A nasty little biodiesel conflict is brewing, fueled by foreign oil, paid for by U.S. citizens and playing a part in the decline of Europe's biodiesel infrastructure. My company, Euro Marketing Tools, sits squarely in the middle of the conflict, and we have a worm's-eye view of the issues as we work on projects in the United States and Europe.

 
 The so-called "splash-and-dash" issue involves the swift passage of biodiesel from all over the world through U.S. ports to pick up a couple of gallons of diesel fuel and collect up to $9 million in federal blending credits per load. The newly created 99.99 percent biodiesel is then shipped to Europe where it is sold on the open market with an extra $1 per-gallon profit compared to the local competition. 
 
 The U.S. taxpayer has been the biggest loser in this operation because he is the unwitting treasure chest from which the subsidies flow. To start with, it is very clear that $1 per gallon in the highly competitive petroleum industry is a huge subsidy to dump overseas with absolutely no local, national or even international benefit to the United States. It is even bigger when you take into consideration that a lot of that biodiesel is not even made with American oil, in American processors or even using American ships. 
 
 But even if some American producers are selling their biodiesel in Europe, it still does not meet the smell test of ethical business because the blenders' credit had a triple purpose: to increase energy independence, lower pollution rates and promote the production of renewable fuels-all in the United States. Once the splash-blended biodiesel hits European shores, it immediately benefits from the full panoply of the European incentives, from tax breaks to subsidies. In effect, having taken from Paul (the U.S. taxpayer) the exporter/importer will now take from Pierre to pay himself. 
 
 There is little joy in Europe when a new load of biodiesel arrives. A German biodiesel producer told me about a year ago that he feels twice betrayed-the first time when his government removed his product from preferential tax treatment, the second when the U.S.-subsidized biodiesel was dumped into his market. Needless to say he no longer makes biodiesel but has a thriving business distributing "foreign oil." 
 
 In the United States and Europe, legislation is slowly moving into position. U.S. Rep. John Shadegg, R-Ariz., introduced legislation closing up the so-called "splash-and-dash" loophole, and the European Commission is going into bilateral trade talks on the issue. The European Biodiesel Board has held an active and bitter campaign on the issue for over a year condemning the practice in order to protect its members. The sad thing is that it may be too little too late; severe damage has already been done to the European biodiesel industry. Some of it is self inflicted, but quite a bit is through our administration's laissez faire attitude.
 
 It will not be easy to put this genie back in the bottle. No one has done anything illegal and no one really anticipated how international our business would become. Decisions in Washington, D.C., have repercussions in Indonesia. But this small trade conflict amply demonstrates that the altruistic reasons for making biodiesel now have a healthy layer of financial interest. In our estimation, each country will have to keep their biofuels incentives strictly within their borders, apply their own incentives and base them on the local sale of biodiesel. Biodiesel will once again become a regional solution to a global crisis. 
 
 Peter Brown is the principal of Euro Marketing Tools, a sales and marketing group specializing in the creation of ecologically friendly biodiesel facilities in Europe and the United States. Reach him at <a href="mailto:peter@euromarketingtools.com">peter@euromarketingtools.com</a> or (408) 206-7035.

Biodiesel Trade: A Global Issue

Web exclusive posted May 13, 2008 at 2:12 p.m. CST 
 
 A highly volatile global biodiesel market has affected most of the industry looking to stay afloat due to compressed operating margins. Not even specialty chemicals and biodiesel producer <a href="http://www.chinacleanenergyinc.com/">China Clean Energy Inc.</a> was immune. The China-based company posted a net profit of $1.04 million for its first quarter result, compared to $1.15 million during the same period in 2007.

 
 Gross margin for the first quarter of 2008 was 23.3 percent, down from 27.8 percent the same quarter a year ago. The decrease in gross profit and gross margin was mainly due to an increase in the cost of raw materials as the prices for waste cooking oil, cotton seed waste and rapeseed waste feedstock increased to over $500 per ton in February, versus an average cost of $320 per ton during the same quarter in 2007. 
 
 "The recent spike in the cost of our raw materials associated with the rapid increase in global crude oil prices and agricultural commodity prices in Asia and China during the quarter, combined with a stagnant wholesale diesel price in China, impacted our results for this quarter," said Tai-ming Ou, chairman and chief executive officer of China Clean Energy. "We have made the necessary adjustments by shifting our focus away from biodiesel production and toward the sale of higher value-added specialty chemicals, the market for which is not regulated by the Chinese government."
 
 Net revenue for the first quarter was $4.47 million, an increase of 8 percent over the same period a year ago. Biodiesel accounted for 12 percent and specialty chemicals accounted for 88 percent of total revenue. 
 
 For more information on China Clean Energy, visit http://www.chinacleanenergyinc.com/

Volatile biodiesel economics impact China Clean Energy first quarter earnings

On March 11, South Dakota Gov. Mike Rounds signed Senate Bill 148 into law, lowering the biodiesel producer tax from 22 cents per gallon to 20 cents per gallon. The tax break will go into effect once state producers have 20 million gallons of annual production capacity on line and produce at least 10 million gallons. Currently, there is one biodiesel plant in the state: Midwest Biodiesel Producers LLC, a 7 MMgy facility in Alexandria. The incentive is scheduled to end in the fiscal quarter following 35 million gallons of taxable fuel blended with at least 5 percent biodiesel and sold in-state.

South Dakota governor signs biodiesel bill

Small and large biodiesel producers, distributors, and various feedstock suppliers and farmers will help lead the biodiesel industry in regard to sustainability. The National Biodiesel Board recently announced the members of its inaugural Sustainability Task Force. Under the leadership of Emily Bockian Landsburg of Philadelphia Fry-O-Diesel, the Sustainability Task Force will work to ensure that the U.S. biodiesel industry continues to protect the environment while producing jobs and reducing dependence on foreign oil. NBB Governing Board Chairman Ed Hegland appointed Landsburg to chair the 10-member volunteer task force of NBB members.

 
 "In order to develop best practices that will be adopted throughout our industry, we selected a task force that represents the various segments of the industry and regions of the country," Landsburg said. "Recognizing the need for input from critical stakeholders who are not members of the NBB, such as environmental organizations, government entities and sustainability advocates, we are forming an advisory committee that will be heavily involved in this process."
 
 The members of the task force, chosen from more than 200 pages of applications, are:
 › Kumar Plocher, Yokayo Biofuels, Ukiah, Calif. Yokayo is a small producer making and distributing biodiesel from waste kitchen greases the company collects.
 
 › Victoria Carver, Iowa Soybean Association, Urbandale, Iowa ISA has developed environmental management practices that address soil and energy conservation, and run-off, pest and nutrient management.
 
 › Rachel Burton, Piedmont Biofuels, Pittsboro, N.C. Piedmont is a small producer that grew out of a grassroots cooperative. 
 
 › Dennis Fisher, Archer Daniels Midland Co., Decatur, Ill. Fischer is the director of the Office of Compliance and Ethics and member of ADM's Sustainability Steering Committee.
 
 › Darryl Brinkmann, American Soybean Association. Brinkmann is a soybean farmer who resides near Carlyle, Ill.
 
 › Tim Maneely, U.S. Biodiesel Group, St. Paul, Minn. Maneely, representing a large producer, is a production plant engineering and design expert with experience in soy, palm and coconut oil supply chains. 
 
 › Doug Smith, Baker Commodities, Minneapolis Smith has more than 20 years experience in the rendering and oleochemicals industry, specializing in quality control and safety management.

 
 › Jeff Trucksess, Green Earth Fuels, Houston Trucksess is a regulatory and legislative expert with a background in international development.
 
 › Brian Young, Imperium Renewables Young is the director of sustainability for Imperium's 100 MMgy plant in Washington state.
 
 › Landsburg, Philadelphia Fry-O-Diesel, Philadelphia Landsburg, who is an organizer of the Sustainable Biodiesel Summit, is from a company that developed technology to convert the waste material of sewer trap grease into biodiesel.
 
 "The members of this task force will lead the charge to develop industry-wide guidance to ensure that the biodiesel industry does not harm or deplete our natural resources," Hegland said. "I am looking forward to working with this dynamic group, in creating policies that are of vital importance to the biodiesel industry."
 
 The task force will oversee the development and implementation of a comprehensive sustainability roadmap for the U.S. biodiesel industry that will quantify and maximize the environmental and social benefits of biodiesel; ensure that biodiesel produced and sold in the United States comes from sustainable resources; ensure the best environmental and safety practices are followed in the production of biodiesel; develop mechanisms to encourage responsible use of the world's resources; discourage the use of non-sustainable agriculture practices worldwide in biodiesel production.
 
 Further, the renewable fuels standard, which was recently expanded under the 2007 Energy Bill, includes a requirement that biomass-based diesel, which includes biodiesel, reduce greenhouse gas emissions by 50 percent compared to petroleum diesel fuel in order to qualify as an advanced biofuel under the program. Scientific, peer-reviewed studies from the USDA and U.S. DOE suggest that biodiesel will easily exceed this threshold. The NBB also has feedstock development programs in place that have the potential to bring sustainable agriculture to non-productive lands.
 
 Visit <a href="http://biodiesel.org/aboutnbb/sustainability">biodiesel.org/aboutnbb/sustainability</a> for more on the task force, including extended bios on the members.

NBB appoints members to Sustainability Task Force

Over the past six months, we've all heard reports that the biodiesel industry has hit tough times. Feedstock costs, quality concerns, a lack of legislative support and increasing construction costs have all contributed to a slowdown in production and construction. However, it was unclear to the editorial staff at Biodiesel Magazine just how much those factors were impacting the industry, and we wanted to quantify the effects of these challenges.
 
 So, we decided to call all of the current biodiesel producers in the United States and Canada to ask them about their production levels and feedstocks, among other things. What better way to get that information than by going directly to the source? It was certainly a daunting task. We started with 154 plants, and although we may not have compiled what professional researchers would consider official data, we did come up with some interesting information that we wanted to share with our readers (see the feature on page 38). I won't give away any details here, but I wanted to explain how we organized and categorized the plants after we compiled the data.
 
 First, we found a handful of facilities that we termed "defunct." These were plants that had produced biodiesel in the past but were now dismantled, or being used as research and development facilities. In other words, these facilities weren't likely to start producing biodiesel again. The defunct plants were separate from the 21 idle plants that admitted to us they have ceased production at this time. Some of them may have abandoned operations permanently, leaving the equipment behind for a potential restart by another company. 
 
 Others aren't quite ready to throw in the towel and are investigating alternative feedstocks such as algae, jatropha, corn or palm oil with the intent to restart production when the market is more favorable.
 
 Sixty-one plants confirmed that they are continuing to produce biodiesel in these difficult times. These producers have a total production capacity of 938 MMgy, but many aren't producing at full capacity. 
 
 As can be expected in a project like this, there were some plants we just couldn't get a hold of, and it was hard for us to decide how to categorize those plants. We eventually decided to label them "unconfirmed" because we weren't able to determine their production status by press time (the companies didn't return our calls). This category includes some pretty big names, such as Archer Daniels Midland Co., Cargill Inc. and Peter Cremer. Although it's unlikely they've hit the same challenges as some of the smaller producers, we weren't able to confirm that, and we didn't want to make any assumptions.
 

 Overall, I feel I can say the survey was successful, giving us a better idea of the current status of and trends in the industry. Maybe if analyzed further, it can even identify ways the industry can break out of its funk. In any case, it will most definitely help us provide editorial content that is of pertinent interest to our readers and the producers.

