Our cover story this month highlights the serious-and seriously atypical-market conditions that U.S. biodiesel producers are up against.
 
 Soy oil is very pricy, even as the nation sits on near-record soybean stocks. As staff writer Jerry Kram describes in the feature, "A Hard Row to Hoe" on page 42, this is a tough situation for the whole industry. Producers and developers have to deal with the fact that soy oil prices are inflated-some say without cause-based on anticipated demand, while feeling the added pinch of surprisingly affordable diesel fuel.
 
 At press time, soy oil was at a 10-year high of about 30 cents per pound. As Kram explains, 2003 was the last year that America saw prices this high, and that was the result of a bad crop, low stocks and high demand. Back then, it wasn't perceived or anticipated demand that sent prices soaring. It was the real deal.
 
 The market is controlled by greed and fear, though, and with 1.2 billion gallons of U.S. biodiesel production capacity under construction, it's no wonder we're seeing proactive markups on raw materials. After all, once those plants come on line, current stocks will start drying up fast. Meanwhile, we're seeing a serious trend toward more acreage going to corn and less to soybeans in what one USDA economist says could be a "new era" in which soybean acreage is indefinitely reduced to 70 million acres per year or less.
 
 With this austere picture in mind, it's clear that U.S. biodiesel producers need to embrace a plethora of low-cost feedstocks. A growing number of producers are turning to animals fats, but that's no panacea either. This issue of Biodiesel Magazine includes a pair of features on rendering companies with bold ideas about our industry's future. "Clearly Biodiesel," a story about Wisconsin-based Sanimax Energy on page 60; and "Recycling for Renewables," a profile on Illinois-based Kaluzny Brothers Inc. on page 68, provide valuable insight about the role of animal fats in the North American biodiesel market.
 
 The cost of animal fats is generally 10 cents (or more) per pound cheaper than virgin soybean oil, and many people believe rendered feedstocks could provide a good chunk of the biodiesel industry's perceived raw material demand. Of course, these feedstocks come with unique process challenges, and their lower cost can't be taken for granted. Biodiesel demand in Europe, for example, is having a tightening effect on the global price of yellow grease. Likewise, the prevailing price of animal fats shot up this spring simply based on news that Tyson Foods and ConocoPhillips had formed a renewable diesel partnership.
 
 That basically means fears about renewable diesel production adversely affecting the biodiesel industry have already been confirmed, even before a single large-scale renewable diesel plant is on line in the United States. The first of these facilities will be built at ConocoPhillips' petroleum refinery in Borger, Texas, where a $100 million capital investment is underway to outfit the complex with thermal depolymerization capabilities. Of course, the concern here is that ConocoPhillips will receive the $1-per-gallon blender's tax credit that oil companies are now eligible for. I won't get into this debate again-check out the "Controversy Brews over Blender's Credit" feature on page 52-but I will say I have a tough time believing there's little money in this game for ConocoPhillips. A spokesman for the oil company says in the story, "Even with the credit, the economics are marginal." The last time I checked, however, oil companies like ConocoPhillips didn't make brash, shortsighted $100 million investments based on marginal economics. I'll let you read the story and draw your own conclusions.
 

 Tom Bryan
 Editorial Director
 <a href="mailto:tbryan@bbibiofuels.com">tbryan@bbibiofuels.com</a>

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Anticipated demand weighs heavily on producers

Editor's Note

XL Dairy Group Inc. is currently expanding its 2,500-head dairy operation to 7,500 dairy cattle in Vicksburg, Ariz., the first step in developing its integrated biorefinery complex. Biomethane from anaerobic digestion will produce 11 megawatts of power while providing enough process heat and steam to make 54 MMgy of ethanol and 5 MMgy of biodiesel. Start-up is targeted for the first quarter of 2009, after which the company plans to incorporate algae into its feedstock stream, which would boost biodiesel capacity six-fold to 30 MMgy.

Dairy biorefinery to include biodiesel

Working in conjunction with Utah State University student Dallas Hanks, who is obtaining a doctorate degree in Plant Soils and Environmental Sciences, the Utah Department of Transportation (DOT) is funding the plantation of four plots of canola, safflower and perennial flax plants that will be used to produce biodiesel. The first seeds, located along state highways from the northern to the central part of the state, were planted in early May as part of Hanks' dissertation. The biodiesel produced will most likely be used to fuel the Utah DOT's vehicle fleet.
 
 For more information, read <a href="http://www.biodieselmagazine.com/article.jsp?article_id=1669" target="_blank">Lindsey Irwin's Web exclusive</a>.

Utah DOT grows biodiesel feedstocks

Maple River Energy LLC-a 5 MMgy biodiesel plant in Galva, Iowa, slated to begin construction in July-recently received a $10 million USDA Rural Development loan guarantee and a $2 million state special projects tax credit, according to General Manager Delayne Johnson. Maple River Energy expects to use corn oil supplied by adjacent ethanol plant Quad County Corn Processors and soybean oil crushed at its facility as feedstocks. It will blend and sell its biodiesel locally.

Iowa plant receives $10 million

Citing its interest in holding majority or sole ownership in the companies it operates, TexCom Inc. announced that it is selling its 44 percent stake in Houston Biodiesel LLC for $3.1 million. The move will relieve the company of $23.7 million in corporate guarantees over five years. The 35 MMgy biodiesel plant is under construction on the Houston Ship Channel in Seabrook, Texas, and is expected to be on line by December.

TexCom sells stake in Houston Biodiesel

As part of Huntsman Corp.'s sustainable chemistry initiative, the company recently began customer trials of its biobased propylene glycol-which it produced from glycerin, a byproduct of biodiesel production--that can be used to make airplane deicer and plastics, among other things. Currently, the chemical is made from propylene derived from petroleum. "We're looking to scale up production and start serving the market in 2008," said Don Stanutz, president of the company's performance products division.

Huntsman to produce propylene glycol

Senate Bill 204, which would have mandated that all diesel fuel sold in Missouri contain at least B5, failed to come up for a vote in the House before the Missouri legislative session ended in May. However, both the House and Senate passed House Bill 741. It changed the definition of "feedstock" so that biodiesel producers can use non-Missouri agricultural products and still qualify for the in-state tax incentive. The bill was delivered to the governor at press time.

Missouri biodiesel mandate stalls

Felda Holdings Bhd., one of the world's largest producers of palm oil, has signed a memorandum of understanding to purchase a controlling interest in Quincy, Mass.-based Twin Rivers Technology, a producer of commercial fatty acids and glycerin with a minor interest in the biodiesel market. In addition to its Massachusetts facility, Twin Rivers Technology has terminals in Newark, N.J.; Cincinnati; and Houston.

Malaysian firm buys U.S. oleochemical company

Montana Gov. Brian Schweitzer, an outspoken advocate for biodiesel, stopped the passage of a bill that would have allowed a $500 tax credit for biodiesel consumers. Unable to determine the overall implications of the legislation because the state budget hadn't been finalized yet, Schweitzer said the bill's estimated $3 million economic impact was simply too much to approve without final numbers in place. House Bill 822 didn't pass by the two-thirds majority vote necessary to override the veto.

Montana governor vetoes biodiesel bill

A flotilla of national and international organizations establishes and monitors quality standards for biofuels, including biodiesel. As the biodiesel industry continues to grow and mature, two major organizations that set quality standards for biodiesel-the European Committee for Standardization (CEN) and ASTM International in the United States-are examining some of their differences to see if they can be harmonized.
 
 There is an incredibly strong international push toward harmonized standards for all renewable fuels, said Stu Porter, biodiesel technical analyst for Ontario-based BBI Biofuels Canada. Given the current differences between CEN and ASTM, harmonization will be a long haul. "We are working toward some consistency of treatment," Porter said. "From an international trade aspect, the closer the specifications are to being the same, the simpler international trade becomes." Porter, also the chairman of the Oxidation Stability and Biodiesel Cleanliness task groups at ASTM, was recently invited to give an update on ASTM biodiesel test method developments to CEN Working Group 19.
 
 Porter said the European biodiesel industry has focused in the past on a single feedstock: rapeseed oil. Meanwhile, the U.S. industry uses a more diverse variety of feedstocks, including soybean oil, animal fat and waste grease. "The United States wanted its standard to be more feedstock-neutral," Porter said. 
 
 CEN 14214 was the first biodiesel specification to be created. "The ASTM D 6751 [biodiesel specification] is the new kid on the block," Porter said. "CEN had its specification before biodiesel was even a consideration for ASTM." As the global biodiesel industry continues to work closely with engine manufacturers on biodiesel quality considerations, there has been movement toward harmonizing CEN 14214 with the ASTM D 6751 biodiesel standard.
 
 Some important parts of the standard have already been harmonized. Both organizations now use the same acid number and metal specifications, and ASTM D 6751 now contains an oxidative stability specification "The specifications are much, much closer than they used to be," Porter said.
 

 However, there are still many differences that need to be worked out. CEN's oxidative stability test is a six-hour test, as opposed to the three-hour ASTM test. CEN 14214 applies to B100, whereas ASTM D 6751 doesn't. The European standards have separate maximums for mono-, di- and triglycerides, whereas the ASTM standard only has a bound-glycerin standard. ASTM is developing new rules for particulates that form above the fuel's cloud point. In addition, Porter said CEN is looking at expanding its iodine number spec as it has largely been superseded by the oxidative stability spec. "The key thing is that they are getting much, much closer," he said.
 
 Other national and international standards organizations-including the American National Standards Institute (ANSI), International Standards Organization (ISO) and the National Institute of Standards and Technology (NIST)-have also been involved in meetings and consultations about increasing international trade in biofuels. To that end, Brazil, China, India, South Africa, the United States and the European Union have established an International Biofuels Forum to "meet regularly to discuss ways to promote the sustained use and production of biofuels around the globe."
 
 In May, the ANSI held the inaugural meeting of its Biofuels Standards Panel. Two breakout sessions reviewed the biofuels standardization needs from the field to the plant, and from the plant to end use. Speakers in both sessions addressed various challenges to biofuels standardization, including the many differences in feedstocks, the methods of harvesting and preprocessing those feedstocks, and transportation, among other things.

Standards groups seek uniformity

The introduction of biodiesel legislation has been common on both the federal and state level this year. However, a few key federal bills are worth highlighting this month. In particular, three bills are now under consideration that would either provide federal funding or mandates for the production and use of biodiesel. The two House resolutions and one Senate bill have been read and referred to their respective committees.
 
 House Resolution (H.R.) 927 was introduced Feb. 8 by Michael Burgess, R-Texas. It would amend the Internal Revenue Code of 1986 by increasing the 50-cent-per-gallon tax credit for blending biodiesel from recycled oils to $1 per gallon. The increase would bring the tax credit on biodiesel made from waste vegetable oil on par with biodiesel produced from virgin oil feedstocks. The bill has been referred to the House Ways and Means Committee. Rep. Vito Fossella, R-N.Y., said H.R. 927 will help to ease demand on edible oil by allowing biodiesel producers and marketers to benefit from the same tax credit whether they use virgin oil or reused oil in the process. The bill would also simplify the record-keeping needed to apply for the tax credits, eliminating the two-tier system that complicates the credit process.
 
 In early May, Rep. Timothy Walberg, R-Mich., and Rep. Phil Gingrey, R-Ga., introduced H.R. 2178, a proposed federal mandate for all diesel fuel to contain at least 2 percent biodiesel. The Energy Independence through Biodiesel Act would amend the Clean Air Act by adding a paragraph stating that all diesel fuel sold to consumers in the contiguous United States contain 2 percent biodiesel on an annual average basis. The mandate would create a guaranteed market of more than 1.1 billion gallons of biodiesel per year based on the country's use of 55 billion gallons of diesel fuel in 2005. H.R. 2178 has been referred to the House Committee on Energy and Commerce. The bill may make it to the floor as it is now or as part of other legislation.
 
 Senate Bill 1242 would amend the Federal Crop Insurance Act, and the Farm Security and Rural Investment Act of 2002, to establish a pilot program to offer crop insurance to producers who grow "experimental biofuel crops." The bill would also create a program to make loans and loan guarantees available to those same producers. Introduced by Sen. Jon Tester, D-Mont., on April 26, this bill was read twice and referred to the Committee on Agriculture, Nutrition and Forestry. Tester said the bill would help to remove barriers that keep biodiesel feedstocks like camelina from being grown by many producers. The bill would provide expedited insurance for biofuel crops through the USDA's Risk Management Agency, a process that normally would take years.
 
 If the biodiesel legislation doesn't make it through Congress on its own, there is hope among biodiesel industry groups that the measures will be included in the 2007 Farm Bill. The National Biodiesel Board and American Soybean Association (ASA) are calling for more federal incentives for the burgeoning biodiesel industry. "Through biodiesel, soybean growers can help fuel the nation," said ASA First Vice President John Hoffman. "To do this, we need the 2007 Farm Bill to contain specific pro-biodiesel measures, including a biodiesel incentive program."

Key biodiesel bills introduced on Capitol Hill

The 98th meeting of the American Oil Chemists' Society (AOCS) in Quebec City, Quebec, in May focused a considerable amount of attention on biodiesel, and even featured methyl esters in a two-day "short course" that preceded the official start of the main exposition and meeting sessions. "Biodiesel is a pretty hot topic right now," said Robert Dunn, chemical engineer for the USDA's Agricultural Research Service (ARS) in Champaign, Ill., and a biodiesel expert who has been studying the fuel for almost 12 years.
 
 Dunn highlighted the most memorable discussions of the Quebec meeting for Biodiesel Magazine, quickly reviewing the areas relating to oil chemistry and biodiesel. "The idea right now is to improve the kinetics [of the production process] by providing a cosolvent," he said. "This way, you get better contact from the reactants." Along those lines, David Boocock gave a presentation, titled "Chemistry and Physics of Making Biodiesel." Boocock, who works for the University of Toronto, invented the patented process used by biodiesel producer Biox Corp. in Hamilton, Ontario. His talk was part of the Industrial Oil Products tract of the meeting, which featured several discussions about renewable fuels.
 
