 12 percent.

 
 A Case In Point
 The evolution of the renewable energy sector is moving at a rapid clip, and those anticipating the next evolution of the business will be better positioned to succeed over time. Today, biofuel businesses are enjoying the benefits of strong petroleum prices coupled with relatively stable-priced agricultural inputs. At some point, markets will tighten and competition will increase, all of which underscores the importance of defining and quantifying your plant's competitive advantage in order to improve your odds of success. Finding and implementing ways to position your plant to move off the "margin" of the industry cost curve will become increasingly important to long-term sustainability.
 
 Ascendant Partners is presently working with industry leaders to develop renewable fuel portfolios and integrated bio-refining business models. A project in northeast Kansas-Northeast Kansas Bioenergy LLC-is positioned to be the first integrated biodiesel and ethanol bio-refinery to come on line. That bio-refinery expects to produce 30 MMgy of biodiesel and 50 MMgy of ethanol, both of which were based on regional market fundamentals.
 
 Mark Warren is a partner at Ascendant Partners Inc., an independent consulting organization dedicated to helping agribusiness, food and renewable energy companies succeed. He can be reached at (303) 221-4700.

An integrated bio-refinery solution nets efficiency, diversity and enhanced returns

Talking Point

Nanotechnology company Nanoforce Inc. has announced the incorporation of alternative energy resource developer Energy Farms Inc. into its enterprises. In a company release, Nanoforce said it was interested in Energy Farm's intense research in utilizing micro-algae as a biomass feedstock for biodiesel production, which involves the cultivation and harvesting of small photosynthetic organisms in refinery waste. According to Lux Research, revenues from products using nanotechnology-the science of manipulating certain materials, devices and processes at atomic or molecular levels-will account for 15 percent of global manufacturing output by 2014.

Nanoforce incorporates Energy Farms

A company working toward building a biodiesel plant in the United States announced in June that it received substantial investment funds for the project. Cornell Capital Partners invested $22 million in New York-based GreenShift Corp., according to Kevin Kreisler, GreenShift chairman and CEO. 
 The agreement was executed by the company's new division, GS AgriFuels. The funds will be used to build and operate a 45 MMgy biodiesel plant. At press time, three sites located near the Mississippi River were under consideration. GreenShift planned to have the plant built and on line sometime in 2008, Kreisler said. n

Cornell invests in GreenShift  biodiesel project

Three B20 users were presented awards from the Office of the Federal Environmental Executive for their environmental track records. The Department of Defense Naval Station in Great Lakes, Ill., and the U.S. DOE Green Fleet Team and U.S. Postal Service, both of Washington, D.C., received the annual White House Closing the Circle Award in an early June ceremony.	
 

 Sixteen winners and 11 honorable mentions were selected from nearly 200 nominations. The awards recognize outstanding achievements of federal employees and their facilities for efforts that resulted in contributions to, or made a significant impact regarding, environmental stewardship. n

White House awards agencies for biodiesel use

The Haas School of Business at the University of California-Berkeley awarded $25,000 to alternative energy company, Aurora Biofuels, the winner in the school's eighth annual business plan competition. The Berkeley-based enterprise showed how to create biodiesel with yields 125 times greater than existing technologies and at half the cost. This proprietary technology was also developed at the university. The business plan competition was founded and organized by business students at Berkeley in 1998 to help make commercial enterprises out of university innovations.

Aurora Energy wins Berkeley Award

Secretary of Agriculture Mike Johanns has appointed three new members to the board of directors of the United Soybean Board (USB). Steve Moore of Maryland, James Call of Minnesota and Richard Fordyce of Missouri will fill positions that the USB said will help to improve the competitiveness of U.S. soybean farmers. The new members will help operate the soybean checkoff, which is set up to fund research and promotion of new uses and production methods for soybeans, according to Haley Wansing of Missouri Soybeans.

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USB adds three

Official elections for the American Soybean Association (ASA) executive committee were held July 11. Bob Metz, a soybean producer from West Browns Valley, S.D., transitioned from president to chairman. Richard Ostlie, a soybean producer from Northwood, N.D., was installed as president-the first from North Dakota. He was previously the first vice president. ASA executive officers follow a leadership chain from first vice president to president to chairman.

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ASA transitions executive leadership

Western Iowa Energy LLC, a 30 MMgy biodiesel plant near Wall Lake, Iowa, hired Joe Reed as its biodiesel production manager. He will be responsible for overseeing and scheduling production, improving quality, training new employees, supervising maintenance and assuring the plant operates efficiently and safely. Reed, who started July 5, spent several years as a plant manager in the food-grade and pharmaceutical-grade gelatin industry. He also has experience in the corn syrup and ice cream industry. Reed received a degree in chemistry from the University of Iowa.