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Trends Emerge in Unofficial Biodiesel Survey

A recent study conducted by Resource Efficient Agricultural Production-Canada has concluded that canola- and soy-based biodiesel reduce greenhouse gases (GHGs) by 58 percent and 50 percent, respectively, compared with regular diesel fuel. The report, titled "Analyzing Ontario Biofuel Options," compared various commercially available energy technologies, evaluating their costs and benefits for reducing GHGs when used for transportation fuel, electricity generation or thermal energy applications. The report concluded that biomass pellets offered the most cost-effective way for government incentives to reduce GHGs.

Canadian report shows biodiesel benefits

Bankrupt BioEnergy of America Inc. and two affiliated Colorado biodiesel plants are being dismantled and sold to satisfy creditors. A judge dismissed bankruptcy proceedings Feb. 25, two months after the company filed for Chapter 11 protection. BioEnergy of America was building an 80 MMgy plant in Edison, N.J., when a major funding source backed out in January 2007. Construction was one-third complete. The Colorado plants, producing a total of 18 MMgy, were partial collateral for the financing and were seized in the proceedings.

Judge dismisses biodiesel bankruptcy case

Pioneer Hi-Bred International Inc. is targeting a 40 percent yield increase in its corn and soybean products in the next decade, said Pioneer President Paul Schickler at the USDA Agricultural Outlook Forum in Washington, D.C., in February. He explained the yield increase for soybeans will come from proprietary accelerated yield technology, along with the trademarked Optimum GAT herbicide-tolerance trait and biotech yield traits built on superior soybean base genetics.

Pioneer targets 40 percent yield increase

Freedom Fuels LLC in Mason City, Iowa, and Sioux Biochemicals Inc. in Sioux Center, Iowa, recently joined the state's 12 other biodiesel plants as members of the Iowa Biodiesel Board, according to Randy Olson, executive director of the IBB. "This is a clear sign that the Iowa biodiesel industry is unified, and a demonstration that we need to work together to pursue an agenda for the success of biodiesel in Iowa," he said.

Two plants join IBB

The Federal Trade Commission has proposed to amend Fuel Rating Rule 16 CFR, Part 306 to include rating, certification and labeling requirements for biodiesel fuel, as required by the Energy Independence & Security Act of 2007. The changes wouldn't require labels for fuels less than B5, but would require a single label for B5 to B20 blends and a separate label for fuels greater than B20. The proposed rule also incorporates new or amended definitions for terms such as "biomass-based diesel," "biodiesel" and "automotive fuel."

FTC issues rulemaking on biodiesel pump labels

Cargill Inc. has been ordered to pay $100,000 for environmental violations at its biodiesel plant in Iowa Falls, Iowa. The lawsuit was filed by Iowa Attorney General Tom Miller. "We alleged a series of violations relating to water pollution, wastewater pretreatment and solid waste," he said. The mid-summer 2006 violation involved sludge being improperly disposed of in a local field, which resulted in the death of nearly 600 fish in an area river.

Cargill receives environmental penalty

World Energy Alternatives LLC in Lakeland, Fla., is now certified to produce kosher-grade glycerin through February 2009. Commodities Director Jerry Petak has been appointed to oversee the operation. The company has also partnered with Petroleum Fuel Terminal Co. in Greensboro, N.C., to develop the state's first biodiesel bulk storage and blending facility. The project will convert an existing 172,000-gallon storage tank to blend or store B100. The $250,000 project received a $150,000 grant from the North Carolina Solar Center at North Carolina State University.

World Energy makes upgrades, changes

The National Biodiesel Board's legislative team is working to extend the biodiesel excise tax credit and the small agri-biodiesel producer tax credit beyond the end of this year. "Extension of the biodiesel tax incentive is the NBB's top legislative priority, and while there are certainly no guarantees in the legislative process, we are hopeful that Congress will extend the credit beyond its current Dec. 31, 2008, expiration date," said Manning Feraci, vice president of federal affairs. 
 
 There have been as many as six attempts in the U.S. Congress to tack an extension onto existing legislation, such as the Energy Independence & Security Act of 2007 and the Federal Aviation Administration Reauthorization Act of 2007. Feraci said the U.S. House has passed a two-year extension on three separate occasions, and the U.S. Senate has also approved legislation containing a two-year extension of the incentive. At press time, the extension was attached to the tax title of the Senate version of the 2007 farm bill, on which Congress has struggled to move forward.
 
 Because the biodiesel tax credit is a tax package, it is difficult to add on to a bill. The Ways and Means Committee is the principle committee that has authority over tax legislation. A tax package was negotiated within the committee for the EISA, but it didn't make the final bill. "[Because] the administration didn't want a tax package in the energy bill, we're looking for other vehicles where the tax package will be welcome," said Amber Thurlo Pearson, NBB communications specialist. 
 
 Meanwhile, Congress and the Internal Revenue Service are considering future changes that could alter the credit's structure and how it's administered. A biodiesel work group, made up of representatives from stakeholder industries and the government, was formed in the fall of 2007 to address the complexity of administrating the biodiesel tax law provisions within the current reporting requirements of the Excise Summary Terminal Activity Reporting System (ExSTARS). One reason the process is so complex is the tax credit may go to a different source than where the tax originated. The group reported on its work at the National Biodiesel Conference in February and is forming recommendations to the IRS for electronic monthly reporting requirements. "The first step is to get biodiesel producers reporting total production available for sale in the United States," said John Love, excise tax consultant and a member of the work group. He said this is necessary in order to match reported production gallons with excise credits claimed. The monthly reporting would include biodiesel production blended and sold by each producer as B99, as well as biodiesel production sold or transferred as B100. At the conference, the work group said this would likely be developed by this fall.
 
 Beyond that, Love said one of the primary pending legislative issues is the paraffin rule. The current U.S. Treasury regulations say if a fuel is less than 4 percent paraffin, then it's not a taxable fuel. This allows biodiesel blends up to nearly B80 to be tax exempt, yet still eligible for the blender's tax credit. "There's concern in the industry and administration that the credits are being taken but the taxes are never paid downstream," Love said. In addition to extending the tax credit, pending legislation would change the point of taxation to the first point of blending, not withstanding the 4 percent paraffin rule. Information reporting would track below-the-rack sales to the point that a 24.4-cent-per-gallon diesel fuel tax is collected or fuel enters the tax-exempt market. "Pending legislation would centralize the tax and the credit," Love said. "Because it's the same party, it's easier for the reporting system."

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Will biodiesel tax credit be extended?

Virgin Atlantic and its partners Boeing, GE Aviation and Imperium Renewables Inc. have demonstrated that a commercial airliner using renewable fuel can fly. On Feb. 24, a Boeing 747 jumbo jet flew from London to Amsterdam, burning a mix of 20 percent biofuel containing babassu and coconut oils, and 80 percent standard jet fuel in one of its four engines without any modifications to the aircraft. Technical advisors were on board, collecting and recording flight data for analysis, which will be used in future research and the development of next-generation biofuels. Boeing will also use the findings in another demonstration flight later this year.
 
 Seattle-based biodiesel producers Imperium Renewables prepared the biofuel, which must stay liquid in frigid, high-altitude temperatures. "It's a good day, not only for biojet fuel, but for all biofuels," said Imperium spokesman John Williams. "If you want to prove that the plane can fly on biofuels, you've got to fly on biofuels."
 
 Prior to the flight, extensive laboratory and static-engine testing was conducted to evaluate the energy and performance properties of the biofuel. "The fuels performed as expected," said Tim Held, manager of Advanced Combustion Engineering at GE Aviation. "The team entered the historic flight demonstration with great confidence." 
 
 Richard Branson, president of Virgin Atlantic, said the flight marks a biofuels breakthrough for the airline industry. "This pioneering flight will enable those of us who are serious about reducing our carbon emissions to go on developing the fuels of the future, fuels which will power our aircraft in the years ahead through sustainable next-generation oils, such as algae," he said.

 
 Boeing and GE Aviation are also partnering with U.S. carrier Continental Airlines to conduct a biofuels demonstration flight in 2009. Continental is the first major U.S. carrier to announce plans to highlight technological advancements in sustainable biofuels. "Exploring sustainable biofuels is a logical and exciting new step in our environmental commitment," said Mark Moran, Continental Airlines executive vice president of operations. "For more than a decade, we have been focused on reducing fuel consumption and carbon emissions, while providing industry-leading service to the places our customers want to go. Boeing and GE Aviation have been frontrunners in pioneering technology that will benefit the aviation industry, customers and the environment, and we are pleased to benefit from their expertise in this venture."
 
 The 2009 biofuel flight will use a Boeing Next-Generation 737 equipped with CFM International CFM56-7B engines. CFM is a 50/50 joint venture of General Electric Co. and Safran Group. Currently, Continental, Boeing and GE Aviation are working with an undisclosed fuel provider to identify sustainable fuel sources. Officials said additional details, including the flight plan, will be announced closer to the demonstration flight date.
 
 Will Thurmond, biodiesel analyst and author of "Biodiesel 2020: A Global Market Survey," said a number of biofuel-powered flight projects are in development. The Defense Advanced Research Projects Agency and Honeywell Inc. are testing algae as a feedstock for jet fuel, and the National Renewable Energy Laboratory and Chevron Corp. are working on a similar project. The U.S. Navy and meat processor Tyson Foods Inc., along with synthetic-fuel producer Syntroleum Corp., are producing renewable diesel from chicken fat for use in B-52 bombers.

Airline industry advances use of biofuels

In early February, Seaport Biofuels installed the nation's first biodiesel blender pump in Seattle. The fuel distributor, which has offered ASTM-spec biodiesel to retail consumers and commercial accounts for years, now offers consumers the choice of B20, B50 or B99 with the simple push of a button. 
 
 Seaport Vice President of Finance Travis Paulson said sales from the multi-blend biodiesel dispenser have increased every week since installing the pump. "Sales are going through the roof," he said. "We're just trying to keep up." Most of Seaport's new biodiesel blender business is coming from word-of-mouth references, he said.
 
 The company decided to offer B20, B50 and B99 for specific reasons. Average customers are more willing to use lower blends of biodiesel such as B20. B50 is a good choice for wintertime use when B99 would become too thick to run in vehicles. B99 is "for the diehards," Paulson said, or in other words, loyal customers who have used biodiesel for some time and prefer the highest percentage possible. Seaport customers who use B99 aren't just fueling vehicles but are also using it for home heating, off-road vehicles and other applications. Seaport has been fueling its own 12-truck fleet with B99 for the past four years.
 
 Of the three blends now being offered at Seaport, Paulson said B50 has been the top seller. "We installed [the pump] at the tail-end of winter, and we kind of counted on that happening," he said.
 
 The company isn't releasing the name of the pump manufacturer, but Paulson said more blender pumps may open in the near future. Seaport has been working with a few other local biodiesel retailers to provide biodiesel customers across the state with additional biodiesel blender pump locations.

Seaport Biofuels Vice President of Finance Travis Paulson, left, and President Randy Thomas

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Seaport Biofuels installs blender pump

The coast of south Texas, near South Padre Island, will be the site of the nation's first commercial-scale, open-pond algae farm for the production of oil for biodiesel feedstock. 
 
 PetroSun Biofuels Inc., a wholly owned subsidiary of PetroSun Inc., began cleaning the site near the cities of Harlingen and Rio Hondo in preparation for operations to begin in April.
 

 The farm is located on the site of a former shrimp farm, according to Jim LeCrone, chief operating officer of PetroSun Biofuels. The facility currently has 94 five-acre and 63 10-acre ponds for a total of 1,100 acres of growing space on the 1,831-acre site. "The farm will give us a step into immediate large-scale production and extraction of algal oil," LeCrone said. "It will be like a giant pilot plant for us, showing us how to do this on a much larger scale." The open-pond system will use salt water, which implies a marine species of algae, but LeCrone wouldn't confirm that.
 