 Some of the most intriguing information of the event came from the simplest of tests. "One of the things that stood out to me was a presentation given by researchers at Wayne State University," Dunn said. "When they tested the fuel for a precise blend ratio, they found that the blend contained much less biodiesel than what they were told they were purchasing. They thought they had bought a B20 blend and discovered it to be only around 2 percent biodiesel or something like that. I thought that was pretty strange."

 
 Dunn's presentation focused on monoglyceride precipitation in storage tanks due to fuel settling. Monoglycerides are essentially molecules containing glycerin and fatty acid, and their formation can clog storage tank pump lines without the biodiesel exhibiting any of the characteristics usually associated with cloud point performance or cold flow properties. Dunn said this work is important because some field performance tests don't account for fuel settling in storage. Terminals or plants can avoid this problem by conducting routine tank cleaning and correct heating practices.

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AOCS meeting highlights biodiesel

Biodiesel's growing impact on soybean markets will now be tracked in a major USDA report, the association recently announced. The season's first World Agricultural Supply and Demand Estimates (WASDE) report, released May 11, projected that biodiesel producers will use 19 percent of total soybean oil production for the 2007-2008 crop year compared with 13 percent in 2006-2007.
 
 The WASDE includes the USDA's comprehensive forecasts of supply and demand for major U.S. and global crops. The first monthly report of this season listed projections for soybean oil to be used domestically for methyl ester, a key ingredient in biodiesel, based on data compiled by by the U.S. Department of Commerce. WASDE monthly reports are developed by committees of USDA analysts in nine commodity categories using data compiled by many USDA and other government agencies. The reports are available at <a href="http://www.usda.gov/oce/commodity/wasde" target="_blank">www.usda.gov/oce/commodity/wasde</a>.
 
 Price projections in the same report predict the season average soybean price at $6.50 to $7.50 per bushel, compared with $6.30 per bushel last season. Soybean oil prices are projected at 29.5 to 33.5 cents per pound compared with 29.5 cents per pound last season. Soybean meal prices are forecasted at $185 to $215 per ton compared with $195 per ton last season.
 
 USB studies soy meal outlook
 With the production of soy-based biodiesel tripling from 75 million gallons in 2005 to an estimated 225 million gallons produced and sold in 2006, the United Soybean Board (USB) commissioned a comprehensive study on the future of soybean meal. The study, called "Soybean Meal Evaluation to 2020," predicts that biodiesel will be the primary factor driving developments in the U.S. soybean crushing industry. Based on what has happened in the European Union (EU), the report predicts that increased demand from biodiesel will boost crush margins that will result in expanded crush capacity in the U.S. market. Multinational companies in the EU are now importing oilseeds.
 
 Soybean crush capacity is expected to increase by 66 percent between 2005 and 2020, while U.S. soybean crops are expected to increase 21 percent. At the same time, 22.8 million metric tons of soybeans are projected for export, down from 29.3 million metric tons exported in 2005, according to the report. Despite the 66 percent increase in soybean crush capacity, there is only a forecasted 20 percent increase in domestic meal demand. Thus, soybean meal available for export will expand four-fold by 2020.
 
 "The two most striking developments are the rapid increases in soybean meal exports and the transformation of the United States into a sizable net importer of 4.8 million metric tons of soybean oil by 2020," the report concluded.
 

 The 250-page study is available in the Library section of the USB Web site at <a href="http://www.unitedsoybean.org" target="_blank">www.unitedsoybean.org</a>.

The USDA and USB are now reporting how the biodiesel industry is affecting the soybean market.

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USDA, USB track biodiesel's effect on soybean market

An endurance test for diesel engines using B20 reached a milestone in April. The Two Million Mile Haul logged its 500,000th mile while gathering performance data in order to compare the biodiesel blend with petroleum diesel.
 
 According to Iowa Central Community College, one of several partners in the study, there haven't been any significant differences in mileage or cold flow problems so far between the trucks using B20 and the control vehicles. The test involves 10 long-haul trucks using B20 and 10 trucks using No. 2 diesel. The trucks are owned and operated by Decker Truck Line Inc.

Two Million Mile Haul surpasses 500,000 miles

Researchers at two universities are examining the feed value of glycerin. Monty Kerley, professor of ruminant nutrition at the University of Missouri-Columbia, is researching the effectiveness of glycerin as cattle feed. The six-month study, which started in May, will determine the impact of glycerin on calves' growth performance and meat quality. Over a period of 160 to 180 days, 60 calves from various breeds will consume differing percentages of glycerin in their diets: 0 percent, 5 percent, 10 percent or 20 percent.
 
 Meanwhile, researchers at Iowa State University (ISU) and the USDA Agricultural Research Service (ARS) are researching glycerin in swine and poultry feed. Brian Kerr, an ARS research leader and collaborating associate professor of animal science, recently concluded a nine-month metabolism study, in which nursery and finishing pigs were given feed with glycerin levels of 5 percent, 10 percent or 20 percent. The study found that glycerin is readily used by pigs. Preliminary data suggests glycerol has approximately 3,500 kilocalories per kilogram, Kerr said. He is also finalizing the data on a four-month growth study, in which 5 percent and 10 percent glycerin was fed to pigs from weaning to market weight. Results showed equal growth performance between the glycerin-supplemented diet and a more conventional corn/soy meal diet. Kerr's glycerin was provided by Ag Processing Inc. in Sergeant Bluff, Iowa. Next, Kerr would like to see if biodiesel feedstocks affect the feed quality of the glycerol.
 
 A poultry study conducted by Kristjan Bregendahl, assistant professor of poultry nutrition at ISU, trialed four levels of crude glycerin: 0 percent, 5 percent, 10 percent and 15 percent. It found the energy was used with high efficiency by 48 laying hens with no adverse effects. Other studies at ISU are in the works to further examine the use of crude glycerin in diets for nursery and finishing pigs, sows, broilers, and laying hens.

Researchers study glycerin as animal feed

On May 24, Iowa's Renewable Fuels Infrastructure Board (RFIB) announced the latest recipients of grants that would go toward the cost of installing biodiesel fuel pumps, biodiesel-blending equipment and tank wagons with dedicated compartments for biodiesel used in farm deliveries. Under the Iowa Department of Economic Development (IDED) umbrella, the program was able to provide 25 awards totaling $541,600 to 20 Iowa biofuels retailers in its effort to expand consumer access to renewable fuels.
 
 Star Energy, a biodiesel retailer with several locations throughout central and western Iowa, has tentatively been approved to receive $30,000 from the state, said Matt Litwiller, cardtrol and marketing manager. For the past two years, Star Energy has been upgrading an estimated 40 tanks at its nine bulk fuel sites across the state, and it plans to use the state grant funds to cover some of the incurred costs. The tanks will now be able to hold anything from B2 to B100, Litwiller said. "[This grant is] huge for us because we are making a five-year commitment to having soy in all these different tanks," he said. "It's a nice deal what [the RFIB] is doing because it encourages other companies to do what we did and use more biodiesel."
 
 Seven of Star Energy's proposals-prepared in January-were approved during this selection, and two other proposals were approved in March. Other biodiesel companies that received the latest round of funding included Agriland FS Inc. and Raccoon Valley Biodiesel LLC. The IDED allocated $13 million in funds to distribute over a three-year period, and since July 2006, more than $2.2 million has been awarded, according to the IDED. Owners or operators of retail motor fuel sites or biodiesel terminals are eligible to submit applications to the IDED. More applications are scheduled to be considered Aug. 21. 
 
 For a complete list of recipients, visit <a href="http://www.iowalifechanging.com/business/renewablefuels.html" target="_blank">www.iowalifechanging.com/business/renewablefuels.html</a>.

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Iowa awards 25 biofuels infrastructure grants

Biodiesel Industries Inc. (BDI) recently started dirt work at its sixth biodiesel production plant, positioned in the heart of Detroit. DaimlerChrysler spokesman Max Gates said BDI's 10 MMgy project is different than most because of BDI's collaboration with DaimlerChrysler and NextEnergy, a nonprofit research and development corporation also based in Detroit.
 
 Gates said NextEnergy is charged with scientifically, technologically and economically developing Michigan's future fuels. "They're doing collaborative work with Biodiesel Industries, which was chosen mainly because it is a small, innovative, research-oriented company," he told Biodiesel Magazine. BDI's facility, scheduled to start production this fall, will be six blocks from NextEnergy and will supply biodiesel to NextEnergy for research.

 
 DaimlerChrysler's role will be to manage a site in Rose Township, Mich., where agriculture research will be conducted by Michigan State University (MSU). "The site is a field in a rural area of Michigan that was used 40 years ago as a chemical dumping ground," Gates said. On-site crop research will explore energy-specific uses for oilseeds and cellulosics since crops for human consumption aren't allowed to be grown there yet. Soybeans, sunflowers and canola are the primary subjects of research. "[Eventually,] the oilseeds being tested there will be fed into Biodiesel Industries' plant in Detroit to refine into biodiesel," Gates said. MSU harvested approximately two acres of soybeans there last fall and is currently studying the results. According to Katie Zuchowski with Chrysler Group's public relations, DaimlerChrysler is committed to at least two more years of related research there.

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Biodiesel Industries breaks ground

In late May, Rix Petroleum, a U.K. fuel distributor, launched GoGreen, a biofuels card program aimed to "green" commercial vehicle fleets.
 
 The new program is similar to the country's plan to supply green electricity to environmentally conscious consumers. Although renewable energy isn't guaranteed to course through the wiring of a customer's home, those who purchase green power know that for every unit of electricity they consume, an equal amount of renewable electricity will be generated. Likewise, for commercial fleets that use GoGreen fuel cards to purchase conventional diesel, an equal volume of a 5 percent biodiesel blend will be purchased and added to the system by the participating fuel station operator. "It's a displaced benefit," said Rory Clarke, director of Rix Petroleum. "It's obviously not going directly into your vehicles, but the more people that embrace it, the more (Rix trademarked) BioBlend5 that goes into the system."
 
 A network of about 1,300 filling stations across mainland Britain can be accessed with the fuel card. Rix records the purchases on each card, raises invoices for each fleet's total fuel consumption and facilitates the delivery of biodiesel to participating stations.
 
 Since the card can only be used to purchase fuel, a record of the fuel economy of a vehicle-when, where and how often a truck, van or car has filled up-can be generated. "It's a good fuel management tool for a company," Clarke said. In addition, Rix sends out a certificate every three months to each fleet showing the amount of carbon saved with the card. Clarke estimates that for a fleet of about five to 10 trucks that use about 5,000 gallons of diesel each week, the fuel card will reduce annual carbon emissions by 2.25 to 2.5 tons. "We're making it practical for any business anywhere in the country to get access to biofuels," he said.

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GoGreen promotes biodiesel among fleets

The National Biodiesel Board has been working to protect the integrity of the biodiesel tax incentive and has opposed an effort by certain large, integrated petroleum refiners to exploit an ambiguity in the tax code. Our Washington, D.C., office is leading this effort, but as the saying goes, all politics is local. If anyone is going to close this loophole that threatens our industry, it's you.
 
 The Energy Policy Act of 2005 extended the $1 per gallon biodiesel tax incentive through 2008. It also attached a $1 credit for "renewable diesel" to the same section of the Internal Revenue Service code that provides for the biodiesel tax incentive. Renewable diesel was defined as diesel fuel produced using a thermal depolymerization process.
 
 On April 2, the U.S. Department of the Treasury made an extraordinary ruling on what qualifies as renewable diesel. Specifically, the Treasury expanded the definition of "thermal depolymerization" to include conventional refinery processes. Petroleum refiners could qualify for the renewable diesel credit by co-processing small amounts of biomass in very low percentages with petroleum. By doing this, a petroleum refiner could get a credit to subsidize decades' old refinery capacity in a way that does not add new investment, capacity or fuel. Not to mention, by co-processing biomass with petroleum, petroleum refiners can already receive a 50-cent-per-gallon alternative fuels tax credit, which was enacted under the 2005 transportation bill. In fact, in a Sept. 7, 2006, letter to Treasury Secretary Henry Paulson, the author of the original renewable diesel provision stated it was not his intention for "traditional processes" to qualify as renewable diesel.
 
 To remedy this problem, Congressman Lloyd Doggett, D.Texas, along with 50 original cosponsors, introduced the Responsible Renewable Energy Tax Credit Act of 2007 (HR 2361). This bipartisan compromise would not repeal the $1 per gallon tax credit for free-standing renewable diesel production. Instead, it would clarify that co-processing biomass with petroleum in existing oil refineries would not qualify for the $1 per gallon credit. Petroleum refiners could receive it if they process pure renewable diesel fuel that meets a stand-alone specification and registration requirements before blending. This approach represents a common-sense, bipartisan compromise that is both technology-and feedstock-neutral.
 
 Here's where you come in. You can help Doggett's bill gain traction by letting your congressional representative know how important this issue is to you. Ask your representative to cosponsor HR 2361 to show support for renewable fuels that will return benefits to society. Not supporting this fix will lead to further subsidization of large oil companies, whose product does not provide many of the benefits that biodiesel does.
 

 In a recent response to an interview question about rising fuel prices, ConocoPhillips CEO James Mulva said, "We fully are utilizing our refining capacity, and a result of that is we need more refining capacity, so as to take the oil, manufacture the gasoline and diesel that the consumers want."
 
 Mr. Mulva makes a valid point-America needs more refining capacity to meet consumer demand. Twisting the meaning of the renewable diesel tax incentive to subsidize existing refining operations does not address this situation.
 
 By contrast, limiting the $1 per gallon tax incentive for biodiesel and renewable diesel to free-standing production facilities-the position taken by the National Biodiesel Board-will provide the additional refining capacity Mr. Mulva indicated is necessary to meet growing fuel demand. We hope that petroleum refiners and Congress will join us in supporting this reasonable approach.
 