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Reed joins Western Iowa Energy

Throughout late 2005 and early 2006, Tommy Foltz was a regular presence at farm group meetings in eastern Arkansas. For months on end, Foltz spoke to growers about his soon-to-be biodiesel plant start-up, Patriot BioFuels Inc., which today is a tangible reality having already produced and sold more than 600,000 gallons of fuel through the end of July.
 
 The Stuttgart, Ark., facility, located in the heart of Arkansas' Grand Prairie-a fertile rice- and soybean-growing region-melds new and old within a 31,000-square-foot building in an aging industrial district of town. The structure that houses the facility was built during the Great Depression by the Works Progress Administration, a federal relief agency established in 1935 by executive order to create jobs by spending money on a wide variety of programs, including highways and building construction, slum clearance, reforestation and rural rehabilitation. 
 
 Now, one area of that old building-located just feet from an operational rail line-is filled with state-of-the-art biodiesel production equipment; much of the structure remains unutilized. The plant came on line in late April with an annual production capacity of 3 MMgy. By today's standards, that means Patriot BioFuels is a relatively small producer, but Foltz, president of the company, and his partners have much larger plans for this booming young business. If all goes as planned, the Stuttgart facility will soon be expanded to approximately 13 MMgy. There's enough space in the building to go even larger-perhaps up to 25 MMgy-but the economies of scale for that particular market become less attractive beyond the 13 MMgy mark, Foltz estimates. That's why Patriot BioFuels will likely put its money into a second plant in a different location after the Stuttgart facility undergoes its 10 MMgy expansion. In fact, Foltz says the company is aggressively evaluating sites for a second plant nearer to key metropolitan diesel markets. 
 
 Right now, the company is selling as much biodiesel as it can produce-and doing it profitably-so Foltz and his partners are primarily focused on building a strong, sustainable company. "We're working on all the nuts-and-bolts types of things right now," he says. "We can have a 7,200-gallon tanker in and out of here in about 45 minutes. Being able to do this, by both truck and rail, will be critical to our opertions." 
 
 While feedstock supply is not a problem for Patriot BioFuels at the moment, growing the supply and diversity of raw materials for production in the region is something the company actively supports. Arkansas Agriculture Secretary Richard Bell says one project in the works is a collaborative effort that includes Patriot BioFuels and larger players like Riceland Foods, a giant farmer-owned cooperative and grain processor. The aim is to build contracts with farmers to grow canola, a fall-seeded crop with a higher oil content than soybeans. Arkansas has only two major vegetable oil processing facilities. Riceland Foods' soybean crushing facility in Stuttgart has an output of about 26 MMgy of virgin soybean oil. Not far away in Pine Bluff is the nation's largest cottonseed crushing plant, Planter's Cotton Oil Mill, which has a capacity of 11.5 MMgy of cottonseed oil. "It would be nice to bring canola into the region," Foltz says. 
 
 Currently, Patriot BioFuels is using soybean oil, cottonseed oil and first-use poultry oil as production feedstocks, making it a true multi-feedstock facility. Arkansas is the nation's second-largest chicken-producing state in the nation and home to Tyson Foods. Foltz says the poultry oil it gets from suppliers in the region is of a relatively high quality. That said, the company has no plans to use yellow grease or other second-use waste feedstocks that require intensive pretreatment. 
 
 Just a Different Kind of Diesel
 Bell, a former Riceland Foods CEO, was among the dignitaries present for Patriot BioFuels' April 20 grand opening. The one-time career official at the USDA's Foreign Agricultural Service told the crowd, "I was a bit of a skeptic in terms of biofuels. My career was based on agricultural exports, and every time we looked at the arithmetic in earlier years, it didn't work out [for] biofuels. … But I tell people, when the price went to $60 a barrel for petroleum, it changed my mind."
 
 Foltz echoed Bell's sentiment. At more than $70-per-barrel oil, he said, "By the end of the work week, we'll have transferred about $1.6 billion to the OPEC nations-and I don't think most of those nations have our best interests at heart. … We believe what we're doing here matters. We believe that our employees are doing something that's heroic. We're not just making diesel fuel out of soybeans; we're making a more secure nation. We're cleaning the air that our children breathe. We're reducing greenhouse gases … and we're playing a positive role in the economy of the state of Arkansas and of the mid-South region."

 
 Foltz says Patriot BioFuels' slogan is, "We're fueling America's future today," and he likens his company to a small, clean renewable petroleum producer. "We're really not in the business of making alternative fuels," he says. "What we do here is make diesel fuel. It's just that we don't make diesel fuel out of petroleum. We're making it out of soybean oil and a number of other feedstocks." Foltz got a laugh from the crowd at the grand opening when he said Patriot BioFuels was just like Exxon-except for the feedstock difference and the fact that the oil giant "posted the largest corporate profit 'in the history of the world' last year. … But other than that, we're just like Exxon."
 