 PetroSun Biofuels has also entered a deal to acquire half the interest of Fleet Biodiesel Inc., a company that is buying an 82.5 percent stake in Bridgeport, Ala.-based Eagle Biodiesel Inc. Eagle Biodiesel owns a biodiesel plant, port access to the Tennessee River, a five-truck tanker fleet and a retail biodiesel fuel station. PetroSun plans to expand the plant's capacity to more than 50 MMgy. As part of the deal, PetroSun will provide algae oil to the Bridgeport plant, and some of the algae oil produced in Texas may end up in Bridgeport, LeCrone said. "[Eagle Biofuels is] using a different type of feedstock right now, but in the long term, that is a possibility," he said. "We are building a facility in Coolidge, Ariz., and that will also be a customer. We are also talking with potential customers in Louisiana."
 
 LeCrone said tests conducted at PetroSun Biofuels' pilot algae farm in Opelika, Ala., showed oil production between 5,000 and 8,000 gallons per acre per year. He said challenges with extracting the algae from the water and the oil from the algae were overcome at the pilot facility. "All of the technology was developed at Opelika over the past year," he said. "We have a process that is totally different than what anyone else has been doing." After extraction, the residual algae biomass can be made into ethanol or other products.
 
 The company will extract the oil in Texas using a proprietary process, and ship the oil by truck, rail or barge to company-owned or joint-venture biodiesel production facilities. "We can ship by land, sea or rail, so this site is pretty nice that way," LeCrone said. PetroSun will be conducting jet fuel and bioplastics research and development projects supported by the supply of oil from the operation.

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PetroSun commences algae-farm operations

Cranford, N.J.-based Beacon Energy Corp., formerly known as AgriFuel Co., announced in February plans to acquire Smithfield BioEnergy LLC and its operating assets, including a 12 MMgy biodiesel plant in Cleburne, Texas. The plant processes animal fats and other secondary feedstocks. The acquisition price wasn't disclosed at press time. Beacon will finance the purchase through available cash and the proceeds of a private equity placement. The transaction was expected to be complete by the end of March.

Beacon Energy acquires Smithfield BioEnergy

An extensive look at alternative feedstocks, along with an update on governmental policies and programs, are the major additions to the second edition of "Biodiesel 2020: A Global Market Survey." 
 
 Author Will Thurmond studied several alternatives in addition to the palm, soy and canola oils now in use. He investigated jatropha, castor and algae oil; yellow grease; chicken fat; beef tallow; and municipal waste. "It's not easy to get people working in algae or jatropha to tell you how much they'll produce, and where their price points will be," he said. The study looked at feedstocks and biodiesel trends in the United States, the European Union, Brazil, China and India, as well as worldwide. 
 
 The report, published by Emerging Markets Online, is a chart-filled study targeted toward financiers, producers, developers, distributors, consultants and analysts. Thurmond said the current period of rapid, transitional growth in the biodiesel industry is creating both uncertainty and opportunity. "In 2007, there were only 20 oil-producing nations supplying the needs of more than 200 nations," he said. "By 2010, more than 200 nations will become biodiesel-producing nations and suppliers."
 
 <center><img src="/images/upload/20080415052355.jpg" alt="" /></center>
 SOURCE: BIODIESEL 2020: A GLOBAL MARKET SURVEY, SECOND EDITION
 
 In addition to the new, 280-page section on alternative feedstocks, the second edition updates other information discussed in the first edition, which was published in 2006. "Governments have changed policies," Thurmond said. "The United States has changed from a 7 million-gallon renewable fuels standard to 36. China changed from using food feedstocks to not using any food. The European Union is going toward sustainable energy and not renewable energy, and Brazil has started biodiesel [production]. The market has grown quite a bit since the first study."

 
 A prospectus of the study can be found at <a href="http://www.emerging-markets.com/biodiesel">www.emerging-markets.com/biodiesel</a>.

New Biodiesel 2020 report surveys alternative feedstocks

Small-scale fuel retailers are often inaccurately advertising biodiesel blends, a recent study concluded. Conducted by researchers at the Woods Hole Oceanographic Institution in Massachusetts, the study is the second in four years that found incorrectly calibrated biodiesel blends.
 
 The Woods Hole study found that a B20 blend was actually 20 percent biodiesel in only 10 percent of stations sampled, while remaining samples varied from 10 percent to 74 percent biodiesel. The study, from which results were released Feb. 27, sampled pure biodiesel and blends from more than 20 distributors and small retailers across the United States.
 
 The wide variance is problematic to consumers and their vehicle engines, said Woods Hole chief researcher Chris Reddy. His study was a companion to one conducted in 2004-2005 by the National Renewable Energy Laboratory in Golden, Colo., which found that large-scale retailers were experiencing the same blending inaccuracies. Reddy said when blends deviate to the higher ranges, such as B74, it could damage gaskets and hoses in older vehicles. Researchers concluded the variance stemmed from mathematical errors, measurement mistakes or inadequate mixing. Reddy attributed the error rate to splash blending-pouring the two fuels together into a container. Because biodiesel is denser than petroleum-based fuel, Reddy said it has a tendency to settle to the bottom of a container if not properly mixed.
 
 According to the National Biodiesel Board, fuel-grade biodiesel must be produced to strict industry specifications, such as ASTM D 6751, to ensure proper performance. Each state government regulates its fuel standards, but regulations aren't uniform from state to state. The NBB is currently working with each state to catalog information regarding their ability to regulate biodiesel, adopt standards and analyze samples.
 
 For example, in Minnesota, retailers have computerized blending systems to ensure accurate blends of B2. However, in neighboring North Dakota, regulation is in the embryonic stages. "We have the statutory authority to draft rules to regulate biodiesel, and we are in the process of doing that right now," said Gary Berreth, state program manager for the North Dakota Underground Storage Tank Program. "To what degree we will actually go out and do that type of testing, I don't know. To be honest, I'm not completely sure our laboratory has the capability to do that."
 
 Reddy happened upon the blending discrepancies while studying a biodiesel spill in a marine environment. "It is essential that the advertised blend be accurate for fairness to the consumer, performance of the vehicle, tax regulations, and emissions and carbon-cycling studies," he said.

A recent study found that a majority of B20 blends actually range in biodiesel content from 10 percent to 74 percent.

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Buyer beware: What blend of biodiesel is in your tank?

The Iowa State University Department of Animal Science recently concluded tests conducted throughout 2007 that assessed the viability of crude glycerin as an animal feed. The results indicated that the byproduct of biodiesel production is viable and comparable to corn.
 
 Brian Kerr, research leader in Ames, Iowa, who works for the USDA Agricultural Research Service, said the crude glycerin was fed to laying hens and swine while their metabolisms were analyzed. "Our goal was to use [glycerin] as an energy source for swine and poultry," he said. "You've got to have energy for pigs and chickens to grow, as well as amino acids and other items, and [glycerin is] used for growth and productive purposes."
 

 Although the crude glycerin was determined to be a viable energy-creating feed, Kerr said the ever-fluctuating markets ultimately determine its use. "Corn would be cheaper," he said, referring to the present situation. "When we started [testing], glycerin was 3 cents a pound. Corn at that time was maybe 6 cents a pound." However, now glycerin is 20 cents per pound. "At 20 cents a pound, it's too expensive as an energy source," he said.
 
 The testing consisted of energy-balance experiments that determined the effect of carefully applied dietary treatments, which ultimately rendered a metabolized energy number. "[We] feed them a known quantity of feed or test ingredient, and then determine how much energy they have consumed from that diet and how much energy has been excreted in the feces or urine to come up with a metabolized energy number," Kerr explained.
 
 Crude glycerin is 85 percent glycerin, 10 percent water and 5 percent salts, as opposed to refined glycerin, which is more than 99 percent glycerin with no impurities. Refined glycerin can be used to make pharmaceutical products.

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Feed tests show glycerin comparable to corn

As part of its efforts toward vertical integration, Allegro Biodiesel Corp., a Los Angeles-based biodiesel producer and distributor, has signed a binding letter of agreement to partner with an investor group for the acquisition, development and operation of the sole liquid terminal at the Port of Alexandria in Louisiana. 
 
 The joint venture formed by Allegro and the unnamed investor group has signed a 40-year lease of riverfront property with the Alexandria Port Authority. In addition, the venture plans to acquire 22 acres of adjacent land with existing liquid-terminal infrastructure, including 5 million gallons of tank storage and a fuel rack.
 
 The port lies on the Red River, a tributary to the Mississippi River, and is approximately 20 miles from the 12 MMgy biodiesel plant that Allegro operates in Pollock, La. By developing this terminal at the port, the company should significantly reduce the costs associated with the production and sale of biodiesel.
 
 In separate news, the company announced it would receive and begin processing its first shipment of crude jatropha oil from Global Clean Energy Holdings Inc., a Los Angeles-based biofuel feedstock development company, at its production facility in Pollock. 
 
 Global Clean Energy and Allegro have a testing and processing agreement for the production of biodiesel from jatropha oil. "This is a very strategic agreement with Allegro," said Richard Palmer, president and chief executive officer of Global Clean Energy. "It is a very well-respected processor and distributor of biodiesel and has considerable experience in utilizing a wide range of different feedstocks in its production process. It is logistically well-located in Louisiana and can accept large shipments of jatropha oil from us through 
 various Gulf of Mexico ports." 
 
 The resulting biodiesel will be tested by Allegro to ensure it meets ASTM International and European Committee for Standardization specs. Samples will also be sent to independent labs for a full series of ASTM testing. Allegro will evaluate the feedstock and final product for blending with its current feedstock soy oil in an effort to reduce the company's future production costs and improve its profit margin. "The [Energy Independence & Security Act of 2007] mandates the greater development of biofuel resources at a time when competition for feedstocks has increased key commodity prices," said Bruce Comer, CEO of Allegro. "Jatropha oil and other alternative feedstock choices represent the next chapter in biodiesel fuel production. Given recent price spikes for soy, canola and palm [oil], we believe alternate nonfood-based feedstocks will be essential to growth in the biodiesel industry. We are confident that jatropha oil will blend well with other feedstocks to produce a high-grade biodiesel while addressing the ongoing concern of utilizing food for fuel."

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Allegro to acquire fuel terminal, receive jatropha shipment

Over the past few years, U.S. biodiesel production has increased from 25 million gallons in 2004 to nearly 500 million gallons last year. Consumers have embraced the fuel, and policymakers have recognized the important role it plays in the larger national strategy to enhance energy independence, reduce greenhouse gas emissions and create new "green" jobs.

 
 Yet it is no secret that the industry is facing daunting short-term challenges. A perfect storm of events-increasing food oil demand in Asia, rising production costs, market speculation and the weak dollar, just to name a few-have all contributed to record increases in feedstock costs. Despite the challenges these temporary market conditions present, the long-term future for the U.S. biodiesel industry remains bright, and no one should doubt either the viability of the industry or its ability to meet future demand for fuel.
 
 Biofuels are currently playing, and will continue to play, a critical role in meeting global fuel demand. In fact, a prominent commodity strategist for Merrill Lynch recently noted that oil and gas prices would be approximately 15 percent higher absent biofuel production. By any objective estimate, global fuel demand is expected to increase in the coming years. 
 
 Given these realities, it is unlikely that either the public or private sectors will abandon biofuels and opt to meet growing fuel demand solely with petroleum. This is especially the case when you consider that biodiesel yields 3.5 units of energy for every unit of energy used to produce the fuel. 
 
