Better Biodiesel announced Sept. 29 that it successfully completed a share exchange with Domestic Energy Partners LLC (DEP), a biodiesel fuel and technology producer. Better Biodiesel is now the sole owner of DEP. Upon acquisition, Better Biodiesel appointed officers and directors to its new subsidiary, including Ron Crafts as chairman and CEO. Better Biodiesel currently develops proprietary biodiesel technology.

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Better Biodiesel Inc. acquires DEP

The sheer variety of fats and oils allows for the development of a diverse production base in the biodiesel industry. On one end of the spectrum, large greenfield plants developed by sophisticated builders like Renewable Energy Group Inc. (REG) are steadily coming on line. In the United States, large-scale continuous processors like these often take soy oil in the front and push ASTM-quality biodiesel out the back. Three REG-built refineries are already in operation, with four more under construction and two in the project development phase. With that much product in the pipeline, REG's commercial model of success should continue to play a major role in this industry's build-out. 
 
 On the other end of the spectrum are systems designed and used by companies championing self-contained conversion units, some built to handle extremely cheap and often abundant waste grease streams-staying away from the highly competitive market for virgin oils altogether. North American Biofuels Corp. (NABFC) is operating its 1 MMgy pilot conversion outfit on Long Island, N.Y., located within waste management company Russel Reid's water treatment site. The primary feedstock for the pilot plant is brown trap grease. The system, which is self-contained in a sea-land container and self-powered by a Detroit Diesel generator burning its own biodiesel, is capable of hooking up with duplicate systems to expand production on the fly. Apparently commercial-ready, the company plans to capitalize on the plentiful urban feedstocks of brown trap and black sewer greases by deploying its units on the populous East Coast through new partnerships with large sewage treatment facilities that will provide a good source of cheap, high-volume waste stocks. NABFC has several patents pending on its proprietary conversion process.
 
 GreenStar Products Inc.-former owner of American Biofuels, the Bakersfield, Calif., plant where a methanol-induced explosion ceased operations indefinitely-recently announced plans to build containerized production systems in Glenns Ferry, Idaho. The company also announced plans this year to develop what it calls the first carbon dioxide-neutral biodiesel plant. Natural gas, electricity and methanol are three staples for most biodiesel refineries, but GreenStar plans to change that model. "Our proprietary continuous flow waterless process requires less than one-third the electrical energy to operate versus existing batch plants," GreenStar President Joseph LaStella says. "Therefore, we have decided to furnish our own electric generators, which will run on our own biodiesel." He also notes that the Glenns Ferry site is located within 200 yards of a cogeneration power plant. "We are in negotiations to utilize some of the waste heat from that plant," he says, adding that existing boilers for production will be backups-and when needed, biodiesel will fuel the boilers. LaStella also says ethanol, rather than methanol largely refined from natural gas, will be used to make its biodiesel even greener. 
 
 International Processing

 Headquartered near Paris, Axens licensed the use of its solid, heterogeneous catalyst technology, called Esterfip-H, to a handful of international biodiesel plants in 2006. The novel catalyst eliminates the use of sodium methylate, sodium hydroxide or potassium hydroxide, which act as a catalyst in transesterification. Thus, the unique system also wipes out the need to recover these consumed materials from solution, reducing waste streams. The first commercial biodiesel refinery to use Esterfip-H was built by Diester Industries in Siete, France, which started operations in March. Axens' Jay Ross told Biodiesel Magazine that since commercial production began last spring, things have gone well for the most part. "This is a first-of-a-kind plant, so we expected some issues to arise," Ross says, noting that licensing of its Esterfip-H catalyst was suspended for a short time to assess any performance glitches after the French plant's start-up. Ross says licensing has resumed since the suspension. Glitches aside, the uncommon catalyst hasn't stopped the plant from exceeding nameplate capacity by 20 percent. "Overall, the black box is working perfectly," Ross says. "There are a few things going on inside that we don't quite understand just yet."
 
 Ross confirms that three more biodiesel refineries are slated to use Axens' catalyst system. One is a plant in Stenungsund, Sweden, designed to produce 160,000 tons a year (approximately 48 MMgy). The facility is currently under construction, and commissioning is planned for the first quarter of 2007. A U.S.-based plant announced its intentions to implement this conversion approach, too-the first biodiesel refinery to do so stateside. Beatrice Biodiesel LLC, a subsidiary of U.S. Biofuels Inc., wholly owned by Australian Ethanol Ltd., announced its decision to implement Axens' novel technology in a 50 MMgy plant currently under development 30 miles south of Lincoln, Neb. The facility is expected to begin biodiesel production some time in 2007. The third project, a 15 MMgy biodiesel refinery in Spain, is also licensed to use Esterfip-H. Ross says this plant is expected to be operational by the first or second quarter of 2007.
 
 In Ontario, Biox Corp.'s one-of-a-kind refinery began commercially producing biodiesel this year. David Boocock, of the University of Toronto helped to make this possible. He discovered that particular inert cosolvents, resident during the conversion reaction of feedstocks with high free fatty acid contents, provide real cost-savings benefits-and it's lightning-fast. Biox first initialized small-scale production and testing of its distinct process five years ago in a 1 MMly (264,000 gallons per year) pilot rig. The company describes its technique as one that produces an "oil-rich, one-phase" system of acid-catalyzed esterification and base-catalyzed transesterification, yielding a 1:1 conversion ratio of feedstock in to biodiesel out. Biox proved out its process and then built its first commercial-scale plant in Hamilton, Ontario. The 60 MMly (nearly 16 MMgy) refinery started production in the summer of 2006. Biox touts that its process provides capital and operational cost-savings of up to 40 percent and 50 percent, respectively, compared with conventional processing.
 
 EarthFirst Americas created a stir in late 2005 and early 2006. The company, a division of EarthFirst Technologies Inc., began importing palm-oil-based biodiesel to the United States through the port of Tampa, Fla. In a joint venture with La Fabril, a large Ecuadorian palm oil distribution company, EarthFirst has been conventionally transesterifying palm oil at La Fabril's former margarine plant since 2005. The company shipped a "catalytically activated vacuum distillation" (CAVD) pilot system from the United States to La Fabril's Manta, Ecuador, site. The pilot CAVD unit was scheduled to operate alongside of conventional transesterification processing at the Ecuadorian facility. According to an earlier report by Biodiesel Magazine, EarthFirst describes its CAVD process as being similar to pyrolysis in a vacuum, but more refined. EarthFirst didn't respond to repeated requests for an update on these activities. 
 
 Research and Development
 The USDA Agricultural Research Service (ARS) patented its in situ method of biodiesel production this year. Developed by ARS scientists Michael Haas, Thomas Foglia and William Marmer, this approach to processing allows producers to make biodiesel from virtually any lipid-bearing component, including flaked soybeans. It also eliminates the need for hexane extraction-the most common, large-scale method of oil recovery during the crushing process. At the American Oil Chemists' Society's (AOCS) 2006 meeting in St. Louis, Haas, who is also an AOCS chairman, discussed the economics of this novel technique. One drawback, as indicated by the economic modeling, is that there are significantly higher utility costs involved in this technique, compared with traditional processes because of the elevated energy levels required to recoup the high volume of excess methanol. Therefore, Haas says alcohol reduction is critical to making in situ transesterification economically competitive.
 

 John Massingill, of Texas State University developed an advanced fiber-based neutralization process that could eliminate biodiesel producers' need to centrifuge. Lab-scale trials show advantages to using this trademarked Fiber-Film technology, according to Massingill, who was unavailable for additional comment but presented a summary at this year's AOCS conference. The process offers fast, clean reactions as a result of the short contact times needed on the high surface-area medium. Massingill says results showed a 90 percent removal of free fatty acids in neat oils, up to 1 percent by volume. His research showed that reduced energy consumption, and the elimination of capital and maintenance costs associated with centrifuging, are two additional benefits that could be experienced in commercial applications.
 
 Enzyme-maker Diversa Corp. recently announced U.S. EPA approval of its trademarked Purifine enzyme, which could have applications for biodiesel producers. According to Diversa, Purifine is a novel approach to degumming oils, or the removal of phospholipids from unrefined feedstocks. While biodiesel companies utilizing refined virgin oils may not find the need for such enzymes, biodiesel processors using lower-quality feedstocks-and oilseed processors-may indeed find value in such a development. 
 
 Ultimately, the sieve of time-and the motion of the markets-will sift out those biodiesel production models and processes that are unable to endure the rigors of commercial applications. Until then, however, this industry's diverse base is a trait to embrace. n 
 
 Ron Kotrba is a Biodiesel Magazine staff writer. Reach him at <a href=mailto:"rkotrba@bbibiofuels.com">rkotrba@bbibiofuels.com</a> or (701) 746-8385.

This past year saw greater diffusion of novel production techniques worldwide, reaffirming the notion that this trade's process model is myriad, and its base is diverse.

Out of Many Models Rises One Fuel

Michigan Gov. Jennifer Granholm recently named committee members to the newly formed Michigan Renewable Fuels Commission. They represent college professors, ethanol producers, executives from the automotive and petroleum industries, the state Department of Agriculture, and the state Department of Labor and Economic Growth. The commission was established in July under Public Act 272, which also reduced the gas tax by 36 percent for biodiesel and ethanol blends, and aided station owners seeking to provide alternative fuels.

Michigan forms renewable fuels commission

Iowa's largest biodiesel plant, East Fork Biodiesel, has partnered with Renewable Energy Group Inc. (REG) in a comprehensive management and marketing agreement. REG will now manage operations, risk management, production services, and sales and marketing for the 60 MMgy plant under construction in Algona, Iowa, which is scheduled to begin producing in the fall of 2007. Currently, REG has six management and marketing agreements in place, and is looking to add six more by 2010.

REG partners with East Fork Biodiesel

The biodiesel industry has a steady wind at its back right now. Business is booming, and despite calls for managed growth, few U.S. producers or project developers are showing any signs of easing up. 
 
 That's the way it should be. Or rather, that's the way it should be if-and this is an important if-the U.S. biodiesel industry is as aggressive about fuel quality and market development as it is about bringing more capacity on line. At any rate, slowing down is usually a shortsighted strategy. On the heels of what has been, hands down, the biodiesel industry's biggest year of expansion ever, some say the growth is simply too much, too soon. However, it could be argued that opportunities like the one facing the biodiesel industry at the present moment don't come along twice. Yes, the biodiesel industry should seek to establish some semblance of controlled growth, but we should not let the current burst of new plant construction lead us to think an industry slowdown is imperative.

 
 On that note, allow me to go off on a small tangent and share with you the vision of the 25x'25 Alliance, which has begun circulating a preliminary draft of its ambitious renewable energy plan in early December. Specifically, the plan outlines steps needed to put America on a path to producing 25 percent of its energy from renewable sources like solar, wind and biofuels by 2025. The February issue of Biodiesel Magazine will include a feature article on the 25x'25 Alliance, so I won't go into great depth about the details other than to explain why I think the biodiesel industry should support the plan. 
 
 First, the plan calls for up to 85 billion gallons of biofuels production per year in the United States by the year 2025. Yes, most of that volume would be made up of cellulosic ethanol, but it would also allow for dramatic increases in biodiesel production and use-well over a billion gallons, in fact. The plan calls for the creation of a "new generation" of biofuels plants, renewable heat and electricity for commercial, residential (think Bioheat) and stationary applications, greater community ownership of production and strengthened federal support for research, development, deployment and demonstration of novel production technologies (think algae-to-biodiesel, etc.).
 
 The 25x'25 goal includes the establishment of a new Bioenergy Feedstock Security Program that would provide incentives for farmers to grow energy crops (think camelina and hemp) for future biofuels facilities. It also calls for the development of improved renewable energy distribution systems in the United States-from pipelines to pumps-something the growing biodiesel industry needs. It also calls for increased consumer education and methods that would simplify consumer decisions (think along the lines of standardized biodiesel blends). 
 
 In terms of near-term growth and the creation of "substantial markets" for biofuels, the 25x'25 Alliance recommends that the federal renewable fuels standard be raised from 7.5 billion gallons by 2012 to 15 billion gallons by 2015. Again, ethanol may take the lion's share of this volume, but let's not discount what such a policy change could do for biodiesel. I'm just touching the surface of what the 25x'25 plan offers, but I would encourage you to go to the group's Web site-<a target="_blank" href="http://www.25x25.org">www.25x25.org</a>-and read our feature article on the initiative in the February issue of Biodiesel Magazine.
 
 Until then, happy New Year.

It's not if we should grow, but how we should grow

Editor's Note

Gulf Hydrocarbon Inc. has added B100 pumps to its wholesale distribution terminals in Indiana and Texas, both of which are available 24 hours per day. Wolf Lake Terminal in Hammond, Ind., has been carrying biodiesel since January but added 24-hour, seven-days-a-week B100 access in September. Intercontinental Fuels, located in North Houston near Bush Intercontinental Airport, has 420,000 gallons of storage for biodiesel for petroleum jobbers and distributors in Texas, Louisiana and Oklahoma, among others.

Gulf Hydrocarbon opens 24-hour terminals

Blue Sky Biodiesel, a producer in New Plymouth, Idaho, received a serious citation from the Occupational Safety and Health Administration (OSHA) for violations causing a fatal explosion and fire in July. The company has agreed to abate the cited hazards and secure the services of an expert in flammable liquid processing, who will review plant's process controls and safety program. No monetary penalty was levied with the citation because of the sensitive circumstances, according to OSHA.

OSHA reprimands Blue Sky Biodiesel

Northstar Bioenergy LLC has announced plans to build a 30 MMgy biodiesel plant, using canola as the feedstock, in northwest Minnesota. According to Todd Johnson, vice president of Northstar's board of directors, an equity drive is slated to begin in February to raise $30 million for the $75 million project. Johnson, also the co-owner and vice president of Johnson Oil Co. in Hallock, Minn., said the company formed a six-member board of directors in September.

Northstar Bioenergy to build biodiesel plant in Minnesota

The Alberta government has made available CAN$239 million over the next five years to develop the province's biofuels industry. The Renewable Energy Producer Credit program will provide up to CAN$209 million in tax exemptions-equal to the Alberta Fuel Tax-for eligible commercial bioenergy products processed in Alberta from April 2007 to March 2011. The remaining CAN$30 million is immediately available in the form of grants from the Energy Innovation Fund for new marketing and distribution infrastructure in the next three years.

Alberta offers biofuels incentives

After a long and frustrating fight for biodiesel proponents in Texas, officials from the Texas Commission on Environmental Quality (TCEQ) decided to place another stay of execution on the Texas Low Emission Diesel (TxLED) standard Dec. 8. It was originally executed Dec. 15, 2005-but suspended by TCEQ until the end of 2006 to give involved parties time to prepare-and would make the sale of biodiesel blends illegal in the eastern part of the state (shown above). The new stay was recommended by TCEQ chairwoman Kathleen Harnett White and Commissioner Larry Soward. If formally voted for on Jan. 10, the stay will expire Dec. 31, 2007.

 
 TxLED was born more than five years ago when TCEQ determined the need to combat NOx-filled smog in the state's densely populated 110-county eastern region. In order to reduce NOx, and thus smog and its associated health problems, TCEQ developed a regulatory standard for diesel fuel, which required that all fuel sold must contain a minimum cetane number of 48 and an aromatic hydrocarbon cap of 10 percent by volume. As a fuel, biodiesel meets both criteria.
 
 Jake Stewart, who cofounded the Biodiesel Coalition of Texas (BCOT) to address in-state issues like TxLED, says an internal memo circulated last year among TCEQ officials that categorized biodiesel as a diesel fuel additive rather than a fuel, effectively rendered biodiesel's high cetane number and low aromatic content (the two criteria TxLED fuel is required to meet) irrelevant. TCEQ's decision was based on U.S. EPA data gathered from stationary engine dynamometer tests conducted in the 1990s, which showed that biodiesel slightly increases NOx emissions. 
 
 Shortly thereafter, TCEQ spokesman Morris Brown said any diesel formulation that increases NOx is unacceptable under this strategy. Due to B100's status as an alternative energy rather than a diesel fuel, it couldn't be regulated under TxLED because B1 through B99 is blended with diesel. However, blends are enforced under this ruling. The classification has caused Stewart and others a great deal of frustration, Stewart said, adding, "We have gotten caught in a technical eddy here."
 
 Pacific Biodiesel, a fellow cofounder of BCOT and current biodiesel producer, has a great interest in the issues, said Kelly King, Pacific Biodiesel marketing and communications director. The company's plant in Carl's Corner, Texas, produces 2 MMgy of cottonseed oil-based biodiesel. Under the TxLED standard, Pacific Biodiesel will still be able to produce biodiesel but won't be able to sell it in eastern Texas.
 
 "The problem originates from historic data that initially indicated that biodiesel blends might increase NOx, although they significantly reduce all other major pollutants associated with diesel," King said.
 
 Since those dated EPA tests were conducted, recent testimony in the Texas Senate and a technical report released by National Renewable Energy Laboratory (NREL) scientist Robert McCormick indicate that B20's NOx output is similar to that of diesel fuel when chassis dynamometers are used. Some experts say chassis tests better represent real-world duty cycles and loads of certain diesel applications, like transit or school buses, as opposed to that of long-haul tractor trailers. There have also been credible reports compiled by the U.S. Navy, and scholastic institutions such as Texas A&M and the University of North Carolina.
 
 "The real gem that came out of [NREL's] report is that [approximately] 50 percent of the data points that the EPA compiled in its conclusion were from one engine type," Stewart said. "The data set wasn't wrong, but the conclusion was weighted heavily toward an outlier engine point ... so we may very well see a shift in the EPA's official position in the coming months."