 Foltz is no stranger to the inner workings of Washington, D.C. During the Clinton Administration, he was deputy staff director of the U.S. DOE's Federal Fleet Conversion Task Force. Later, he was director of the National Clean Cities Program, and he eventually became a lobbyist on behalf of clean fuel alternatives. He now says the idea for Patriot BioFuels came to him while he was promoting a blenders' tax credit during the 2005 session of the Arkansas General Assembly. Back then, Foltz says, the closest biodiesel production facility to central Arkansas was 350 miles away. "It didn't seem like anyone was doing a whole lot to start a production facility in this area," he says. "So Cal McCastlain (now Patriot BioFuels' general counsel) and I started working on a business plan for a new facility."
 
 The next to collaborators come on board were Mike Shook and Steve Danforth, who had participated in a Winrock International feasibility study for locating a biodiesel plant in Arkansas. In all, Patriot BioFuels has a dozen co-investors, ranging from the president of a leading regional seed company to the director of governmental affairs for the world's leading methanol producer. All but one of the investors are Arkansas natives. It took slightly less than a year-"from putting pen to paper to producing the first gallon of biodiesel"-to bring the company together, Foltz says, adding that the Stuttgart plant sold its first load of biodiesel on April 27. "We have Mike and Steve to thank for that," Foltz says. "They are two guys who really know what they're doing, and without them we wouldn't be in production today." 
 
 U.S. Sen. Blanche Lincoln, D-Ark., a long-time advocate of biodiesel, said during the grand opening that the plant was "a dream come true" for her. "I talked until I was blue in the face to everybody I could find in Washington, D.C., and elsewhere, about how important it was to give farmers a secondary market," she said. 
 
 Bell says Arkansas, with Patriot BioFuels and another new biodiesel plant in Batesville formerly owned by Eastman Chemical Co., has entered "a new dimension in demand for agricultural products." At the grand opening, he said, "I don't want to give up on the trade issues. I don't want to give up on the farm programs. I just want to add this one to it." 
 
 Biodiesel producers in Arkansas will benefit from a "technical correction" passed during a special session of the state's General Assembly. The action extends the 50-cents-per-gallon credit to blends of B2 and higher-not just B2. 
 
 No Wastewater, Plenty of Glycerin
 The Stuttgart plant has environmentally unique features, according to Shook, who is Patriot BioFuels' COO. An engineer by training, Shook was also a long-time Riceland Foods employee before leaving in 2000 with Danforth to start a consulting/engineering firm, Agri-Process Innovations. Shook says the plant's process technology comes from California-based Greenline Industries. "It's fairly unique in that it doesn't use a water wash," he explains. "It uses a two-pass transesterification process, where it actually injects methanol and the catalyst twice-and removes it-and then goes through a long settling process and ion exchange resin, to purify the biodiesel in lieu of a water wash."
 

 Foltz and his partners believe this process is more environmentally friendly since it doesn't produce wastewater. It's also able to bypass the difficult step of removing the fuel from the wash. Although the process adds time to the initial start-up, it's a continuous batch system. Once running, Shook says, "Our production output is a gallon coming in, a gallon going out." From start-up, the first biodiesel is ready in four to five days.
 
 Shook says they're constantly working to solve what has become an industry-wide challenge for biodiesel manufacturers: what to do with the leftover glycerin from the transesterification process. He says the compound has a high energy value and could be used to fuel cement kilns or asphalt plants-"anything where there's a large burner and a boiler." In addition, the University of Arkansas is researching into using glycerin as an animal feed. "It looks like the energy value is at least that of corn, maybe higher," Shook says. 
 
 At the time of the plant's April 20 ribbon-cutting, Patriot BioFuels had 80,000 gallons of biodiesel in storage and was waiting for the final marketing approval from the U.S. EPA. That approval came five days later, and the first load-out took place within a week of getting the go-ahead from the agency. Now, Foltz says the facility has produced and sold more than 600,000 gallons of biodiesel and is on track to hit the 1 million gallon mark by mid-September. 
 
 Some weeks, Patriot BioFuels can barely keep up with demand. At a meeting in May for potential diesel users in Conway, Ark., just outside of Little Rock, Foltz reported Patriot BioFuels had already "sold out" for the week. "We can make about 61,000 gallons of biodiesel a week, and actually we sold 78,000 [gallons] this week, so we had some in storage that we sold," he told the audience. 
 