 Thank you.

Call to action: Support the Responsible Renewable Energy Tax Credit Act of 2007

NBB In Sight

House Agriculture Committee Chairman Collin Peterson, D-Minn., proposed to reauthorize and double funding for the Commodity Credit Corporation's (CCC) Bioenergy Program in the 2007 Farm Bill. This would benefit the soybean and biodiesel industries.
 
 "Chairman Peterson is a true champion of the U.S. biodiesel industry," said American Soybean Association (ASA) President Rick Ostlie, a soybean farmer from Northwood, N.D. "If his proposal is realized in the 2007 Farm Bill, biodiesel made from soybean oil and other domestic feedstocks can play a major role in America's renewable fuel strategy for reducing dependence on foreign oil, cutting greenhouse gas emissions, and strengthening and diversifying our rural economy."
 
 National Biodiesel Board (NBB) Chairman Darryl Brinkmann, a soybean farmer from Carlyle, Ill., added, "Chairman Peterson's initiative would give a real boost to the young U.S. biodiesel industry, helping new plants in rural areas compete with subsidized biodiesel imports and to weather current volatile energy markets."
 
 Peterson included the CCC's Bioenergy Program reauthorization in a draft energy title released in May as part of this year's omnibus Farm Bill legislation. The reauthorization would extend the original program, which was authorized in the 2002 Farm Bill, from 2008 through 2012 and provide a total of $1.5 billion ($300 million per year) in funds to encourage increased production of biodiesel, ethanol and other energy products derived from biomass by U.S.-based companies. This amount is twice the annual funding level of $150 million provided under the previous Bioenergy Program and reflects the growth of domestic bioenergy industries, including biodiesel, over the past five years.
 
 USDA analysis indicates that every 50 million gallons of biodiesel raises soybean prices 1 percent. Last year, the industry produced about 250 million gallons of biodiesel, most of it soy-based.
 
 "The Bioenergy Program is vital for U.S. biodiesel companies who use soybean oil as their primary feedstock, but face increasing competition from imported biodiesel and feedstocks, some of which benefits from significant foreign government subsidies," Ostlie said.

 
 Brinkmann added, "NBB is pleased that Chairman Peterson has also included the Biodiesel Fuel Education Program in his draft energy title. NBB has used these funds on everything from enhancing fuel quality, to increasing the number of petroleum distributors carrying the fuel, to generating positive warranty position statements for biodiesel blends from automakers. We hope that the program can be expanded in the 2007 Farm Bill."

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Washington watch: House bioenergy proposal favorable for biodiesel

ASTM International (previously the American Society for Testing and Materials) continues to refine and improve the specifications for biodiesel and biodiesel blends. The National Biodiesel Board's (NBB) Steve Howell is chairman of the ASTM Biodiesel Task Force and leads the intense efforts to work with original equipment manufacturers and other ASTM members to secure specifications for finished blends of B20 and lower.
 
 "The key to good performance with B20 and lower blends is using biodiesel meeting D 6751 to make the blend," Howell said. "The B100 and blended fuel specifications are being set up so that if you have good biodiesel and good diesel fuel, the blended fuels should meet their specifications."
 
 B5 and lower blends are being incorporated into the traditional petroleum diesel specification, ASTM D 975, while B6 to B20 will be a new, separate stand-alone specification. The B5 specification passed ASTM's Subcommittee E on diesel fuel in December 2006. However, concerns over the possibility of some small fraction of biodiesel exhibiting precipitates above the cloud point must be addressed by a Subcommittee E task force, which was also formed in December. The ballot will then move to the ASTM D02 main committee for final approval. The NBB's Don Scott has worked closely with the National Renewable Energy Laboratory to help provide data to the new ASTM task force.
 
 "The task force is focusing on investigating the phenomenon and developing performance-based measurements for B100 that will indicate acceptable performance of vehicles with B5," Howell said. "We should have more data in June, and the hope is that we will have a set of actions to resolve the issue and be able to move forward with the final B5 approval in December, but it will be dependent upon what the task force comes up with."
 
 At press time, another ballot on the stand-alone B6 to B20 specification was forwarded to ASTM's Subcommittee E for a vote and was expected to be adjudicated at the June meeting. The current version of the B6 to B20 ballot is based on the Engine Manufacturers Association's B20 test specifications. NBB representatives hoped that any negative votes on the B6 to B20 specification could be resolved and the specification would pass Subcommittee E to be ready for the D02 main committee ballot, as soon as the precipitates-above-the-cloud-point matter is resolved in D 6751.

NBB aggressive on finalizing B5 and B20 specs

It's relatively easy to make orange juice from oranges, but imagine making an orange from orange juice. The analogy is an apt description for the work done by the Solvay SA representatives who received the 2007 Glycerin Innovation Award from the Soap and Detergent Association (SDA) and the National Biodiesel Board (NBB).
 
 "The NBB is proud to team with SDA to encourage new, high-value uses for glycerin," NBB Technical Director Steve Howell said. "Glycerin is an important byproduct of making biodiesel. Also, the use of glycerin as a chemical building block can help supplement petroleum-derived products."
 
 Business managers and researchers helped develop Solvay's trademarked Epicerol technology that company officials say offers major environmental improvements in the production of epichlorohydrin, whose main applications include the production of epoxy resins and paper reinforcement and water purification products.
 
 The environmental advantages of the new technology include a tenfold reduction of water consumption and an eightfold reduction of chlorinated residues. The technology also consumes glycerin, a renewable resource, instead of oil-derived propylene.
 

 Solvay researchers offer the analogy of making an orange from orange juice as a reference to the reverse technology that allowed the company to produce epichlorohydrin from glycerin. The company previously produced synthetic glycerin from epichlorohydrin. Solvay has 22 patent applications covering the Epicerol technology.
 
 Bruno Jestin and Philippe Krafft, representing Solvay's business and research teams, were named on the Glycerin Innovation Award commemorative plaque, which also comes with a $5,000 honorarium.
 
 More information on the award and the research is available at <a href="http://www.cleaning101.com/oleo" target="_blank">www.cleaning101.com/oleo</a>.

NBB and SDA present Solvay with glycerin award

The port city of Portsmouth, N.H., was one of the first permanent settlements in the United States. Established in 1623, the city is known for its maritime industries of fishing and ship building. Calling Portsmouth home is a company that once relied heavily on those maritime industries by distributing whale oil to light the city's streets. Now Sprague Energy is meeting area fuel needs with an environmentally friendly fuel-biodiesel.
 
 Within the area's rich history, Sprague, founded in 1873, seems to be creating a history of its own in the oil business. The company is also a pioneer in the petroleum side of the biodiesel business.
 
 Tim Keaveney, Sprague's marketing manager for premium fuels, joined the company just before it started carrying biodiesel three years ago. He was on the original committee that introduced the fuel, which Sprague supplies for transportation use and Bioheat home heating oil.
 
 Out of Portsmouth's rich history came a new corporate philosophy that has led Sprague's decision to be a leader in petroleum companies "going green." Lead it has. Not only was it one of the first companies to sell ultra low sulfur diesel (ULSD) fuel six years ago, it offers rack-injected biodiesel at four of its terminals in key growth markets. Sprague was the first northeastern terminal to implement biodiesel, doing so at its Albany, N.Y., terminal more than one year ago. Sprague was also the first petroleum company in the nation to earn the status of "certified marketer" in the BQ-9000 voluntary quality assurance program.
 
 Sprague's footprint spans 22 terminals and 1,000 petroleum distributors, so its commitment to biodiesel doesn't go unnoticed.
 
 Keaveney credits Sprague's biodiesel involvement largely to the leadership of its parent company, Stockholm, Sweden-based Axel Johnson Inc. He said its owner, Antonia Johnson, feels that energy companies have a responsibility to try to be more environmentally friendly. "[Antonia Johnson's] friends are environmentalists so they tease her about owning an oil company," Keaveney said. "She answers back with, 'Who better to own an oil company than an environmentalist?' It is that corporate philosophy that has formed Sprague into a biodiesel advocate."

 
 Despite Sprague's great leaps as a petroleum distributor offering renewable fuel, public education is necessary. According to Keaveney, "Customers are reluctant to change because they may fear the new. We work on educating them until they are comfortable. Not a day goes by without me talking about our BQ-9000 status with customers with great pride. We also make prevalent the BQ-9000 logo whenever we can. We've had companies call us because they were searching for BQ-9000 certified marketers."
 
 Sprague earned the BQ-9000 seal of approval one year ago. "As a BQ-9000 certified marketer, we will only deliver ASTM D 6751 biodiesel to our customers," Keaveney said. "Our suppliers include the accredited producers Renewable Energy Group, Cargill and Organic Fuels." Keaveney is a commissioner on the National Biodiesel Accreditation Commission, which oversees the BQ-9000 program.
 
 Due to its progressive biodiesel achievements, Sprague Energy took home the honor of the annual Eye on Biodiesel "Impact" award at the 2007 National Biodiesel Conference. Keaveney doesn't see Sprague's biodiesel operations slowing down anytime soon. "In 10 years, we feel 10 percent of our fuel will contain biodiesel," he said. "It's here to stay."
 
 Port cities such as Portsmouth used to be the lifeblood for their regions. Now the energy company out of Portsmouth may take that title. "Terminals are the lifeblood of an area, for fuel, for heat," Keaveney said. "Serving those needs, and doing it in just a little bit better way, is what Sprague is all about."

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Member profile: Sprague evolves from whale oil to sustainable fuel

At one time, Nebraska biodiesel supporters felt a little like they had been behind in the count when it came to encouraging the growth of the biodiesel industry in their state. A number of neighboring states had policies in place that either required biodiesel's use or put together creative packages of tax policies and other incentives that brought investment and biodiesel production. Now Nebraska has scored a solid hit with the recent passage of legislation designed to spur investment in the state's biodiesel industry.
 
 Nebraska Gov. Dave Heineman recently signed legislation creating a tax credit for individuals investing in the development of a Nebraska biodiesel production facility. Also, investments made in locally owned biodiesel facilities will be eligible for up to a 30 percent tax credit.
 
 The ninth inning is also not over for other states. Tax policy is becoming a driving force for state legislatures encouraging the growth and use of alternative fuels, particularly biodiesel. The most common approach creates incentives through tax credits and/or exemptions, and investment credits. In Oklahoma, two bills are on their way to the governor. House Bill 1916 extends the income tax credit for certain biodiesel facilities for an additional year to Dec. 31, 2008. House Bill 1513 extends the biodiesel production tax credit to Dec. 31, 2012.
 
 Other states are taking different approaches to encourage the development of biodiesel. In April, New Mexico Gov. Bill Richardson signed into law a measure that seeks to increase the use and production of biodiesel in his state. The bill requires diesel fuel sold in New Mexico to contain a 5 percent biodiesel blend by July 2012. Diesel purchased by state and local government and public schools must be B5 beginning July 2010.
 
 Colorado boosted efforts to continue biofuels research and development. On May 23, Gov. Bill Ritter signed a bill that specifies 20 percent of funds appropriated to bioscience discovery evaluation will be used to provide grants to biofuel research projects, such as biodiesel. Another section of the new law stipulates certain program funds as grants to research institutions for biofuels research projects.
 

 States are also recognizing biodiesel's benefits in efforts to combat climate change. Nevada has given school districts the ability to spend money received from local air pollution funds if the proposed expenditures assist in improving air quality. This includes using biodiesel in school buses. Several states, including Hawaii, New Hampshire and Pennsylvania, have proposals that include biodiesel as part of a renewable portfolio standard or to meet requirements for renewable energy targets.
 
 With only a few, if any, remaining weeks in many state legislative sessions, some biodiesel supporters are sure to feel like they're rounding the base to home plate with many biodiesel bills becoming law.

State legislative sessions winding down

The National Biodiesel Board (NBB) has taken its membership services on the road. Members have the opportunity to attend three board meetings per year, but the NBB is also giving its members some of the focused attention they deserve in an effort to strengthen the industry. The NBB is holding regional open-forum meetings with its members.
 
 These informal meetings, so far held in Texas and Iowa, have included addresses by NBB CEO Joe Jobe and other NBB staff. Meeting hosts included NBB Technical Director Steve Howell, MARC-IV's Alan Weber, NBB Technical and Regulatory Engineer Don Scott, petroleum consultant Hoon Ge, the Biodiesel Coalition of Texas and the Iowa Biodiesel Board.
 
 The meetings provide a chance for members and staff in the NBB's rapidly growing membership to get to know each other. The NBB wants to learn about the members' concerns and regional issues, with suggestions on what members think the NBB should be doing. The NBB also shares information on some of the industry's top priorities, including technical developments. The staff also focuses on the importance of grassroots engagement in public policy that will inevitably shape the members' businesses in the months and years to come.

NBB comes to you

Gulf Hydrocarbon Inc. recently began offering dye red biodiesel at its Intercontinental Fuels terminal in Houston, which has 420,000 gallons of dedicated biodiesel storage on-site. The dye is injection-blended at the loading rack. Dying off-road fuel red is an Internal Revenue Service protocol, since off-road fuels aren't subject to fuel tax. Penalties are issued if on-road vehicles are caught using red dye fuel. Gulf Hydrocarbon began wholesale distribution to regional petroleum jobbers in Houston last fall. It now sells off-road biodiesel to Louisiana and Texas distributors with a farmer-customer base, such as O'Roarke Petroleum Products and Temple Oil Co.

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Gulf Hydrocarbon offers dyed, off-road biodiesel

This spring, the Pennsylvania Biodiesel Producers Group was formed in order to present a unified voice regarding the business, environmental and energy policy benefits of biodiesel. In May, Ben Wootton, president of current biodiesel producer Keystone Biofuels in Shiremanstown, Pa., represented the group at a Pennsylvania House Environmental Resources and Energy Committee public hearing, speaking of the need for an in-state production incentive for biodiesel. Biodiesel of Pennsylvania Inc., United BioFuels and United Oil Co. are additional producer-members of the group. Companies that are members, but haven't started production yet, are Soy Energy and Middletown BioFuels.