 Similarly, there is recognition that biofuels must play an integral role in America's effort to both reduce reliance on foreign oil and address climate change issues. This was reflected in the expanded renewable fuels standard enacted in last year's Energy Bill. This landmark legislation specifically requires the use of at least 500 million gallons of biomass-based diesel, which includes biodiesel, in 2009. The requirement increases to a minimum of 1 billion gallons by 2012. This provides a minimum floor for domestic biodiesel use that will ensure biodiesel's long-term role as part of the nation's fuel supply. The fact that biodiesel reduces lifecycle carbon dioxide emissions by 78 percent means that biodiesel will meet the aggressive greenhouse gas emission reductions required in the RFS.
 
 The U.S. biodiesel industry has both the production capacity and feedstock available to meet market demand and the use requirements established in the RFS. Historically, soybean oil has provided up to 80 percent of the feedstock used to produce U.S. biodiesel. As the industry continues to grow, new feedstock sources are being developed, which include animal fats, restaurant grease, corn oil from fractionation used in ethanol production, and ongoing research on algae and jatropha. Additionally, major seed companies have announced new technologies that will increase oilseed yields on current acreage by as much as 360 MMgy.
 
 By any objective measure, the long-term future of the U.S. biodiesel industry remains bright. Increasing global demand for energy, the renewable targets provided in the RFS, and the availability of feedstock and ample production capacity will ensure that the biodiesel industry will remain a significant component of America's overall energy strategy. 
 
 NBB grants $1.2 million to Danforth Center
 As the demand for a plentiful supply of feedstock oil for biodiesel increases, The Donald Danforth Plant Science Center and the National Biodiesel Board have teamed up on a research project designed to enhance the oil production in soybeans. Thanks to support from U.S. Department of Transportation, the NBB has granted the center more than $1.2 million to fund a three-year project that would increase America's supply of renewable oil used in the production of biodiesel.
 

 "This grant program can benefit the greater availability of feedstock for biodiesel," said Danforth Center President Roger N. Beachy. "We greatly appreciate the support of Sen. Kit Bond and his staff in facilitating the relationship between the Danforth Center and the National Biodiesel Board in an effort to increase the oil feedstock for biodiesel production."
 
 Bond said, "Increasing the efficiency of renewable biofuels from plants is vital to America's drive for energy independence and is critical to improving our environment. Making biofuels more efficient puts America one step closer to a stable home-grown energy supply, and I applaud the partnership of the Danforth Center and the National Biodiesel Board for its leadership and vision."
 
 Danforth Center Principal Investigator Jan Jaworski will lead the research project which will be focused on increasing the oil produced in soybean seeds by altering specific biochemical pathways embedded within the soybean plant. "We will undertake a new approach to enhancing the production of soy oil with a goal of increasing the percentage of oil produced in each seed by more than 20 percent," Jaworski said. "While this approach is new, we are confident our results will lead to increased oil production without reducing the amount of protein in the seeds. Proteins are an important source of food and feed."
 
 NBB Chief Executive Officer Joe Jobe said, "We are proud to support the Danforth Center as researchers there look for ways to get more bang for the buck from each soybean seed. Increasing the oil feedstock supply is vital to the rapidly expanding biodiesel industry. Soybean oil is one of the primary feedstock sources used in the production of biodiesel, and we hope this research will increase the soy oil supply. Plus, whatever advances are made on soybeans will have a high likelihood of being transferred to other oilseed crops-other biodiesel sources."
 
 Founded in 1998, the Donald Danforth Plant Science Center is a not-for-profit research institute with a focus on enhancing the nutritional content of plants to improve human health, increase agricultural production to create a sustainable food supply, and build scientific capacity to generate economic growth in its area. Visit www.danforthcenter.org for additional information.
 
 Sincerely,
 Manning Feraci 
 NBB Vice President of Federal Affairs

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Outlook for Biodiesel Remains Bright

A new study by the Steel Tank Institute confirms that biodiesel and biodiesel blends are safe for use in underground steel storage tanks. The study, presented in March at the 20th Annual National Tanks Conference and Expo in Atlanta, reports that low carbon steel typically used for underground storage tanks has excellent corrosion resistance to biodiesel and biodiesel blends. 
 
 "In most cases, the amount of surface rusting was slightly higher in 100 percent ultra low sulfur diesel than in biodiesel or biodiesel blends," said Wayne Geyer of the Steel Tank Institute. Corrosion rates for biodiesel and biodiesel blends were so low that they could not be measured. 
 

 The findings of the biodiesel and steel compatibility study, which was co-sponsored by the National Oilheat Research Alliance and the National Biodiesel Board, were consistent with years of in-field use. 
 
 "In nearly a decade of experience covering hundreds of millions of gallons of biodiesel being used, we have not experienced any problems with the compatibility of biodiesel blends in underground storage tanks," said Don Scott, a technical engineer with the NBB. "Biodiesel is non-toxic and biodegradable, and we are committed to promoting and encouraging environmentally safe storage and handling procedures." Scott presented at the conference on behalf of the NBB.
 
 The conference was produced by the New England Interstate Water Pollution Control Commission.

Study: biodiesel safe for underground tanks

President George W. Bush, while speaking at the Washington International Renewable Energy Conference in March, called biodiesel the most promising renewable fuel for helping to meet renewable fuels standards included in the new Energy Bill. The WIREC conference also featured biodiesel in other ways.
 
 "The legislation requires fuel producers to supply at least 36 billion gallons of renewable fuel in the year 2022," Bush said. "In other words, these just aren't goals, these are mandatory requirements. I'm confident the United States can meet those goals, and I know we must, for the sake of economic security, national security and for the sake of being good stewards of the environment. Biodiesel is the most promising of these fuels. Biodiesel refineries can produce fuel from soybeans and vegetable oils, and recycled cooking grease; from waste materials. All you out there with waste, you may be in business before you know it as this new technology kicks in. Most Americans-or more Americans-are beginning to realize the benefits of biodiesel every year." 
 
 Bush added, "Last year, we produced 450 million gallons of biodiesel. That's up 80 percent from 2006. ... There are hundreds of fleet operators that use biodiesel to fuel their trucks, and that's just the beginning of what is going to be a substantial change in our driving habits."
 
 Equipment at the conference showed biodiesel in application. Volvo Group, together with Mack Trucks, featured trucks running on renewable fuels, including biodiesel, on the trade show exposition floor. The truck running on biodiesel was manufactured in Dublin, Va. Bush also visited the exhibit, commenting on the "amazing joint venture with Mack and Volvo on these giant trucks that are using biodiesel to power them." Visit www.volvogroup.com for more information.
 
 Manning Feraci, National Biodiesel Board vice president of federal affairs, addressed conference attendees in a session. The NBB also staffed a booth at WIREC.
 
 Read more of the president's speech at <a href="http://www.biodiesel.org">www.biodiesel.org</a>.

Bush: biodiesel 'most promising' fuel to meet RFS requirements

The National Biodiesel Foundation recently unveiled the first-ever biodiesel fuel card. Officially called the BioTrucker Fuel Card, it highlights the availability of biodiesel with a network of truck stops that carry biodiesel. Among other benefits, truckers and fleets will have no fuel transaction fee for biodiesel at in-network truck stops. Additionally, in conjunction with the card, Sapp Bros. Travel Centers in Peru, Ill., Waddy Unocal 76 in Waddy, Ky., and Drivers Truck Stop in Ft. Worth, Texas, are offering a two-cent discount at the pump for BioTrucker Fuel Card holders. 

 
 The initial in-network list of 149 truck stops will continue to grow as more truck stops sell biodiesel and accept the BioTrucker Fuel Card. In-network truck stops include large chains and independent stops. 
 
 The BioTrucker Fuel Card gives trucking companies and owner operators an easy way to pay for fuel, access cash advances, and pay for repairs and other expenses while on the road. Cardholders pay the cash price for all fuel, instead of a credit price. ProMiles Software Development Corp. is a partner of the BioTrucker card and provides incentives for using its software. ProMiles mapping software is the only software for the trucking industry that provides locations of biodiesel refueling stations. Discounts on repairs and tires, as well as road-side assistance, are also available through the card. 
 
 In addition to the in-network truck stops, the card is accepted at 4,900 truck-accessible retail stations across the United States. Truckers and fleets can sign up for the card, and find all in-network locations for the BioTrucker Fuel Card and hundreds of truck stops that carry biodiesel at <a href="http://www.biotrucker.com">www.biotrucker.com</a>. 
 
 The National Biodiesel Foundation is a not-for-profit organization supporting biodiesel education and outreach. The National Biodiesel Board and members such as the Kentucky Soybean Board represented biodiesel at the recent Mid-America Trucking Show in Louisville, Ky., where the fuel card was introduced. The United Soybean Board and the Nebraska Soybean Board are sponsors of NBB's truck education efforts.

The MT100 will be installed at Louis Dreyfus Agricultural Industries LLC, an 80 MMgy biodiesel plant in Claypool, Ind.

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BioTrucker Fuel Card Unveiled

Columbus, Ohio-based MonitorTech Corp. announced in late February that it will supply an emissions-monitoring system to Louis Dreyfus Agricultural Industries LLC, an 85 MMgy biodiesel plant in Claypool, Ind. The MT100 system is a low-cost, accurate and reliable stack gas-monitoring system based on fuel-cell technology. It will be used to monitor emissions including nitrogen oxides, carbon monoxide and oxygen coming from the steam boiler at the facility, which also processes soybean oil.

MonitorTech to provide emissions-monitoring system to Louis Dreyfus

Ralston, Iowa-based Renewable Energy Group Inc. made several business moves recently. In March, it partnered with ISE Corp., a hydraulic drive supplier based in California, to comarket biodiesel to city bus fleets across the United States. It also withdrew plans for its initial public offering, which was to raise $150 million to finance the construction of three biodiesel plants. REG said it was trying to stay flexible in order to grow the business during difficult market conditions. In February, it entered into a capital line of credit with financial service provider WestLB AG to raise $28 million.

REG tries to stay ahead of biodiesel downturn

PerkinElmer Inc. introduced two new biodiesel platforms during the Pittsburgh Conference on Analytical Chemistry and Applied Spectroscopy in March: the EcoAnalytix Glycerin and Methanol Analyzer, and the EcoAnalytix Trace Metals Biodiesel Analyzer. The two new platforms are the company's latest in application-based solutions to improve business ecosystems. "Our analyzer approach provides step-by-step instructions and training to ensure fast ramp-up," said Alessandra Rasmussen, director of strategic programs for PerkinElmer. "This approach ensures higher accuracy and faster time-to-market."

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PerkinElmer launches biodiesel platforms

GreenHunter Biofuels Inc., a subsidiary of GreenHunter Energy Inc., closed two leasing transactions in March related to its bulk liquid fuels terminal at the GreenHunter Renewable Fuels Campus in Houston. Two separate, unnamed companies will utilize GreenHunter's tank storage for loading, unloading, bulk storage, throughput management, vessel scheduling and logistical management for several bulk liquid products. Upon completion, the Houston campus will house a 105 MMgy biodiesel refinery, a 700,000-barrel bulk liquid terminal operation and a 200 million-pound-per-year glycerin refinery.