 Getting in the Stream
 Patriot BioFuels' customers are diesel distributors, and Foltz says it has not been difficult to sell them on biodiesel. "There are a lot of diesel distributors out there whose customers are asking them for biodiesel," he says. "They've been a great ally for us." Patriot BioFuels got a boost in June when HWRT Oil of Alton, Ill., became the first oil company with a central Arkansas terminal to open an ethanol and biodiesel blending station for haulers. Company official Matt Schrimpf says HWRT Oil was the first fuel distributor in the nation to offer ethanol-blended gasoline-it started doing so in 1978-and the company began marketing biodiesel blends in 2000. He says Arkansas' blender tax credit, and the Patriot BioFuels and Eastman Chemical Co. plants, encouraged the company to open its blending station near Little Rock Airport. In addition, Foltz says Arkansas Terminalling and Trading (ATT) was also just weeks away from opening up a biodiesel blending operation just down the street from HWRT's blending station. 
 
 Arkansas has formed a Bioenergy Policy Task Force, and Foltz says he'd like to see the group work toward a number of important legislative goals. While he would like to see the state's blender credit remain in place, he would also like to see a producer payment, infrastructure development incentives, and research and development funding fall into place in Arkansas. Four states adjacent to Arkansas-Missouri, Oklahoma, Texas and Mississippi-already have producer credits in place. Foltz says it would help level the playing field, and without it, it is possible those states could deliver their fuel into Arkansas. "It really depends on where the best market is," he says, adding that so far, Patriot BioFuels has been able to sell its own biodiesel both in and out of state. "We've sold our fuel in Missouri, Illinois, Tennessee and Mississippi. … So, instead of biodiesel migrating into Arkansas, a lot of our biodiesel is migrating out of Arkansas."
 
 There is frequent talk about new biodiesel plants coming on line in the South, including two reported to be under construction just across the Mississippi River in Memphis, Tenn. "We're trying to get a foot in the door in all the markets that we can, so that when and if those plants come up, we'll still be competitive in their areas," Foltz says, adding that his company has received an "overwhelmingly positive" response. "We're asked to go and make speeches and talk to people all the time, all over the state and in the Memphis area," he says. "We've had a great reception. … We're real pleased with it. People understand that supporting biofuels is a very patriotic thing to do. They are starting to see that green is the new red, white and blue." 
 
 Gary DiGiuseppe is an Arkansas-based freelance writer. He has authored several articles for Biodiesel Magazine, including the February feature "Tennessee Steps It Up."

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Public tours of Patriot BioFuels were held during the plant's April 20 grand opening.

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Arkansas' newest biodiesel plant is about one-tenth the size of some of the massive facilities in the Upper Midwest, but that's of no consequence to Tommy Foltz and his investor partners, who are using Patriot BioFuels Inc. as a base from which to launch larger, more expansive operations.

Patriotic Pursuit

Record-high world oil prices have catapulted biofuels into the multi-billion dollar commodity mainstream, threatening to cause shock waves in other sectors-some say eventually food prices-and an explosion in new investments in production. Brazil has long been far ahead of the mean in biofuels development, production and distribution ever since the country's sugarcane mills convinced the government that it could lighten Brazil's dependence on foreign oil imports by implementing the famous, but now defunct, Pro-Alcohol Program of the late 1970s. 

 
 Now, President Luiz Inacio Lula da Silva is attempting to expand Brazil's presence in biofuels production with a new biodiesel program. When the Brazilian Congress approved a national biodiesel law in late 2004-the first of its kind that will mandate a biodiesel blend in all petroleum diesel fuel sold at the pump by 2008-many specialists, especially in the vegetable oils industry, were skeptical of the program as it was floated by the government. 
 
 The law will mandate B2 and eventually B5 nationwide. Brazilian demand for biodiesel is estimated to reach 800 million liters (211 MMgy) anually when the B2 mandate takes effect Jan. 1, 2008. An additional 2.5 billion liters (660 MMgy) a year will be required by 2013, when B5 becomes mandatory. For now, using B2 is voluntary as the nation ramps up for the launch of program.
 
 Critics have said the requirement wasn't viable and that production capacity couldn't be on line by the established deadlines. However, with the increased presence of Brazil's state-controlled oil giant Petrobras in the biodiesel industry-as well as growing investment from the private sector-it appears Brazil won't have much, if any, difficulty meeting demand for the vegetable-oil-based fuel when the 2008 launch date hits.
 
 Big Investments Being Made
 Petrobras plans to invest in biodiesel plants that are expected to produce 855 million liters per year (226 MMgy) by 2011. In addition to its investments in conventional biodiesel plants, Petrobras has begun patenting a new technology that it says can produce high-quality diesel using 10 percent vegetable oil in the refining process at a cost well below the cost of producing traditional high-quality diesel. The company calls it H-Bio, and President Lula was present for an industrial test run of the production process at Petrobras' Getulio Vargas Refinery (Repar) on June 20 in Araucária, Paraná-Brazil's leading grain-producing state. "In developing this technology, we are allowing a great advancement in the energy independence of Brazil, and also in the area of diesel," Petrobras President Jose Sergio Gabrielli said during the test production of new biodiesel.
 