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TCEQ delays TxLED decision

A new collaboration could result in a new production technology for renewable fuels made from cellulosic material, according to George Douglas, spokesman for the National Renewable Energy Laboratory (NREL). In early October, Chevron Technology Ventures signed a strategic research agreement with NREL to explore this avenue. 
 

 In the five-year agreement, both companies will research and develop new production technologies for biofuels, including renewable diesel. However, Chevron and NREL weren't limiting the project to this area. "They still have to sort out where the research is going to head," Douglas said. 
 
 Right now, the focus is less on the biofuel end-product and more on the best feedstock for the job. Ultimately, the real target of the research is finding the best way to convert a cellulosic feedstock into a usable fuel, "whatever that fuel might be," Douglas said. 
 Chevron and NREL don't plan to pursue biodiesel production technology through this project, at least not biodiesel made from feedstocks such as soybeans. "They're not looking at making biodiesel in the conventional sense," he said. 
 
 The research may delve into producing renewable diesel from bio-oils. Bio-oils can also be used to produce hydrogen, he said. 
 "We believe that for the next generation of biodiesel production to become commercially viable, there must be flexibility to diversify the feedstocks, and the process by which the biofuels are produced must also increase in efficiency and effectiveness," said Rick Zalesky, vice president of biofuels and hydrogen for Chevron Technology Ventures. "This research will address both of these fundamental challenges."
 
 Chevron and NREL each have other research partnerships in the area of cellulosic biofuels. In the past year, Chevron also announced research alliances with the University of California, Davis, and the Georgia Institute of Technology. At about the same time Chevron partnered with NREL, NREL was linked with investment company HamiltonClark for work on cellulosic ethanol. 
 
 What Is Renewable Diesel?
 According to the U.S. EPA, renewable diesel is defined as a nonester renewable fuel. Biodiesel is made from mono-alkyl esters.
 Nonester renewable diesel is derived from nonpetroleum renewable resources, including-but not limited to-poultry fats and poultry wastes, municipal solid waste, sludge and oils derived from wastewater, and other wastes, according to the EPA. Current examples include diesel fuel produced from fats and oils through a refinery hydro-heating process.
 
 The EPA plans to finalize a proposed ruling for equivalency values for renewable fuels, including renewable diesel, by early 2007, according to Enesta Jones, an EPA spokeswoman. The values will be used to track renewable fuels standard (RFS) credits that were initiated in the Energy Policy Act of 2005. In the meantime, the EPA has proposed that biodiesel has an equivalency value of 1.5 gallons, while nonester renewable diesel has a 1.7 equivalency value. "Equivalence values of nonethanol renewable fuels are based on their energy values in comparison with ethanol, and then adjusted as necessary for their renewable component content," Jones told Biodiesel Magazine.

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NREL, Chevron consider renewable diesel research

Australian renewable energy company Axiom Energy Ltd. had a busy autumn as it issued an IPO, which later was "withdrawn," according to the Australian Securities Exchange, and entered into agreements with two companies to test biodiesel in its trucking fleets. 

 
 On Sept. 20, Axiom opened its initial public offering (IPO), which was going to be used to fund Axiom Energy's first biodiesel facility near Melbourne. The company, which had previously withdrawn an AUS$37.6 million IPO in 2005, extended the closing of its most recent IPO from Oct. 20 to Nov. 3 and again to Nov. 30. After that time, the Australian Securities Exchange listed Axiom's IPO application as "withdrawn." Axiom Energy could not be reached to confirm or deny the withdrawal. 
 
 While its IPO was open, Axiom Energy also lined up two companies to begin trial use of biodiesel in their trucking fleets. The first agreement was with Linfox Logistics, a warehousing, transportation and supply-chain management company operating in Australia and throughout the Asian-Pacific region. Linfox cited a need for the logistics industry to play a more active role in tackling carbon emissions as its motive for the trial. According to Axiom Energy, Linfox is the first major Australian trucking company to announce intentions of biodiesel use. 
 
 "The public announcement of commercial trials by industry leaders such as Linfox has led to a number of commercial players seeking partnerships to establish their internal alternative fuel strategies," said Danny Goldman, Axiom Energy managing director. "We expect to announce a range of strategic commercial partnerships as we bed down the terms and conditions." 
 
 One such company that followed suit was Visy Industrial Packaging, which will run commercial trials of biodiesel in its trucking fleet. Visy develops and supplies high-quality plastic and steel packaging, recycling and associated sustainability services. Upon completion of the trial, Axiom Energy is expected to become Visy's preferred biodiesel supplier.
 
 Axiom Energy offers commercial users discounted prices to promote the use of its biodiesel. "An alliance with Axiom Energy allows us to understand the potential economic benefits, which include cost savings, product quality and also the ability to source biodiesel from metropolitan locations-namely Melbourne," Visy Chairman Raphael Geminder said. Axiom Energy is developing a 40 MMgy biodiesel facility near Melbourne at the Toll Geelong Port.

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Axiom partners with Linfox and Visy

The use of biodiesel blends, such as B20, continues to grow in popularity across the globe, gaining acceptance in the political arena, among motorists and through endorsements by large corporations. As part of its corporate social responsibility program, international telecommunications giant Ericsson has also joined the renewable energy cause. Ericsson teamed up with multinational telecommunications company MTN Group and the Global Systems for Mobile Communication Association, which represents more than 690 mobile phone operators in 214 countries, and plans to begin fueling its mobile base stations in Nigeria with biodiesel blends in early 2007.
 
 With only 25 percent of Nigeria currently connected to the electricity grid, the use of base stations makes mobile communications accessible in the developing nation. The three telecommunications groups have set up a pilot biodiesel-powered base station in Lagos, Nigeria, and will later deploy mobile base stations to rural areas in southeastern and southwestern regions of the country. A supply chain has been set up to benefit the local agricultural community through the use of homegrown feedstocks such as groundnuts, pumpkin seeds, jatropha and palm oil to produce the biodiesel.
 
 Although Sweden-based Ericsson is still designing the network, plans call for 20 to 40 base stations, said Elaine Weidman-Grunewald, director of corporate responsibility for Ericsson. The concept of using biodiesel has many benefits, Weidman-Grunewald said. "If you look at the petroleum use, the amount used in one average base station is 15,000 liters (approximately 4,000 gallons) per year … to fuel parts of Nigeria that are not connected to the power grid," she said.
 
 Project leaders expect that the use of cleaner-burning fuel will result in fewer site visits, extend the life of each base station and environmentally friendly benefits.
 

 Even more important, however, is the positive effect that Ericsson hopes the project will have on the poorer areas of Nigeria Weidman-Grunewald said. Since the biodiesel can be produced locally, it will create local jobs. She and her colleagues will be examining the effects of the pilot program in Nigeria with hopes of implementing similar projects elsewhere in Africa, as well as India. In fact, Ericsson is already in the beginning stages of planning in those countries, Weidman-Grunewald said.
 
 "There is a positive economic and social spin-off, and we are trying to measure the contribution we bring," Weidman-Grunewald said. "We are also looking at solar, as well as other alternative energy sources, but they don't have the same community contribution that you get through biodiesel."

Ericsson will begin using biodiesel-powered base stations, like the one shown above, in 2007 to provide mobile phone service to remote areas in Nigeria.

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Ericsson mobile service stations use biodiesel in Nigeria

The Saskatchewan Research Council (SRC) has opened its Biofuels Test Center in Regina, Saskatchewan, offering the latest in analytical testing services to the biodiesel and ethanol industries. SRC is an accredited member of the Canadian Association of Environmental Analytical Laboratories and is capable of conducting tests that meet fuel requirements in both the United States and Europe. Saskatchewan is the first province in Canada to introduce an ethanol mandate requiring an ethanol blend in gasoline.

Biofuels Test Center opens in Canada

Cherokee, N.C., opened its first private B20 filling station for Cherokee tribe employees, tribal transit and maintenance vehicles, and Cherokee Boys Club (CBC) buses, according to Kathy Littlejohn, transit manager for the Eastern Band of Cherokee Indians. The pump is wholly owned by the CBC, and was funded by a U.S. EPA grant, the Cherokee Preservation Foundation and the North Carolina State Energy Office. A biodiesel shuttle bus has also started to run between Cherokee and Gatlinburg, Tenn., in Great Smoky Mountains National Park.

N.C. mountain town opens biodiesel pump, fuels buses

While soybeans, canola and palm oil are the traditionally preferred feedstocks for biodiesel production, researchers around the world continue to search for alternative feedstocks that are cheaper and yield more oil. Dr. Daniel Geller, a faculty engineer at the University of Georgia, is conducting tests on several types of what he calls "industrial" peanuts-those not suitable for eating-in hopes of identifying a perfect peanut for biodiesel production. Peanut oil produces approximately 123 gallons of biodiesel per acre while soybeans yield 50 gallons, according to Geller.

 
 The prevalence of peanuts in Georgia made it a logical choice for biodiesel research, Geller said. He and his research team have run initial tests on 10 varieties of peanuts, inputting their properties into a database, manufacturing biodiesel and running engines on the fuel from each type with success.
 
 The high price of the commodity, however, keeps it from competing with soybeans in the biodiesel market. Peanut oil costs 50 cents per gallon while soy oil costs 30 cents per gallon. Geller's ideal peanut would be one with negative food properties that doesn't perform well as a cooking oil, yet is suitable for biodiesel manufacture, he said. 
 
 University of Georgia research teams have been experimenting with peanut oil as a fuel for more than 20 years, running university buses on it as far back as 1982, Geller said. However, a number of hurdles for peanuts as a viable feedstock remain. "We're going to try to get higher yields for less money to make this happen, and that's the only way it's going to work," he said. 
 
 In a similar project, Dr. Becky Grube, an associate professor from the University of New Hampshire and sustainable horticultural crop specialist, is collaborating with local farmer Dorn Cox to conduct research into the feasibility of sunflowers as a biodiesel feedstock. Just like Geller's peanuts in Georgia, the sunflowers were chosen because of their ability to grow well in New Hampshire and their higher oil yield. Grube and Cox estimate 130 gallons of biodiesel can be made per acre of sunflowers. While Cox built a mobile biodiesel manufacturing station on a trailer, five hybrid varieties of sunflowers were planted on a four-acre plot at the university's Kingman Farm.
 
 Grube said the first batch of sunflowers has been harvested, and a second crop has also been planted. Seed and oil yield measurements will be taken to determine the economic feasibility for New Hampshire growers. Biodiesel will be produced with the sunflower oil and then used to power farm equipment at Cox's farm. Grube said that through research, they hope be able to identify a new feedstock that "local farmers can use to fuel their energy needs without having to rely on something that is imported."
 
 The experiment is the first of its kind at the University of New Hampshire, Grube said. There are similar research projects being done at the University of Maine and the University of Vermont.

A sunflower's higher oil content has caught the attention of University of New Hampshire researchers.

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Feedstock research continues with peanut, sunflower oils

The American Petroleum Institute recently published a biofuels pamphlet to update members on the latest news in cleaner-burning gasoline, diesel and alternative fuels. Called "Fuel Choices for Advanced Vehicles," the 29-page, full-color publication is free and available at <a target="_blank" href="http://new.api.org/aboutoilgas/otherfuels">http://new.api.org/aboutoilgas/otherfuels</a>. Topics covered include past successes and the future potential of alternative fuels, new vehicles such as hybrids, and evolving technologies including hydrogen-powered fuel cells.

Petroleum association produces biofuels paper

In the wake of the U.S. DOE's new five-year strategic plan to address energy challenges, Alabama received a $312,000 federal grant from the DOE to install B20 pumps at five gas stations along Interstate 65. The pumps will be located in Birmingham, Cullman, Evergreen or Greenville, Huntsville or Decatur, and Montgomery, although specific stations haven't been selected yet. According to the National Biodiesel Board, there are currently 17 B20 retail stations in the state.

Alabama benefits from federal biofuels grants

In a joint report, Worldwatch Institute and the Center for American Progress predicted a rapid increase in renewable energy use. "American Energy: The Renewable Path to Energy Security" was positive regarding technological advances, increased investment and strong public support. However, the report said if the United States is to join world leaders in renewable energy, the country must adopt world-class energy policies based on a sustained and consistent policy framework at all governmental levels. The report is available at <a target="_blank" href="http://americanenergynow.org/">http://americanenergynow.org/</a>.

Report confirms increase in renewable energy

Imperium Renewables celebrated a groundbreaking on what would be the largest biodiesel plant in the United States, once it is operational next year. The company is building a 100 MMgy manufacturing facility at the Port of Grays Harbor in Washington.
 
 "We stand here today to celebrate not just the foundation of a physical plant but the foundation of an entire movement-a movement away from our dependence on foreign oil toward reliance on renewable, homegrown biofuels; a movement away from heat trapping petroleum fuels to cooler, clean-burning biodiesel; a movement away from old energy economy despair to new energy economy promise," said John Plaza, founder and president of Imperium Renewables. "I am thrilled to see this great facility begin to take shape."
 
 U.S. Sen. Maria Cantwell, D-Wash., and U.S. Rep. Norm Dicks, D-Wash., were among the dignitaries involved with the event.

Imperium Renewables breaks ground on nation's largest biodiesel plant

Cargill, an experienced agricultural company but a relatively new biodiesel producer with a 37 MMgy plant in Iowa Falls, Iowa, announced plans to form a new company that will make a variety of bio-based products from glycerin, a by-product of transesterification. The name of the future company wasn't available at press time.
 

 Cargill plans to commercialize a proprietary process that turns glycerin into propylene glycol (C3H8O2), a sweet, colorless, viscous, hygroscopic liquid used as an antifreeze, in brake fluid, and as a humectant in cosmetics and personal care items. 
 
 The company's Iowa Falls production facility also includes a 30 million-pounds-per-year glycerin refinery, which started operations in September, according to Glycerin Products Manager Rob Wolter. "Cargill already sells glycerin from its biodiesel plants, and has ready access through its supply chain and other sources to enough glycerin for world-scale production of [propylene glycol]," said Jim Stoppert, senior director of industrial bio-products for Cargill. "We are confident that our approach to manufacturing price-competitive, renewable [propylene glycol] on a large, commercial scale will be highly desired by the chemicals industry."
 
 The Missouri Soybean Association and Cargill announced plans earlier this year for a 40 MMgy biodiesel plant and a 30 million-pound food-grade glycerin refinery adjacent to Cargill's existing soybean processing facility in Kansas City, Mo. The project is jointly owned by Cargill and Paseo Biofuels LLC, an entity comprised of Missouri soybean farmers. A Missouri Soybean Association representative said construction on the project is expected to begin later this month.
 
 "We anticipate continued, steady growth in the [propylene glycol] market," Stoppert said. "Current capacities remain tight, and the fluctuation of propylene prices continues to batter the industry. These market dynamics create a ripe opportunity for a new, renewable and stable product offering."

Cargill makes plans for glycerin supply

IMA Financial Group Inc., an insurance brokerage company with a dedicated Biofuels Practice Group, has begun to offer a biodiesel insurance program. Since July, this new program has been providing coverage specifically designed for biodiesel producers, according to Account Executive David McKinney.
 
 Biodiesel producers have always had the option to purchase insurance coverage in the past. However, IMA's biodiesel insurance package allows biodiesel producers to pick and choose various options, depending on their needs, McKinney said. Choices cover property, testing, builders risk, a delay in start-up, general liability, automobiles, business interruption, crime, or workers compensation, among others. Pollution coverage is also available through a different insurance package. 
 
 In McKinney's experience, small- to medium-sized biodiesel facilities struggle to find adequate insurance coverage at a competitive price, he said. In some cases, biodiesel producers have had to make tough choices in risk management-going without needed insurance in some cases. Other facilities have been held back from moving forward with their business plans because they have been unable to get the required insurance coverage. "They are faced with some pretty high minimums," he said. 
 
 IMA set out to solve that problem by offering necessary insurance options to biodiesel producers. The new program has the advantage of lowered minimums, which IMA has negotiated with the insurance providers, McKinney said. 
 
 At press time, about 15 biodiesel producers were part of the program. The company was also in the process of working with many other producers. Insurance is only one of the thousands of things biodiesel producers need to choose, said David Weaver, IMA sales consultant. 
 
 IMA has about 400 employees in seven offices across the United States. The company provides risk management services to many different industries in all 50 states. Its Biofuels Practice Group is based in Wichita, Kan. For more information, visit IMA's Web site at <a target="_blank" href="http://www.imacorp.com">www.imacorp.com</a> or call the company's Biofuels Practice Group at (316) 266-6290.

IMA rolls out biodiesel insurance package

Due to a growing amount of interest in biodiesel production in the state, the Oregon Department of Environmental Quality (DEQ) posted a biodiesel fact sheet on its Web site to educate people on the regulations of biodiesel manufacture.

 
 The three-page document, which was posted online at the end of September, lists common questions and answers regarding biodiesel production for personal use or small-scale commercial production. "We were getting these questions all the time," said Kevin Downing, DEQ clean diesel program coordinator. "Rather than sending people out to state agencies, we compiled a single [source of information]."
 
 Some key questions are, "How do I start a biodiesel production business in Oregon?" and "I am a farmer, and I'm interested in on-farm biofuels production. Where do I start?" The document forwards readers to various sources of information, such as the National Biodiesel Board (NBB) and the correct government agencies, depending on the topic. It addresses safety, storage, air quality requirements and chemical handling. "It's a collection of everything you want to know, including road taxes, fuel quality standards, NBB testing and some guidance, including zoning," Downing said.
 