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GreenHunter closes tank storage leasing transaction

Renewable Trading Services LLC announced that between March 20 and March 31, more than 1 million renewable identification numbers (RINs) were traded on RINXchange, a Web-based exchange platform that allows transparency in price discovery when trading RINs. "The size of posted bids and offers on the RINxchange is frequently 1 million RINs [each week]," explained Doug Cummins, managing director of RINXchange. The company, formerly called RINMark, is open to all parties registered with the U.S. EPA under the renewable fuels standard program created in the Energy Independence & Security Act of 2007. At press time, there were more than 25 registered users "Our goal is to have over 400 market participants on the exchange by the end of 2008," Cummins said. RINXchange upgraded to a fully electronic platform April 4.

RINXchange exceeds 1 million RIN trades

Green Country Biodiesel Inc., a former 2 MMgy biodiesel production facility in Chelsea, Okla., auctioned off its equipment in late February. The company filed for asset liquidation in November, citing rising feedstock prices and a lack of financing. The company broke ground on the original, 600,000-gallon-per-year facility in June 2005 and expanded to its current capacity in April 2006. It was in the middle of upgrading the plant when its financing fell through.

Green Country Biodiesel Inc. auctioned off its equipment in Chelsea, Okla., in late February.

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Green Country Biodiesel sells equipment

State-controlled Brazilian oil company Petrobras SA has created a subsidiary to coordinate biofuels efforts, establishing a work group that will gather Petrobras biofuels efforts under one management umbrella. The new subsidiary, launched March 3, will handle biodiesel input acquisition and processing, as well as ethanol production, and coordinate production-chain activities in Brazil and abroad, the company said. It will have invested $1.5 billion in biofuels by 2012. Biodiesel and ethanol marketing and logistics will remain under its "downstream area's" responsibility.

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Petrobras creates biofuels unit

While many checkmarks are needed to complete the to-do list during the builder's risk phase of a biofuel project, one of the most important-placement of the builder's risk coverage-is often overlooked. A builder's risk policy serves to protect the project against loss during the course of construction. While one would think that this might be one of the higher priority items during this phase, often it is not. In fact, it is often a last-minute decision, and that is not in the best interest of any involved. 
 
 Why this oversight happens is not clear. It may be due to the number of parties involved in the project during this time. Contractors, sub contractors, engineers, and lenders and equity partners are all providing input which, at times, can blur the lines of who has, and will take, responsibility for each different aspect of the construction process. It may be that the excitement of finally having enough cash available to get the project underway dulls the focus on some of the key issues that should be addressed. It could even be that there just isn't enough time to spend on each critical component, and so a path of least resistance is chosen. Regardless of the reason, it is important to know that the builder's risk coverage is a critical part of the project. It can set the tone for the facility and can have an impact long after the actual policy has expired. 
 
 Who Secures the Policy?

 One initial, proactive decision that should be made related to builder's risk coverage is deciding who will secure the policy in the first place. Contractors often include the provision of a builder's risk policy within the scope of their responsibilities. While, from a simplistic point of view, that may seem like the easiest way to handle it, there are a number of reasons why it may be preferable for the owner to control the process instead. 
 
 First, within most projects, there are often items outside the scope of what the general contractor will provide. Office buildings, storage sheds, fire protection and even tank farms can be designated as the responsibility of the owner. If that is the case, it is very likely that these items would not be included within any builder's risk coverage a contractor may provide. In that instance, an owner would have to secure a separate policy for the work they are responsible for, which would then mean there are multiple policies in force. That is not ideal from a coverage or expense standpoint. 
 
 A second reason an owner should seriously consider purchasing the builder's risk coverage is that a contractor may not include delay in start-up coverage within their policy. A contractor's main concern is the property on site during the construction process and the replacement of that property in the event of a loss. While that is important, the lost income a plant would experience due to a loss during the course of construction should also be considered. During the operational phase of a plant, this is called business interruption or business income coverage. During the construction phase, this is called delay in start up. The absence of this coverage could be a real problem for lenders and investors who have significant dollars committed to the project. Additionally, even if delay in start-up coverage is included within the contractor's policy, often such items as soft costs and extra expense are overlooked in the calculations. Both of those items could be critical in the event of a loss and would be something an owner would want to make sure to include.
 One final and important reason for an owner to consider purchasing the builder's risk policy themselves is the fact that, in the event of a loss during the construction process, it is much better, from an owner's perspective, to have control of any settlement rather than to defer that to someone who may have competing interests. 
 
 Design Considerations
 After the decision has been made regarding who will ultimately carry the actual builder's risk policy, the next critical area of focus should be the design of the coverage to be implemented. Many potential landmines could remain hidden until a loss occurs, which is the absolute worst time to find out. The following are several such areas that are often overlooked:
 
 Contractual obligations-Equity and lending agreements, feedstock and offtake arrangements, and lease contracts all carry expressed or implied insurance obligations. It is critical to any project owner to review any and all contracts to determine exactly what responsibility each party as and what obligations exist in the event of a loss. 
 
 Sublimits terms and conditions-Each insurance market within the biofuel space will often carry different sublimits, terms and conditions. Deductibles are one of the most obvious areas of difference, but there may be variance on many others including offsite storage, transportation coverage, earthquake and flood limits, and even how service interruption issues are handled. All sublimits, terms and conditions vary considerably from policy to policy. Until one understands and evaluates the differences and thus compares the options on an apples-to-apples basis, a risk exists that there will be a big surprise in the event of a loss.
 
 Exclusions-This is another area often overlooked when binding or crafting coverage. What is considered a covered cause of loss and what particular events are excluded from that definition? Exclusions are an incredibly important part of any coverage and should therefore be addressed with care. Often, because of a lack of understanding, knowledge or time on the part of the owner or insurance broker, they are not, and that could make a huge difference in the event of a loss.

 
 Carriers involved-Obviously the owner will want to make sure to understand something about the insurance carrier that will ultimately be providing the protection desired. How long have they been in the biofuel business? How many similar plants do they write? What is their long-term commitment to the industry? What support will they provide through the process? What lines of insurance will they carry and what lines will they not? Will there have to be layers of coverage or are they able to handle the full total insured value? All of these are important questions that should be answered before any coverage is bound.
 
 Finally, how testing coverage works and how fire protection is designed must be addressed during this coverage phase. Testing coverage is important because every insurance carrier views it differently and each has a different definition as to how and when that coverage starts and stops. It will be critical for an owner to understand this within the scope of the project and to make sure there are no gaps in coverage at any time. 
 
 Fire protection is also critical because the ultimate design of the fire protection program could have a significant impact on the availability and or pricing of the insurance coverage down the road. Today, while the insurance markets are soft, it is easy to find a carrier that will cover a project as long as some fire protection is in place. However, when the insurance markets tighten up, it will be critical that the fire protection design will be able to stand up to the scrutiny of those carriers still interested in writing biofuel facilities. A tighter market means tighter requirements. For that reason, it is imperative for an owner not to cut corners.
 
 Who Will Provide Assistance?
 Finally, maybe the most important decision an owner can make, even before the builder's risk coverage is placed, is that of selecting an insurance broker to help navigate the minefield of issues. Many times this decision is made based on who an owner knows or who happens to be an investor in the project. Unfortunately however, that choice is often not in the best interest of the project. Insuring a biofuel facility is very different than insuring a retail building, business or even another manufacturing operation. A number of issues must be managed, including, but certainly not limited to those mentioned earlier. Selecting a broker without significant experience in this field means that someone else has to pick up the slack and often times that simply does not occur. The inexperienced broker does not have the knowledge, owners and boards of directors don't have the time, contractors, engineers and technology providers each have a different set of issues to worry about, and even insurance companies have a singularity of focus. Ultimately, it is important to select a broker that has the experience and ability to assist and coordinate through all aspects of the project and to make sure that there are no surprises at a time when they are needed least. 
 
 As mentioned earlier, the builder's risk phase and the placement of builder's risk coverage is one of the most important phases of the entire project. The key for any project owner is to make an early, proactive decision as to how each of those items will be addressed and who might be chosen to assist in that process. In the end, those owners that pay heed to the phrase, "an ounce of prevention is worth a pound of cure," will be well on their way to success both in the present and the future. 
 
 David Weaver is with the biofuels practice group of The IMA Financial Group Inc. in Wichita, Kan. Reach him at <a href="mailto:david.weaver@imacorp.com">david.weaver@imacorp.com</a> or (316) 266-6203.

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Items such as tank farms, office buildings, storage sheds and fire protection are often outside the scope of an EPC contractor.

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Builder's Risk Coverage: An Ounce of Prevention is Worth a Pound of Cure

Hielscher Ultrasonics GmbH, a German technology company, was awarded Frost & Sullivan's 2007 European Technology Innovation of the Year Award in Biodiesel Processing Technologies. The Hielscher technology harnesses the energy of sound waves to produce a severe agitation that disrupts the molecular structure of the reactants in the transesterification process. This agitation reduces the time of the reaction from several hours in a typical batch process to less than an hour with a 99 percent yield.

Hielscher Ultrasonics wins biodiesel technology innovation award

Aquaflow Bionomic Corp., a New Zealand-based algae biodiesel development company, has appointed Desmond Ashton to consult in aviation projects and lead those key areas of development for the company. Ashton runs his own aviation consultancy business, and he is a qualified pilot and an aeronautical engineer. He previously served as chief executive officer of Port Marlborough, which oversaw port operations and operated the Blenheim Airport. Aquaflow Director Nick Gerritsen said Ashton's appointment marks a new stage of development for the company.

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Aquaflow hires aviation specialist

Symbios Technologies LLC, a new research and development company, was founded in January by Justin Bzdek, former vice president of research and development for Blue Sun Biodiesel LLC. The name "Symbios" reflects the company's symbiotic approach to its project and technology development. "One system's waste becomes another system's feedstock in innovative, colocated, integrated biorefinery applications to produce combined heat and power, fuels, chemicals, fertilizers, clean water and other products," said Bzdek, president of the new company.

Bzdek leaves Blue Sun to launch Symbios Technologies

Sure Seal Inc., based in Mineral Point, Mo., appointed Eric Melton to the position of biofuels sales manager. Previously, he served as Midwestern regional sales manager for Sure Seal and its parent company OPW Fluid Transfer Group, and was responsible for a 14-state territory in the chemical/industrial markets. "His previous work has enabled him to develop lasting relationships with many distributors," said Tim Warning, president of OPW Fluid Transfer Group's Chemical and Industrial Market Unit.

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Sure Seal appoints biofuels sales manager

Staying in touch with biodiesel producers is the lifeblood of Biodiesel Magazine. It's what keeps our content fresh, focused and relevant. Since the publication's inception in 2004, we've reliably produced accurate monthly construction reports and a comprehensive, continually updated list of producers-searchable by name, state, feedstock, capacity and start date-on our Web site. Our efforts are amplified once a year when we conduct our annual "Proposed Biodiesel Plant List," an exhaustive census of would-be producers (coming in September). 
 
 This year, as the industry continues to face unprecedented challenges, we took things a step further. Late in 2007, as the rate of biodiesel plant startups began to wane, and reports-both fact and rumor-of severely limited production output began to surface, we decided it was time to go beyond construction and startups and take a good hard look at production trends. A survey was in order. About a dozen writers and editors teamed up, divided more than 150 plants proportionally, and hit the phones. We asked producers 16 questions pertaining to data fields ranging from the plant's nameplate capacity to feedstock storage capacity. Our principal aim, of course, was to find out for ourselves approximately how much biodiesel is currently being produced in the United States and Canada-and roughly how much was produced last year. 
 
 Of the 154 plants listed as "producing," or on line, on Biodiesel Magazine's Web-based plant list, 107 or nearly 70 percent responded to our survey. In addition, the survey was conducted alongside the biannual "U.S. & Canada Biodiesel Plant Map" providing the information for what we believe is the most accurate picture of the biodiesel industry available anywhere. Plants that didn't respond to our survey are listed as unknown on the plant map for the time being, and it's our intention to verify their information in the future. 