 H-Bio could be used by city bus fleets to improve urban air quality because of its low sulfur content-roughly 10 percent that of normal diesel. Annually, Brazil consumes 40 billion liters (10.5 billion gallons) of petroleum diesel. The quality of domestically produced diesel is seen as rather poor, and its production and use is not environmentally nominal. Still, H-Bio has yet to be produced commercially and is still in an incipient state, having come about only a year ago. Petrobras says its H-Bio program alone will allow Brazil to quit importing 250 million liters (66 million gallons) of diesel in 2006 and reduce 2007 imports by 450 million liters (119 million gallons). 
 
 There is also the private sector investment in biodiesel production. According to government estimates, on the same day he stopped at the H-Bio Repar plant, President Lula inaugurated the BSBios biodiesel plant that is expected to produce 100 million liters of the fuel per year (26 MMgy) in Passo Fundo in Rio Grande do Sul, a large grains and oilseed producing state in the South. It should begin operations in 2007. It will require an investment of about BRZ$20 million, based on financing from the Banco do Brasil, Caixa Economica and Brazil's BNDES development bank. Some 4,000 farmers will be supplying the plant with soy, sunflower and canola that will be used to produce the fuel. Rio Grande do Sul is a state of mostly small farmers, unlike the larger operations in the west-central part of the state.
 
 "Brazil looks as though it is on course to reach and surpass the market's demand for biodiesel by 2008 with plenty to spare," says biofuels analyst Miguel Biegai at private consultants Safras e Mercado.
 

 Rodrigo Rodrigues, coordinator of the government's biodiesel commission, recently said at a biodiesel seminar in Aracatuba, São Paulo, that Brazilian biodiesel production capacity should reach 1.1 billion liters (291 million gallons) in 2007, more than sufficient for the 2 percent compulsory blend coming into force in 2008. 
 
 Brazil currently has five biodiesel plants on line, with a total production capacity of nearly 50 million liters per year (13 MMgy) and another five mills representing an additional 61 million liters per year (16 MMgy) that are under development and/or construction. Another 24 mills with 1 billion liters (264 million gallons) of collective capacity are planned or being built.
 
 Leaders in the vegetable oils industry, however, say the Brazilian government could do more to attract the private sector, and they complain that policy has been favoring family producers to the detriment of industrial manufacturers. Government representatives are quick to point out that foreign investors are involved in new projects outside the government program. However, only biodiesel producers that can show they have bought a minimum quota from family farmers can take part in government buying-auctions, where Petrobras purchases biodiesel for its distribution arm.
 
 Putting Feedstock and Infrastructure in Place
 Participation in the auctions is key. At the most recent auction, Petrobras bought 93 percent of the 600 million liters (159 MMgy) of biodiesel sold. Petrobras's Refap refinery purchased the remaining 7 percent. Petrobras and Refap have been the major buyers at all of the previous auctions. While there is a private market for the product and other filling stations are also selling biodiesel, Petrobras controls 98 percent of oil refining in Brazil and is hands down the largest fuel distributor. Petrobras already offers biodiesel at 500 of its filling stations and plans to sell it in 7,000 stations in 2007.
 
 ALE, which was the first gas station in Brazil to sell biodiesel, has been surprised by the success of the biofuel's sales. Since beginning to sell B2 at a handful of its gas stations in March 2005, the company has expand B2 sales to 194 of its 487 locations. ALE is now planning to invest roughly $15 million in two biodiesel plants, which will have a combined production capacity of 100 million liters per year (26 MMgy). 
 
 Likewise, Rio de Janeiro oil refinery Manguinhos recently announced a plan to begin producing biodiesel. The refinery initially plans to produce 30 million liters per year (8 MMgy), with the ultimate goal of producing 100 million liters per year (26 MMgy).
 
 The plan of President Lula's left-leaning administration was to provide tax and fiscal incentives to stimulate small family farmers of castor beans mostly but also other oil-bearing crops-the oilseed feedstocks of biodiesel production. Some said it was the government's attempt to even the playing field for the small guy against the big oilseed processors like Archer Daniels Midland Co., Bunge, Cargill, Louis Dreyfus and the national crusher Caramuru. 
 
 Analysts and leaders in the vegetable oils industry say that only Brazil's soybean-crushing industry has the infrastructure, logistics, capacity and economy of scale to deliver vegetable oil volumes of that size in the short-term. Brazil is the world's second-largest soybean grower after the United States. Soy oil is significantly cheaper than castor oil.