 The Washington Governor's Office of Regulatory Assistance (ORA) posted a similar informational tool online earlier this year. Called the "Biodiesel Facility Permits Fact Sheet," the 15-page document details six steps in the biodiesel permitting process; offers tips for how to reduce permits, saving time and money; and lists online resources and contact information for additional permitting information and regional regulatory assistance.
 
 Michelle Vasquez of the ORA echoed Downing's reason for offering the document-increased interest. She said another fact sheet for "microproducers" was under development. "We don't have clear lines about what is large and what is small [production]," she said.
 Downing said a recent string of biodiesel fires-one that destroyed a barn in rural Canby, Ore.-catalyzed Oregon's fact sheet effort. "The people that call us are trying to do it right, so we need to support them," Downing said.
 
 Oregon is looking at other ways to support the biodiesel industry, as well. Downing said the state is considering more tax incentives that would encourage the use of biodiesel while conveying caution about the aspects of making biodiesel in one's home.

Oregon DEQ releases biodiesel fact sheet for small producers

North Dakota is the U.S. canola king, and the state has seen heightened biodiesel activity over the past year with three plants currently under construction that plan to use the oilseed as a feedstock, along with another proposed project. More may follow.
 
 The Archer Daniels Midland Co. (ADM) facility, which is currently under construction in Velva, is expected to be the largest biodiesel producer in North America with a nameplate capacity of 85 MMgy. Magic City Biodiesel is a 30 MMgy facility being built in Minot, adjacent to an oilseed crushing facility. All-American Biodiesel will produce 5 MMgy of biodiesel in York. These three enterprises will take in approximately 1.5 million acres of canola per year when they come on line before summer 2007, according to Barry Coleman, executive director of the Northern Canola Growers Association, based in Bismarck, N.D.
 
 Coleman said North Dakota, which grows about 95 percent of the nation's canola crops, only harvested 930,000 acres of canola in 2006, but 2007 predictions are reaching 1.3 million acres. "Beyond that, we're not sure, but there's certainly potential for a much larger increase in '08 and '09, depending on prices, the Farm Bill, the crops and other factors," Coleman said. 
 
 Another biodiesel plant is under development in North Dakota, as well. There is a feasibility study underway for a plant in Munich, N.D., which also plans to use canola. 

 
 North Dakota canola is not only in high demand from the biodiesel industry; it is also a crop that is gaining popularity in the food sector, said D.C. Coston, vice president for the agriculture and university extension at North Dakota State University (NDSU). "[Publicizing] the health benefits that come along because of direct human consumption of canola has the potential to create great demand, too," Coston said. "There are some very positive things happening with this crop, and it holds great potential for North Dakota." 
 
 Coleman said announcements by fast food chains such as Taco Bell, which said it will start using canola oil in its food preparation, will have a large impact on the canola market. Likewise, diesel engine companies issuing B20 warranties in their vehicles will have a large impact on the biodiesel industry, as well. 
 
 The demand created by biodiesel manufacturing shouldn't strain the supply for the traditional canola markets, but it will provide some price competitiveness, Coston said. "Materials and other things tend to go places where people pay for them," he said. "If traditional markets will pay a price that is reasonable, there will be plenty for that along with the biodiesel. We're optimistic that the canola industry here will be supplying all those [traditional markets], as well as these new and opening markets."

North Dakota farmers harvested 930,000 acres of canola in 2006. When the three biodiesel plants under construction in the state start production in 2007, they will require 1.5 million acres of canola

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N.D. canola may not meet producers' demands

The beautiful thing about Yogi Berra is that nobody really knew whether his nuggets of wisdom were intentional or not. One of my favorite sayings of his is, "You got to be careful if you don't know where you're going because you might not get there." 
 
 As we head into a new year, our industry finds itself at the proverbial fork in the road. Unlike Yogi, we can't just head in any direction. We have to know where we are going and how to get there. 
 
 One thing that will help us find our way to becoming a major player in the nation's energy supply is quality. We recently learned of some disappointing fuel quality results. A national study, funded by the National Biodiesel Board (NBB) and the National Renewable Energy Laboratory, found that half of anonymous biodiesel samples pulled between November 2005 and July 2006 were out of spec on at least one parameter. That includes one-third of the samples that were out of spec on total glycerin. If this sounds like "déjà vu all over again," as Yogi would say, you're right. That's the same issue that caused some filter clogging problems in Minnesota last year. 
 
 These results are quite simply unacceptable. This underscores the need for enforcement agencies to take action against entities that aren't producing biodiesel that meets the existing ASTM D 6751 standard. The NBB, by direction of the board, started calling for active enforcement months ago during a fuel policy change in its bylaws. This puts us in the unusual position of a trade association whose members are actively seeking to have themselves policed. I think that shows how serious we are about turning quality around.
 
 To that end, as I mentioned in last month's letter, the NBB has made great progress with its Fuel Quality Outreach Program. We have made contact with all state divisions of weights and measures, and encouraged them to adopt ASTM D 6751 into the laws that regulate fuel quality. Currently, half of the states have done so, and an additional 13 states are planning to adopt the specification or are studying it. Ten states now proactively test biodiesel or biodiesel blends, including Minnesota, where all diesel fuel contains 2 percent biodiesel.
 
 In addition, the biodiesel industry, through the NBB, has done the following: 
 

 --Worked diligently with the Internal Revenue Service, U.S. EPA and state weights and measures bureaus on enforcing fuel quality 
 --Teamed up with the Petroleum Marketers Association of America to issue a "Winter Weather Advisory" to fuel suppliers, advising them to take samples of fuel, ensure a certificate of analysis for every batch and take other precautions
 --Recommended that all consumers buy fuel from BQ-9000 companies 
 --Developed an online Fuel Quality Enforcement Guide at <a target="_blank" href="http://www.biodiesel.org/">www.biodiesel.org/</a>
 resources/fuelqualityguide that helps people take action against a company they suspect is not producing spec fuel 
 
 In the past year, industry growth was tremendous as the number of U.S. plants nearly doubled, and hundreds more retailers and distributors began selling biodiesel. Demand is up. Producers may have a temptation to produce as much biodiesel as possible as quickly as possible, and some may be making a business decision to shortcut testing. 
 
 I am heartened by the fact that, overall, the biodiesel industry's commitment to fuel quality is growing. This is exemplified by a six-fold increase in the number of biodiesel producers completing the BQ-9000 voluntary certification program. There are now three certified marketers and 14 accredited producers. Those companies account for more than 40 percent of the U.S. biodiesel production capacity. In Minnesota, all three major producers are now accredited. Sampling done by the state Division of Weights and Measures and fuel transporter Magellan Mid-Stream Partners in recent weeks found that all Minnesota biodiesel was in spec at the plants and at the terminal. That's good news. 
 
 As Yogi said, "There are some people who, if they don't already know, you can't tell 'em." But you can try. This is a wake-up call for those companies that have decided to shortcut the production process. It's time to get on the ball or leave the game.

Fuel Quality: Even Napoleon Had His Watergate, Part II of II

NBB In Sight

It's Congress-meets-country in San Antonio for the National Biodiesel Conference and Expo in February. An impressive lineup of guest speakers and performers will entertain and educate attendees like no other biodiesel event. 
 
 The Congressional rock band The Second Amendments will perform at the opening night reception and serve on a panel during Monday's general session. Political pundit couple James Carville and Mary Matalin close the conference with their unique style of communicating how to make politics work in your favor. Country music legend Merle Haggard will kick off biodiesel's first political action committee (PAC) with a live performance you won't soon forget. "With escalating gas prices and dwindling petroleum resources, biodiesel is the next step toward a solution to the world's energy crisis and a way to diminish dependency on foreign oil," Haggard said.
 
 Other highlights include biodiesel supporters Larry Hagman, who played J.R. Ewing on the TV show "Dallas;" and Bill Mack, the XM Satellite Cowboy. Dr. John G. Stoessinger-an internationally recognized political analyst and prize-winning author of 10 world politics books, including The Might of Nations: World Politics in Our Time-will serve as a keynote speaker. Stoessinger escaped from Nazi-occupied Austria and went on to serve with the United Nations and the Council on Foreign Relations.

 
 A record number of biodiesel marketers, feedstock growers, fuel distributors, government leaders and biodiesel users attended the 2006 meeting. New to the rich educational program for 2007 will be an additional track on production. The conference, to be held at the Henry B. Gonzales Convention Center, will include an array of networking and social events in this dynamic city, along with the expo showcasing more than 175 booths.
 
 The National Biodiesel Board (NBB) and sponsors host the National Biodiesel Conference and Expo. For more details and to register, visit <a target="_blank" href="http://www.biodieselconference.org/2007">www.biodieselconference.org/2007</a>.

Merle Haggard will perform at the 2007 NBB Conference.

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There's something for everyone at the National Biodiesel Conference

For a third year, the biodiesel industry has chosen farmer-leader Darryl Brinkmann to lead the National Biodiesel Board (NBB). The soybean grower from Carlyle, Ill., who was elected by the NBB's 143 voting members at its November board meeting, represents the American Soybean Association and has served as an NBB board member since 1998. 
 
 Officers elected to lead the nonprofit association's board are:
 --Vice chairman-Jim Conway of Griffin Industries, a biodiesel supplier based in Cold Spring, Ky. 
 --Secretary-Gary Haer of Renewable Energy Group Inc., a biodiesel supplier based in Ralston, Iowa
 --Treasurer-Ed Ulch, a farmer from Solon, Iowa, representing the Iowa Soybean Association
 
 Additionally, three others joined the governing board: Greg Anderson, a farmer representing the Nebraska Soybean Board; Bill Ayres of Ag BioEnergy LP in Austin, Texas; and Kris Kappenman of Archer Daniels Midland Co. in Decatur, Ill. The remaining governing board members who are still serving their terms are: 

 
 --Jim Boushka of Smithfield BioEnergy, a biodiesel supplier in Smithfield, Va.
 --John Campbell of Ag Environmental Products, a division of Ag Processing Inc., a biodiesel fuel supplier based in Sergeant Bluff, Iowa
 --Gene Gebolys of World Energy, a biodiesel supplier based in Chelsea, Mass.
 --Ed Hegland, a Minnesota farmer representing the state's Soybean Research & Promotion Council
 --Bob Metz, a farmer representing the South Dakota Soybean Research and Promotion Council
 --Robert Stobaugh, a farmer representing the Arkansas Soybean Promotion Board
 --Fred Wellons of Baker Commodities, a biodiesel supplier based in Los Angeles, Calif. 
 --David Womack, a farmer representing the Tennessee Soybean Promotion Board
 
 The NBB recognized outgoing governing board members Jerry Osterholt, former treasurer and Indiana Soybean Board representative; Jeff Nelson of Northfield, Ill., biodiesel supplier Stepan Company and marketing committee chair; and Bob Clark of Noil Energy Group in Commerce, Calif.

NBB reelects farmer-chairman during time of change for biodiesel

Two major biodiesel producers in Minnesota and a biodiesel marketer in New York are now accredited producers or certified marketers under the industry's BQ-9000 quality-control program. 
 
 FUMPA Biofuels in Redwood Falls and Minnesota Soybean Processors (MnSP) in Brewster joined SoyMor as BQ-9000 accredited producers, while Metro Fuel Oil Corp. in Brooklyn has adopted, and been voted into, the industry's voluntary program. BQ-9000 includes procedures for fuel storage, handling and management aimed at ensuring fuel quality throughout distribution. 
 
 "We are very pleased to join the ranks of BQ-9000 producers," said Charles Neece, FUMPA Biofuels director of research and development. "We encourage all producers and marketers to go through the process so they understand the procedures that will help all of us become more attuned to the quality required. The additional attention to detail that BQ-9000 requires is something that will strengthen our industry. We are proud that now the three biodiesel producers in Minnesota have achieved that status," Neece said.
 

 MnSP expressed its gratitude toward the organization that created BQ-9000. "We applaud the National Biodiesel Accreditation Commission for taking a leadership position to ensure that all biodiesel producers deliver quality fuel to the system," MnSP CEO Rodney Christianson said. "To grow the biodiesel industry, it is critical that we have high-quality fuel that provides trouble-free use."
 
 The three newly accredited or certified companies understand that although producing biodiesel to its ASTM D 6751 specification is critical, proper handling and blending of the fuel after it leaves the plant is equally important. Petroleum distributors are often the last to touch the fuel before it goes into vehicles. 
 
 "Metro has made a large commitment to renewable energy and has dedicated over 1 million gallons of storage capacity for biofuels," said Paul Pullo, president of Metro Fuel Oil Corp. "Quality and integrity are our utmost commitment, and the BQ-9000 program will help our industry grow and guarantee product integrity." Besides distributing transportation fuel, Metro also handles the trademarked Bioheat heating oil.
 
 Having producers and marketers increasingly adhere to BQ-9000 parameters helps to ensure that a process is in place to prevent contamination, use additives properly and engage in good blending practices. Altogether, these factors equate to the consumer having a positive experience. 
 
 More than 40 percent of the biodiesel fuel on the U.S. market is from a BQ-9000 accredited producer, certified marketer or both. Biodiesel is the fastest-growing alternative fuel in America with 75 million gallons sold in 2005, triple the previous year's figures. The industry is on track to sell more than 200 million gallons of biodiesel this year.

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Three more biodiesel companies achieve BQ-9000 status

BQ-9000 has taken root in the nation's fuel supply this year. In February, there were only four accredited producers in the BQ-9000 program. Now, there are 14 accredited producers and three certified marketers. 
 
 The first certified marketer, Sprague Energy, also operates a large biodiesel terminal in Albany, N.Y. Following Sprague, Peter Cremer North America became the first company to be both an accredited producer and a certified marketer. Metro Fuel Oil Corp. rounds out the certified marketers as a fuel and Bioheat fuel distributor.
 
 Visit <a target="_blank" href="http://www.bq-9000.org">www.bq-9000.org</a> for more on this program.

BQ-9000: Year-in-Review

The Iowa Soybean Association (ISA) and Decker Truck Line Inc. have kicked off the "Million Mile Haul." The program is designed to complete a one-of-a-kind, comprehensive fuel impact study that examines the effects of B20 compared with regular petroleum diesel fuel. The study will compare soy biodiesel to regular diesel fuel in a fleet of 10 over-the-road trucks.
 

 The documentation trucking program is the first in the nation to be made public. The objective of this study is for the trucking industry to use the data, and as a result, promote the use of soy biodiesel as an alternative fuel. A fleet of 10 trucks running on B20 and 10 trucks running on regular diesel will each complete 1 million miles in the first year. Caterpillar Inc. will participate in gathering technical information, as well as analytical analysis, with the use of B20 in its engines, which are in Decker trucks.
 
 The ISA, Decker Truck Line, the National Biodiesel Board (NBB), Caterpillar Inc., Iowa Central Community College, Renewable Energy Group and the USDA have partnered to support this study. Rep. Tom Latham, R-Iowa, as well as Iowa state senators, were on hand at the ISA and Decker's announcement.
 
 The ISA, an NBB member, develops policies and programs that help farmers expand profit opportunities while promoting environmentally sensitive production using the soybean checkoff and other resources. The association is governed by an elected volunteer board of 21 farmers.
 
 Decker Truck Line has more than 450 powered units in its refrigerated, protected services, van and flatbed divisions. The company transports food products, dry freight, and steel and building materials throughout the Midwest, Southeast, West and south-central United States, and selected provinces in Canada. The company is based out of Fort Dodge, Iowa.

ISA, Decker Truck Line kick off "Million Mile Haul"

Kubota Tractor Corporation (KTC) has approved the use of B5 biodiesel blends in specified Kubota diesel-powered products. The tractor and equipment maker, headquartered in California, called for quality in its announcement and said biodiesel fuel should be purchased from a BQ-9000 accredited producer to ensure quality.
 
 "Kubota is committed to environmentally sound practices and the support of renewable, agriculturally based products used in fuels, as we continually work at increasing energy efficiencies within our industry," said Tetsuji "Mike" Tomita, president of KTC. "Kubota believes strongly in the efficiency and high performance of the diesel engine, and approves the use of B5 biodiesel fuels."
 
 Kubota has tested and approved the use of B5 biodiesel fuel as a blend component that meets the minimum requirements provided by ASTM D 6751 specifications. "Kubota strongly recommends compliance with the appropriate handling, storage, operating, and maintenance of diesel and biodiesel fuels to ensure quality and safe handling," the company said in its announcement.
 
 KTC is the U.S. marketer and distributor of Kubota-branded equipment. Its products include a complete line of tractors with up to 103 power takeoff horsepower, performance-matched implements, compact construction equipment, consumer lawn and garden equipment, commercial turf products and utility vehicles.

Kubota promotes burning biodiesel, encourages BQ-9000 producers

The Barenaked Ladies are getting on the biodiesel bandwagon-or bus-by burning biodiesel blends in their four tour buses and three trucks. 
 
 "We're looking forward to reducing the amount of waste and CO2 emissions we create on tour," said Barenaked Ladies bassist/vocalist Jim Creeggan. "Now that technologies like biodiesel, renewable energy and compostable products are available, it has made it possible for us to take action against environmental threats. We hope the concert industry will take the opportunity to use these innovations, as well. There isn't time to wait."
 
 The band is touring on B20. The National Biodiesel Board (NBB), which teamed up with the environmental organization Reverb, is assisting them with biodiesel fuel procurement. For more information on tour dates and biodiesel usage, visit <a target="_blank" href="http://www.bnlmusic.com">www.bnlmusic.com</a> or <a target="_blank" href="http://www.reverbrock.org/barenakedplanet">www.reverbrock.org/barenakedplanet</a>. 