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Pennsylvania biodiesel producers form group

California-based technology company Aspectrics Inc. has developed a new application for its encoded photometric near-infrared (EP-NIR) spectroscopy technology. The MultiComponent 2750 EP-NIR analyzer can provide accurate measurements of the biodiesel content in any biodiesel blend from zero percent to B100. It has a 99.9 percent confidence level with an accuracy of plus or minus 0.27 percent. It was given an honorable mention among the PittCon Conference & Expo's 2007 Editor Awards.

Aspectrics technology measures biodiesel blends

In early May, GS CleanTech Corp., a subsidiary of GreenShift Corp., announced that letters of intent had been executed between itself and four separate ethanol plants. If the documents become legally binding, which is expected by the end of June, GS CleanTech would be required to design, construct and operate integrated corn-oil extraction and biodiesel production technologies at each of the plants. A system that extracts corn oil from distillers wet grains is one of the company's proven technologies. The company's biodiesel production system was acquired by sister company GS AgriFuels Corp. When integrated, the two technologies can get 7 percent more fuel out of an equal amount of corn, said David Winsness, CEO of GS CleanTech.

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GS CleanTech executes letters of intent for technology

Throughout May and June, the Oil Price and Information Service (OPIS) expanded the range of its biodiesel price-tracking coverage with 21 new rack locations. With more than 6,800 prices at 143 rack locations-the largest database of biodiesel prices-OPIS offers this latest tool for valuing the fuel at different points along the supply chain. The new locations are in Eddystone, Reading, Sinking Springs and Manheim, Pa.; Mobile and Birmingham, Ala.; Asheville, N.C.; Eugene, Ore.; Osceola, Neb.; Newark and Elizabeth, N.J.; New York City; Pollock, La.; Imperial and San Jose, Calif.; Miami and Ft. Lauderdale, Fla.; Defiance, Ohio; Pulaski, Tenn.; and Charleston, S.C. The companies that generate prices in these locations include Independence Biofuels, Merritt Oil Co. Inc., Blue Ridge Biofuels Jerry Brown Bio, Cenex, Eastern Bio Fuels, Allegro Biodiesel, Sellers Petroleum, Fuel Bio, Golden Gate Petroleum, Taylor Biodiesel, TransMont, American Ag Fuels, Big Biodiesel LLC, Southeast BioDiesel LLC,Coast Oil and Allied Energy.

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OPIS expands biodiesel coverage

California-based Kreido Biofuels Inc. recently announced the appointment of Larry Sullivan as the company's chief technology officer. In his new position, he will manage the commercial advancement of Kreido's trademarked STT biodiesel processing technology. He will also be charged with overseeing research and development programs, as well as spearheading Kreido's chemical engineering and quality assurance operations. Sullivan has more than 25 years of experience in the energy sector, including a recent managerial position with Delta-T Corp.

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Sullivan joins Kreido Biofuels

World Waste Technologies Inc. announced the addition of two new executive officers: Michael Fatigati as vice president of engineering and project management, and Matthew Lieb as chief operating officer. Fatigati will focus on renewable fuel technologies, including biomass-to-liquids and biodiesel. He brings over 26 years of experience in project and technology development to World Waste, most recently from Delta-T Corp., where he served as vice president of technology development. Lieb joins the company after 10 years with Kingsley Management LLC. World Waste is developing patented technology to turn cellulose biomass from municipal solid waste into electricity and fuel.

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World Waste Technologies hires two executives

Seven is an important number for biodiesel producers. It takes more than seven pounds of soybean oil to make a gallon of biodiesel. So when soybean oil prices jump a penny a pound, that's a seven cent hit to biodiesel producers' feedstock costs. And when soybean oil prices jump nearly a dime a pound in less than a year, it's a major drain on the biodiesel industry's pocketbook. "It's huge," says Ben Robertson, CFO of Fuel:Bio, which operates a 50 MMgy biodiesel plant in Elizabeth, N.J.
 
 The odd thing is that this should be a good time for biodiesel producers. Soybean stocks in the United States are at their highest level in three years. Soybean production in Brazil, Argentina and other South American countries are projected to set records this year. By most measures, oil prices should be dropping like a rock. But at more than 30 cents a pound, prices are higher than any time in the past 10 years and are forecast to go higher.
 
 Combined with stable to lower diesel fuel prices, high soybean oil prices have led to some lean times for biodiesel producers. "We are doing the best we can," Robertson says. "It has definitely hurt our off-take. Biodiesel is not competitive with diesel, ultra-low sulfur diesel, heating oil or any of the other comparable fuels right now."
 
 Fuel:Bio has been producing biodiesel since March. While it has the capability to use other feedstocks, so far the company has been using only soybean oil that it sources from soybean crushers in the northeastern United States. Robertson says the company is coping by limiting its production to current demand and looking for alternatives. "We are looking for ways to diversify our feedstocks," he says. "We're not producing anywhere near our capacity. We're just buying [soybean oil] and producing to demand. So whatever we can do on a regular basis, that's what we are doing."
 

 Anticipation
 The high prices are caused more by anticipated demand than current demand. "Right now, we have probably near-record stocks of soybean oil," says Mark Ash, an economist with the USDA's Economic Research Service. "There is a lot of anticipatory demand out there that isn't very worried about how large these stocks have been. They view these stocks as being temporary."
 
 The last time soybean oil prices approached 30 cents a pound was in 2003, but Ash says that was an extraordinary year. "We had some pretty tight soybean markets at that time," he says. "We had a generally poor crop and demand was strong. So we got soybean stocks quite low that year. That also affected soybean oil production. So supplies got pretty tight." The USDA forecasts that soybean oil prices will continue to rise and could average as much as 33.5 cents a pound in 2008.
 
 The market is looking at the number of biodiesel plants set to come on line in 2007, Ash says. According to Biodiesel Magazine's Spring 2007 Plant Map, there are more than 800 million gallons per year of biodiesel capacity on line with another 1.2 billion gallons per year under construction. "Once these biodiesel plants start to have their grand openings, all those [soybean oil] stocks could diminish quite quickly," he says. "We do have some very large stocks at the moment but there is the expectation that a lot of biodiesel capacity is going to come on board over the next few months. So those stocks could be drawn off very quickly."
 
 Typically, soybean production has been driven by the demand for soybean meal. However, with the growth of the biodiesel industry, the demand for oil has outpaced the demand for meal. USDA has forecast that about 3.6 billion pounds of soybean oil will be used to produce 470 million gallons of biodiesel in the 2007-'08 soybean marketing year. That is up from 2.55 billion pounds of soybean oil used during the current season to produce 330 million gallons of biodiesel.
 
 <center><img src="/images/upload/20070621113622.jpg">
 <img src="/images/upload/20070621113614.jpg"></center>
 
 Soybean oil production in the United States is more than 20 billion pounds a year, enough to manufacture about 2.6 billion gallons of biodiesel. In 2006, biodiesel production was about 250 million gallons, less than a third of the industry's current capacity, but the industry used nearly 10 percent of the soybean oil produced. "The size of the industry is going to depend a lot on feedstocks and just how much can be produced," Ash says. "The amount of soybean oil that can be produced is going to be constrained by the acreage we can plant to soybeans in this country. Given the strength of the market for ethanol, it's going to be hard to get a lot of those [corn] acres back to soybeans. We've lost quite a few acres [of soybeans to corn] this year and even next year it may be a challenge to get those back even with rotational considerations. So we could be seeing an era where it may be very rare to see soybean acres top 70 million acres again."
 

 U.S. biodiesel producers will likely be faced with the need to develop new feedstock sources as soybean oil accounts for about three-fourths of the country's supply of vegetable oil. "I think there is probably a pretty good potential for this industry in the long term," Ash says. "There are going to be some growing pains for some companies that don't have access to a secure supply of feedstock."
 
 A Pocketbook Issue
 Despite an overall growing consumer attraction to alternative fuels like biodiesel, the fuel market is still mainly price driven, says Robertson. "It's really just a matter of price," he says. "People want it, but it's true that a lot of people aren't willing to pay for it if they have to pay more."
 
 Market development will be one of the keys to overcoming the current difficulties, Robertson says. "We are the largest capacity plant on the East Coast," he says. "Biodiesel really hasn't come to the coast the way it has in the Midwest. So the market is still in the process of developing. You have a lot of people here who are extremely positive about biodiesel. The reception we get from consumers and everybody we talk to is extremely positive. I would say that from the view of how much people want the product, it is great, but when you start talking about what it costs that is more of a difficult sell."
 
 Surveys show only about 5 percent of consumers are truly "green" enough to pay more for alternative fuels such as biodiesel and biodiesel blends, Robertson says. The company is working with distributors who cater to that minority. "People understand energy independence-not having to rely on foreign imports," he says. "They understand lower emissions and environmental quality. But there is a whole set of things you have to put together and then say 'You're also going to have to pay a higher price,' and people don't want to pay for that."
 
 Marketing tools could also help producers hedge some of the risk in the biodiesel market. But the market is so tight right now, there is no profit to preserve, Robertson says. "The biodiesel industry isn't as mature as say, the ethanol market," he says. "If we could have a guaranteed off-take, that would be a big step in the right direction. The situation you run into is that if there is no margin to begin with, there is no reason to hedge. Right now what you are looking at is extremely tight margins. It would have been great to hedge six months or a year ago, but hedging right now just doesn't seem to make all that much sense."
 
 Ultimately, the success or failure of companies like Fuel:Bio could depend on support from state legislatures. "We are talking to our local politicians to put in tax incentives and possibly mandates so we can have some pull through the market that's not solely based on price," Robertson says. "The political people we talk to locally get it. Everybody gets it right away. The question is how to make it work economically."
 
 Editor's Note: Since this article was completed, the upward trend in soybean oil prices has continued. In early June, the price of soybean oil for the July contract on the Chicago Board of Trade reached 36.4 cents a pound, the highest since 1984.
 

 Jerry W. Kram is a Biodiesel Magazine staff writer. Reach him <a href="mailto:jkram@bbibiofuels.com">jkram@bbibiofuels.com</a> or (701) 746-8385.

Although soybean oil stocks are at near-record highs, prices are increasing because the market is reacting to anticipated demand based on the number of biodiesel plants that are set to go on line.

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Plants such as the 50 MMgy Fuel:Bio facility in Elizabeth, N.J., are being pinched by high soybean oil prices.

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Despite near-record soybean stocks, biodiesel producers are being pinched by high feedstock prices while diesel fuel remains relatively affordable. Projected demand from the biodiesel industry is sending the cost of raw materials through the roof.

A Hard Row to Hoe

In 1946, four brothers from Illinois enlisted into military service to serve the United States in World War II-but one was turned away. That lone sibling was needed on the home front because of his experience with rendering fats and oils, a skill that was in high demand. "Rendering was vital to the war effort," says Dave Kaluzny II, vice president of Kaluzny Bros. Inc. in Joliet, Ill. "One reason was that tallow and other oils were being used to make certain specialty products, especially nitroglycerin."
 
 All of the brothers survived the war and, after they were released from service, joined their brother in the rendering business. Today, more than 60 years later, Kaluzny Bros. has offices around the globe and strong ties to the biodiesel industry. In one of its latest and largest projects, KBI Energy, a Kaluzny Bros. affiliate, is providing $4 million in project equity financing for Houston's Nova Biosource Fuels Inc. to build a 60 MMgy biodiesel plant in Seneca, Ill. Lipid Logistics LLC, also affiliated with Kaluzny Bros., is contracted to provide all the feedstock requirements for the plant, which broke ground in mid-April. The plant is being built on 54 acres in the Shipyard Industrial Park of Seneca, offering excellent access to truck, rail and barge transportation.
 
 Supported by inexpensive recycled feedstocks and attractive transportation options, it wasn't long after the groundbreaking in Seneca, that Nova Biosource announced a move from being an over-the-counter stock listing to a listing on the American Stock Exchange. The change went into effect in mid-May, and Nova Biosource has since then been highlighted in several newspapers and financial journals as a company to watch in the energy realm.
 
 Nova Biosource chose Lipid Logistics as its primary feedstock supplier because of the cost benefits of using animal fats to produce biodiesel. "It's real easy," says Nova Biosource President J.D. McGraw. "The cost of animal fats is about 10 cents a pound cheaper than your virgin soybean and other vegetable oils." Edible tallow, yellow greases and other rendered feedstocks could provide an even larger chunk of the biodiesel industry's feedstock needs over the next few years as supplies of virgin vegetable oils tighten. Currently, rendered products account for nearly one-third (11.6 billion gallons) of the nation's entire lipid production, with vegetable oils accounting for the remaining two-thirds (22.4 billion gallons), making the resource a viable option as the biodiesel industry looks to expand its feedstock base.
 
 A Valuable Service
 The rendering sector and the services it can offer biodiesel producers may be underutilized in the soy oil dominated market as only a handful of biodiesel plants in the United States are using tallow, animal fats and yellow greases as feedstocks. Kaluzny Bros. however, seems to have added considerable strength and legitimacy to Nova Biosource's business plan. Other companies may need to think outside of the traditional soy oil templates to find success in the future, as well.
 

 With 273 facilities in the United States, the rendering industry processes 60 billion pounds of raw materials a year and generates billions of dollars in revenue. The raw materials include offal, bones and fat, blood and fallen animals. Recycling fallen animals, which are the animals that die on the farm or in transport before they can be slaughtered, is an important part of the company's services. Collecting expired animals is essential to public health and, at the same time, provides a revenue source by adding value to a waste product. "Kaluzny Bros. is dealing with off-spec product like dead cattle, and is also recycling other low-value material," McGraw says. "These are the low-end, high free-fatty-acid feedstocks we're using to make biodiesel at a low cost." Indeed the biodiesel plants in DeForest, Wis., and Clinton, Iowa, that use Nova Biosource processing technology, are using this material as a feedstock.
 