 
 Producers Respond
 One of the primary reasons the survey was undertaken was to find out approximately how much biodiesel is being produced. In November 2007, National Biodiesel Board Chairman Ed Hegland told Minnesota Public Radio that actual production in the industry was estimated at a rate of 400 MMgy to 450 MMgy. This works out to an industry that was producing at 20 percent to 25 percent of its potential. Hegland said high feedstock costs kept some producers from producing at 100 percent of capacity. 
 
 The NBB's numbers are calculated differently from those generated by Biodiesel Magazine. NBB members are asked to report and pay dues based on how many gallons of fuel they produce. For our survey, the staff attempted to contact all plants that produce 1 MMgy and over, including those who aren't NBB members.
 
 According to our producing respondents, the average plant produced roughly 40 percent of its nameplate capacity in 2007. For 2008, we asked producing respondents to estimate their current rate of production as a percentage of their nameplate. According to our producing respondents, the average plant in 2008 is producing at a rate of 45 percent of its nameplate capacity. The 2008 number reveals a slight increase, which could be because some of the respondents came on line late in 2007, and others may have been able to successfully incorporate less expensive feedstocks into their operations heading into 2008. As one plant owner said when asked what feedstock he was looking to use in 2008, "When my tanks are empty, we'll be switching to yellow grease." 
 
 Twelve of the producing respondents who were making biodiesel in 2007 say they are making less fuel in 2008. The average drop in production among these plants was 29 percent. Some producing respondents reported making more fuel in 2008 than they did in 2007. When adjusted to reflect only the 14 plants that were in operation during all of 2007, the numbers reveal a 22 percent average increase in production.
 
 After speaking to more than 100 plants, we also learned that 21 plants are now idle. It is not clear if those will be restarted once margins improve, or if they will be repurposed, resold or removed. These plants are listed as idle on the current biodiesel plant map.
 
 Feedstocks in Focus
 The story of biodiesel production in 2007 was dominated by feedstocks. In late 2007, soy oil hit a 34-year high, causing many producers to completely rethink their business model. One producing respondent plans to send a spokesperson to Vietnam to "search for crude" soy that was less expensive. Another pointed out that "tax incentives for feedstock supplies are needed to stabilize the market." One of the respondents who reported his soy-only plant is currently idle said, "Until Uncle Sam does something about the skyrocketing feedstock problems, we'll keep [the plant] turned off."
 

 Of course, not all plants use soy, and there is some question in the industry as to whether having an on-site crush facility can help a producing plant realize an economic advantage. Clearly, for soy-based operations, many questions need to be answered. 
 
 We asked survey respondents what their primary feedstock is and if they expected to use a different feedstock in 2008. In our survey, 26 plants listed soy oil as their primary feedstock, or the feedstock they were currently using. Out of 26 respondents, 12 expect to use different feedstocks in 2008. The results indicate that of these producing respondents, six that were designed specifically for soy now expect to use animal fats in 2008. 
 
 We also asked producing respondents to tell us what feedstocks they'd experimented with in the past. Of all the producing respondents, 18 had tried using animal fats. 
 From this survey we also determined that very few plants were looking to algae as a feedstock they expect to use in 2008. Three producing respondents reported interest in algae. 
 
 That may be because they see the technology as too expensive, or still out of reach for a commercial-scale operation. As one plant manager recently remarked, "Algae is a headline in 2008, but it isn't a fuel until 2010." 
 
 A Typical Plant
 In order to describe a particular product's ideal customer, advertisers will often create a demographic profile of the subject based on generalized traits among group members. In a similar fashion, we used the data collected from our survey to paint a picture of what an average biodiesel plant responding to our survey might look like. 
 
 The typical responding producer plant is located in the central portion of the United States-the Illinois, Iowa, Missouri tri-state area. The 15 MMgy plant is designed for soy oil as its primary feedstock, but has changed to a multi-feedstock platform since it came on line in January 2005. In addition to using a variety of feedstocks such as animal fats and waste vegetable oil, the management team has investigated less common feedstocks such as palm oil and rapeseed. 
 
 Capital is hard to come by for this plant, and in the past they've been able to switch feedstocks more easily using funds they had on-hand, and by managing risk effectively. Today, using alternative feedstocks means spending money that the management team didn't expect to a year ago. And although they have the ability to process an assortment of feedstocks, they are closely watching the futures markets and public policy shifts. 
 

 The plant has a full-time staff of 13 employees, including a general manager, and has recently added one new part-time worker in the past 18 months. 
 
 Our average plant handles its own biodiesel marketing. The plant has about 400,000 gallons of on-site feedstock storage capacity, which allows it to operate for some time between feedstock shipments, if necessary. Again, this is based on our responding producers and not on a real 15 MMgy plant. 
 
 When it comes to participating in the industry, the general manager is a full voting member of the NBB. The company is not currently a member of the BQ-9000 program, but is pursuing certification sometime in 2008. 
 
 Looking Ahead
 As this is the first industrywide survey Biodiesel Magazine has undertaken, clearly there is much more to learn. From this survey we've come closer to knowing the actual production totals for 2007 and 2008. In addition, we've discovered 21 plants are idle waiting for margins to improve. Producing respondents are keenly aware of the struggles they face in the 
 coming months. Many plants moving away from soy oil indicate their willingness to reinvent themselves in the face of difficult economic conditions.
 
 Not surprisingly, interest in other feedstocks is increasing as producing respondents seek new ways to make their industry profitable once more. As companies explore their options, looking toward waste oils, animal fats and other feedstocks, the real benefit may lie in the ability to use a variety of feedstocks depending on market conditions.
 
 Craig A. Johnson is the Biodiesel Magazine plant list and construction editor. Reach him at <a href="mailto:cjohnson@bbibiofuels.com">cjohnson@bbibiofuels.com</a> or (701) 738-4962.

 
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For the first time Biodiesel Magazine asks producers exactly how much biodiesel is being produced. The results of our comprehensive survey create an intriguing picture of the industry. Not all producers took our phone calls, but those who did spoke loudly.

Biodiesel Production Trends Survey 2008

Fuel dilution in diesel engines is not a new issue, but it's one that's gained greater attention recently as lower emissions thresholds went into effect last year. Meeting the 2007 regulations requires the incorporation of diesel particulate filters to trap soot. To avoid filter plugging, however, the accumulated soot needs to be burned off-a plugged filter will cause high backpressure and operational issues. Many original engine manufacturers (OEMs) use a regeneration scheme in which fuel is introduced late in combustion to create an exothermic reaction downstream in the filter, which burns off the soot. The resulting ash from regeneration of the filter can collect for hundreds of thousands of miles. 
 
 Modern diesel engines are already equipped with sophisticated fuel injection systems, prompting engine manufacturers to utilize the flexibilities resident in these injectors thereby cutting the cost of devising an alternative approach. "As injection systems and injection technologies have advanced since the early 2000s, all the OEMs are using common rail or unit injection systems, which allow multiple injections of fuel during the cycle," says Alexander Sappok, a researcher working on his Ph.D. at the Sloan Automotive Laboratory at Massachusetts Institute of Technology. "It gives you the flexibility to really modify your injection strategy for a number of different reasons. So some OEMs figured since they've already made the investment in these injection systems they would utilize those same systems as a part of their regeneration strategies for aftertreatment systems." 
 
 Not all aftertreatment systems providers utilize post injection in their regeneration strategy. Some incorporate in-stream fuel injection where injectors positioned in the exhaust stream squirt controlled doses of fuel downstream of the combustion process, some coupled with a burner, to create the exothermic reaction needed to incinerate the trapped particulate matter while avoiding the issue of fuel dilution altogether. Caterpillar utilizes this in-stream approach with a diesel burner in the exhaust stream. Currently it's a matter of economics-OEMs see a cost savings in utilizing existing fuel injection systems rather than tacking on the additional cost of extra equipment. A 2007 Society of Automotive Engineers paper written by engineers from Tenneco Inc. and AirFlow Catalyst Systems stated that, "Although most 2007 systems introduce the fuel for diesel particulate filter (DPF) regeneration through in-cylinder post-injection, it is likely that 2010 systems will also need in-stream fuel injection to help avoid oil dilution and potential premature engine wear." 
 
 The engineers note this may be especially necessary if the DPF is downstream of the urea-injected selective catalytic reduction (SCR) systems for nitrogen oxide (NOx) abatement. 
 
 Even though some predict the need for in-stream injections eventually, as of now many OEMs rely on post-injection to meet their needs. 
 
 A New Understanding of Biodiesel's Dilution Effect
 Volkswagen is using post-injection for regeneration and according to Stuart Johnson with the Engineering and Environmental Office of Volkswagen Group of America, the issue of oil dilution from biodiesel is a real concern for the automakers. "We can tolerate up to 50 percent fuel mix in the oil but no more," he said at the 2008 National Biodiesel Conference. 
 
 Volkswagen tests using B5 and post-injection showed 45 percent oil dilution after 10,000 miles, but surprisingly no engine damage was evident upon inspection. "Using B10 at 10,000 miles surpasses that 50 percent threshold-and that is unacceptable," Johnson said. "We want longer oil change intervals as a car company, so it's hard for us to talk about this." The implications are that increased fuel dilution due to biodiesel blends could lead to premature engine wear if oil changes are not done more often. 
 

 Senior technical advisor for Cummins Inc., Howard Fang, explains to Biodiesel Magazine exactly how this inordinate accumulation of biodiesel in the crankcase oil takes place. 
 
 Cummins has done extensive work to characterize biodiesel's effects on engines, performance and exhaust. "Biodiesel definitely promotes fuel dilution," Fang says. 
 
 Post-injection of fuel into the cylinders is intended to vaporize in the cylinder but not combust, exiting then through the exhaust valves and traveling downstream where the introduction of the unburned fuel to the catalyst creates an exothermic reaction incinerating the collected soot. Inevitably the heavier fractions of fuel will not vaporize during post-injection and in liquid form can adhere to the cylinder walls. Through the slapping motion of the pistons and oil rings, the unburned fuel from post-injection can make its way through the tight, hot quarters between the piston, rings and cylinder walls. The fuel accumulates in the crankcase and dilutes the oil, which is a major concern regarding engine wear and longevity. 
 
 "Using post-injection you will generally see elevated levels of fuel dilution regardless of what fuel you're using," Sappok says. Because biodiesel has a higher distillation temperature and boiling point, when it's present in the post-injected fuel it tends to dilute the oil on a level disproportionate to its blend ratio in the fuel. Fang says this is just now becoming understood. 
 
 Through his work at Cummins, Fang has developed a new algorithm to predict the amount of fuel dilution when running on various blend ratios of biodiesel. "The conventional way to derive the calibration to estimate the amount of fuel oil dilution is completely wrong," Fang tells Biodiesel Magazine. This conventional approach to determining biodiesel's dilution effects on oil when implemented in a lab suggests mixing 5 percent of B20 in fresh oil, then 10 percent B20, and so on to create a calibration curve through analytical means such as infrared (IR) or gas chromatography (GC), the results from which can then be used to predict unknowns using the slope created by those data points. "We cannot use this way to quantify the fuel dilution from biodiesel in the oil," Fang asserts. "The problem is in all IR, GC-any analytical technique really-you assume the concentration is B20 but because ultra-low sulfur diesel (ULSD) is easier to vaporize, the concentration of biodiesel on the cylinder walls is higher than 20 percent, maybe way higher." In fact, Fang has developed a method to more precisely measure this and found that post-injected B20 can lead to as much as 40 percent methyl ester accumulation on the cylinder walls. 
 