 
 In the past year, the NBB has assisted many tours with finding biodiesel, including Dave Matthews Band, Bonnie Raitt, Indigo Girls, Guster, the Black Crowes and more.

More rockers rolling on biodiesel

Consolidated Biofuels Inc. (CBI), a development-stage alternative fuels company, announced in October it had signed a letter of intent (LOI) with privately held company International Bio Fuels Corporation (IBFC). In the agreement, IBFC will provide substantial equity investment in CBI. IBFC's choice to invest in CBI was based on the company's similar business strategy, according to an IBFC press release. IBFC is a biodiesel plant manufacturer with operations in the United States, China, Indonesia and Africa.

Consolidated Biofuels Inc. signs LOI with IBFC

Nova Biosource Fuels Inc. has lined up contracts for biodiesel marketing and feedstock at its proposed 60 MMgy biodiesel facility in Seneca, Ill. Through a long-term biodiesel sales agreement, ConAgra Trade Group Inc. will provide sales and outbound logistics services for the company. The agreement was executed through a Nova Biosource Fuels subsidiary and will complement a feedstock supply agreement signed with Lipid Logistics LLC, an affiliate of Kaluzny Brothers Inc. The company expects the biodiesel facility to be on line in summer 2007.

Nova Biosource Fuels signs biodiesel sales agreement

In October, Bunge Iberica, the Spanish arm of Bunge Limited, announced a joint venture with Acciona, a renewable energy company, to build two biodiesel plants in Spain. The proposed plants, one with a 60 MMgy capacity and the other undeclared, will be located adjacent to Bunge's newly constructed oilseed processing plants and vegetable oil refineries in Bilbao and Cartagena, Spain. This venture follows a March agreement between Acciona and Repsol YPF, Spain's largest petroleum refiner, to develop biodiesel plants near Repsol's crude oil facilities.

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Bunge enters JV to build biodiesel plants in Spain

Grace Davison, a division of former asbestos producer W.R. Grace & Co., recently formed the BioFuel Technologies Group to direct the company's growing interest in product development for the renewable fuels industry. Products will initially focus on catalysts and absorbents for improved biodiesel and ethanol production, as well as chromatography-based analytical and quality control tools. The BioFuel Technology Group is the "flagship project" of the Incubator Technology program at Grace Davison, the company said.

W.R. Grace & Co. establishes biofuels unit

Schaeffer Manufacturing Company, a St. Louis-based manufacturer of oils, greases and fuel additives, recently promoted Phil Hamilton to the position of national fuel additive sales manager. An employee of Schaeffer since 1997, Hamilton offers customers the expertise needed to get through the newest round of ultra-low sulfur diesel standards based on recent U.S. EPA fuel mandates, the company said. Hamilton earned his bachelor's degree in economics and chemistry at Southern Illinois University in Edwardsville.

Schaeffer promotes Hamilton

Renewable Energy Group Inc. (REG) added Brad Albin as director of plant sales and construction in October. Albin will serve as the director for all REG biodiesel construction projects, directing all internal and external resources required to design, build and start up plants. He has 22 years of experience in executive operations of various industries. He most recently served as executive director of operations for Material Sciences Corporation. Albin also helped author the current BQ-9000 accreditation program administered by the National Biodiesel Accreditation Committee.

REG hires Albin

MAN Diesel North America Inc., which designs large-bore diesel engines, has assigned Simon Lott to its Houston office as the director of business development, biofuels and gas engines. He is responsible for developing the market for stationary power generation that runs on biodiesel and other biofuels. Previously, Lott was responsible for establishing a packaging facility and developing the turbine market for MAN Turbo Inc.

Lott joins MAN Diesel North America

Bunge North America recently created three executive vice president positions,  to which it promoted Tim Gallagher, Larry Clarke and Fred Luckey. Previously, the three employees were each senior vice president and general manager of their respective divisions: Bunge Grain, Bunge Oilseed Processing and Bunge Milling. Gallagher will oversee grain operations, along with Bunge's expanding biofuels activities. Oilseed processing, oils and transportation will fall under Clarke's jurisdiction. Luckey will oversee milling operations, procurement and a newly created industrial management group.

Bunge names three executive VPs

D1 Oils plc recently named two directors and a manager to its staff. Lord Oxburgh was appointed nonexecutive director; he will also replace Karl Watkin as chairman of the board in early 2007. Dr. Henk Joos was named plant science and agronomy director. He will be responsible for the company's crop science program working to develop jatropha curcas as a commercial energy crop for biodiesel. Tony Larkin was hired as senior sales manager to head the United Kingdom and European sales and marketing of biodiesel.

D1 Oils hires three

If your company isn't growing, it's dying. 
 
 Just about everyone is familiar with this ubiquitous business dictum, yet many people prefer to believe companies and industries, large and small, can be sustainable and healthy without constant expansion. I generally avoid absolutes, yet I'm inclined to prescribe to the "keep growing" rule of thumb because everything I know about business, money and life tells me it's true. 
 
 So then, if growth does equate to survival in business-if we can suppose that for just a moment-then I guess you could say our industry is a picture of health right now. At this time last year, I said 2005 was a "bigger, better year" for biodiesel than almost anyone thought it would be. I said, "We've been witness to unprecedented industry expansion, landmark federal and state legislation, the formation of critical distribution partnerships, strengthened commitments from diesel engine vehicle manufacturers, and stunning growth in the sheer number of North American fleets using biodiesel blends."
 
 Perhaps I could just say "ditto" for 2006? 
 
 In fact, the growth of biodiesel stands in sharp contrast to the relative stagnancy of the oil industry. I won't go so far as to say the oil industry is dying-it's too massive and complex to make that bold claim-but I think it's safe to say its growth is in question. After all, while the U.S. biodiesel industry currently has more than 40 facilities under construction or expansion, the U.S. oil industry hasn't built a new refinery in some 30 years. At the same time, most experts now agree that the era of peak oil either looms near or has already begun. 
 
 Try to keep these ideas in mind as you page through our 2006 Year In Review. This year's comprehensive review and update includes articles that hit on the most important issues related to process technology, fuel quality, emissions, business, project development, construction, fleets, distribution, feedstocks, coproducts, policy and more. Our hope is that these articles put the year in perspective and provide a preview of what's to come in 2007. 
 
 The compilation of articles spanning the following 46 pages begins with a look at use-from fleets to home heating oil-examining the growing acceptance of biodiesel blends over the past several months. That article is followed by a compelling look at what we call a "greater diffusion" of novel biodiesel production technologies worldwide. After that, we recap the year's biggest goings on in policy. The increase in federal and state legislation for biofuels should leave no doubt that biodiesel is becoming an important thread in the fabric of America's fuel supply. Next, we look at the raw materials of production. In the world of biodiesel feedstocks, soybeans continue to rule in the United States. As the industry grows, however, other feedstocks such as canola, corn oil and grease are gaining traction. 

 
 Our 2006 Year In Review wouldn't be complete without a story on construction, and we've focused on the biggest projects out there. A typical biodiesel plant's capacity increased significantly this year as companies like Archer Daniels Midland Co. and Cargill entered the industry. How 50 MMgy plants, and even 80 MMgy plants, will affect the rest of the industry may be determined in 2007. Fittingly, the following article points out that the industry can't afford to sacrifice fuel quality at such a defining, developmental moment in its history. We close out our Year In Review with a project development roundup, an article that highlights the intense planning, fundraising and strategizing that took place in the biodiesel industry in 2006. 
 
 With 2006 behind us, it's time to focus on what is sure to be another incredible year for biodiesel. I'd like to thank the companies, associations and individuals that provide our publication with the invaluable support it receives year round. Thank you. 
 
 Enjoy the reading.

2006 Biodiesel Year in Review

The advantages for fleet vehicles using biodiesel are well-known among biodiesel supporters. The renewable fuel helps to reduce emissions and odors. For many, it fulfills a sense of patriotism. 
 
 In the past year, Biodiesel Magazine reported on a variety of fleets that have adopted the cleaner-burning fuel. Companies ranging from L.L. Bean and Sugarbush Resort to New Belgium Brewing Co. and Terminal Systems Inc. have successfully used biodiesel blends in fleet vehicles. As the year progressed, even more fleets jumped on the biodiesel bus and began to use the renewable fuel. Others-pleased with past performance-increased the amount of biodiesel in the blended fuel. 
 
 From his unique perspective as director of outreach and development for the National Biodiesel Board (NBB), Tom Verry has witnessed the emergence of biodiesel in the fleet vehicle market. Verry has been promoting biodiesel use for 15 years, and has played a part in developing the growing acceptance and use of biodiesel as it becomes more common among city, state and federal government fleets, as well as with school buses and private trucking companies. "That's kind of our mainstream markets now," he tells Biodiesel Magazine. The NBB aims to keep fleet use trending upward by continuing to provide education and promotion in new markets. For example, in the past couple of years the NBB has been working with the Mine Safety and Health Administration (MSHA) to help miners meet new underground mine safety regulations with tightened emissions standards using B99. "Biodiesel is one of the most cost-effective ways to do that," Verry says, adding that it's a market the NBB continues to pursue. 
 
 Another biodiesel market that's experienced recent growth is the over-the-road trucking industry. While interest is growing cautiously with the large trucking fleets, independent owner-operators are excited about using biodiesel blends. "They love the idea of biodiesel," Verry says. 
 
 Biodiesel is a common topic of conversation among truck drivers. It's also a frequent topic of discussion on XM Satellite Radio. Disc jockey Bill Mack, known to his loyal listeners as "The Satellite Cowboy," hosts a show that is popular with truck drivers. Supporting America's farmers, homeland security issues and energy independence are the biggest reasons truck drivers are interested in biodiesel. "It's absolutely a red, white and blue issue," Verry says. 

 
 When the NBB sets up its booth at truck shows, interest is always high, Verry says. Most often, truckers want to know where they can buy biodiesel. In response to those inquiries, the NBB launched its Biodiesel Hotline in August. Truckers and other consumers can call the hotline-which is staffed 24 hours a day, seven days a week-for information on the retail outlets that carry biodiesel blends. 
 
 Fleets Embrace Biodiesel
 The Toledo Area Regional Transit Authority (TARTA) in Ohio went beyond just using a biodiesel blend in its transport buses. TARTA began a three-year study of 48 buses, half of which are being operated with ultra-low sulfur diesel blended with B20. 
 
 The study, conducted in partnership with the University of Toledo's Intermodal Transportation Institute (ITI), will look at possible emissions reductions, as well as in-bus air quality for passengers-considered the first study of its kind. It will also examine the economic factors, such as how biodiesel will impact engine performance, engine wear and operating costs. "On the surface, you still have a cost penalty for using [B20]," says ITI Director Mark Vonderembse. "It costs more per gallon than diesel [and particularly] ultra-low sulfur diesel. So what we're trying to determine is, are there offsetting savings associated with it, such as extending the life of the vehicle, [or] extending maintenance?" 
 
 This fall, the U.S. National Park Service (NPS) was recognized by the United Soybean Board for its successful use of biodiesel for more than 10 years. It started with a single vehicle using B100 in Yellowstone National Park. "When we started with that one truck 10 years ago-and it's still running on 100 percent canola [biodiesel]-we envisioned that a decade later, we'd have created niche markets within the region and in the surrounding states," says Yellowstone National Park Environmental Manager Jim Evanoff. "That has pretty much come to fruition. We now have five public biodiesel pumps within the greater Yellowstone area, and we've seen a ripple effect on biodiesel being accepted by other national parks." 
 
 Following Yellowstone's lead, more than 50 national parks from Kentucky to Alaska are now using biodiesel blends and even B100. In all, NPS used nearly 84,000 gallons of biodiesel in 2005. 
 
 In Indiana, a construction company was using a biodiesel blend to power equipment while building a biodiesel plant. G&G Hauling and Excavating Inc. was using about 1,000 to 1,200 gallons of B2 daily while building a Louis Dreyfus Agricultural Industries LLC, an 80 MMgy biodiesel plant in Claypool, Ind. 
 

 Though it was a good fit, Louis Dreyfus didn't require G&G to burn biodiesel. The construction company has been using biodiesel for the past two years. 
 
 Manufacturers Encourage Use 
 There were some exciting commitments made by vehicle manufacturers this year. DaimlerChrysler and Arctic Cat Inc. announced their public support of biodiesel blends in September.
 
 DaimlerChrysler plans to factory-fill B5 in two of its 2007 diesel vehicles. Every 2007 Dodge Ram pickup leaving the Fenton, Mo., assembly plant and Jeep Grand Cherokee common rail diesels with a 3.0-liter turbo-diesel engine will be filled with a 5 percent biodiesel blend. 
 
 This isn't the company's first move to embrace biodiesel. More than 15,000 Jeep Liberty vehicles produced at the Toledo, Ohio, factory were delivered with a B5 blend before the factory-fill was discontinued. DaimlerChrysler also approved B20 for vehicles used in commercial, government and military fleets. Earlier in 2006, DaimlerChrysler became the first automaker in the United States to specifically approve B20 in a warranty position statement. Work to develop a B20 standard is ongoing in partnership with the NBB and other groups. 
 
 Not too long before DaimlerChrysler made its September announcement, Arctic Cat said it had completed development of a twin-cylinder diesel all-terrain vehicle (ATV). It was the first of its kind on the market. The Thief River Falls, Minn.-based company is encouraging biodiesel blends in all its ATVs and has developed a fuel tag that recommends biodiesel blends of up to B20.
 
 NBB Trademarks 'Bioheat' 
 The emerging Bioheat heating oil industry was shored up in early 2006 by the NBB's move to trademark the term for home heating oil blended with biodiesel. A sublicensing agreement was also formed, allowing the National Oilheat Research Alliance (NORA) to use the term, as well. 

 
 Bioheat heating oil is blended between B2 and B20 mostly in the New England and Mid-Atlantic states. Paul Nazzaro, the NBB's director of petroleum affairs, predicted that demand will inevitably rise. "Bioheat is the beginning of a new era for oil heat," he says. "Through the cooperative spirit of the NBB and NORA, the confidence level is very high that we will continue to meet the challenges facing the energy industry. Through efficient combustion technologies, cleaner-burning fuels and a burning desire to sustain market prominence, the new oil heat will be tough to beat." 
 
 Though small overall, heating oil represents a huge market opportunity for the biodiesel industry. Only 1 percent of what NORA says is a 7 billion gallon heating oil market represents a total of 7.6 billion gallons of biodiesel, per year. Compared to 1 percent of on-road diesel fuel demand, which would represent 350 MMgy of biodiesel heating oil seems to present a great opportunity. However, to put that into perspective, total production of biodiesel was just 75 MMgy in 2005, Nazzaro pointed out. 
 
 Distribution 
 In a world dominated by petroleum, incorporating biofuels into the fuel system hasn't been easy. As biodiesel capacity swells, it is straining the infrastructure to support blending and transportation of product to the consumer. 
 
 However, 2006 was a good growth year for the infrastructure of biodiesel distribution. The number of biodiesel distributors grew in the past 12 months from 1,500 to more than 1,800, according to Amber Thurlo Pearson, communication specialist for the NBB. At press time, there were 36 terminals blending biodiesel nationally, compared with 25 in April. 
 
 A growing number of biodiesel producers are now equipped with metered pumps to fill tankers quickly and accurately. The U.S. Department of Transportation requires interstate weight limits and the need for precise measuring of loads. Union County Biodiesel Company LLC, a 5 MMgy plant in Morganfield, Ky., uses the metered pumps, says Plant Manager Andy Sprague, adding that it makes truck load-out a worry-free process that is now a minor operational focal point. 
 
 Blending-a major component of distribution-has also become more routine with the use of injection blending. It's the best way to go when possible, says Don Irmen, a North Dakota-based marketing manager for the 12 MMgy West Central plant in Ralston, Iowa. "Splash blending works well if it's done properly, but biodiesel weighs more than regular diesel. If it is not done correctly, [problems can arise]," he told Biodiesel Magazine. 
 
 Industry leader Countrymark Co-op, a petroleum refining and marketing company, was the first in the country to have a metered biodiesel facility at its Jolietville, Ind., terminal. The company was also the first to install a fully automated loading system and heated storage tanks, says Countrymark Terminal Manager Dennis Reynolds. "A tanker driver pulls up to the loading racks, selects a product (a specific blend), hooks up the hoses, and the machines do the rest of the work," Reynolds says. "We are pretty much out of splash-blending operations." 
 

 Countrymark might have been the first, but fortunately for the biodiesel industry, not the last. More and more, terminals across the United States are putting high-speed biodiesel blending infrastructure in place. 
 
 This year, Countrymark helped the biodiesel industry reach a new milestone. The company quietly used its own pipeline for biodiesel transport. In all, 210,000 gallons of B5 traveled through the 238-mile pipeline for 72 hours. It moved without incident from Countrymark's Mount Vernon, Ind., refining complex to a central Indiana terminal, according to Dennis Reynolds, manager of pipeline and terminals for Countrymark. It was the first time a company had announced moving B5 through a pipeline that carries gas, diesel and heating oil, according to Steve Howell, NBB technical director. Though-at this point-it was a one-time test as Countrymark continues to evaluate its options, the NBB considered the test a win all around. "This represents the next step toward full integration of biodiesel into the nation's transport system," Howell says. 
 
 Holly Jessen is a Biodiesel Magazine staff writer. Reach her at <a href=mailto:"hjessen@bbibiofuels.com">hjessen@bbibiofuels.com</a> or (701) 746-8385.

Forty-eight TARTA buses are running on a blend of biodiesel and ultra-low sulfur diesel in Ohio in what will be a three-year study.