 Although it might not sound attractive, material from rendering plants is an important and perhaps often overlooked recycled resource. Nearly half the live weight of the 35 million cattle produced in the united states every year, as well as a large percetage of hog, turkey and chicken production, is used for something other than human food. If the material that doesn't go into food processing isn't used somehow, animal production would be extremely wasteful. Rendered products, including edible tallow, lard, refined greases and poultry fat are used to manufacture a myriad of products ranging from pet food to paints and varnishes to biodiesel.
 
 Material from rendering plants is also considered a choice feedstock for the production of renewable diesel, a product that has caused controversy and concern among biodiesel producers. The National Biodiesel Board (NBB) is lobbying to prevent oil companies from benefiting from what it calls a loophole in the biodiesel tax incentive. Essentially, the U.S. Department of the Treasury decided to allow oil companies that use a small amount of biomass in the production of diesel fuel to collect a blending credit, which was designed to stimulate biodiesel and renewable diesel production. "We're totally neutral on renewable diesel," says Kaluzny, whose company is a founding member of the NBB. "This is just another outlet for our product."
 
 The NBB is supporting legislation introduced by Rep. Lloyd Doggett, D-Texas, called the Responsible Renewable Energy Tax Credit Act of 2007 that would prevent oil companies from claiming the $1 dollar-per-gallon blending credit for producing renewable diesel.
 
 Kaluzny believes there will be competition between renewable diesel and biodiesel producers for feedstock supplies. As the largest rendering firm in the Midwest, however, he is not averse to selling its products to companies that produce renewable diesel, even with its considerable stake in the biodiesel industry. "You're always looking to expand your customer base," he says, indicating that he has few, if any, worries about renewable diesel hurting the biodiesel industry.
 
 Market Dynamics
 The rendering industry depends heavily on export markets because it generates more product each year than the United States can use. "We have offices in London, Africa and Hong Kong," says Kaluzny, who is chairman of the National Renderers Association Inc. "We want to maintain a presence in all of those different areas." On the world stage, China receives the most attention because of its growth potential. "When you're looking at the Chinese market, you're looking at one of the largest markets in the world, and an economy that is growing by double digits every year," he says. China won't be a big market for biodiesel, however, until it starts to embrace more environmentally friendly practices, he says.
 
 In regard to the world market, it's important to note that because Europe has mandated the use of more biodiesel than it can produce from its own resources, it is looking to import additional feedstocks. "This has buoyed the price of yellow grease," Kaluzny says. The rising cost of energy has also helped boost the price of yellow grease, which is now being used to fire boilers and in other low-grade fuel applications.
 
 Kaluzny believes the same market factors at work in the rendering industry are also true for other commodities. Strong export performance doesn't always translate into shortages in the United States, he says, adding that production of most commodities is outpacing demand despite reports indicating otherwise. "There's a market anomaly," says Kaluzny, whose interest in renewable fuels goes beyond biodiesel. "We're seeing some of the highest prices for corn occur at a time of the lowest usage-there was leftover corn last year." Those high corn prices were reportedly taking a toll on cattle producers who primarily use corn, however, there are many products that can be used as cattle feed, Kaluzny points out, including yellow grease and sorghum.

 
 He blames distorted media reports and the media's inexperience reporting on agriculture and renewable fuels for the food versus fuel debate, which he believes has been blown out of proportion. He cites the Mexican tortilla crisis that was attributed to U.S. ethanol production, as an example. The corn crop in Mexico was a miserable failure last year that is why the price was so high there, Kaluzny says. "There was no shortage of corn in the United States," he says. "Hype moves markets. Much of this has no bearing on reality. Most people are so far removed from agriculture that they don't know a thing about it." While most of the focus regarding the food versus fuel debate has been on corn and ethanol, it's no different for biodiesel. "It would take a heck of a lot of biodiesel to be able to suck up all the excess soybean oil in this country."
 
 In addition, because of technological developments, specifically genetic engineering, soybean and corn yields are increasing every year. "America is so preoccupied with the short term, it sometimes fails to consider things like this," Kaluzny 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.

Rendering is not a topic generally discussed around the dinner table or over cocktails, but the industry is an important component of animal processing, recycling billions of pounds of material that would otherwise have no home. It also has a growing role in supplying low-cost feedstocks for renewable fuels.

Recycling for Renewables

Taking a new technology to commercial scale can be a risky endeavor. In its current quest, Sanimax believes the opportunities outweigh the risks as it employs a new process to scale-up the production of biodiesel using low-cost animal fats and other high free-fatty-acid (FFA) feedstocks. The result is a highly efficient process that yields biodiesel that is as clear as water.
 
 Sanimax Energy a $20 million, 20 MMgy plant in DeForest, Wis., came on line in April. The plant used soy oil in its first weeks of production, but in late May switched to high FFA feedstocks from rendered animal byproducts. The plant was expected to be running full tilt by mid-June, according to plant manager Russ Read. Plans are already underway to break ground on a second plant this year that will be operational in 2008, says Jeremy Goodfellow, vice president of Sanimax Energy, although he wasn't at liberty to disclose a location at press time. More 20 MMgy and 40 MMgy plants will follow and will be built near the company's feedstock sources. The company also plans to expand through production and marketing agreements.
 
 Sanimax's plans for growth are based on its confidence in Nova Biosource Fuel Inc.'s patented production process. The real advantage of the process for Sanimax, with its roots in the rendering industry, is its feedstock neutrality. "The free-fatty-acid level for us makes no difference," says Nova Biosource President J.D. McGraw. Feedstocks with 2 percent or higher FFAs can be problematic for traditional biodiesel plants because it creates soaps that need to be removed, resulting in yield losses as high as 30 percent. The Nova Biosource process has been successfully tested in the lab using feedstocks that contain up to 60 percent FFA, says McGraw, although a plant typically will blend feedstocks to keep the FFA level at about 20 percent. Blending allows the plant to change feedstocks without shutting down, he says, but adjustments do need to be made to compensate for different FFA levels. 
 
 Animal fats aren't the only feedstocks with high FFA content, he adds. Waste vegetable oils from fast-food restaurants can run as high as 20 percent. Even virgin soybean oil, typically a 1 percent FFA feedstock, can shoot up to 15 percent if left in a railcar during a week of hot summer days, he says.

 
 Efficient Process
 Nova Biosource technology "fixes" the FFA in the first stage of the process when moisture and impurities are removed, Read says. The second phase is a standard transesterification reaction. "Then we have a continuous liquid-liquid separation that is proprietary technology," he says. "The light phase goes one way and the glycerin phase goes another. Next we have a double refining stage to remove the methanol and, secondly, to purify the biodiesel and the same for the glycerin." Methanol recovery is highly efficient at 99.7 percent to 99.8 percent, Read says.
 
 The process is unique in its ability to deliver high yields and quality while keeping costs low, Read says. In addition, nearly all the high-cost methanol is recaptured. Waste products that other plants typically send to a landfill get used as a primary energy source for the process. "Our natural gas consumption is extremely low," Read says. Water treatment costs experienced in traditional biodiesel processes are eliminated in the Nova Biosource technology because it uses a dry purification process to make biodiesel.
 
 Although the plant doesn't have enough run history to qualify for BQ9000 certification, it is producing product that is superior to its published specifications, Read says. For example, the flash point is listed at greater than 130 degrees Celsius (266 degrees Fahrenheit) on the spec sheet. "We haven't tested anything less than 180 degrees (356 degrees Fahrenheit)," Read says. The spec sheet that compares Sanimax's product with ASTM D6751-06B biodiesel also shows that it has a lower moisture content resulting in less biological growth and filter plugging. "Our ash content is low and our sulfur is low," Read says. The cloud point and oxidative stability numbers depend upon the feedstocks used, he adds.
 
 The process also produces a high-quality glycerin coproduct. Sanimax has added a "polishing" step to further refine the glycerin to U.S. pharmaceutical (USP) grade standards, which make it suitable for use in food, cosmetics and pharmaceuticals. Sanimax is also participating in trials with antifreeze producers testing the use of the coproduct as antifreeze without first being converted into propylene glycol. Goodfellow says the company hopes to get ASTM approval soon. "We see glycerin as an excellent additional value stream for biodiesel producers," he says.
 
 Roots in Rendering
 Sanimax Inc. was created in 2005 by the merger of two well-established, family-held rendering companies and a third company that sold animal byproducts for feed. Green Bay, Wis.-based Anamax got its start in 1881 as the Green Bay Soap Co. Sanimal started in the early 1920s in Montreal as a rendering company. Bi-Pro Marketing Ltd. in Guelph, Ontario, started in the pet foods business in 1992. The combined companies have facilities in the Canadian provinces of Ontario, Quebec and Alberta, throughout the northeastern United States and in the Midwestern states of Ohio, Wisconsin and Minnesota. The company processes 100 MMgy of animal fats and yellow grease, placing it among the largest independent rendering companies in North America. It's considered independent because it doesn't have animal feeding or slaughter capabilities like Tyson Foods Inc. and Cargill. Sanimax handles the hides, meat, fat trimmings and bone byproducts from the slaughter industry. It prepares hides for domestic and export leather markets and sells the byproducts for feed. It has a separate service that picks up waste vegetable oil from restaurants and food processing plants.
 
 Biodiesel could become a much-needed new revenue stream for the rendering industry. The prime animal fats that can be used for oleochemicals, soap manufacturing and animal feed are at the high end of the market, while lower grade fats, waste restaurant oil and other waste greases are generally burned. The market has been challenged by mad cow disease and concerns about bird flu, McGraw says. "Twenty-six countries have banned U.S. animal fats," he says. Some countries have seen the market for animal fats drop from 20 to 25 cents per pound to 3 cents. The announcement this spring of the alliance between Tyson Foods Inc. and ConocoPhillips to develop renewable diesel from Tyson byproducts had a positive impact on the market. The price for animal fats was 30 percent below soybean oil earlier this year, and narrowed to a 10 percent discount after the announcement, Goodfellow says. However, McGraw expects the increase will be short-lived. "The overall trend has been downward," he says. "The challenge for the biodiesel industry will be the ability to compete with fossil fuels in the face of increasing feedstock costs and emerging technologies, such as renewable diesel," Goodfellow says.
 

 Sanimax will be looking to develop additional feedstocks to blend with the fats produced in its rendering plants and yellow grease operations for its biodiesel production. It is also continuing to review emerging technologies. "We see promise with the third- and fourth-generation renewable fuel technologies such as pyrolysis and hydrogen produced from renewable sources," Goodfellow says.
 	
 Susanne Retka Schill is a Biodiesel Magazine staff writer. Reach her at <a href="mailto:sretkaschill@bbibiofuels.com">sretkaschill@bbibiofuels.com</a> or (701) 746-8385.

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Sanimax is using Nova Biosource technology in its highly efficient biodiesel production process. Pictured is the open distillation unit.

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Sanimax's double distillation technique reportedly produces a super-clean biodiesel. The feedstock-neutral process allows the company to use everything from soy oil to low-cost animal fat and restaurant grease.

Clearly Biodiesel

In terms of methanol safety, 2006 was a year that many in the biodiesel industry would rather forget. A string of methanol fires and biodiesel tank explosions marred the otherwise bountiful growth of the industry. In February, the National Biodiesel Board organized a panel on methanol safety at the organization's national conference. This was the first panel dedicated solely to the topic. In tandem, the Methanol Institute released a primer that discussed the worldwide use and production of biodiesel including guidelines for the safe handling and use of methanol in the manufacturing process.
 
 Overall, biodiesel production is considered a safe process. Handling methanol might be considered an exception to that generality. The simplest of the alcohols, methanol is a colorless, tasteless chemical with a mild but sweet odor. Traditionally called wood spirits or wood alcohol because it can be made through the pyrolysis of wood, methanol is the fuel of choice for drag racing, flying model airplanes, and until late 2005 (when ethanol took its place), for Indy Racing League cars because it performs better, emits fewer emissions and is less flammable than gasoline. Methanol is primarily used as a solvent in paint strippers and antifreeze, and as a material used in the synthesis of dyes, resins and perfumes.
 
 However, along with its many beneficial attributes, methanol is a volatile, flammable poison that burns with a nearly invisible flame. The very same chemical properties that make it an indispensable solvent also elicit a "3" out of "4" fire hazard rating from the National Fire Prevention Association (NFPA). A rating of 3 is given to all materials that are flammable, volatile or explosive at normal temperatures and pressures. "With all the plants that are being built now-at all levels of competence-the general awareness of methanol has come to the front of the stage," says Larry Sullivan, chief technology officer for Kreido Biofuels Inc., who chaired the methanol safety panel at this year's National Biodiesel Conference. "Biodiesel is more and more in the news and regulatory people, whose job is safety, are becoming more aware."
 
 The Simplest Alcohol
 Transesterification is the initial chemical reaction in biodiesel production. The reactants in this early step in the process include vegetable oils, a basic catalyst, sodium or potassium hydroxide, and an alcohol, usually methanol. Vegetable oils are esters of fatty acids and glycerol. The fatty acid is the useful part for the production of fuel. Methanol is added to tweeze the fatty acids from glycerol. It replaces the glycerol component of the oil resulting in a methyl ester. Biodiesel in its final form is essentially a slew of purified methyl esters. From a chemistry point of view, any alcohol can be used in the reaction. From a monetary standpoint, however, methanol is No. 1. "Economics largely drive the use of methanol," says John Mostek a chemical engineer with Renewable Energy Group Inc. (REG). "It's the most economical alcohol to use."
 