 Fang's new method to determine this uses what he calls an oil tracer-a component that is stable, not subject to decomposition or easy oxidation and is compatible with additives. "We monitor the tracer concentration and quantify the decrease and correlate it to a certain fuel percentage and estimate the fuel dilution," Fang explains. There are many different compounds suitable as oil tracers, but Cummins has been using pentaerythritol ester (PE). "It's a very common oil component used for aviation oil, so it's very compatible with oil," he says. The GC or IR signal of PE is far different from the oil and additive signatures so the amount of the tracer can be easily quantified. 
 
 Sappok ran across a different analytical problem: Inordinately high oxidation readings gained from fresh oil and fresh biodiesel mixed. It is his conclusion that the ester peak interfered with the oil oxidation spectra. 
 
 Biodiesel Interaction with Additives and Trace Concerns
 Oil additive packages, which may constitute up to 25 percent of the total lubricant, contain dispersants to suspend soot in the oil, viscosity improvers, over-base detergent used to neutralize any acids built up and zinc dialkyldithiophosphate (ZDDP) as an anti-wear agent. "Look at all of these additives," Fang says. "They are all bipolar molecules-one side of these molecules is very polar while the other is nonpolar. The nonpolar tail is used to sustain the polar head and make it suspended in the oil, which is largely nonpolar." So the additives are relatively polar compounds compared with the base oil, and methyl esters are polar as well. Polar molecules are attracted to polar molecules, so biodiesel in the oil is attracted to the likewise polar additives. "We used spectroscopy to quantify this," Fang says. "The more polar the additives, the more they interact with the biodiesel. And if the biodiesel gets degraded, or experiences thermal or oxidative aging or whatever, the biodiesel will absorb more oxygen and become even more polar, which will generate even more interaction with the additives." 

 
 It didn't take long for Fang to discover the adverse effect aged biodiesel has on ZDDP, the anti-wear additive. ZDDP is chemically designed to be attracted to the metal surface of the cylinder walls and to form a protective layer. "But if you've got biodiesel in your oil, and the biodiesel likes to go to the metal surface too because the metal surface is polar, the biodiesel competes with the additive over the metal surface," Fang says. Although there are complex interactions between the biodiesel and additives affecting the functionality of the additive, Fang suggests the mere fact that biodiesel and ZDDP compete for surface area on the cylinder walls is troublesome enough. The effectiveness of detergents is also mitigated by the presence of biodiesel in the oil. 
 
 New diesel engines require the use of low-ash oil as found in the CJ-4 oil standard, which limits ash content of the lube to 1 percent. "The ash in the oil is mainly coming from the additives-anti-wear, detergents, dispersants-and currently the oil companies are limited as to how much additives they can use in the oil because, as the additives are consumed through normal operation, they end up in the diesel particulate filter," Sappok tells Biodiesel Magazine. 
 
 At MIT, Sappok is interested in how trace contaminants resident in biodiesel-even that which is within the ASTM spec-may cause trouble downstream. Calcium and magnesium are limited to 5 parts per million (ppm) in D 6751, the B100 spec. Sappok says 1 ppm of trace metals in the fuel can equate to as much as 1,000 ppm of the same material in the engine oil. "Oil consumption is about a thousand times less than engine fuel consumption," Sappok says, which is where his calculation comes from. According to him, even biodiesel within the trace metals specification can lead to inordinate concentrations of potentially damaging metallic ash loading in the DPF. Sappok's concern is that ash from trace metals in biodiesel may either contribute to ash buildup in DPFs, facilitate a gradual deactivation of the catalyst used in regeneration, or both. Ongoing research conducted by Sappok will lead to a better understanding of how sodium and potassium ash specifically affect aftertreatment systems. "There's not been a lot of work on this yet," he says. 
 
 Fang doesn't buy this argument about trace metals in biodiesel, and the 1:1,000 ratio of contaminants present in the fuel versus that which ends up in the oil. "We've never seen that ash can cause trouble for the DPF," Fang says. "If the regeneration scheme is good, the ash is not an issue. … The MIT estimates are too high from my point of view." 
 
 Even though for years biodiesel has been heralded as a lubricity additive helping keep fuel system components like the moving parts inside fuel injection systems operating smoothly, the bitter irony here is that, when post-injected, it tends to dilute engine oil and interacts with additives and increases the possibility of engine wear. Much work remains developing viscosity improving, anti-wear, dispersant and detergent additive packages in which adverse reactions with biodiesel are significantly reduced. 
 
 Ron Kotrba is a Biodiesel Magazine senior writer. Reach him at <a href="mailto:rkotrba@bbibiofuels.com">rkotrba@bbibiofuels.com</a> or (701) 738-4962.

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Many diesel engine manufacturers have implemented what's called post-injection, the introduction of fuel late in the combustion cycle, as part of an advanced control strategy to reduce emissions. Biodiesel Magazine looks at how post-injection of biodiesel blends facilitates dilution of engine oil while interacting with oil additives to potentially accelerate engine wear.

Understanding the Post-Injection Problem

Craig Shaver has taken on the monumental task of single-handedly making sure the president's renewable fuel goals are met. The Florida businessman's year-long battle to build a biodiesel plant near Dundee, Fla., ended in failure, leaving him with a $2.5 million empty lot. He threatened to sue the city, but decided instead to move on to another town. 
 

 Along the 45-mile route, he's preaching the gospel of biodiesel loudly, insistently and unwaveringly. Meeting President George W. Bush's renewable fuels standard is a patriotic, practical and a positive step in making the country energy independent, Shaver maintains to anyone who will listen. "This is an important story," he says. "Not because it's mine, but because people need to be educated. There's a fear of the unknown and I feel people are against biodiesel for no good reason. It's good for the country."
 
 Mandate's Ground Zero: Dundee, Fla.
 Shaver's fight with Dundee started in early 2004 when he applied for a zoning change to operate a crane business on a parcel of land he owned adjacent to a propane business on the outskirts of town. By January 2007, he'd caught biofuels fever, changed plans and proposed building a biodiesel plant on the site, calling his company US Biodiesel Inc. Dundee, a town of 3,400 residents, is nestled on the Highway 27 corridor, which runs through the heart of Florida, from Miami north to Maine. Shaver's plant was a closed-loop design, engineered to produce 20,000 gallons of fuel a day. The major commercial highway was a big draw, because Shaver's business plan called for manufacturing and distributing the fuel on-site, "like a truck stop," he says. He wanted to capitalize on the heavy traffic flow, selling to a captive audience. 
 
 Shaver purchased tanks capable of storing 150,000 gallons of feedstocks, and had a building on the site. "Basically, we had the complete infrastructure minus the processing and equipment," he says. It wouldn't have taken long to ramp up production. Shaver and his engineer researched feedstocks and although they had imported jatropha seeds, they were concerned as feedstock prices rose precipitously. His engineer was able to adapt, he says, using new process technology to accommodate cheaper grade feedstocks. He looked at beef tallow, waste vegetable oil and waste grease. He arranged a tentative deal with a Brazilian supplier to import crude soy oil for five years. "It was a great plan until the city turned us down," he says. Shaver claims his property had the correct land use and zoning for the proposal. Not so, say city leaders.
 
 "It did not fit into our comprehensive plan," says Bob Kampsen, a Dundee Town Council member, and the only city official willing to go on record about the dispute. "It was not zoned properly. The zoning was for light industrial and we considered a biodiesel plant a heavy industrial use."
 
 Shaver, who says he had "one of the best land-use attorneys in the county," disagreed. He and his attorney concluded the land was properly zoned and that he was illegally denied a permit. Dundee and its attorney said the distinction between light industrial and heavy industrial use might have been a fine point but an important one nonetheless. And city leaders denied they were too rigid in their interpretation of the city zoning ordinance. "Unless our comprehensive plan provides for a heavy industrial area, I don't foresee any biodiesel or any type of manufacturing, which is classified as heavy industrial," says Kampsen, a local citrus farmer. "I don't see any of those floating."
 
 Debate Takes a New Turn
 On January 22, when the Dundee Town Council launched a lengthy discussion of the project, talk turned from zoning issues to a more explosive topic-the potential for a biodiesel plant to catch fire. Councilman Randy Dowd said he conducted research on the issue and he didn't like what he found. He declared biodiesel plants a potential fire hazard. He declined to comment further to Biodiesel Magazine. Another council member said while he supports the space shuttle program, he didn't want one taking off from the Winn-Dixie parking lot. Residents and business owners banded together in opposition to the plant on the grounds that it would cause odor problems, disturb a tranquil area and uproot an eagle's nest. That's when Shaver got mad. The propane business across the street had a lesser zoning use: commercial. "We had light industrial yet they were able to keep a flammable gas there but we couldn't put a biodiesel plant on our land," he protested. "At any given fuel station within city limits, even the diesel is more flammable than biodiesel."
 
 Shaver went away mad, threatening to sue the town. It probably didn't help his case when he referred to the townspeople as "uneducated and afraid of the unknown." But since the town seemed dead set against biodiesel, it probably didn't hurt him, either. He then channeled his anger into a more productive venue. He sent his engineer to set up a booth at the National Biodiesel Conference and Expo in nearby Orlando, Fla., in February. "A councilman from the panhandle saw the display," Shaver says. "They're just begging for biodiesel there. They have farmers interested in doing it." But he quickly learned that the cost of moving so far upstate wasn't advantageous, so he embarked on a central Florida tour-part educational mission, part developmental quest.

 
 On March 5, President Bush gave Shaver's quest a much needed boost. Addressing the Washington International Renewable Energy Conference, he discussed his 36 billion gallon by 2022 goal. "These aren't just goals, these are mandatory requirements," the president told conference attendees. "I'm confident the United States can meet those goals, and I know we must, for the sake of economic security, national security, and for the sake of being good stewards of the environment. ... Biodiesel is the most promising of these fuels."
 
 The Green Debate Through the Permitting Process
 Kampsen says it's wrongheaded to think that Dundee doesn't want to participate in the president's biofuels mandate. It simply wasn't the best fit, he maintains. "I'm very sensitive to the environment," he says. "I have a small 10-acre grove and as far as chemicals that I use, and the caretaker of the grove uses, we're very sensitive." He says he doesn't know how Shaver got the idea that the council was against alternative fuels in general. "There's a lot of speculation about green industries in Florida," Kampsen says. "Down south they're talking about the sugar waste being used in alternative fuels. There are many industries interested and speculating on alternative fuels and what crops can be used. I can't speak for the rest of the council but this biodiesel plant just didn't fit into our comprehensive plan."
 
 Steve Snyder is a zoning and development attorney in Syracuse, Ind., who has worked both sides of the fence. He's helped small towns shore up their zoning ordinances and comprehensive development plans. He's also assisted biofuels industries to fit into those schemes. He says that although he hasn't been involved in the Florida case, he's familiar with the premise. "This issue is raised in all types of zoning situations when additional governmental permits for nonzoning approvals are required," he says. "Typically new industry requires some type of air or water permit from the state or federal environmental agency, but also requires zoning approval from the local Board of Zoning Appeals. The two operate on totally different standards." 
 
 But he also says that, "zoning ordinances normally have much more nebulous standards. … health and welfare of the community, effect on adjacent property values, compatible land uses and preserving the purpose of the zoning ordinance." While zoning ordinances give discretion to local zoning boards to approve or deny a permit, environmental agencies issue a permit if their standards are met. "Because the two groups represent different constituencies, their respective decisions on the same project could be completely opposite," Snyder says. "That doesn't mean either was right or wrong."
 