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From use by fleets to home heating oil, the popularity of biodiesel blends gained ground in the past year as people became more familiar with the renewable fuel's positive characteristics. For many, especially over-the-road truckers, fueling up with biodiesel has become synonymous with displaying the American flag.

Red, White and Biodiesel

Since America's inception, and most likely for many years to come, the Republicans and Democrats tend to disagree on how to lead our nation and how best to tackle the big issues. Keeping this in mind, it is somewhat rare when a subject arises that garners support from both of the major political parties. To be sure, there are several viewpoints on how to implement the renewable fuels standard (RFS) set forth in the Energy Policy Act of 2005 (EPAct), but the big victory for the biofuels industry is that the support for the RFS is resoundingly in place. Whether bills were introduced by Republicans or Democrats in 2006, there was and still is an overall bipartisan endorsement for biodiesel that is truly making it a fuel that everyone can stand behind.
 
 "What we have seen is that there is a lot of support for biodiesel on both sides of the aisle," says Scott Hughes, director of governmental affairs for the National Biodiesel Board (NBB). "We hope and anticipate that there will continue to be strong support for biodiesel in the new Congress."
 
 In March, the biodiesel industry trade association opened a new governmental affairs office in Washington D.C., moving even closer to the action on Capitol Hill, Hughes says. The move couldn't have come at a more opportune time. The hill was buzzing with efforts focused on a number of biofuels-related issues, including an extension of the biodiesel tax credit. Some bills called for a two-year extension, while others aimed for a longer extension, including one piece of legislation introduced in the House of Representatives that called for a permanent extension of the tax credit, Hughes says. Unfortunately, there just "weren't many tax vehicles moving this year that those could be attached to," he noted. Although it didn't come to fruition this year, there was a lot of interest in the issue. Other bills included appropriations for the biodiesel education program, funding for biodiesel engine testing authorized through EPAct, as well as other regulatory issues. The outcome of the funding for most of these issues, however, is yet to be determined, Hughes says.

 
 Patchwork of State Progression 
 While the federal government has done much to work on long-term goals to ensure the country's energy independence, policy-makers at the state level also chose to proactively pursue pro-biofuels legislation in an effort to make a more immediate impact. Indeed, action at the state level was at an all-time high in 2006. More than 275 pieces of biodiesel-specific legislation were tracked by the NBB as of Sept. 30. With 53 of those pieces eventually adopted into law, the nation's 50 states are helping weave together a strong patchwork of policy supporting the biodiesel industry that now stretches from coast to coast. 
 
 "I think it really boils down to the fact that a lot of states realize that they can play a key role in this, in terms of addressing our energy needs, and at the same time help out American agriculture," Josh Zahn, NBB's state regulatory manager says. "Many states have taken the lead, and governors, as well as a variety of state legislators, have recognized that it's just good policy."
 
 Each state's biodiesel plan has a different makeup, shape and size. Some are in the form of packages coupled with ethanol-related legislation, others stand alone, and some are in the form of incentives, or use requirements. Still others come in the form of point of taxation clarifications, study authorizations, state fleet use requirements, promotion strategies, and the list goes on. In a recent report of the year's state legislation highlights, the NBB identified 23 different states that adopted new biodiesel laws this year, and none were exactly the same. Every state takes a different approach, Zahn says. 
 
 "Where a tax incentive would be extremely popular and workable in one state, it would be dead in the water in another state, so they really work it to fit the environment in their state," he adds.
 
 Michigan became somewhat of a trendsetter this year, passing a seven-bill biofuels package that included legislation covering ethanol and biodiesel tax credits, infrastructure grants, new renaissance zones, the creation of a renewable fuels commission and more. Robert Craig, director of the agriculture development division at the state's Department of Agriculture, says that while the big three automakers are headquartered within the state and there has been a real commitment made to ethanol, state legislators have also focused on biodiesel. 
 
 "We are seeing more than a doubling in consumption [of biodiesel] in Michigan this year (as of Sept. 1)," Craig says. Parts of the package signed by Gov. Jennifer Granholm in July that are specific to biodiesel include a 20 percent tax cut for all biodiesel-blended fuel and B100, seats held by soybean growers and biodiesel producers on the newly formed renewable fuels commission, the installation of biodiesel pumps for state fleet vehicles by Jan. 1, 2007, and matching grants by the Michigan Strategic Fund for fuel station owners who seek to install biodiesel pumps.
 
 Packages like Michigan's, as well as one signed by New York Gov. George Pataki this summer, which included a residential Bioheat home heating oil tax credit, the elimination of biodiesel fuel taxes, and cost share infrastructure grants, are what the NBB expects to see more of moving forward, Zahn says. The "all-encompassing" approach of proposing package deals covering all biofuels was one of two major trends seen in 2006, he says. Also common was the implementation of a variety of incentives rather than mandates or use requirements. While biodiesel mandates have been implemented in states such as Minnesota, Washington and Louisiana, others are leaning toward various incentive options instead, whether it's in the form of tax credits or production incentives, Zahn says. Although quite diverse when examined individually, each state's biodiesel policy plan is one piece of a much larger collection, sewn together by a bipartisan effort to relieve the United States of its dependence on foreign oil. 
 

 Pattern for Quality Control
 With the increase in state policy support for biodiesel, the NBB expects to see a surge in production as well, forecasting that it could reach 200 MMgy to 250 MMgy by the end of 2006, which is triple the amount produced in 2005. The focus for many state legislators now will be assuring the quality of the biodiesel fuel used on U.S. highways. Zahn believes this is "far and away" the biggest challenge for the industry leading into 2007. The NBB reports that half of U.S. states have adopted the ASTM D 6751 standard, and the association's top priority will be helping the remaining states do the same, he says. "We're encouraging [more] to adopt that standard and take measures to be able to enforce it," Zahn says. 
 
 According to a recent study conducted by the National Renewable Energy Laboratory and cofunded by the NBB, approximately 50 percent of all biodiesel sampled in the United States between November 2005 and July 2006 was out of spec for incomplete processing-a number the NBB calls "unacceptable." There was, however, a six-fold increase in the number of biodiesel producers that completed the BQ-9000 voluntary certification program during the same time frame, meaning that more than 40 percent of the production capacity on the market is from accredited producers and certified marketers, according to the study. In similar research conducted by privately held Blue Sun Biodiesel, results showed that 60 percent of biodiesel produced in the United States failed to meet the ASTM specifications. Samples were taken over the course of three years from a variety of sources, according to Blue Sun. The numbers clearly illustrate a need for action to be taken against those that aren't producing up-to-spec biodiesel, says the NBB.
 
 States such as Minnesota, where all diesel fuel is blended with 2 percent biodiesel, have adopted the standard and are currently enforcing it. Another 13 states, including Michigan, are still in the planning stages of adopting the specification, or are studying it. "As part of the seven-bill package that was passed … we are developing a fuel-quality testing and inspection program [for diesel and biodiesel]," Craig says. The wheels are definitely in motion, and he expects Michigan's program to be in place in about a year or two.
 
 At the federal level, Hughes is unsure whether or not there will be legislation concerning fuel quality. In the meantime, the NBB will continue to do whatever it can, surveying the amount of knowledge out there on the importance of standards. 
 
 "We're going back to further educate … and work with those that haven't adopted [ATSM D 6751] about the importance and the need to do so," Hughes says. "We're actually working that from the grassroots level up." 
 
 Lindsey Irwin is a Biodiesel Magazine staff writer. Reach her at <a href=mailto:"lirwin@bbibiofuels.com">lirwin@bbibiofuels.com</a> or (701) 746-8385.

Michigan Gov. Granholm signed a seven-bill package in July that granted several incentives to the biodiesel industry.

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There was tight-knit support for biodiesel legislation in 2006 at the federal and state government levels, and from both sides of the political spectrum. Scores of new state bills sponsored by both Democrats and Republicans covered issues ranging from tax incentives to quality control. The increased activity leaves no doubt that biodiesel is increasingly becoming an important thread in the fabric of America's fuel supply.

A Common Thread

As the feedstock source of choice for biodiesel, the soybean market has experienced the pinch of increased demand. While that may be forcing purchasers to tighten their belts, soybean farmers like Eric Niemann see it in a more positive light. "It creates some challenges sometimes, but it also creates opportunities," he told Biodiesel Magazine during a break from the soybean harvest on his northeast Kansas farm.

 
 After all, creating new markets and turning up the volume on demand is one of the goals of the United Soybean Board (USB), says Niemann, who serves as the vice chairman of the board. "That's what we've been working for," he says. 
 
 One challenge associated with the growth of industrial oil markets is finding a home for the soybean meal left over after oil extraction-something USB is working hard to accomplish. Recently, Niemann learned that 13 percent of soybean oil in America is used for industrial uses. The industrial oil market includes biodiesel as well as other products like plastics, foams, ink and lubricants.
 
 Despite the challenges Niemann-like other USB members and soybean growers-is excited about what biodiesel can do for the soybean industry and the nation. Currently, more than half of American soybean farmers use biodiesel on their farms. "That continues to grow," he says. 
 
 As the biodiesel industry expands, Niemann has been paying close attention to the news regarding new technology and feedstocks. The way he sees it, soy is available now and is a proven biodiesel feedstock. "We're excited that we can be a part of the energy needs of this nation today," he says. 
 
 While farmers are enjoying the higher prices that come with increased demand, a nagging question has arisen. As demand for soybeans ramps up, will there come a time when there's not enough of the crop to go around for feed, fuel and export markets? Niemann doesn't see that as an issue now, and with so many variables involved, it's impossible to predict when that might happen. However, it's still a concern, one that the soybean board plans to examine. In an effort to answer the supply question, and in anticipation of other questions that may crop up in the future, USB is conducting a Soy 2020 study, the results of which will be released in March, Niemann says. The study will also address the issue of increasing the oil content of soybeans. Through its Select Yield and Quality program, USB keeps farmers apprised of currently available soybean varieties that meet a 19 percent oil and 35 percent protein threshold. The Soy 2020 study will determine whether there's a need to "dramatically increase" the percentage of oil content in soybeans.
 
 In 2006, the industry was in good shape as far as soybean supply, Niemann says. Including carryover supplies from 2005, this year's yields look good. 
 
 Soybean production was forecast at 3.2 billion bushels, up 5 percent compared with 2005 figures, according to National Agricultural Statistics Service (NASS) numbers released Nov. 9. If the forecast proves correct, this year's crop would be the largest soybean crop on record. 
 
 As of Nov. 1, the average yield was estimated at 43 bushels per acre, which is equal to last year's record-high yield. In all, soybean farmers planted 74.5 million acres, up 5 percent from last year, according to NASS statistics. 
 

 While soybean farmers in the northern Great Lakes states, Delaware, New York, North Carolina and the Dakotas had higher yields than expected in October, slightly decreased yields were reported in Illinois, Kentucky, Missouri and Pennsylvania. 
 Other Feedstocks
 
 Soy oil clearly dominates as a biodiesel feedstock, but it's not the only option. In 2006, current and future biodiesel producers made significant headway in turning other feedstocks into fuel. 
 
 While rapeseed, the plant canola was bred from, is widely used as a feedstock in Europe, canola wasn't part of the North American feedstock picture until this year. Two biodiesel producers turned their full attention to canola recently and, oddly enough, are located just a little more than 20 miles apart. In May, agri-giant Archer Daniels Midland Co. (ADM) broke ground on an 85 MMgy facility in Velva, N.D. That was followed by the kickoff of a 30 MMgy Magic City Biodiesel LLC project in Minot, N.D., in August. Both companies plan to build canola crushing facilities on location. Earlier in the year, All-American Biodiesel in York, N.D., also broke ground on a plant that will use both soy and canola oil.
 
 Biodiesel produced from canola oil more easily meets the European EN 14Z14 biodiesel specifications, compared with other feedstocks, according to Jeremy Dockter of Dakota Skies, the parent company of Magic City. "There are certain elements of the European standard that are somewhat stricter," says Dockter, who is in charge of the company's strategic planning and financing. "It just shows that our product is going to be that much more exemptible on the standards basis."
 
 Dakota Skies chose canola for that and other reasons, including its excellent cold-weather properties. It also has lower saturated fat content and low iodine levels, which leads to better oxidative stability and less corrosive deposits.
 
 Some future producers have their eye on the ethanol industry as a biodiesel feedstock source. GS CleanTech Corp.-the process engineering technology transfer arm of New York City-based GreenShift Corp.-and Brookville, S.D.-based ethanol producer VeraSun Energy Corp. are both working toward biodiesel production using corn oil extracted from distillers grains, a coproduct of ethanol production. 
 
 As of October, GS CleanTech had signed agreements with seven ethanol plants and one animal processing facility, according to Kevin Kreisler, chairman and CEO of GreenShift. In total, these agreements represented the capacity to extract 22.5 MMgy of biodiesel feedstocks. Meanwhile, GS AgriFuels, a sister company, is in the process of developing three biodiesel plants where corn oil will be processed. 
 
 VeraSun is working on a different type of technology to abstract corn oil from distillers grains, according to Matt Janes, VeraSun's vice president of technology. At one time, VeraSun had announced that it was working with some of the people now working on the GS CleanTech project, but the two projects have since went different directions, he told Biodiesel Magazine. 

 
 In November, VeraSun announced that it was evaluating sites to build its first biodiesel production facility to process corn oil. The plan is to start construction on a 30 MMgy facility in 2007 with a production date in 2008. "We do plan to move quickly on this project," Janes says. With currently producing plants and others under construction, the company could make biodiesel out of corn oil extracted solely from its own operations. However, that doesn't mean it won't look for corn oil at other ethanol plants, he says. 
 
 Others, like Philadelphia Fry-o-Diesel, are considering waste greases such as trap grease, which hasn't garnered a lot of attention as a biodiesel feedstock. The company hopes to break ground on a 3 MMgy biodiesel plant in the Philadelphia area by June 2007, with production slated for May 2008, according to company President Nadia Adawi. 
 
 There are biodiesel producers using trap grease as part of a multi-feedstock operation, but to Adawi's knowledge, her company's plant would be the only one to focus primarily on trap grease. The company favors trap grease because it is readily available in the urban area where the plant will be built, she told Biodiesel Magazine. 
 
 Unlike yellow grease, trap grease is a true waste product that restaurants sometimes pay companies to haul away. Philadelphia Fry-o-Diesel wants to turn that trap grease into an ASTM-spec biodiesel and sell it in the local market. "I think sometimes the waste greases have a stigma," Adawi says. "There's a belief that they make an inferior biodiesel. We want to prove, once and for all, that we can make a high-quality biodiesel out of a complete waste feedstock."
 
 Back-End Product 
 On the opposite end of the biodiesel production process is biodiesel's by-product, glycerin. As biodiesel production capacity ratchets up, so does the supply of glycerin-rapidly pushing the U.S. industry toward the glycerin saturation point.
 
 From 2003 to 2005, between 400 million and 450 million pounds of glycerin was consumed in the United States yearly, according to the U.S. Bureau of the Census. Between 2006 and 2015, the U.S. biodiesel industry is expected to produce an estimated 1.4 billion pounds of glycerin valued at $289 million, according to an economic study conducted by John Urbanchuk, director of LECG Inc. The biodiesel industry could produce as much as 200 million pounds of glycerin this year alone, according to the National Biodiesel Board. 
 The burgeoning supply and subsequent lower prices has producers scrambling to find new uses for glycerin. The price of crude glycerin, which was priced between 20 and 25 cents per pound, has dropped to 5 cents and lower. 
 
 The nation's synthetic glycerin market has also felt the effects. Dow Chemical was once the only synthetic producer of glycerin in the United States. In January 2006, the company closed down its Freeport, Texas, plant, saying the flood of glycerin from U.S. biodiesel production was partially to blame. "We are beginning to produce more than the market can bear under the current scheme of things," says Jim Conway, vice president of sales for Kentucky biodiesel producer Griffin Industries. 

 
 The subject of finding new applications for glycerin came up at the Energy & Environmental Research Center's biomass conference, held in July in Grand Forks, N.D. Paul Bloom, an ADM scientist, says the company isn't worried about glycerin applications. ADM plans to produce propylene glycol and other "large-volume" chemicals from biodiesel's by-product. "I encourage you to go home and look at the products you have on your shelves," he says. "Propylene glycol is not just a deicer like you've probably heard, but it's in many of the end applications-fiberglass resins, personal care [products] and cosmetics. Go home, look through the chemicals you have around your house. You'll see propylene glycol all over."
 
 At the same event, Everett Dobrinski, president and CEO of Magic City Biodiesel says his company would likely find a ready market for the 150 metric tons of canola meal it will produce annually at the facility. The glycerin was another story. "There's an awful lot if it out there right now," he says. 
 
 In September, Cargill Inc., another company with a growing presence in the biodiesel industry, announced its plans to commercialize a process using glycerin as a feedstock for producing bio-based products. The company operates a 30 million-pounds-per-year glycerin refinery in Iowa Falls, Iowa. The refinery, which produces U.S. Pharmacopeia grade and other grades of glycerin, is collocated with a 37.5 MMgy biodiesel plant that Cargill has been operating since May.
 
 Holly Jessen is a Biodiesel Magazine staff writer. Reach her at <a href=mailto:"hjessen@bbibiofuels.com">hjessen@bbibiofuels.com</a> or (701) 746-8385.

Three biodiesel projects under construction in North Dakota plan on using canola oil as a feedstock.

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Dakota Skies Biodiesel started construction of Magic City Biodiesel in August and plans to use canola oil as a feedstock.

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The growing supply of glycerin, a biodiesel production by-product, has some in the industry concerned.