 
 Although the recent low price of soybeans and oil in Brazil has been bad for producers and the industry, it has made the production and sale of soy-oil-based biodiesel competitive with petroleum diesel in the southeast, home to Brazil's largest consumer market, the Center for Advanced Studies in Applied Economics (Cepea) at the University of São Paulo said in a recent study on biodiesel. When the price of soy, processing and returns from byproducts of processing are taken into account, biodiesel is about 30 percent cheaper than the average price of petroleum diesel sold at the pump in the region. This margin will be more than enough to cover freight costs and taxes while still allowing a profit margin for resale by distributors, Cepea said. 
 
 The think tank said that soy oil may eventually only be cost competitive in some regions of the country, such as the west-central area, where most of Brazil's soybeans are produced but where costs for importing diesel deep into the interior of the country are very high. Other oil-bearing crops may eventually replace soy oil depending on the region. Palm oil in the northeast will likely be the most competitive in that region due to its oil yields, specialists said. Canola and sunflower seed will be competitive in the more developed, southern grain-rich states. For now and in the medium term, the soybean crushing industry is the only oil producer that has the necessary capacity and infrastructure to immediately meet demand.
 
 In addition to oilseed projects, Brazil's cattle industry is also investing in lard-based plants. Bertin, one of Brazil's top beef producers and exporters, began construction of a large biodiesel plant recently. The plant will cost an estimated BRZ$30 million (US$13.3 million) to build and will begin operating in November. Earlier this year, Brazilian fertilizer manufacturer Fertibom also began production of biodiesel using animal fat as a feedstock. The company has already participated in the government-sponsored biodiesel auctions. Likewise, two other companies-Biocapital and meatpacking plant Marfrig-are also reported to be considering investments in biodiesel production.
 
 Given current investment levels, Brazil is poised to become a world leader in biodiesel production and is likely to repeat the success of its ethanol program, significantly reducing its dependence on oil and contributing to the reduction of greenhouse gases. 
 
 Elizabeth Johnson writes for Biodiesel Magazine. Her last contribution, "Argentina's Climate of Growth," was published in our November 2005 issue.

Brazil President Luiz Inacio Lula da Silva tosses a shovel of concrete into the foundation forms of what will become Petrobras' H-Bio plant.

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President Lula holds up a beaker of H-Bio after a test run at a plant where the fuel is being developed in the state of Araucaria, Parana.

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With a plethora of projects in the works, and a nationwide low-blend mandate looming, Brazil-a nation famous for producing low-cost ethanol-is poised to become a world leader in biodiesel production.

Brazil just makes it happen

The demand for biodiesel continues to grow every day in the United States. The ability to keep up with that demand while trying to improve efficiencies and uptime is a challenge that all biodiesel producers must continue to refine. Having the correct pumping and storage equipment in place at the production facility is a key component to its success.
 
 No one knows this better than Peter Cremer North America LP (PCNA), a biodiesel plant based in Cincinnati, Ohio, and the first BQ-9000 producer of accredited producer in the United States. As the demand for biodiesel surges, Peter Cremer serves as an example to other producers on how to successfully increase production and uptime. In July, PCNA completed an expansion that made it one of the largest biodiesel producers in the United States with a production capacity greater than 30 MMgy. 
 
 PCNA began producing biodiesel in 2002 and quickly outgrew its infrastructure in a few years. Knowing the need to grow was imminent, the company mapped out a plan to double its 15 MMgy production capacity by approving an expansion project in September 2005. "We knew we had the capacity to produce 30 million gallons a year, but we were limited by our infrastructure," says Mack Findley, North America sales manager for PCNA. "The addition of the six 1 million-gallon tanks will give us the storage capacity to hit our production capacity in 2006."
 

 As a longtime proponent of biodiesel and a person who really believed in its viability, Findley was the first employee at the company hired by its president, Raymond Bitzer, when the company was created in 1999 as an oleochemical services business. The company packages, tests and stores different types of oleochemicals for larger oleochemical producers, and markets crude and refined glycerin, a biodiesel production byproduct. The crossover from oleochemicals to biodiesel was somewhat natural due to similar core competencies. "When you produce 100 gallons of biodiesel, you also produce 10 gallons of glycerin," Findly says. "PCNA is a global marketer of glycerin." 
 
 The company has enjoyed rapid growth over the past seven years and currently employs 110 people. "Since 1991, I have been saying biodiesel is the next big thing," Findley says. "So, it's been a 15-year educational exercise getting everyone to understand the potential and benefits of biodiesel." 
 Plant Project 
 
 PCNA's original plant design had limitations on storage capacity. The company has storage tanks located near the Ohio River, and it is building six new 1 million-gallon storage tanks to give the company the capacity to produce 30 MMgy. Two of the new tanks hold the soybean oil feedstock that's brought into the facility every day, while the other four tanks are designated for the finished product. 
 