 The storage and handling of methanol demands respect as its flashpoint, or ignition temperature, is 54 degrees Fahrenheit. To that end, REG takes a three-pronged approach to fire prevention and suppression in its biodiesel plants. Beginning in the rail unload area outside of the plant, where cylindrical tanks on wheels roll in carrying up to 25,000 gallons of methanol, several precautions are taken to prevent and-in the event of an accident-to contain spills, fires and explosions. First, the methanol is pumped from the rail transport car into a storage tank, one of many scattered over the tank farm, which is a series of staging units used to store the raw materials used in the transesterification process and the finished products of biodiesel production. Methanol stored on the tank farm is given the star treatment. "We store methanol in its own spill containment area," Mostek explains. "There's an earthen dike berm built up around the storage tank area so that if there was ever a leak or rupture of a tank then it would be contained in its own area separate from the other tanks."
 
 Dealing with the liquid form of methanol is only one issue when it comes to methanol safety. The alcohol's tendency to form vapors is of even greater concern because the vapors are more flammable than the liquid. To minimize the formation of vapors in a tank, the extra air space is filled with nitrogen gas. "We keep a positive pressure of nitrogen in that space," he explains. "As the tank fills with methanol it displaces some of that nitrogen and as it empties we fill in with additional nitrogen to always maintain an inert atmosphere."
 
 The use of nitrogen blankets in biodiesel production was also a session topic at the National Biodiesel Conference. Lynn Mead, applications consultant for Praxair Inc., an industrial gas provider, presented in the session and explained that nitrogen is an inert gas that is nonflammable and noncombustible. Mead says three factors must align for a fire to start: a source of ignition, which could be as seemingly insignificant as a spark from a hammer hitting the head of a nail; a source of fuel, including fuel vapors; and oxygen or some other oxidizer. These combustion requirements can be visualized as a triangle, suggesting that preventing a fire is as simple as eliminating one leg of that triangle. In the case of a nitrogen blanket, the gas effectively eliminates the oxidizer portion of the combustion triangle by taking up the available air space in a tank.
 
 The benefits don't end there. "A nitrogen blanket reduces oxidation, hygroscopicity and hydrolysis," Mead says. If not held in check, these factors can ultimately lower the quality of biodiesel, he explains. "The whole issue originally was to stop things like fires but with a nitrogen blanket you also get the added bonus of a lot better product," he says. Mead has worked with more than 20 different biodiesel plants on various issues. So far, 17 plants in his coverage area are using nitrogen blankets. In addition, his conference presentation sparked numerous questions including, "How soon can you come visit my facility?" Mead recalls.
 
 Nitrogen blanketing is not a new process, Mostek says. He explains that REG has been using it since 2002. "It's a time-tested and accepted method for preventing fires," he says. For that reason, nitrogen is not only used to blanket storage tanks in an REG designed or built facility, it is also used in all of the process tanks within the plant that have methanol in the liquid stream. In addition, methanol detectors are installed that sniff out vapors. In the event of a methanol vapor leak, the devices warn the system and automatically shut the plant down.
 
 Besides breaking the oxygen leg of the fire triangle, REG's methanol safety measures include eliminating ignition sources-the second prong in the company's overall safety scheme. All the wiring that powers electrical pumps, motors, instruments and other devices must be nonsparking and the equipment explosion proof. This is something that's actually required by law, explains Jim Blair, CEO of CoreVentures Renewable Fuels. "From the process side, the part of the facility where the transesterification occurs by law is required to be what is referred to as 'intrinsically safe'," he says. Tools must be coated with a material like beryllium that prevents sparking, and all motors and electrical wiring must be nonsparking.
 
 Blair also advocates the use of nitrogen blankets. "We have nitrogen blankets on our soybean oil," he says. "We have nitrogen blankets on our biodiesel. We have nitrogen blankets on our methanol. It's more costly to do business but how do you place a value on safety?" In addition, Blair recommends high levels of safety training for employees. "Our employees are brought in six weeks prior to start-up and it's a minimum of four weeks of safety training-just safety training-not production operation training," he says. "It's all about safety. It's all about people being aware of what they're doing."
 
 Safety Standards
 Not every biodiesel plant goes to these lengths when it comes to fire prevention. This is due in part to the upfront cost of installing nitrogen blankets as well as the continued operation expense. There's also not a single set of methanol safety standards that biodiesel producers are forced to follow. A few of the codes that many producers comply with are the International Building Code, certain standards recommended by the NFPA, specifically NFPA 30, which outlines storage and process handling standards for flammable and combustible liquids, and standards required by various insurance companies.

 
 "One of the most critical things in the design process is determining who the owners' insurance representative is," says Michael Reese, vice president in charge of the fire sprinkler division of NewMech Cos. Inc., an engineering, procurement and construction firm. "The requirements from one insurance company to another are drastically different."
 
 FM Global is one of the few insurance companies willing to cover biodiesel plants at this time, and it's considered one of the most stringent in terms of its methanol safety standards. "The position that we've always taken is that if a plant is built to FM standards then virtually every insurance company will accept the fire protection," says David McKinney, industry practice specialist with the Biofuels Practice Group, a division of the insurance brokerage firm IMA. "If a plant is built to only the NFPA standards, however, not every insurance company will accept those standards."
 
 FM Global has a separate testing facility in Rhode Island where engineers run fire tests that become the basis for the company's standards, McKinney says. One recommendation is that methanol is stored outside a plant at specific distances from the main building, based on the size of the tank. Additionally, FM recommends that the process part of the facility be protected with a sprinkler system and that a drainage system be designed to carry liquids away from other process equipment, because the main focus for insurance companies is minimizing property damage and controlling loss, McKinney says. "It's not so much about trying to put out a fire as it is about protecting the equipment around it from getting damaged in the fire," McKinney explains. "And water has a cooling effect on equipment."
 
 Water also has a suppression effect on fire, which is the third prong in the approach that REG takes to safely use methanol. The sprinkler systems that Mostek describes are purely water emitting. Some biodiesel production facilities, on the other hand, install sprinkler systems that emit aqueous film forming foam with alcohol resistance (AFFF/AR) to layer and suffocate methanol flames. However, "foam, while effective on a two-dimensional fire is practically useless on a three-dimensional fire," McKinney cautions.
 
 The Three-Pronged Approach
 Together, nitrogen blankets and methanol vapor detectors, explosion-proof equipment, and sprinkler systems form an integrated, efficient and what is arguably the most comprehensive approach to methanol fire prevention and suppression. It's an approach that some say should be the standard for the biodiesel industry. "We're trying to handle and prevent anything from happening in the first place but should it happen then we're taking the precautions to minimize any negative effects of an event," Mostek explains. "In a young industry, the tendency for some may be to do things as cheaply as possible. If that comes at the expense of safety … it'll get you in the long-term."
 
 Jessica Ebert is a Biodiesel Magazine staff writer. Reach her at <a href="mailto:jebert@bbibiofuels.com">jebert@bbibiofuels.com</a> or (701) 746-8385.

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A Renewable Energy Group Inc. employee wears personal protective equipment while illustrating the proper way to unload a methanol railcar during a training exercise in Ralston, Iowa.

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As the early wave of small, independent biodiesel producers is eclipsed by a deluge of bigger plants, leaders in the biodiesel industry, insurance companies and other invested parties are working to bring safety concerns-in particular, concerns for the safe handling, transport, and storage of methanol-to the forefront.

Playing It Safe With Methanol

He's the one they call when all the others say, "It can't be done." His peers refer to him as the "foremost authority on Duramax diesel conversions of all vehicles." His work is in such high demand that he could sell one converted diesel engine Hummer an hour, if he wanted. Although he has a right to brag about his innovations, Jonathan Goodwin's quiet, reserved nature communicates his preference for a low profile. That's not quite possible, however, as the Wichita, Kan., native's talent keeps him in the spotlight. In fact, his upcoming conversions are going to be taped for a television series that is set to air on the Discovery Channel, and one of his diesel conversions involves California Gov. Arnold Schwarzenegger's personal vehicle. Goodwin's projects are cutting edge, but he insists that he's simply a hard-worker and a determined problem solver, doing what he loves. "I'm not a chemist, I'm not a scientist or an electrical engineer," Goodwin says. "I'm just one of those people that will take something that I'm interested in and I can't leave it alone, and I will push it to the highest edge."

 
 Now the head of two of his own companies, Jonathan Goodwin H-Line Conversions, a Hummer conversion business in Wichita, Kan., and SAE Energy, a technology development entity, he got his start working on motorcycle and all-terrain vehicle engines when he was 15 years old. In 1998, Goodwin converted his first Hummer, an H1, to a Duramax diesel engine after a few roadside repairs, running it at high speeds through a pond, pushing all the vehicle's limits and bending all the rods in the motor. He decided to drop in the new engine to modify a few complications and gain more horsepower and has been refining issues associated with the Hummer line ever since.
 
 Goodwin began to hone in on the environmental and fuel-efficiency aspects of his conversions at the request of a client and since then his business opportunities have snowballed. In 2006, Goodwin partnered with a group called the EcoTrek Foundation to convert the perceived worst gas-guzzler of all sport utility vehicles (SUVs)-the Hummer H2-to run on biodiesel rather than conventional gasoline. Goodwin and environmentalist and auto enthusiast Tom Holm, founder of EcoTrek and the host of Outdoor Life Network's "Adventure Highway" television series, aligned with General Motors Corp. (GM) to customize the vehicle with a Duramax LBZ engine, an Allison M1000 transmission, sustainable soy-foam seats and nonpetroleum-based tires, along with several other upgraded features. Needless to say, the EcoTrek H2 Hummer was a hit at the 2006 Specialty Equipment Market Association (SEMA) show, the premier automotive specialty performance products trade show that attracts more than 100,000 industry professionals each year. "We've gotten a lot of interest with mass transportation and some fleets of 800 are just waiting for us to come out and offer this to them," Goodwin says. "We're getting close to wanting to do that, but we've just been having so much fun refining the technology. It's been incredible."
 
 Hot Commodity
 Almost immediately following the SEMA Show, Goodwin received a call from Martin Tobias, the CEO of Imperium Renewables, with an out-of-the-ordinary pitch. He wanted to convert a beat-up classic American muscle car to run on biodiesel for a special Earth Day episode of MTV Network's "Pimp My Ride" (PMR) television show. Goodwin agreed and flew out to Galpin Auto Sports' garage in Southern California to begin work earlier this year. After 500 hours of taping and build time, the outcome was the ideal "green machine"-an 800 horsepower biodiesel-powered 1965 Chevrolet Impala that gets 25 miles per gallon (mpg). Not only did Goodwin convert the engine despite skepticism from producers of the show, but the car also demonstrated the sheer performance that can be achieved using the renewable fuel. The upgraded Impala raced a Lamborghini at the Pomona Raceway and left it in the dust. "I'm glad that I was able to show them that this diesel engine running on canola oil can pretty much yield all the power that you want," Goodwin says.
 
 When the green machine covered a quarter mile in about 12 seconds it caught a lot of attention. Rap artist Dr. Dre offered to purchase the vehicle dubbed the "Bio Rocket," and Tobias and Schwarzenegger were in attendance for the race during the final day of the PMR shooting. Both are having their personal vehicles converted by Goodwin this summer. "Governor Schwarzenegger came right up and started talking to me about the conversion, and I introduced myself as the person who had done it," Goodwin says. "The next thing you know we were over there talking about his Jeep Grand Wagoneer and we are now in the middle of negotiations on converting that." Goodwin is putting a Duramax diesel engine into a 2007 Cadillac Escalade EXT for Tobias, and adding his patented ethanol fuel injection technology that will allow the car to get 30 mpg and add 110 percent horsepower to somewhere around 800, conservatively, Goodwin says. The vehicle will have a number of customized changes, including no chrome parts, he says.
 
 Goodwin will then start converting Schwarzenegger's 1987 Jeep Grand Wagoneer to run on biodiesel. GM has also talked to Goodwin about having him build an H2 Bio/Hydrogen Hummer for the governor, a dual-fuel technology vehicle that can run on both biodiesel and hydrogen. This would "pretty much just emit water and vegetable oil," he says. A similar process may take place with one of the governor's old military-style H1 Hummers. Details of all the conversions Goodwin has planned will be captured by the Discovery Channel and a German television channel comparable to National Geographic, which began filming its first installment in early June. Goodwin says another possible show topic would cover the work he is doing on biodiesel engine conversions in offshore pleasure boats. Portions of the series will be taped in high definition, and all the conversions will be completed by the end of the summer, so the vehicles can be displayed at the 2007 SEMA show in late October.
 
 Goodwin says the response from his participation in the PMR episode has been overwhelming, along with the questions and comments. His conversions also seem to have had an effect on GM. GM Chairman and CEO Rick Wagoner announced in February that all vehicles in the Hummer 2010 model year will be renewable-fuel compatible, including an H2 with the same Duramax diesel engine, as well as a V8 E85 Hummer H3. If the interest and demand is any indicator then there is certainly a market for vehicles that can run on biofuels, Goodwin says.
 
 In early June, Goodwin and his team were just getting settled into SAE Energy's new workshop, a 1,000-square-foot space in Wichita. "Things are kind of a mess but there has just been a huge demand for what we are doing, so we had to step it up a little bit," he says. While the majority of his projects have focused on biodiesel, Goodwin has developed an H1 Hummer that is completely computer controlled and can run on several different fuels, including propane, natural gas, ethanol and hydrogen. Once the dust settles, Goodwin plans to begin work on a specialized vehicle for himself-a bioelectric H3 Hummer. His design will feature a four-cylinder biodiesel-powered Isuzu motor, which already gets 50 mpg, that will power the batteries for the vehicle's electric motor. The electric motors have 2,000 pounds of torque, that can propel the car from zero to 60 miles per hour in under five seconds, he says. "I am really excited about doing that because I'm going to personally be driving the wheels off of that one," he says. "I'm going to play with that one quite a bit."
 

 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.

Goodwin converted this 1965 Chevrolet Impala to run on biodiesel for a special Earth Day episode of MTV's "Pimp My Ride" television series that aired April 22.