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In the world of biodiesel feedstocks, soybeans continue to reign supreme. As the industry grows, however, some producers are singing the praises of other feedstocks such as canola, corn oil and grease.

Feedstock Flashback

This year marked the development and construction of the largest biodiesel projects on record. Imperium Renewables' 100 MMgy plant, under construction in Grays Harbor, Wash., and Archer Daniels Midland Co.'s (ADM) 85 MMgy construction project in North Dakota are the leaders in a pack of mammoth plant development projects. In addition, Lurgi PSI Inc. just finished building a plant for Cargill Inc. in Iowa Falls, Iowa, and in Europe. Also, Renewable Energy Group's (REG) agreement with Bunge to collocate biodiesel plants at existing crush facilities could bring hundreds of millions more gallons on line.
 
 "We've certainly seen a trend toward these larger plants-30 MMgy or larger," says Mark Soutter, project analyst for BBI International. However, that doesn't mean that smaller plants are on the way out. "Some of the small plants are using niche feedstocks," Soutter says. "They've got a waste stream coming out of a processing plant somewhere, a small rendering facility and some other captive feedstock supply. In the long run they might do all right. Those who are producing 2 MMgy and railing in feedstock from halfway across the country, are going to be the high-cost producers." 

 
 Although the U.S. biodiesel industry has grown, it still has a ways to go to catch up with Europe. Lurgi is very active in Europe and has seen growth there accelerate much faster than in the United States. "That is probably driven by a number of factors, one being the transportation fuel basis of diesel versus gasoline, but we see that moving toward the states," says Vaughan Farrie, marketing director for Lurgi.
 
 In the United States, Lurgi's completion of the Cargill project is a signal that suggests the most significant action stateside has come from companies in the agricultural oils business that are expanding their operations to include biodiesel plants. Bunge, ADM and Cargill's projects alone could nearly double the industry's capacity. 
 
 So what do the heavyweights entering the ring mean for the lighter contenders? Having control of the oils from which biodiesel is made could be a major competitive advantage in regard to project development. Also, if the meal market floods and crush margins are driven into negative territory, the agricultural oils companies will react predictably. "They are going to have to do something else to make a profit, and that means doing something value-added with their oil, which is biodiesel," Soutter says. On the other hand, there are advantages to being a smaller producer outside of the farm belt. "We've seen the same phenomenon with the ethanol industry," Soutter says. "No matter where your plant is, you will have to ship either your feedstock or your product. Sometimes it makes more sense to be close to the product markets."
 
 One of the downsides for large soybean crushers is contending with the extra soymeal. Nearly 80 percent of the product generated by a crush facility is soymeal. "So you're taking beans that would ordinarily be exported and crushed overseas, and you're crushing them domestically for the oil, but then you've got all of this meal," Soutter says. "So we've seen downward pressure on the meal market, which has been negatively affecting the crush margin."
 
 Companies like REG aren't worried about creating a meal surplus just yet, however, even with the numerous projects taking shape in Iowa. "There is some concern, but there is a very solid meal market and a growing livestock industry worldwide, so it is an issue but it is not imminent," REG President Jeff Stroburg says. "More and more, countries are increasing the amount of protein that they're consuming, and ultimately the most desirous form of protein is meat."
 
 Stroburg's theory will be put to the test as REG has 12 projects in its cache. "We will be collocating biodiesel plants at Bunge crush facilities," Stroburg says. The first of these plants is in Cairo, Ill., a town on the southern tip of the state with access to the Mississippi River. Locations along the Mississippi, Missouri and Ohio rivers have created a stronghold in the area for several agricultural processing firms. "There are a lot of things that would attract a biodiesel plant there, including transportation efficiencies," Stroburg says, adding that he believes more biodiesel will be transported via marine outlets in the near future. River transport looks even more attractive when railcar shortages keep product and feedstock from moving in a timely manner. "All of this infrastructure is already positioned on the river to tap into the flow of the big processors," Soutter says. 
 
 The Big Picture
 At press time, a total of 88 biodiesel plants were operating with a total capacity of more than 700 MMgy.
 

 A skeptical observer might look at this tremendous growth and wonder whether soybean production will be able to sustain the added biodiesel production. In fact, even by diverting the roughly 30 percent of soybeans that are distributed into export markets, the United States could only produce about 1.5 billion to 2 billion gallons of biodiesel from soy oil. "The problem, however, is that to actually keep them from going to export-because it is a global market-you'd have to raise your price so high that your crush margin would keep getting smaller because the meal price is just going to keep going down," Soutter says. "The only way to divert them from export channels is to pay more than the world market is dictating."
 
 Obtaining appropriately priced feedstocks is a major issue in developing new projects. "If one looks at the economics of these facilities, the cost of feedstock is typically in the neighborhood of 70 percent to 80 percent of the cost of the product, so it appears obvious to us … that's the driver," Farrie says. "If you're one of the big grain guys, who deals with those [feedstocks], you're in a stronger position. If you have the ability to crush, that is better than if you don't have the ability to crush." 
 
 Even with a supporting crush operation, diversifying a feedstock portfolio may be how some project managers keep their jobs. "Feedstock neutrality is a must," Jake Stewart, formerly of Biodiesel Industries, said in July. "If you build a high-volume facility around one feedstock with little flexibility-that, to me, is a risky place to be. If there is a hedging mechanism, like an ADM or a Cargill has, you can mitigate some of that risk." Feedstock neutrality, or being closer to feedstocks and closer to the end market, allows nimbleness through the natural turbulence of the industry.
 
 "Most of our plants are using multiple feedstocks, so soy continuing to be our primary source-that may or may not be the case," Stroburg says. Lurgi's plants have been designed to accommodate various virgin oils, as well. "We have designed plants using tallow and avian fats, but in general we have been looking at a variety of virgin oils," Farrie says. "Rapeseed is predominant in Europe, as is soy, canola and palm oils in the U.S. So if you are talking about large facilities on a commercial basis, you're going to be looking at those types of feedstocks." 
 
 Although being able to use multiple feedstocks provides flexibility, there are some challenges. "There are some design peculiarities," Farrie says. "If you are talking about all virgin oils, it is quite manageable. If you are talking about any kind of recyclable things-recoverable oils and fats-then it's the unknown factor."
 
 Project development providers, big and small, are faced with the task of finding solutions for coproduct marketing and management. As Biodiesel Magazine reported in its September issue, the U.S. crude glycerin market has reached a saturation level, that has prompted some companies to upgrade the product. "From our point of view as a designer, the physical plant would be the same, and it would be a difference of operating conditions as to whether you make pharmaceutical grade [glycerin] or something less," Farrie says. "The view I've heard from some clients is that they suspect it will be a difficult market, and their feeling is that they have to have the best glycerin in the marketplace just so they can sell it." 
 
 Lurgi is also investigating an option where glycerin is fed into a gasifier to produce a syngas. "Then, from the syngas, you can produce a variety of either pipeline-quality gas or transportation fuels," Farrie says. "We know we have the technology, but it is not currently applicable to the economy. It's a huge investment, and it has to be a very large plant."
 
 That may well be another reason to build larger plants, but it remains to be seen until the larger plants start to come on line in 2007. 
 
 Nicholas Zeman is a Biodiesel Magazine staff writer. Reach him at nzeman@bbibiofuels.com or (701) 746-8385.

Western Iowa Energy, designed by REG, started production of its 30 MMgy facility in Wall Lake, Iowa, in May.

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Mid-America Biofuels, built and designed by ADM, started production at its 30 MMgy Mexico, Mo., plant in November.

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Agriculture processing giants Bunge, Cargill Inc., and Archer Daniels Midland Co. entered the biodiesel game with mega-sized projects that could change the identity of methyl-ester manufacturing. As these plants come on line, the industry will continue to evaluate the efficiencies and deficiencies involved when agricultural processing is combined with biodiesel production on a large scale.

How Significant Is Scale?

It wasn't just biodiesel that had a big year in 2006. Virtually every diesel-related industry underwent 12 defining months. Companies whose emissions control devices were being finalized made last-minute design changes before commercial integration with 2007 models, which must meet decidedly lower emissions thresholds. These exhaust-treatment components-sensitive to sulfur-have been under development for years, building extended anticipation of diesel fuel's 33-fold reduction in sulfur. Because of all the unknowns still present in people's minds onlookers might get the impression that these stringent U.S. EPA regulations were dropped on the diesel industry without warning. That wasn't the case. Questions lingered, however, as Chris Sharp of the Southwest Research Institute expressed at the 2006 National Biodiesel Conference in San Diego. "I think we'll find out a few things the way we'd rather not," he says. Diesel experts at the gathering also expressed concerns about uncertainties with new diesel technologies and ultra-low sulfur diesel (ULSD), which are commanding appreciable resources already-without consideration of biodiesel. "It will be much worse if the biodiesel is out of spec," Sharp indicated. 

 
 Ultimately, this year was a period of time when problems of a recent past and concerns of a not-so-distant future converged. That result was an intense focus on biodiesel fuel quality. Damage control from experiences in Minnesota and other locales in recent memory, where off-spec biodiesel had been deemed partially responsible for plugging filters, motivated some of the emphatic focus on quality. Fear of condemnation by truck and bus manufacturers, fuel blenders, distributors, retailers and-perhaps most importantly-those who truly believe in the benefits of bodiesel use, have also compelled industry leaders to hammer home the message that quality is paramount. Moreover, the potentially traceable chain of supply may lead to monetary damages for those fuel makers found liable for off-spec product. As Leland Tong, chairman of the National Biodiesel Board (NBB) Accreditation Commission, and Paul Nazzaro, NBB petroleum liason, wrote in their October contribution piece to Biodiesel Magazine, "With explosive growth comes the challenge of maintaining fuel quality from the producer to the end user. Biodiesel stakeholders realize the importance of fuel quality and are becoming more involved in petroleum outreach. It is important to recognize that each link in the supply chain is critical. Producers and marketers must keep biodiesel and biodiesel blends on specification all the way through to the consumer." Changes to ASTM D 6751 were made to demonstrate this conviction to some degree. 
 
 It's Not Your Granddaddy's (Bio) Diesel
 Significant changes to diesel systems have occurred in the past several years. Today's diesel systems aren't the compression ignition engines of Rudolf Diesel's time. The "new" diesels are high-tech machines calibrated for cleaner, more efficient operations-and they are increasingly sensitive to changes in fuel. Therefore, biodiesel must meet the highest evolving standards of quality. 
 
 D 6751 was modified this year to lower acceptable limits on calcium and magnesium, which, like sulfur, can affect the proper functioning of diesel particulate filters and NOx abatement equipment. "The biodiesel industry is committed to working with engine makers and exhaust aftertreatment companies to do what it takes to boost automakers' support of biodiesel blends with new diesel technology," Steve Howell says. Howell is NBB technical director and also chairs the ASTM task force on biodiesel standards. "That means ensuring that high-quality fuel specifications exist, which recognize and adapt to important changes in diesel technology," he says. According to Robert McCormick, principal engineer with the National Renewable Energy Laboratory (NREL) in Golden, Colo., new sodium and potassium levels were also introduced this year, limiting both to five parts per million. 
 
 These changes to D 6751 affect B100 only. According to the NBB, however, modifications made to the standard were needed to advance the development of a new B20 spec. A stand-alone quality spec for B20 will be required if industry proponents expect sweeping B20-acceptance by the major diesel-vehicle makers. Biodiesel blends up to B5 are supported by many of the major original equipment manufacturers, but that's not the case with B20, yet. 
 
 According to Howard Fang, technical advisor with Cummins Materials Engineering Group, who works primarily with fuel, lubes and aftertreatment devices, a ULSD-based B20 shows a disconcerting phenomenon in the lab. Using the ASTM D 2274 method to evaluate fuel deposits, a fixed amount of fuel gets heated to 95 degrees Celsius for 16 hours with a constant flow of oxygen. After heating, the deposits are collected through filtration, and then the deposited amount is weighed. "I think the limit for ULSD is one or two milligrams per 100 milliliters," Fang told Biodiesel Magazine. "When we mix with B20 biodiesel, the deposits show a tremendously large value in that B20 or B30 area." He calls this B20's antagonism effect of deposit formation. "When we run the [borderline spec] B100, for example, it generates 10 milligrams per 100 milliliters based on the D 2274 test," Fang says. "ULSD should be low, like 1 milligram per 100 milliliters. Theoretically there should be a straight line between them if you plot these deposits on a Y axis, and on the X axis is the biodiesel blends." That's not the case, and work will continue into 2007 to solve this problem. 
 
 Future changes to the quality standard may include the first-ever oxidation stability standard. McCormick says he believes oxidation stability and oxidative degradation, which pertain to the stability of the fuel, need to be monitored. "If a B100 is of high quality-well below the acid number standard and meeting all other standards easily-it might still go out of spec for acid during storage pretty quickly if it is unstable," he says, adding that reasonably stable B100 with an acid value that's not pushing the limit is less likely to degrade during storage. Others indicate that D 6751's 0.24 percent limit on total glycerin free and bound needs to be adjusted. Remnant free glycerin in the finished B100 fuel is rarely a problem, but bound glycerin in the form of mono- and di-glycerides-the direct result of incomplete transesterification-is problematic. Concerns from some industry experts about lowering the total glycerin limit exist, however. Gary Knothe, USDA Agricultural Research Service scientist and renowned expert on biodiesel properties, says reducing trace contaminants resident in biodiesel could adversely affect lubricity, something that's lacking in ULSD. 
 

 While ASTM specifications tell producers what criteria need to be met for quality fuel, it doesn't tell producers or distributors what steps to take that better ensure getting there. BQ-9000, the only quality assurance program tailored for the biodiesel industry thus far, has been heavily promoted this year as a way to help make certain that quality standards are met. "Granted, [implementing BQ-9000] doesn't come without cost or some effort, but keeping off-spec biodiesel from entering the marketplace is critical to building consumer confidence in biodiesel," Tong and Nazzaro wrote. "The stakes are too high to ignore these steps." The two go on to say that distributors should "trust but verify" certification by sampling. "Testing samples for total and free glycerin, acid number, flash point, and water and sediment serve as a good check to help ensure that the product entering the system is meeting ASTM D 6751 specification," they wrote. 
 
 Enhancing the Burn
 For years, biodiesel has been blamed for slightly increasing NOx output from diesels. However, recent work by various organizations-the U.S. DOE, NREL, Texas A&M University, the North Carolina Department of Transportation and the U.S. Navy-show biodiesel blends like B20 are essentially "NOx neutral." This information defies results from the antiquated data that the EPA produced by using engine dynamometer tests. Jake Stewart, co-founder of the Biodiesel Coalition of Texas, tells Biodiesel Magazine that the EPA's historical emissions data on biodiesel relied too heavily on an unrepresentative number of diesel engines, hence producing defective data on biodiesel emissions. Also, engine dynamometer test results may not accurately portray the real-world operations of diesel vehicles such as transit or school buses, and other applications. Chassis dynamometer testing, however, may capture a more representative look at emissions profiles from such applications. 
 
 With questions mounting in 2006 regarding fuel effects on diesel systems as commercial production of clean diesels drew closer all year, conjecture on biodiesel's ill effects on such advanced emissions control systems were thrown out the window. Diesels produced for model year 2007 will require diesel particulate filters (DPFs), which trap soot while allowing gases to pass through a permeable cell-wall structure. As more soot collects, however, a back-pressure builds in the exhaust. Therefore, a critical aspect to the proper functioning of these devices is the occasional burn-off, or regeneration, of this trapped soot in order to keep back-pressure to a minimum. 
 
 Compared to gasoline engine exhaust, diesel exhaust is cool. This low-temperature characteristic of diesel exhaust necessitates intervention on some level to either boost exhaust temps and initiate regeneration, or to lower the temperature at which the soot can be incinerated. This can be accomplished many different ways: by the addition of a fuel-born catalyst, catalyzing the DPF with imbedded precious metals, and the addition of a diesel oxidation catalyst upstream of a noncatalyzed DPF, to name a few. Tests conducted and/or released this year by NREL, Penn State University, and Cummins, among others, all demonstrate that biodiesel and even low blends like B5 can significantly lower the temperature at which particulate matter burns. However, if biodiesel doesn't meet quality standards, the benefits the fuel can offer clean-diesel technology may be outweighed by costs incurred by the use of off-spec product-one more reason to focus on producing a superior fuel.
 
 Ron Kotrba is a Biodiesel Magazine staff writer. Reach him at <a href=mailto:"rkotrba@bbibiofuels.com">rkotrba@bbibiofuels.com</a> or (701) 746-8385.

The National Biodiesel Board offers two biodiesel quality-control programs, one for producers and one for marketers.

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If this year taught just one lesson to biodiesel advocates, it was that this industry can't afford to sacrifice quality at such a defining, developmental moment in its history.

A Defining Year

Amelot Holdings Inc. is not producing biodiesel yet, but it is planning to buld a facility in Nashua, N.H., and the company recently entered into a supply agreement with Loud Fuel, a Massachusetts-based distribution service. The company is an ambitious, publicly traded enterprise with some grand forward-looking statements. "Our objective is to have 50 [biodiesel] facilities, one in each state, over a five-year period," the company said in a news release. In early November, Ultra Soy of America LLC announced its intention to build a soybean processing facility in Indiana that would eventually include a couple of biodiesel plants. The crushing plant is expected to be large enough to supply feedstock for about 120 MMgy of biodiesel production. Pronouncements of this nature were the norm in the biodiesel business in 2006. 