 Even though the raw and refined products are located within a few feet of each other, both are being pumped to and from the transesterification production facility via two one-mile pipelines. The importance of the proper pumping technology used throughout the plant is critical to its success. Without durable pumps that are easy to maintain, PCNA would not be able to meet its targeted production. The company chose to use vane pump technology throughout its plant due to the pump's consistent performance and superior handling ability of thin liquids, such as biodiesel. 
 
 "Our entire operation uses NP2 or NP4 Blackmer Vane Pumps. From railcar loading and unloading, to sending the product to our production building and back to storage-or loading it onto the trucks for deliver-over the years, we've tried different types of pump technologies, but the vane technology works the best. Some of the pumps might be geared differently in different applications, but these are perfect pumps for our needs," says Mike Doll, PCNA's plant manager. 
 
 PCNA soybean oil feedstock is shipped into the facility by railcar. The typical railcar coming into the plant holds roughly 20,000 to 25,000 gallons of soybean oil. "The railcars enter the plant and are top-unloaded, which is something you probably won't see anywhere else," Doll says. "The Blackmer vane pumps have such a tremendous suction ability that we are able to load and unload from the same point. Because of their suction lift capability, and high performance characteristics, the vane pumps enable us to unload these railcars very efficiently."
 
 After the oil is unloaded, it gets pumped to its production facility via a one-mile pipeline where it's processed and turned into methyl ester. Once again, having the right pumps and piping configuration is essential to this process. The methyl ester is sent back to the new storage tanks via a different pipeline and pumped into the new storage tanks. 
 
 Meeting Industry Specs

 Once the B100 is placed into the new storage tanks, the methyl ester will be blended with additives before being sent out to a third-party testing lab to verify that each lot meets the ASTM D 6751 specifications. PCNA does several other kinds of testing at its in-house lab for other industries it serves. PCNA takes great pride in making sure that all of the B100 produced in its facility meets proper industry specifications. "Not one drop of B100 will be shipped out of our plant before it has been properly tested and approved," Findley says. 
 
 Continuing its commitment to quality, PCNA was the first producer to gain the BQ-9000 producer accreditation for quality in the United States. The BQ-9000 program was intended as a quality philosophy that incorporates ISO 9000 practices with the American Society for Testing Materials (ASTM) D 6751 standard for biodiesel. The rationale behind the BQ-9000 program was to promote the commercial success and public acceptance of biodiesel, to assure biodiesel is produced and maintained to ASTM specifications throughout the supply chain, and to avoid redundant testing throughout the supply chain. 
 
 "We volunteered to be the first BQ-9000 producer as part of this program because quality is very important to PCNA and the biodiesel industry. We also know that the industry-the automobile and engine manufacturers, municipalities, utilities, etc.-wants to make sure the end product meets a certain specification," Findley says. 
 
 He continues, "The first step you have to do is to review your quality manual and make sure you have a true quality program in place. Once the National Biodiesel Accreditation Commission thinks you have the right quality system in place, they'll come into the plant for a two-day audit. They'll review your procedures, records, retains, specifications, data, testing procedures, etc., to confirm that every drop of biodiesel coming out of your plant meets that ASTM [spec]." 
 
 In June, PCNA also became a BQ-9000 certified marketer, meaning that not only is the company producing ASTM D 6751-approved biodiesel, but it also delivers it to its customers. Whether the product is sold via tanker truck, railcar or by the barrel, the company makes sure each shipment meets ASTM D 6751. 
 
 "The infrastructure that's needed to produce 30 million gallons of biodiesel per year is significant," Doll says. "Not everyone takes into consideration all of the piping, pumps and equipment that's needed. We selected Blackmer vane technology for our pumps because of their superior thin liquid handling capabilities, seal integrity and uptime performance, and we have properly configured our piping and production equipment to provide optimum results."
 
 Targeting the Right Customers
 PCNA has worked with many local municipalities to increase consumer awareness of biodiesel as a viable alternative fuel. By doing so, not only has the company improved customer acceptance, but it has also increased demand. The company enjoys a solid relationship with the Southwest Regional Transit Authority, Cincinnati's metro bus company and the single largest transit company that uses biodiesel in the United States, according to Findley. The city runs biodiesel blends up to B75 during the summer months, decreasing to B20 blends in the winter. In 2005, PCNA also helped Cincinnati avoid fuel shortages after Hurricane Katrina. 
 
 "Last year after Hurricane Katrina, the city of Cincinnati could not get enough diesel fuel to keep its entire fleet operational," Findley explains. "They have a big event every year called the Labor Day Fireworks. They called us up, and they were out of diesel. They picked up 17 truckloads of biodiesel. We kept the Cincinnati Labor Day fireworks show running because they ran 100 percent biodiesel in their buses. They had no problems with it, and they loved it." 