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Biodiesel is moving into the world of posh consumer sport utility vehicles thanks to diesel engine conversion specialist Jonathan Goodwin. His fuel economy- and horsepower-enhanced vehicles have been featured on MTV's Pimp My Ride, sold on eBay and have now caught the attention of some high-profile figures, including California Gov. Arnold Schwarzenegger.

Biofuel-Powered by Design

National Biodiesel Board (NBB) CEO Joe Jobe has been working overtime aggressively pursuing the recapture of his members' former exclusivity to the $1-per-gallon blender's tax credit that the Internal Revenue Service (IRS) handed to major oil companies in early April. The IRS interpreted ambiguous language in a 2005 energy bill provision extending the previous year's biodiesel tax credit to include thermal depolymerization of animal fats-the more technical term for the production of renewable diesel. In mid-April, a major oil company and a giant food processor announced a subsidized marriage made in misinterpretations. In other words, non-methyl ester green diesel is here. "Renewable diesel is on every continent except Antarctica and North America," says Jeff Webster, the general manager of Tyson Renewable Energy, a division of Tyson Foods Inc. "Now, we're bringing it to North America."
 
 Webster is referring to Tyson Foods' partnership with ConocoPhillips, which will materialize in taxpayer-subsidized production of renewable diesel-175 MMgy of it for starters. Ground zero is the oil company's Borger petroleum refinery in Texas, where a $100 million capital investment is underway to outfit the crude processing complex with enough storage, handling and hydro-heating capacity to convert animal fat byproducts from Tyson Foods into renewable diesel, according to ConocoPhillips spokesman Bill Graham.
 
 On May 3, Jobe testified before the small business committee in the U.S. House of Representatives. "Do you take limited government resources and invest them in new energy technologies built from the ground up, where Americans have leveraged their family livelihood into equity?" he asked committee members. "Or do you take those dollars and give them to large, mature, highly profitable oil companies that will use them for their conventional petroleum processes?"
 
 Graham says ConocoPhillips is the first major U.S. oil company to support the development of mandatory climate change programs. "The company is actively looking at ways to lower our carbon footprint," he tells Biodiesel Magazine. "One way to do this is to modify select refineries to process renewables."
 
 But are these climate change initiatives truly philanthropic; and would ConocoPhillips' desire to reduce carbon impacts through green diesel production wither if the $1 credit disappeared? "It certainly changes the economics of it," Graham says. "We need the tax credit to make it competitive. Even with the credit the economics are marginal."

 
 According to Webster, at $2 a gallon for Tyson's poultry, hog or beef fat, it would cost $84 to buy a 42-gallon barrel of feedstock without the $1-per-gallon credit, compared with $65 to purchase a barrel of crude oil. "Then there are the conversion costs, which range from 35 cents to 50 cents a gallon," Webster says. "Then transportation costs are about 25 cents per gallon, and capital investment depreciation is 6 to 13 cents a gallon."
 
 The Process and Fuel Properties
 In the United States, soybean oil is the most common feedstock for biodiesel production. Concerns of some well-intentioned biodiesel advocates have surfaced over petroleum companies buying up shrinking stocks of virgin vegetable oils-causing sharp rises in virgin oil prices-and then dumping it straight into their refining process. But vegetable oil is more expensive than animal fat byproducts like turkey offal, and animal fats and simply work better than soybean oil when thermally depolymerizing triglycerides.
 
 In the ConocoPhillips-Tyson renewable endeavor, the production process of green diesel begins at Tyson Foods, where animal fats from industrial-scale poultry and pork slicing and dicing for food markets gives way to fat byproducts from chicken, turkey and pork carcasses in typical rendering fashion. Just as adjustments must occur at the petroleum refinery to accommodate the alternative fat stocks, Tyson Foods is also required to refine its byproduct stream further before handing it off to ConocoPhillips. "On our end, as far as animal fats go, it's different than preparations for soaps or other end uses," Webster tells Biodiesel Magazine. He says the primary reason for the additional treatment of the fats is to remove the alkaline-metal elements resident in the animal fat byproduct chemistries. If not removed, these elements would adversely react with the catalyst during refining. Additional capital costs covered by Tyson go toward increasing quality assurance and lab equipment. Webster says he couldn't reveal exactly how much Tyson was spending to make the necessary upgrades.
 
 "Animal agricultural producers have the preferred feedstock for this renewable diesel," Webster says. This is because the molecular structures of animal fats have fewer double bonds than most vegetable oils. The process of thermal depolymerization breaks down complex polymers into simple monomers under high temperatures-monomers are the smallest repeating unit in a polymer-followed by hydrogen saturation and catalyzed reconstruction into combinations, such as C16H34 or diesel fuel.
 
 "What they are doing is breaking down the triglyceride into its parts, removing the oxygen, and saturating the double bonds with hydrogen," Webster says. Because soy oil has more double bonds, it would require more hydrogen. This all occurs in a hydro-heater under elevated temperatures, with hydrogen and a catalyst. The animal fats become a chemical replica of C16H34 diesel minus sulfur, which is negligible in ultra-low sulfur diesel.
 
 Because renewable diesel is virtually indistinguishable from diesel fuel no adjustments need to be made at the terminals to accommodate it; no heated trucks, tanks or lines are necessary; the fuel is hydroscopic, so it will not attract moisture; it's extremely stable; and it's carbon-neutral because fats are a renewable resource, Webster says. Another advantage renewable diesel has over biodiesel is its ability to move straight into pipeline kinetics.
 	

 Preemptive Strikes
 Rep. Lloyd Doggett, D-Texas, introduced legislation to reverse the IRS's interpretive ruling that allows oil companies to collect the $1-per-gallon credit. "Green energy initiatives must not be converted into public boondoggles," Doggett said during a May press conference hosted by Jobe and the NBB, the purpose of which was to promote and rally support for the Responsible Renewable Energy Tax Credit of 2007. He added that allowing multinational oil companies to receive such a large subsidy overexpands and exploits the credit, and therefore is perverse.
 
 Doggett sketched out the means and a timeline for moving the legislation, which was referred to the House Committee on Ways and Means. "I think the most likely vehicle [for the bill] is the energy independence legislation we hope to mark up in the Ways and Means Committee probably about mid-June," he said. "It was announced that we would probably take action, not only in the tax code, but generally on energy independence legislation by July 4 of this year. That's ambitious, but I'm hopeful we'll see action as a part of that bill, though there remains the possibility as standalone legislation for any reason unrelated to our bill, should this legislation be delayed." Those wishing to see the Responsible Renewable Energy Tax Credit of 2007 become law should contact their congressional representatives.
 
 Jobe has made it clear many times that he's not opposed to renewable diesel-he just doesn't believe it should be eligible for the same tax credit his NBB constituents rightfully receive. In his testimony to the House Small Business Committee, Jobe said there is already a 50-cent-per-gallon credit ConocoPhillips and others could cash in on, an alternative fuel tax credit passed in the 2005 transportation bill.
 	
 Can't We All Just Get Along?
 Larry Sullivan, chief technology officer with Kreido Biofuels, a publicly traded biodiesel company with spinning-tube-in-tube (STT) technology, says of the 140 refineries in the United States, 15 oil and gas companies own 80 percent. "Valero [Energy Corp.], Chevron [Corp.], Motiva [Enterprises LLC], the top 10 are very divergent in their approach to this," he tells Biodiesel Magazine. "Some major oil companies have methyl ester investments, but keep in mind, the tax credits are given at the point of blending."
 
 While the IRS is getting a bad rap for its pivotal role in this situation, the IRS didn't rule as much as it took advice from the U.S. DOE, and the U.S. EPA should have had more involvement in that direction, Sullivan says.
 
 The diesel market is a "big church with a lot of pews," says Sullivan, and there's room for many different technologies and alternative diesel fuels-dimethyl ether (DME), biodiesel, and renewable diesel, to name a few. "The middle distillate market is 70 billion gallons in the United States today, and it'll be close to 100 billion gallons in 10 years." He says methyl ester production capacity can reach a billion gallons easily. In fact, DME, biodiesel and renewable diesel could all reach 1 billion gallons in annual volume and not even represent 5 percent of the 70 billion gallon market.

 
 ConocoPhillips is not alone in its interest in capitalizing on the availability of the $1-per-gallon credit. "I know of six companies like ConocoPhillips, all wanting to bring renewable diesel to market," Webster says.
 
 In response to Doggett's legislation to correct this malady of misinterpretations that gives the already heavily subsidized oil companies even more taxpayer money, Graham says legislative efforts to pick technological winners and losers this early in the game would discourage the development of the renewable fuels industry. "In the long run, a level playing field will allow the market to determine the suite of biofuel technologies required to meet long-term policy goals," he says. "We do not believe [NBB's] protectionist actions are in the best interest of the United States."
 
 Essentially, oil companies like ConocoPhillips that are moving forward with renewable diesel production want to have their cake and eat it too, Jobe said. "Advocates have claimed their product would have environmental emissions and carbon benefits, but they haven't proven any of them, or demonstrated them to the EPA as is required by the 1990 amendments to the Clean Air Act." He says future renewable diesel producers have managed to bypass the fuel registration process through this ruling because they've argued to the IRS that their product is clinically indistinguishable from diesel fuel and therefore falls under the registration for diesel. "Well, they can't argue on the one hand that it is clinically indistinguishable from diesel fuel in order to avoid having to go through the EPA certification process, and on the other hand claim that they have emissions and environmental benefits over diesel fuel in order to justify the generous subsidy," he said. "There is very little [emissions] data available, and even less third-party data available because they have essentially side-stepped the process whereby they would have to demonstrate that data." Although ConocoPhillips has yet to receive the EPA's OK, Graham says it will get all the necessary approvals before the product is manufactured or sold in the United States.
 		
 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.

726-1294329749.jpg

The 6,000 barrel-per-day SZorb gasoline plant at ConocoPhillips' Borger, Texas, refinery is where the oil company is preparing to refine animal fats supplied by Tyson Foods into renewable diesel.

727-1294329749.jpg

Refined from low-cost animal fats through thermal depolymerization, renewable diesel is said to possess superior fuel properties and logistical advantages over methyl esters. Large-scale production of renewable diesel will soon be run by Big Oil, its profitability ensured at least for now by a credit originally intended for biodiesel. These issues have producers lobbying hard to keep the blender's credit in the methyl ester realm.

Controversy Brews Over Blender's Credit

In the August 2006 Legal Perspective column, we provided an update on the status of greenhouse gas (GHG) regulation in the United States and promised an update. The production of man-made GHGs and their relationship to global warming is one of the single biggest drivers in the development of this country's evolving energy policy. According to the U. S. Energy Information Administration, carbon dioxide comprises about 82 percent of all GHGs. Approximately 42 percent of all carbon dioxide emissions originate from the combustion of petroleum, including diesel fuel. Biodiesel's overall lifecycle emissions of carbon dioxide are up to 78 percent lower than those for diesel fuel. Therefore, biodiesel is obviously an important component in the country's overall plan to rely more on renewable energy and reduce GHGs.
 
 Now, for the update: At the time of the August 2006 article, the U.S. Supreme Court had just accepted review of Massachusetts v. EPA, a case addressing the issue of GHG regulation by the U.S. EPA. On April 2, 2007, the Supreme Court issued its decision and found that GHG emissions can be considered "air pollutants" subject to EPA regulation under the section of the Clean Air Act (CAA) that deals with motor vehicles. The Supreme Court also determined that the EPA must regulate GHG emissions when such emissions can reasonably be anticipated to endanger public health or welfare.

 
 The pressure to implement some form of GHG regulation has been mounting for years. The issues addressed in Massachusetts v. EPA began in 2001 when 12 states and several environmental organizations asked the EPA to regulate GHG emissions from motor vehicles. The EPA declined, citing lack of jurisdiction and stating that even if it had jurisdiction, scientific uncertainty existed as to any connection between man-made GHG emissions and global warming. The District of Columbia Court of Appeals upheld the EPA's decision as justified.
 
 The Supreme Court's decision reversed the Court of Appeals finding. It ruled that the only factor the EPA can consider in its discretion to regulate GHG is endangerment to public health and welfare. It is this finding that is likely to have the most significant ramifications on energy and other industries, including renewable fuels.
 
 It is important to keep in mind that the Supreme Court's decision is specific to the section of the CAA which applies to emissions from motor vehicles. However, the reality of its application may be that GHG regulations would likewise reach stationary and area sources of GHG under other sections of the CAA. If the EPA makes the determination that GHGs endanger public health and welfare under the section dealing with motor vehicles, it would be difficult for the agency not to make a similar finding under other sections of the CAA.
 
 For instance, under Title I, the EPA is required to set National Ambient Air Quality Standards (NAAQS). The standards apply to pollutants that are deemed to endanger the public health and welfare. To ensure that NAAQS are met, states must adopt a plan for compliance. Several areas of potential regulation of stationary sources that could be affected under Title I include the New Source Performance Standards (NSPS) and the Prevention of Significant Deterioration (PSD).
 
 A big issue in the debates to follow this Supreme Court decision will be technology. Questions regarding commercially common technology, "demonstrated" technology and the feasibility of possible technology will likely be at the forefront of discussions. For example, issues around carbon sequestration and carbon capture technologies are likely to be intensely debated as the EPA addresses potential regulation.
 
 The debate over global climate change and possible new regulations will continue for years to come as government, industry and foreign policy grapple with the fundamental questions now before the EPA. While the Court's decision in Massachusetts v. EPA will invariably generate significant discussion at the agency level, it is likely that Congress will ultimately need to step in and adopt an overall regulatory scheme for GHG emissions.
 

 Lisa A. Crum and Todd J. Guerrero are members of the Agribusiness & Energy Group at Lindquist & Vennum PLLP, a leading provider of legal assistance on renewable energy projects across the country. For more information, visit <a href="http://www.lindquist.com" target="_blank">www.lindquist.com</a> or call (612) 371-3211.
 