 
 As more companies enter the business with promises to ramp up production, many in the biodiesel industry are keeping a wary eye on soybean production figures. Peering into the future, the USDA has predicted a five-bushel-an-acre increase in soybean yields by 2015. This would add another 500 MMgy of oil surplus into today's supply. Furthermore, if the oil content of soybeans across the entire U.S. crop could be increased by 1 percent, that could lead to an additional 250 MMgy of capacity. "The reason to walk through those metrics is, even if we increase [production of] the feedstock, we are not going to get to 2 billion gallons (of biodiesel) coming from soybean oil," says Jim Eiler of Cybus Capital Markets LLC, a food and agribusiness investment banking firm headquartered in Des Moines, Iowa. "What's the feedstock going to be? And, is all of this 2 billion gallons of capacity under construction going to get built?"
 
 These are the burning questions for investors, financiers and business people who have an interest or a stake in biodiesel. A year ago, there were only two plants in operation that were producing more than 30 MMgy, which is now considered small when compared with some of the plants currently under development. However, those larger plants-capable of producing 60 MMgy and more-have yet to come on line. So the question remains, what is the true operating efficiency of a 60 MMgy plant versus a 30 MMgy, or even a 10 MMgy? "As an investor I think you want to be sure that you're in the bottom quartile of operating costs for a sustainable competitive advantage," Eiler says. A company's location is one of the characteristics that distinguish a low-cost, well-managed company from an inefficient, at-risk venture. More than 80 percent of the production cost of biodiesel occurs in the procurement and transportation of feedstock to the biodiesel plant itself. "I think [a No.1 priority] is logistical advantage," Eiler says. "Either you have to have something unique in your feedstock supply, or you need to be located near the terminal where the blending is going to occur."
 
 For instance, NewGen Technologies acquired three fuel terminals on the Colonial and Plantation pipelines from Crown Central LLC in February, which have a storage capacity of over 10 million gallons and an annual throughput capacity of more than 500 million gallons, which will be used for the distribution of renewable fuels. At these terminals, ReFuel America, a subsidiary of NewGen, will begin blending and distributing biodiesel currently on the market. Ultimately, the terminals are intended for NewGen's own biodiesel once its production facilities are up and running.
 
 "Where I would put my money today is in larger plants that have significant logistic advantage," Eiler says. "These would be plants 50 MMgy or larger located on waterways, either deep water ports or on the Mississippi, to access feedstocks and ship finished product." 
 Does that mean that independent companies will need to find and maintain strategic partnerships to stay competitive? "There's no question about that," Eiler says. 
 
 Strategic Processing Partnerships
 The consolidation and diversification of services and abilities will be characteristic of the industry in the months and years to come, Eiler says. Leveraging the specialties and expertise of other companies, and possessing the negotiating skill this requires, will be crucial for survival in the biodiesel business. 
 
 Rather than recruit an independent management team, a company could move right into consolidation, Eiler says. For start-ups, this would involve finding strategic players in this phase that would have an interest in either managing a facility or being an investor as a minority or majority holder in the project. "So move toward the consolidators, the people who have the management team and the risk management skills to really run a company," he says. 
 
 Exemplifying this strategy, Renewable Energy Group Inc. (REG) started a new company, reformulated its business structure and brought in Bunge as its partner. This was a necessary step "to provide a dedicated supply of various raw materials, site locations, risk management and logistics expertise, and enable growth in biodiesel production capacity to the volumes necessary to meet the consumption demands of large customers nationwide," the company says. Having negotiated partnerships with Bunge, the largest oilseed processor in the world, and ED&F Holdings Ltd., a major trader of fats and oils, REG says it has expanded its transportation and distribution networks both domestically and locally.

 
 Nova Energy Holding Inc. is also one of the start-ups that seems to be adhering to this advice. The Houston-based future producer entered into feedstock supply and sales agreements with ConAgra Trade Group Inc. in July for a biodiesel facility slated to be built in Oklahoma. The agreements provide that ConAgra Trade Group will procure the vegetable oil and animal-based feedstock required for Nova Energy's plant, as well as market the fuel and manage the logistics for the facility. Eiler believes that the addition of a partner like ConAgra will lower the operating costs for a plant. "I think the best way to view this is, if you are a low-cost operator, you'll be one of the last plants operating because you can afford to buy the soybean oil versus some of these other guys where these plants may get shuttered … particularly the smaller ones," Eiler says. 
 
 Fossil Players
 Another trend that started in 2006, and is likely to continue, is that large ag purchasing and processing companies, many of which have been involved in biodiesel in Europe for some time, have been making their presence felt in the U.S. industry. Cargill is now producing in Iowa, Archer Daniels Midland Co. has an 85 MMgy plant under construction in North Dakota, and ConAgra Trade Group, the commodity trading arm of ConAgra Foods, will begin marketing ethanol and biodiesel within the next several months, according to Martin Higgins, executive vice president of business strategies for ConAgra. He told EPM that the company is uniquely positioned to support the range of participants in the renewable fuels industry. "We have infrastructure, financial strength, and we're actively involved in renewable fuels by providing feedstocks and marketing by-products." 
 
 The interest and power of traditional companies that have held the liquid fuels market in North America also began to make business moves in the renewables sector. "I think what you are going to see is joint developmental alliances with some of the petroleum interests," Eiler says. Certainly, biodiesel companies wouldn't turn away the deep pockets or the expertise of petroleum enterprises, that want to partner in research, distribution or production in the methyl-ester sector of their liquid fuels operations. 
 
 British Petroleum's study of biodiesel production using jatropha as a feedstock in India and Chevron's formation of a new biofuels business unit is of particular interest to the biodiesel industry. Chevron spokesman Leif Sollid says the company is spending $300 million a year on renewable energy technology. In addition, Chevron Technology Ventures LLC, a subsidiary, bought a 22 percent stake in BioSelect Galveston Bay, which claims its 20 MMgy Texas plant will be among the biggest in the United States after it is expanded to 50 MMgy in the future.
 
 The entrance of the major petroleum companies may signal the maturation of an industry that has been in its infancy. Forming alliances or securing financial alliances from multi-billion dollar corporations adds legitimacy to the sustainability of biodiesel manufacturing. Many of the maneuvers in the development of any business, however, involve a significant amount of risks and uncertainties. "Biodiesel is going to be here, but we are going to see importation of other vegetable oils that are going to supplement [soybean oil] … if they can get it here," Eiler says.
 
 Nicholas Zeman is a Biodiesel Magazine staff writer. Reach him at <a href=mailto:"nzeman@bbibiofuels.com">nzeman@bbibiofuels.com</a> or (701) 746-8385.

With the amount of theoretical production capacity far outweighing the current output of biodiesel operations, 2006 was a year of intense planning, fundraising and strategizing. As the dust settles, investors, bankers and others in the business are left with a lot of questions. Will the immense plans and ambitions of start-ups be brought to fruition, and how can companies secure logistical advantages in a fiercely competitive market?

Forward-Looking Statements

As biodiesel entrepreneurs and aficionados, you likely know that many of the early biofuels projects started as value-added, farmer-owned cooperatives. These are entities where farmers, as owners of the business, add value to their crops by delivering to the cooperative, which transforms the commodity into a biofuel sold in the marketplace. By transforming the commodity into biofuels, the farmer-owned cooperative was seeking a higher return than was likely by simply selling the raw commodity. While the cooperative business structure is being used less in biofuels projects than before, it nonetheless remains an important component of the biofuels industry. To many nonfarmers, however, the way in which cooperatives work remains somewhat of a mystery. 

 
 What is a Cooperative? 
 While there is no single all-encompassing definition, the tax code states that any corporation "operating on a cooperative basis" may claim status as a cooperative. Somewhat surprisingly, the tax code doesn't define what it means to be "operating on a cooperative basis." Based on various court and Internal Revenue Service rulings, in order for a company to be operating on a cooperative basis, the majority of the company's earnings must originate from business that is "done with or for each patron."
 
 In the context of biofuels cooperatives, this has traditionally meant that members of the cooperative (i.e., its patrons) have agreed to deliver soybeans or corn to the cooperative, which then converts the grain into biofuels. The income from the sale of the biofuels is considered to be "patronage-sourced income," since the source of income came in large part from the delivery of the grain to the co-op by its farmer-patrons.
 
 Cooperative Advantages 
 Operating as a cooperative has certain operational advantages in the context of the biofuels industry. A primary advantage is that it assures availability and access to feedstocks. As the biofuels industry moves toward cellulosic feedstocks, a dedicated feedstock supply will become increasingly important. With a farmer-owned cooperative, the member-owners are obligated by contract to deliver feedstock to the cooperative. While the cooperative is typically required to pay market price for the feedstock, its assured supply usually makes the cooperative better able to address feedstock shortages, price volatility or both.
 
 A second, and probably the primary, advantage to the cooperative structure versus other corporate business structures is favorable tax treatment. Corporations are subject to double taxation. The corporation is taxed first on its own taxable income, and second when the earnings and profits are distributed to shareholders, who incur tax liability on that income. In a cooperative enterprise, however, earnings are considered to "flow through" the cooperative to its patron members as "patronage refunds," leaving no taxable income to be paid by the cooperative. Instead, the tax is paid by the member patron, but not the cooperative. 
 
 The single tax principle applies only if income sources and a distribution of earnings are cooperative in nature. That is, in the context of biofuels cooperatives, the income must have some relationship with the business done with or for each patron. It also requires that the cooperative distribute its earnings to its members based not on the amount or proportion of the members' equity-cooperative basis investment in the firm, but instead based on the annual amount of grain it delivered to the cooperative relative to amounts of grain delivered by other members.
 
 Mark Hanson and Todd Guerrero are members of the Agribusiness & Energy Practice Group of Lindquist & Vennum PLLP, a leading provider of legal assistance on biofuels projects throughout the country. For more information, visit <a target="_blank" href="http://www.lindquist.com">www.lindquist.com</a> or call (612) 371-3211.

Biofuels Business Structures: Cooperatives

Legal Perspective

With growth rates of 300 percent over the past year there's no doubt that 2006 will be long remembered as a pivotal year in the evolution of the biodiesel industry. Total production is expected to top 250 MMgy, and the acceleration of biodiesel production is staggering. Even with these record-breaking numbers, biodiesel demand outstripped production.

 
 The federal blenders' excise tax credit is the driver behind the increased demand and price of biodiesel. Biodiesel prices are now easily topping the price paid for diesel by almost the full dollar credit. Biodiesel achieved even higher prices in states offering additional economic incentives such as Indiana, Illinois and Texas. 
 
 Just when you thought it couldn't get any better, according to Biodiesel Magazine, 38 plants are now under construction and eight existing plants are expanding. These projects represent an additional 1.05 billion gallons of biodiesel annually. This future capacity represents a six-fold increase in annual production coming on line within the next several years.
 
 Where's it all going to go? If we take a look at our brethren in the petroleum industry, we might get a glimpse of the future. With diesel outages in major markets and diesel commanding its premium price, petroleum distributors are becoming more reliant on biodiesel to fulfill their ever-expanding commitments. Biodiesel is helping to create a more green petroleum industry.
 
 While our traditional high-volume end users, such as private and government fleets, will remain vital partners in our growth, the retail diesel market demand far exceeds that of our traditional biodiesel customers and offers us the opportunity to move the volumes necessary to support our forecasted growth. The petroleum distributors and new biodiesel marketers can serve many more customers efficiently while likely becoming major partners in getting the projected biodiesel production to market by doing what they do best: efficiently matching supply with demand.
 
 These new distributors and marketing companies are a natural and logical next step in the evolution of our industry and will serve a vital role in the future, creating more liquidity in the market by ensuring future customers for our ever-increasing production. The net result will be markets that are more predictable and efficient, minimizing risk and maximizing margins for all.
 
 Here's the clincher: How do we move an additional 1.05 billion gallons per annum into the distribution chain? It's time to start thinking big. The petroleum distributors will require a more streamlined distribution system to accommodate the new complexities of the burgeoning biodiesel market. The linchpin in this evolution lies in our ability to create the infrastructure to feed this hungry market and reduce the bottlenecks in the distribution chain. 
 
 Rather than 10,000-gallon tankage, we need to begin to think in terms of 100,000-gallon tankage or even larger volumes. This increased storage capacity will soften the impact of inefficiencies due to production outages and transportation delays. Additionally, since petroleum distributors operate on a 24/7 basis, continuous around-the-clock access to biodiesel will become vital. And, heated tanks, where appropriate, will insure year-round access to supplies of biodiesel.
 

 As 2006 comes to a close and we face the certainty of another record-breaking year, it is clear that significant investments will be required to build out the necessary distribution infrastructure to link the ever-increasing production to market demands. Now that's thinking big.
 
 Jess Hewitt is president and CEO of Gulf Hydrocarbon Inc., which markets biodiesel 24/7 to petroleum distributors from its fully automated Chicago (Hammond, Ind.) and Houston terminals (with a combined storage capacity of 546,000 gallons). Reach him at <a href=mailto:"jess.hewitt@gulfhydrocarbon.com">jess.hewitt@gulfhydrocarbon.com</a> or (800) 834-0202.

Think Big-Our Future Customers Already Do

Talking Point

A pair of former public officials has announced a working group of energy producers and consumers aimed at developing federal policy recommendations regarding energy.
 
 Former U.S. Sen. John Breaux and former Long Beach, Calif., Mayor Beverly O'Neill announced Dec. 15 they will co-chair the <a target="_blank" href="http://www.theenergyinitiative.org">Energy Initiative</a>, which consists of 29 national trade associations representing major energy producers and consumers. The coalition is expected to provide a partnership committed to finding new solutions to America's energy challenges.
 
 "To meet the challenge of an ever-increasing demand for energy, we have to come to a consensus on the most appropriate energy policies and better educate people about the country's energy challenges," O'Neill said.
 
 The initiative consists of a six-month process of deliberations, educational outreach and public meetings culminating in a final report to Congress and the President, according to a release. Working groups will be formed to identify new policy recommendations on specific energy areas assigned to each group.
 
 The working groups include stationary energy supply, such as natural gas, electricity and coal; transportation energy supplies, including ethanol and biodiesel; and conservation, efficiency and environmental protection. Each group will review challenges, current policy impediments, market restraints and other barriers affecting energy production and consumption. Policy recommendations will then be created and sent for approval by the full membership of the Energy Initiative.

 
 The coalition is expected to formulate a final report providing policy recommendations within six months.
 
 Energy Initiative members include:
 U.S. Conference of Mayors
 American Petroleum Institute
 The Apollo Alliance
 Interstate Natural Gas Association
 American Automobile Association
 AFL-CIO Building Trades Division
 Agriculture Energy Alliance
 Air Transport Association
 Alliance of Automobile Manufacturers
 American Gas Association
 American Institute of Architects
 American Iron & Steel Institute

 American Public Transportation Association
 Consumer Energy Alliance
 Domestic Petroleum Council
 Edison electric Institute
 Federation of American Consumers & Travelers
 Independent Petroleum Association of America
 Minority Business Roundtable
 National Association of Counties
 National Automobile Dealers Association
 National Conference of State Legislatures
 National Governors Association
 National League of Cities
 National Mining Association
 National Ocean Industries Association
 Nuclear Energy Institute
 Small Business Entrepreneurship Council

 The 60+ Association
 
 Dave Nilles is Online Editor for Biodiesel Magazine. Reach him at <a href=mailto:"dnilles@bbibiofuels.com">dnilles@bbibiofuels.com</a> or (701) 373-0636.
 
 Posted: 10:39 a.m. CST Tuesday, December 19, 2006

Energy Initiative aimed at solving energy issues

<a target="_blank" href="http://www.texcomresources.com">TexCom Inc.</a> announced a Dec. 21 groundbreaking ceremony for its 35 MMgy biodiesel in Seabrook, Texas. The project, which has been under development since October 2005, will be operated under TexCom's subsidiary, Houston Biodiesel LLC.
 
 U.S. Renewables Group is an equity partner in the project, which will be built and designed by Memphis, Tenn.-based Lurgi PSI.
 

 TexCom said the plant is expected to come on line by December 2007. The facility will be located on Galveston Bay at LBC Houston LP's bulk liquids terminal, which provides access to the Houston Ship Channel.
 
 The biodiesel plant will primarily use domestically produced soy oil as feedstock, a spokesman said.
 
 Overland Park, Kan.-based Lansing Trade Group is providing risk management, logistics and feedstock origination services for the plant. Lansing Ethanol will market the plant's biodiesel.
 	
 
 Dave Nilles is Online Editor for Biodiesel Magazine. Reach him at <a href=mailto:"dnilles@bbibiofuels.com">dnilles@bbibiofuels.com</a> or (701) 373-0636.
 
 Posted: 10:52 a.m. CST Tuesday, December 19, 2006

Texas plant's groundbreaking set for Thursday

A Houston company developing biodiesel plants in Texas and Louisiana said Tuesday that it has received investment from Goldman Sachs. <a target="_blank" href="http://www.greenearthfuelsllc.com">Green Earth Fuels</a> said Goldman Sachs invested through its business unit, GS Power Holdings LLC. Green Earth's majority investors include Riverstone Holdings LLC and the Carlyle Group.

 
 Green Earth is building an 86 MMgy biodiesel facility at the <a target="_blank" href="http://www.kindermorgan.com/">Kinder Morgan</a> Galena Park Liquids Terminal located on the Houston Ship Channel in Texas. It's expected to be on line in the third quarter of 2007. The company is also developing an 86 MMgy plant at the Kinder Morgan Terminal in Harvey, La. Construction is expected on that plant in early 2007.
 