 
 Following Cincinnati's lead, the city of Columbus' metro bus company, Central Ohio Regional Transit Authority, has been running its buses on B40. However, recently the city's buses have used a B95 blend with no problems. 
 
 Findley also noted that the Jeep Liberty CRD, which was being manufactured in Toledo, Ohio, until the model was recently discuntinued, had a diesel engine that was being filled with B5 before being shipped out to dealers. PCNA worked with Jeep to supply those SUVs all the biodiesel needed for the factory fill. 
 
 "We will also sell a lot of biodiesel to under-the-rack fuel marketers and jobbers who will blend it themselves to the requests of their customers," Findley says. "We sell to a 300- to 400-mile radius of Cincinnati. We have a unique advantage being on the river. We ship 500,000-gallon barges on almost a weekly basis." 
 
 With so much volume going out on a weekly basis, PCNA has to take every measure it can to ensure quality and consistency.
 
 "Having the right blend is extremely critical to the quality standards of the fuel. Because of this, for blending operations, I would strongly recommend the use of vane pumps to help ensure biodiesel blend quality standards," Doll says, "By virtue of their design, they have self-adjusting vanes that ensure volumetric consistency over time. In our experience, other pump types wear over time which can result in blending inconsistency." 
 
 Looking Forward
 As states such as Minnesota, Illinois, Missouri and Pennsylvania (to name a few) continue to develop mandates, tax benefits and grants, the acceptance of biodiesel will undoubtedly grow over the next several years. Biodiesel producers, such as Peter Cremer North America, see this as a potential mainstream fuel in the not-too-distant future.
 
 "I think the first major level you'll see the biodiesel consumption hit will be 1 billion gallons," Findley predicts. "The U.S. has roughly 300 million gallons of annual production capacity in 2006. But in 2007 to 2008, the industry is going to build another 700 million gallons of capacity. So the capacity will be there to create a 1 billion-gallon market, which will be 2 percent of the overall U.S. diesel market. It doesn't sound like a whole lot, but 1 billion gallons will be a major hurdle. I would say that we could see a 1 billion-gallon market within the next five years." 
 

 Darren Wight is a Cincinati, Ohio-based writer. This is the first time he has written for Biodiesel Magazine.

Peter Cremer North America LP Plant Manager Mike Doll

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For Peter Cremer North America, the first BQ-9000 accredited biodiesel producer in the world, maintaining premium quality fuel without sacrificing production targets is a must. Relying on vane pump technology throughout the entire facility delivers consistency and performance that helps make those important dual objectives achievable.

Pumped on Quality

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Experts may not see eye-to-eye on peak oil projections, but most now agree the world's near- and long-term energy needs will be met by an increasingly diverse portfolio of fossil fuels and renewable energy. At the Energy & Environmental Research Center's inaugural biomass conference, it was made clear that biodiesel can play a key role in this mixed-and-matched energy future.

August 2006

Business Briefs

BBI opens Australian office

Biodiesel Magazine launches new Web site

AOCS offers revised book of interest

Chevron forms biofuels unit

Imperial Petroleum partners with financial group

Bio Solutions Manufacturing acquires BioExtraction Services

Portable IR spectrometer available

European Commission launches Biofuels Technology Platform

Perdue Inc. creates Perdue BioEnergy LLC

Flowserve labs offer technical training

Nanoforce incorporates Energy Farms

Cornell invests in GreenShift biodiesel project

White House awards agencies for biodiesel use

Aurora Energy wins Berkeley Award

USB adds three

ASA transitions executive leadership

Reed joins Western Iowa Energy

Columns

Editor's note

NBB In Sight

Legal Prespectives

Talking Point

Featured

Patriotic Pursuit

Brazil just makes it happen

Pumped on Quality

The 'Peak' Role of Biofuels

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

Business Briefs

BBI opens Australian office

Biodiesel Magazine launches new Web site

AOCS offers revised book of interest

Chevron forms biofuels unit

Imperial Petroleum partners with financial group

Bio Solutions Manufacturing acquires BioExtraction Services

Portable IR spectrometer available

European Commission launches Biofuels Technology Platform

Perdue Inc. creates Perdue BioEnergy LLC

Flowserve labs offer technical training

Nanoforce incorporates Energy Farms

Cornell invests in GreenShift biodiesel project

White House awards agencies for biodiesel use

Aurora Energy wins Berkeley Award

USB adds three

ASA transitions executive leadership

Reed joins Western Iowa Energy

Columns

Editor's note

NBB In Sight

Legal Prespectives

Talking Point

Featured

Patriotic Pursuit

Brazil just makes it happen

Pumped on Quality

The 'Peak' Role of Biofuels

August 2006