 This article is only a general summary for informational purposes and does not constitute legal advice. Consult a qualified and experienced legal advisor for your specific situation or particular questions.

The Supreme Court's Greenhouse Gas Decision

Legal Perspectives

The Pacific Northwest has long been known for its wealth of natural resources and innovative industries. This winning combination continues with the rapid rise of a biodiesel industry that is both pioneering new technologies and supporting growth of regional feedstocks. However, while the Northwest offers many unique advantages for biofuels development, it also harbors its own unique challenges.
 
 The region is well-suited for a thriving biodiesel industry with strong demand from private consumers and fleet operators, ample policy support and financial incentives from state and local governments. Seattle has the highest concentration of personal biodiesel users in the country, and dozens of biodiesel stations dot the Interstate 5 corridor from Canada to the California border. Numerous municipal and commercial fleets are using biodiesel blends, and Washington's largest diesel user-the state ferry system-has made biodiesel usage a priority. Public ports up and down the coast have been some of the most aggressive adopters of biofuels blends.
 
 Broad-reaching coalitions of government agencies, environmentalists, growers, health organizations, academia and biodiesel businesses have worked together to break down traditional policy barriers. Groups often at odds with each other have formed alliances that cross both geographic and cultural barriers. Literally hundreds of biofuels-related bills have been introduced in recent legislative sessions as advocates in the region seek the best means of supporting industry development.
 
 Last year, Washington state became the second in the country to adopt a Renewable Fuels Standard (RFS) for biodiesel-with the first tier (B2) scheduled to take effect in the fall of 2008. During the recent legislative session, lawmakers directed public fleets to aggressively increase their biofuels usage, expedited permitting for biofuels production, and funded much-needed feedstock and market incentive research programs.
 
 At press time, the Oregon legislature was considering an RFS measure for biodiesel similar to Washington's. Meanwhile, Portland is already busy implementing the first municipal RFS measure in the country, a B5 content requirement that went into effect July 1, 2007.

 
 Not to be outdone, the Idaho legislature recently passed two new programs to support biofuels infrastructure: an income tax credit for capital investment and matching grants for retail fuel dealers. Montana continues to support its biofuels industry through tax incentives and other programs.
 
 Now, combine this demand-side interest with optimal growing conditions for regional Brassica feedstocks on the supply-side. Many farmers are already integrating oilseeds into their crop rotation. Universities in all four states have devoted research funds to biofuel agriculture, including the use of oilseed crush products for animal feed and other value-added coproducts. Rural communities have added their support to the burgeoning industry as a way to develop their economies and revitalize local farming.
 
 Even with this enthusiasm and energy, the Northwest biodiesel industry faces a number of key challenges. Competing markets for food-grade oils, and the resulting food-versus-fuel debate, have resulted in volatile feedstock costs and disrupted business plans.
 
 As Northwest states implement fuel standards, complications inevitably arise as policies travel the bumpy road to implementation. Regional distributors have to comply with different RFS requirements in each state, and even different cities within the same state. Washington state chose a volumetric approach while other jurisdictions have a universal content requirement. Efforts to promote use of regional feedstocks must wrestle with interstate commerce concerns, and industry partners continue to debate how public policies and incentives should apply to next-generation fuel technologies.
 
 In response to these unique challenges and opportunities, the Northwest Biofuels Association (NWBA) was formed to represent biodiesel and ethanol producers, brokers, distributors and retailers, along with industry service providers. By working in concert with members and a strong coalition of allies, the NWBA is well-situated to overcome our regional hurdles, maximize our unique opportunities and serve as a model for other regions.
 
 Nikola Davidson is the program director for the Northwest Biofuels Association. Reach her at <a href="mailto:nikola@nwbiofuels.org">nikola@nwbiofuels.org</a> or (206) 389-8660. Peter Moulton is the program coordinator for Harvesting Clean Energy.

Challenges and Opportunities in the Pacific Northwest

Talking Point

Posted June 22, 2007, at 10:42 a.m. CDT

 
 By a 65-27 margin late Thursday, the U.S. Senate passed an energy bill that would mandate the use of 36 billion gallons of alternative fuels and the increase of fuel economy standards to 35 miles per gallon by 2020. Missing from the bill is $32.1 billion in tax incentives after a 57-36 vote removed that provision form the bill.
 
 The bill's alternative fuels mandate comes through raising the renewable fuels standard (RFS) from 7.5 billion gallons by 2012 to 36 billion gallons by 2022. The RFS also contains language that would include mandates for "advanced biofuel," putting in place a mandate of 3 billion gallons by 2016 and 21 billion gallons by 2022. Although not defined, cellulosic ethanol is likely the source of some of the advanced biofuel.
 
 The bill also gives the president the power to declare energy emergencies to trigger anti-price gouging measures. The energy emergencies could include the aftermath of a natural disaster or gasoline shortages.
 
 Finally, the bill would raise the corporate average fuel economy (CAFE) standards to 35 miles per gallon as an average of all passenger cars and light trucks produced by 2020. Although originally considered in the bill, a 4 percent yearly increase of CAFE standards in the years 2021 through 2030 was dropped Thursday.
 
 The U.S. House of Representatives is working on its version of the energy bill and is expected to bring the resolution to the floor for debate within the next two weeks. If that bill passes, a conference committee would meet to iron out differences between the House and Senate versions of the bill.

Senate passes energy bill

Posted July 6, 2007, at 12:52 p.m. CDT
 
 Following the lead of its largest city, Portland, the state of Oregon will soon have a biofuels mandate in place requiring the use of ethanol and biodiesel. Gov. Ted Kolongoski signed HB 2210 into effect this week. Provisions of the bill included 10 percent ethanol and 2 percent biodiesel blends three months after production requirements are met.
 
 The 10 percent ethanol mandate will take effect three months after in-state production reaches 40 MMgy. The biodiesel mandate goes into effect three months after regional production (Oregon, Washington, Idaho and Montana) reaches 15 MMgy.
 

 Oregon currently has no in-state ethanol production, but two plants are in the construction phase-Pacific Ethanol's 35 MMgy plant in Boardman and Cascade Grain's 108 MMgy plant Clatskanie.
 
 Biodiesel production in the state is currently in the 2 MMgy range with another 4 MMgy expected to be in production by early 2008.
 
 Portland's biofuels mandate began July 1 and requires 10 percent ethanol blends in gasoline and 5 percent biodiesel blends.

Oregon biofuels mandate signed into law

Posted July 6, 2007, at 1:22 p.m. CDT
 
 McDonald's Corp. has announced that its British chain has begun to convert its used cooking oil into biodiesel for use in its fleet. The fuel will be used as B100 and is expected to power the company's entire 155-vehicle fleet in the United Kingdom.
 
 A company press release noted that the biodiesel will be produced from 85 percent used cooking oil and 15 percent rapeseed oil.
 
 "We are cuurently working with the Delta Institute, a non-governmental organization, on possible ways to recycle our used restaurant oil for a variety of purposes," McDonald's Vice President of Corporate Social Responsibility Bob Langer said in a statement released by the company. "Also, this year we launched a small-scale test at our Oak Brook, Ill., headquarters in which our used restaurant oil is being converted to biodiesel fuel for our campus shuttles."
 
 McDonald's will gather the used cooking oil from approximately 900 of its restaurants in the United Kingdom.

McDonald's to convert used cooking oil to biodiesel

Posted July 10, 2007, at 2:13 p.m. CDT

 
 The National Biodiesel Board (NBB) will host a webinar July 11 at 2 p.m. EDT. The three-hour tutorial will educate NBB members on compliance with the federal renewable fuel standard (RFS), which takes effect Sept. 1, 2007. All renewable fuel production facilities, refiners, importers and exporters must register with the U.S. EPA by that date.
 
 According to Scott Hughes, director of governmental affairs for the NBB, 120 participants have already registered for the webinar. He said members should have received an email with the registration information. Members can still register until the webinar begins. It is not scheduled to be replayed or posted on the NBB's website at this time, according to Hughes.
 
 The NBB also has information on the RFS available on the "Members Only" section of its website, www.biodiesel.org. Presentations, talking points, background information and papers are included under the federal regulatory section.

NBB to host webinar on RFS July 11

Posted July 10, 2007, at 2:48 p.m. CDT
 
 Shareholders from both the <a href="http://www.cbot.com" target="_blank">Chicago Board of Trade Holdings (CBOT)</a> and <a href="http://www.cme.com" target="_blank">Chicago Mercantile Exchange (CME)</a> have approved the companies' bid to merge in what will reportedly be a $11.9 billion deal. CBOT's shareholder and member tallies from the July 9 vote are subject to official certification by independent election inspectors IVS Associates. Final approval is expected this week.
 

 The combined company will be called CME Group Inc., a CME/Chicago Board of Trade Company.
 
 The merger of CBOT and CME comes at the tail end of nine months of speculation about the future of CBOT. Early merger talks were interrupted by an unsolicited bid by Intercontinental Exchange (ICE). The four-month bidding war concluded July 9 with the shareholder and member vote to merge with CME.

CBOT, CME to merge

Posted July 16, 2007, at 11:18 a.m. CDT
 
 <a href="http://www2.dupont.com/DuPont_Home/en_US/index.html" target="_blank">DuPont</a> announced last week that one of its subsidiaries, <a href="http://www.pioneer.com" target="_blank">Pioneer Hi-Bred</a>, will open a soybean research center in Lawrence, Kan., to enhance product development and testing in Kansas, Nebraska and Missouri. The center is part of a $100 million reinvestment by DuPont in its seed business to improve products through development and into commercialization.
 
 The research center will focus on seed varieties specific to the region and will focus on developing varieties with tolerances designed to counter local conditions that reduce yields.
 
 The center will be Pioneer's third crop-specific research center in Kansas. Besides the Lawrence soybean research center, the company has a corn research facility in Garden City and a sorghum facility in Manhattan.

DuPont to open soybean research center

Posted on July 16, 2007, at 11:45 a.m. CDT

 
 According to regulatory filings with the Securities and Exchange Commission Monday, <a href="http://www.regfuel.com" target="_blank">Renewable Energy Group Inc. (REG)</a> is planning an initial public offering (IPO) of common stock that may approach $150 million, although the filed documents indicate that number is being used solely to calculate the registration fee of the filing.
 
 REG plans to list its shares of common stock under the symbol RWE on the New York Stock Exchange. Credit Suisse Securities is the lead underwriter for the IPO with Goldman Sachs, Banc of America Securities and Thomas Weisel Partners also underwriting the offering.
 
 REG, based in Ralston, Iowa, is one of the leading biodiesel producers in the United States, marketing approximately 78 million gallons of the renewable fuel in 2006.

REG registers for IPO

Posted Aug. 2, 2007, at 12:45 p.m. CDT
 
 Fargo, N.D.-based heavy and industrial construction firm <a href="http://www.wanzek.com" target="_blank">Wanzek Construction Inc.</a> has announced that Jon Wanzek has been named president of the company, succeeding his father in the position. Company founder Leo Wanzek, whom Jon Wanzek will succeed, will continue to serve as chairman of the company's board of directors.
 

 "Jon has proven himself through years of leadership in this company," Leo Wanzek said. "I couldn't be more pleased to be able to pass control of this company to my son. He and many others helped build Wanzek from the ground up into what it is today and now it's their turn to define our direction."
 
 Founded in 1971, the family-owned construction firm specializes in heavy and industrial projects throughout the United States, including construction of ethanol and biodiesel plants.

Wanzek Construction names new president

Posted Aug. 2, 2007, at 1:45 p.m. CDT
 
 Vancouver, British Columbia-based Canadian Bioenergy Corp. has announced that it was granted BQ-9000 status by the National Biodiesel Board and its Canadian counterpart Canadian Renewable Fuels Association.
 
 The BQ-9000 program is a voluntary fuel quality program intended to promote biodiesel by producing and bringing biodiesel to the market that consistently meets ASTM standards. Certified marketers, such as Canadian Bioenergy, and accredited producers qualify for the program by demonstrating adherence to ASTM standards through quality control systems including storage, sampling, testing, blending, shipping, distribution and fuel management.
 
 Canadian Bioenergy markets biodiesel and related products from its terminal hubs in Vancouver and Calagary, Alberta.
 
 For more information on BQ-9000, visit <a href="http://www.bq-9000.org/" target="_blank">www.bq-9000.org</a> or visit the National Biodiesel Board's Web site at <a href="http://biodiesel.org" target="_blank">http://biodiesel.org</a>.

July 2007

Business Briefs

Two Million Mile Haul surpasses 500,000 miles

Gulf Hydrocarbon offers dyed, off-road biodiesel

Pennsylvania biodiesel producers form group

Aspectrics technology measures biodiesel blends

GS CleanTech executes letters of intent for technology

OPIS expands biodiesel coverage

Sullivan joins Kreido Biofuels

World Waste Technologies hires two executives

Columns

Editor's Note

NBB In Sight

Featured

A Hard Row to Hoe

Recycling for Renewables

Clearly Biodiesel

Playing It Safe With Methanol

Biofuel-Powered by Design

Controversy Brews Over Blender's Credit

July 2007.css-7jxktu{position:absolute;bottom:0px;left:0px;right:0px;height:3px;border-radius:3px;background-color:var(--chakra-colors-brandBlack);}

Business Briefs

Two Million Mile Haul surpasses 500,000 miles

Gulf Hydrocarbon offers dyed, off-road biodiesel

Pennsylvania biodiesel producers form group

Aspectrics technology measures biodiesel blends

GS CleanTech executes letters of intent for technology

OPIS expands biodiesel coverage

Sullivan joins Kreido Biofuels

World Waste Technologies hires two executives

Columns

Editor's Note

NBB In Sight

Featured

A Hard Row to Hoe

Recycling for Renewables

Clearly Biodiesel

Playing It Safe With Methanol

Biofuel-Powered by Design

Controversy Brews Over Blender's Credit

July 2007