 Goldman Sachs is one of the oldest and largest investment banking firms in the world. The firm acquired its Green Earth interest from the Carlyle/Riverstone Renewable Energy Infrastructure Fund.
 
 Riverstone is a New York-based private equity firm focused on energy and power. The Carlyle Group is a global private equity firm investing in buyouts, venture capital, real estate and leveraged finance in North America, Europe and Asia.
 
 Green Earth President and CEO Greg Bafalis said Goldman Sachs' expertise in energy, financial and commodity markets will add considerable value to the team. "With Riverstone, Carlyle and Goldman Sachs as our investors, we have three of the largest and most experienced energy infrastructure players in the United States supporting our continued growth," he said.
 
 Green Earth says its biodiesel facilities will be "embedded within the existing petroleum complex," which is what they are accomplishing with their first two plants. Kinder Morgan has a 415-acre liquids terminal along the Houston Ship Channel in Galena Park, Texas. Kinder Morgan's 100-acre Harvey, La., liquids terminal is located along the Mississippi River.
 
 Dave Nilles is Online Editor for Biodiesel Magazine. Reach him at <a href=mailto:"dnilles@bbibiofuels.com">dnilles@bbibiofuels.com</a> or (701) 373-0636.

 
 Posted: 8:58 a.m. CST Wednesday, December 20, 2006

Goldman Sachs invests in Texas biodiesel company

The Canadian federal government announced plans today that require the country to use ethanol and biodiesel in the nation's energy supply. Environment Minister Rona Ambrose and Agriculture Minister Chuck Strahl announced a renewable fuels standard that would require 5 percent renewable content in gasoline by 2010 and a 2 percent renewable content in diesel and home heating oil by no later than 2012.
 
 The announcement was made today in Saskatoon, Saskatchewan. The biodiesel requirement appears to make Canada one of the first countries to specifically require a nationwide biodiesel blend.
 
 Strahl also announced CAN$345 million (US$300 million) in two programs-the Agricultural Bioproducts Innovation Program (ABIP) and the Capital Formation Assistance Program for Renewable Fuels Production-aimed at assisting farmers and rural communities seize market opportunities in the agricultural bioproducts sector. "These programs are an important step in achieving the government's objective of 5 percent renewable content in transportation fuels by 2010, while also creating new economic opportunities for our farmers and agricultural sector," Strahl said.
 
 The requirement for 5 percent renewables in gasoline is expected to require approximately 2.1 billion liters (555 million gallons) of ethanol by 2010. The 2 percent diesel and home heating oil requirement will require an additional 600 million liters (156 million gallons) of renewable fuel by 2012. "Requiring the use of renewable fuels fulfills a commitment by our government," Ambrose said. "Through these regulations, we are keeping with our approach toward meaningful action, and we will ensure that our objectives are met."
 
 Renewable fuels groups and other stakeholders welcomed the announcement. "(The announcement) sets solid targets and gives farmers a chance to benefit from the growing renewable fuels industry year after year," said Robin Speer, director of public affairs for the Canadian Renewable Fuels Association. "This is a good day for farmers and a good day for the environment."
 
 The Canola Council of Canada, which is working with the Canadian petroleum industry to ensure biodiesel meets performance standards in the country, said the announcement was a critical step toward the development of a made-in-Canada biodiesel industry. "The 2 percent standard and access to funds for farmers to invest in biodiesel production are key steps in getting this industry off the ground," said Barb Isman, president of the Canola Council of Canada. "But without government investments that put Canada on par with the U.S. there is no biodiesel industry in Canada. We need to ensure this piece of the puzzle is in place as soon as possible or the opportunity for Canadian farmers and the economy will be lost."
 
 Isman said she expects Canadian biodiesel producers and distributors could build the necessary infrastructure to meet the 2 percent requirement by 2010. "Our longer term goal is to achieve a minimum of 5 percent biodiesel in the fuel supply by 2015," she said.
 
 Several speakers at the <a target="_blank" href="http://www.canadianrenewablefuelssummit.com">Canadian Renewable Fuels Summit</a> held in Banff, Alberta, earlier this month said they supported a 10 percent renewable fuels goal in Canada. Supporters included Saskatchewan Premier Lorne Calvert and Saskatchewan Ethanol Development Council President Lionel LaBelle.

 
 A press release broke down the CAN$345 million (US$300 million) funds. Of the CAN$345 million, CAN$200 million (US$174 million) will be used through the Capital Formation Assistance Program for Renewable Fuels Production to provide producers with incentives for participation in new renewable fuels production capacity.
 
 The four-year program will provide repayable capital funding arrangements to renewable fuels projects based on agricultural producers' contributions to biofuels facilties. The individual arrangements will be based on the level of producers' contributions to eligible project costs and be capped at of CAN$25 million (US$22 million) per project.
 
 The remaining CAN$145 million (US$126 million) will go through the ABIP to provide support for cross-sector research networks conducing scientific research and development related to the advancement of a Canadian biobased economy.
 
 ABIP is a five-year program, and each bioproduct research network may receive a total of up to CAN$25 million (US$22 million). Eligible network participants include universities, the private sector, federal government departments and agencies, and other public sector research organizations.
 
 The release also stated that the regulations are expected to take two year to develop. "Design and implementation of a regulation will require consultation with provinces, territories, affected sectors and other stakeholders," the release said.
 
 Canada currently has eight operational ethanol plants with capacity for 615 MMly (162 MMgy). Two more plants are under construction that would add an additional 250 MMly (66 MMgy).
 
 Dave Nilles is Online Editor for Biodiesel Magazine. Reach him at <a href=mailto:"dnilles@bbibiofuels.com">dnilles@bbibiofuels.com</a> or (701) 373-0636.

 
 Posted: 12:36 p.m. CST Wednesday, December 20, 2006

Canadian government unveils renewable fuel requirement plans

While the new federal Canadian government's Dec. 20 announcement on renewable fuels regulations was significant, it isn't the only government developing biofuels implementation plans. It appears the trend is going global.
 
 South Africa's Cabinet approved a <a target="_blank" href="http://www.dme.gov.za/pdfs/energy/renewable/Biofuels_Strategy_SA.pdf">draft biofuels industry strategy</a> in early December. The strategy proposes an average biofuels market penetration of 4.5 percent of the liquid road transport fuels by 2013. It would require nationwide blending of 8 percent ethanol and 2 percent biodiesel. This would allow the country to domestically produce approximately 40 percent of its fuel supply through renewables, coal, synfuels and crude oil production.
 
 The development of the South Africa's biofuels industries would cost approximately US$860 million, according to the draft report. Stakeholder comments will be reviewed after March 10, 2007, and a final draft strategy would then be presented to Cabinet by May 2007.
 
 The strategy was developed through a Biofuels Task Team, which was comprised of 12 national government departments. The task team was established through a Cabinet authorization in December 2005.
 
 An initial report said that developing a biofuels industry in the country requires the development and refinement of implementation aspects, such as regulations, license requirements, support mechanisms and an incentive scheme. Workshops and meetings at national and provincial levels are being held in order to consult with stakeholders.
 
 Regulations and final approval of a draft strategy is expected by June 2007. The draft strategy is available from the Department of Minerals and Energy and is available online at <a target="_blank" href="http://www.dme.gov.za">www.dme.gov.za</a>.

 
 The Philippines also appears poised to move toward implementing renewable fuels in the nation's fuel supply. The bicameral Congress of the Philippines recently passed a bill that will require ethanol and biodiesel. 
 
 The bill is awaiting the President Gloria Macapagal-Arroyo's signature. Within two years of becoming effective, the bill requires at least 5 percent ethanol shall comprise the total annual volume of gasoline sold and distributed in the country. Within three months of becoming effective, a minimum 1 percent by volume biodiesel shall be blended into all diesel engine fuels sold in the country. That volume could be increased to 2 percent within two years.
 
 A bicameral conference committee passed the Biofuels Act of 2006 in late November.
 
 The Canadian federal government's December announcement will require 5 percent renewable content in gasoline by 2010 and a 2 percent content in diesel fuel and home heating oil by no later than 2012. Environment Minister Rona Ambrose and Agriculture Minister Chuck Strahl made the announcement.
 
 Several Canadian industry leaders have stressed the need for parity with U.S. biofuels incentives in order to create an even playing field in North America. Any federal incentives are expected to be released by late February or early March.
 
 The United States' current renewable fuels standard was set at 7.5 billion gallons by 2012 in the Energy Policy Act of 2005.
 
 Dave Nilles is Online Editor for Biodiesel Magazine. Reach him at <a href=mailto:"dnilles@bbibiofuels.com">dnilles@bbibiofuels.com</a> or (701) 373-0636.

 
 Posted: 8:39 a.m. CST Friday, December 29, 2006

Biofuel requirements going global

Texas is on the verge of adding another biodiesel plant to its ever-growing roster. <a target="_blank" href="http://www.momentumbiofuels.com">Momentum Biofuels Inc.</a>, a 20 MMgy plant near Pasadena, Texas, is nearing full-scale start-up. The project began construction in July 2007 and will use soy oil as feedstock.
 
 A grand opening was held Dec. 18, according to Momentum Biofuels' spokesman David Pierce. The plant began producing test batches Jan. 2. Pierce said full-scale production is expected by mid-month. "The equipment is in place, and we're doing final testing this week," Pierce said. "We're conducting all quality control to make sure everything is working."
 
 The plant's 20 MMgy capacity is based on eight-hour shifts, five days per week.
 
 Pierce previously said Momentum Biofuels will market its own biodiesel. In addition to marketing to local distributors, Momentum Biofuels intends to directly market its product to government fleets and public transport fleets, according to the company's Web site.
 
 Momentum Biofuels was acquired in June 2006 by Tonga Capital Corp., which operates Momentum as a wholly owned subsidiary. Tonga was incorporated in 1987 and is based in Centennial, Colo.
 
 A press release on Momentum's Web site said the company plans to build five strategically located plants around the United States with more than 100 MMgy of capacity. The release, dated June 20, 2006, said the company's second plant would come on line no later than the third quarter of 2007.
 
 Texas continues to expand biodiesel production. The state currently trails only Iowa in production capacity. BioSelect Galveston Bay is expected to bring its first 20 MMgy plant on line by early February. The company plans to eventually expand the plant to 80 MMgy.

 
 TexCom Inc. recently announced a ceremonial groundbreaking of its Seabrook, Texas, facility, which is being designed and built by Lurgi PSI.
 
 Dave Nilles is Online Editor for Biodiesel Magazine. Reach him at <a href=mailto:"dnilles@bbibiofuels.com">dnilles@bbibiofuels.com</a> or (701) 373-0636.
 
 Posted: 3:20 p.m. CST Tuesday, January 2, 2007

Momentum Biofuels begins start-up in Texas

It didn't take long for ethanol and biodiesel to reach the forefront of the 110th Congress, which began its session last week. The bill creating perhaps the most splash was released on the first day. 
 
 Reps. Earl Pomeroy and Kenny Hulshof introduced the Renewable Fuels and Energy Independence Promotion Act of 2007. The bill would permanently extend tax breaks for ethanol and biodiesel production.
 
 The proposed legislation would create a permanent 51 cent-per-gallon ethanol tax credit and a 10 cent-per-gallon small producer ethanol credit. Both current tax credits are set to end in 2010. The bill would also permanently extend the 54 cent-per-gallon ethanol import tariff.
 

 On the biodiesel side, the proposed legislation would permanently extend the $1 per-gallon biodiesel tax credit and the 10 cent-per-gallon biodiesel producer income tax credit. The producer income tax credit provides small agri-biodiesel producers with 10 cents-per-gallon up to 15 MMgy of agri-biodiesel per year, provided their annual capacity doesn't exceed 60 MMgy.
 
 The $1 per-gallon excise tax amounts to a penny per percentage point of agri-biodiesel blended with petroleum diesel. Agri-biodiesel is biodiesel produced from "first-use" feedstocks such as virgin vegetable oils or animal fats.
 
 The American Soybean Association (ASA) praised the bill. "This legislation will help support the price of our soybeans by creating long-term demand for biodiesel made from soybean oil," said ASA President Rick Ostlie. "In turn, it will allow soybean growers to make America more energy secure through biodiesel production."
 
 Another bill would significantly raise the bar for biofuels use in the United States. Sens. Tom Harkin and Richard Lugar introduced the Biofuels Security Act of 2007. The bill would set the renewable fuels standard (RFS) at 30 billion gallons per year by 2020 and 60 billion gallons per year by 2030. The current RFS creates a floor of 7.5 billion gallons of ethanol and biodiesel use by 2012. The U.S. ethanol industry is expected to have capacity to produce more than 8 billion gallons within the next 12 to 18 months.
 
 Lugar and Harkin's bill also addresses the consumer side of ethanol. It requires all U.S. automobiles to be flexible fuel vehicles by 2017. It also requires major oil companies to carry E85 at half of their gas stations by 2017. There are currently more than 5 million FFVs in the United States. The National Ethanol Vehicle Coalition lists more than 1,100 E85 refueling locations on its <a target="_blank" href="http://www.e85fuel.com">Web site</a>. 
 
 "The American Coalition for Ethanol (ACE) is very grateful to Sens. Harkin and Lugar for introduced the Biofuels Security Act of 2007, a bill that contains many of ACE's highest legislative priorities," said ACE Executive Vice President Brian Jennings. "Now is the time for bold policies to help increase the availability of homegrown and renewable alternatives to oil.
 
 While lending some support to ethanol in general, the National Petrochemical and Refiners Association (NPRA) expressed opposition to the bill. "While NPRA shares the enthusiasm of these leaders for measures to enhance the energy independence of our country, we cannot support this legislation," said NPRA Executive Vice President Charles Drevna. "As NPRA has consistently stated, energy policy based on mandates is no recipe for success."
 
 Few specific details were available on two other announcements. Sen. Harry Reid introduced the National Energy and Environmental Security Act of 2007. The bill lays out several energy-related goals, including increasing vehicle efficiency and alternative fuels production, and developing new technologies. 

 
 Finally, the <a target="_blank" href="http://energy.senate.gov/public/index.cfm?FuseAction=IssueItems.View&IssueItem_ID=43">Senate Energy and Natural Resources Committee</a> announced Friday that it will hold a Feb. 1 session to examine the use of biofuels in the transportation sector.
 
 Dave Nilles is Online Editor for Biodiesel Magazine. Reach him at <a href=mailto:"dnilles@bbibiofuels.com">dnilles@bbibiofuels.com</a> or (701) 373-0636.
 
 Posted: 11:46 a.m. CST Monday, January 8, 2007

Congress busy with ethanol and biodiesel

The world's leading manufacturer of agricultural and forestry equipment is throwing more support behind biodiesel. <a target="_blank" href="http://www.deere.com">John Deere</a> announced it has expanded content on its Web site pertaining to biodiesel.

 
 The company's Web site features a 10-page white paper detailing the company's stance on biodiesel and ethanol use. The site also has a 6.5-minute video on biodiesel providing an overview of the company's position on the use of the fuel.
 
 "We believe that supporting the use of 2 percent biodiesel is a logical first step for the industry until challenges with production, quality and distribution are addressed," said Don Borgman, John Deere's director of agricultural industry relations.
 
 John Deere approved the general use of B5 in 2001 and initiated a factory fill program for its self-propelled equipment in March 2005. The company said it is investing millions of dollars in technologies and additives that will further encourage biodiesel use.
 
 "It is John Deere's belief that the industry benefits far more if everyone has a good experience with B2 or B5 instead of most people having a good experience with B20," the white paper said.
 
 The move is a step closer to the stance of one of John Deere's biggest competitors. Wisconsin-based Case IH announced in November that it approved the use of B20 in most of its engines. The company already warranted the use of B5 in all of its engines.
 
 Case also said it was conducting field tests to determine the performance levels of higher biodiesel blends, including B100.
 
 Dave Nilles is Online Editor for Biodiesel Magazine. Reach him at <a href=mailto:"dnilles@bbibiofuels.com">dnilles@bbibiofuels.com</a> or (701) 373-0636.

 
 Posted: 1:38 p.m. CST Monday, January 8, 2007

December 2006

Business Briefs

Better Biodiesel Inc. acquires DEP

REG partners with East Fork Biodiesel

Consolidated Biofuels Inc. signs LOI with IBFC

Nova Biosource Fuels signs biodiesel sales agreement

Bunge enters JV to build biodiesel plants in Spain

W.R. Grace & Co. establishes biofuels unit

Schaeffer promotes Hamilton

REG hires Albin

Lott joins MAN Diesel North America

Bunge names three executive VPs

D1 Oils hires three

Columns

Editor's Note

NBB In Sight

Legal Perspective

Talking Point

Featured

Out of Many Models Rises One Fuel

2006 Biodiesel Year in Review

Red, White and Biodiesel

A Common Thread

Feedstock Flashback

How Significant Is Scale?

A Defining Year

Forward-Looking Statements

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

Business Briefs

Better Biodiesel Inc. acquires DEP

REG partners with East Fork Biodiesel

Consolidated Biofuels Inc. signs LOI with IBFC

Nova Biosource Fuels signs biodiesel sales agreement

Bunge enters JV to build biodiesel plants in Spain

W.R. Grace & Co. establishes biofuels unit

Schaeffer promotes Hamilton

REG hires Albin

Lott joins MAN Diesel North America

Bunge names three executive VPs

D1 Oils hires three

Columns

Editor's Note

NBB In Sight

Legal Perspective

Talking Point

Featured

Out of Many Models Rises One Fuel

2006 Biodiesel Year in Review

Red, White and Biodiesel

A Common Thread

Feedstock Flashback

How Significant Is Scale?

A Defining Year

Forward-Looking Statements

December 2006