 Shaver disagrees. He's a patriotic guy and thinks he has a duty as a citizen to implement the president's goal, along with the rest of the citizenry. He wonders where all those plants will be built to carry out that goal if no one wants them. Population centers that have the infrastructure and transportation systems in place should be willing to step up, he maintains. New technologies have made biodiesel plants noiseless, odorless, and have significantly reduced the fire hazards, he says.
 
 Small Towns Versus the Feds
 "Philosophically, I'm a firm believer in local controls," Snyder says. "Statewide or federal agencies are seldom capable of understanding truly local considerations." Conversely, Shaver believes township boards are myopic and are missing the big picture. He's moving toward a more rural area currently and is in talks with a neighboring county, where he believes the talks are going well. "People are uneducated about biodiesel," he says. "They're not allowing this industry to flourish the way it should."
 

 Snyder, a big-picture guy, disagrees. "If federal policies promote ethanol, that doesn't mean local boards, familiar with local conditions, rebuke that policy if they reject a particular project," he says. "It just means the project didn't meet the standards of development legally established by the local zoning ordinance. Concurrent jurisdiction of both state/federal and local agencies is a way of assuring that the interests of all elements of a community are considered before a decision regarding any project is made." 
 	
 Sarah Smith is a Biodiesel Magazine staff writer. Reach her at <a href="mailto:ssmith@bbibiofuels.com">ssmith@bbibiofuels.com</a> or (701) 663-5002.

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When President George W. Bush proclaimed biodiesel the most promising renewable fuel, one that could help meet his 36 billion-gallon goal, he was likely unaware that this mandate would set off a debate now taking place across America: don't build here or anywhere near here.

A Man on a Mission

Passage of the Energy Independence & Security Act of 2007, and the dramatically increased renewable fuels standard (RFS) within it, took renewable identification numbers (RINs) from a necessary pain to a marketable commodity. Between December and February, the value of RINs grew from 0.25 cents to 5 cents, according to Paul Machiele, fuels center director for the U.S. EPA. The program is in its infancy and RINs aren't well understood, but initial indicators show that they have the potential to be a significant environmental currency. 
 
 RINs are mechanisms the EPA created to ensure compliance with the first RFS. The Energy Policy Act of 2005 mandated that obligated parties, which include refiners, importers and gasoline blenders, fulfill a renewable volume requirement. The requirement is that a certain percentage (released by the EPA every November) of each party's motor vehicle fuel be renewable fuel. This necessitated the development of a flexible accounting mechanism to track compliance with the new renewable fuel blending requirements. A RIN is a unique, 38-digit serial number assigned by producers to each gallon or batch of renewable fuel produced. An obligated party acquires RINs by blending renewable fuel, or it can purchase RINs to satisfy its requirement.
 
 The EPA issued the final rule on RINs in May 2007, and it went into effect that September. Just three months later, long before the kinks were worked out, Congress passed EISA along with an even greater and more complex RFS. EISA requires that the EPA issue a rule for the second RFS by Dec. 19, 2008, which would be effective by Jan. 1, 2009. The EPA is simultaneously enacting the rule while updating it within what Machiele told attendees at the National Ethanol Conference in February is an extremely short time frame. He gave the same presentation at the National Biodiesel Conference earlier in the month.
 
 The beauty of the RIN system is that it was developed as a foundation upon which other regulations could be built. Machiele said the RIN system should remain virtually intact with 38 digits, but the values of some of the digits may need to be redefined. 
 
 In the first RFS, the EPA needed to keep track of two types of fuels: cellulosic ethanol and everything else. The renewable type code is the 22nd digit-cellulosic ethanol is designated as a 1 and other fuels are designated with a 2. This ensures that the cellulosic requirement will be met. Under the new RFS there are more numbers that must be tracked. In addition to cellulosic biofuel, EISA has separate inclusion requirements for biomass-based diesel and advanced biofuel. "With RFS1, we put in a code to prepare for cellulosic ethanol," Machiele said. "With RFS2, instead of 1 or 2, we'll now have 1-4. There will still be one RIN code, but the RIN will have a different value." The difference in these numbers will be reflected in the RIN's market price.
 

 Fuels other than corn-based ethanol have qualified for RINs by equivalence values, which are represented by the 20th and 21st digits. Equivalence values are based on volumetric energy content in comparison with corn ethanol, and determine how many RINs the fuel is worth. For example, 1 gallon of biodiesel is worth 1.5 RINs, while 1 gallon of corn ethanol receives one RIN. For fuels not already designated within the rule, the EPA created a formula to determine the energy equivalence value of those fuels compared with corn-based ethanol. This makes an easy transition to accommodate the advanced biofuels required in the second RFS.
 
 The advanced biofuel requirements can be built into the existing system, but there are other more difficult changes the EPA is addressing. Machiele said one of the greatest 
 challenges, on which most of the EPA's time will be spent, is the new lifecycle greenhouse gas criteria. EISA requires that renewable fuels meet a 20 percent lifecycle greenhouse gas threshold relative to the gasoline or diesel fuel they displace. The EPA must determine the lifecycle performance of the various fuels, and will address how to include emissions resulting from international land-use changes.
 
 "If you thought RFS1 was interesting, RFS2 will have you on the edge of your seats," quipped Jim Redding, vice president of external relations for Aventine Renewable Energy Inc. 
 
 RIN Markets and Values
 While these changes to the rule are being discussed among stakeholders, RINs on today's market are increasing in value, and are seeing trade activity. Several companies have sprouted to accommodate RIN trading. On Jan. 30 of this year, a trading platform for RINs opened, called RINXchange. RINXchange is a Web-based trading platform that enables buyers and sellers complete transparency and price discovery. It's open to the expected customers, such as producers, refiners, blenders, marketers and importers, as well as the occasional speculator. Like RIN trading in general, this trading platform is still in its infancy. "The lion's share of RINs is currently traded on a bilateral basis," says Clayton McMartin, president of the Clean Fuels Clearinghouse, which operates the RINSTAR Renewable Fuels Registry. "They're being traded as direct negotiations from buyer and seller. By a long margin, most RIN transactions are being done as an extension of the physical product that's being traded." He adds that his company's product, RINSTAR, facilitates RIN transactions, but it doesn't get involved with price discovery. 
 
 As previously mentioned, RIN values have increased since the passage of the 2007 Energy Bill. Future RIN values will certainly be affected by availability, but likely even more so by type. For example, when the new RFS goes into place, there could be a premium paid for biomass-based diesel RINs. In 2009, obligated parties must blend 500 million gallons of biomass-based diesel. Because the parties must own this type of RINs to demonstrate compliance, there will most likely be a premium paid for the RIN generated from biomass-based diesel. 
 
 To keep the market from spinning out of control, the EPA has a relief valve. The agency will have the authority to mint RINs or waive the requirement under certain conditions. The cellulosic biofuel waiver, required in the legislation, allows the EPA to reduce the standards for advanced biofuel and total renewable fuel accordingly, and to make EPA credits available for sale at the greater of 25 cents per gallon or $3 per gallon less the wholesale price of gasoline. At today's prices, this equates to approximately 70 cents per 
 gallon.
 
 There's a wild card that may or may not affect RIN values, McMartin says. "It hasn't developed yet, but it could." He points to other markets, where companies, academic institutions and government entities voluntarily purchase renewable energy credits or join the Chicago Climate Exchange to reflect sustainability values. "To date, RINs have not been recognized as a vehicle from a sustainability or environmental stewardship motive," he says. "If they are, that will drive the value of RINs. For instance, a sustainability purchaser buys RINs, takes them off the market and doesn't make them available to obligated parties. That increases the market for RINs." At RIN prices of about 3 cents, a fleet manager could offset the annual fuel consumption of 1,000 vehicles for just $30,000, he says.

 
 If it goes forward, McMartin says environmental stewardship purchases would drive the value of RINs more than anything else. If not, RIN value will likely be dictated by simple transportation logistics. "Unless there's a new dynamic like sustainability or another environmental wild card, RINs will likely stay in the 3- to 5-cent range, a number driven by transportation costs," he says. "It costs nothing to move a RIN, but it costs to move a gallon of gasoline-about 3 to 5 cents." 
 
 Carbon Credit Exchange
 The RIN system may also be the foundation of a carbon cap-and-trade system. RINs could act as the currency for carbon credit trading and compliance, just as they do now for renewable fuels, Machiele said. This scenario may become reality as soon as 2012 if proposed legislation is enacted. In October 2007, Sens. Joseph Lieberman, ID-Conn., and John Warner, R-Va., introduced Senate Bill 2191 as America's Climate Security Act. It creates an economywide greenhouse gas cap-and-trade program that provides maximum flexibility for the marketplace to meet a level of emission reductions that is environmentally credible. In December, by a vote of 11-8, the Senate Environment and Public Works Committee favorably moved the Lieberman-Warner Climate Security Act to the full Senate with a bipartisan list of cosponsors. This is the first time in the United States that a bill mandating economywide reductions in greenhouse gas emissions has reported out of committee in the Senate or the House. According to Lieberman's office, the full Senate is expected to consider the measure in June. 
 
 The fact that RINs could be used in a carbon cap-and-trade system didn't happen by accident. Before Congress passed the Energy Bill, Machiele's team at the EPA was working on a metric for carbon levels, as part of a U.S. Supreme Court interpretation of the Clean Air Act that carbon dioxide is an environmental pollutant.
 
 "I think it goes beyond the boring compliance," says Douglas Cummins, managing director of RINXchange. "The EPA created the market by separating the person who generates the RINs from the person who has to use it. Usually, EPA doesn't create a system without it being applied to another product." McMartin explains how the same equivalence values and renewable type code previously described could be used to move RINs from a volume-based program to a carbon-based program. "Today's RFS is an energy-content based 
 standard," he says. "Instead of being based on energy, it could be based on carbon impact. The way the program is set up today, only three numbers would have to change." 
 
 McMartin is careful to admit that this is just his own educated guess. "I have no idea, nor does anyone else, what the future holds on fully integrating cap and trade with the RFS and RIN program," he says. "My guess is the RIN program will continue to expand to even encompass stationary sources like power plants. There's no reason it can't. The EPA is pretty sharp on this. You could tell they were anticipating changes and made accommodations on RIN numbering and programming to accomplish that." 
 
 Anduin Kirkbride McElroy is a Biodiesel Magazine staff writer. Reach her at <a href="mailto:amcelroy@bbibiofuels.com">amcelroy@bbibiofuels.com</a> or (701) 738-4962.

Renewable Identification Numbers are becoming increasingly important not just for people in environmental compliance or accounting, but also for those in marketing, investing and sustainability.

Will RINs be the Next Environmental Currency?

Residents of San Francisco, which is occasionally called "Fog City," are accustomed to having variations of thick, white mist roll through their neighborhoods at all times of the year. But there's another kind of "fog" in San Francisco-fat, oil and grease (FOG)-that has been clogging city sewers for years and had became such a problem that the city needed to take aggressive measures to combat it. 

 
 The San Francisco Public Utilities Commission estimates that 50 percent of the city's sewer-related emergency calls are in response to backups caused by grease blockages. 
 
 Removing those blockages costs taxpayers $3.5 million each year. "It's like fat in human arteries," says Karri Ving, SFPUC's wastewater division biofuels coordinator. "The FOG clings to [drain] walls and forms hard-to-remove buildup." Restaurants and other food-service establishments illegally dumping waste oil from fryers into drains are usually the culprits. 
 
 To help rid the city of clogged sewers, a city-funded program called SFGreasecycle was launched in November 2007 to collect used cooking oil from food-service establishments free of charge. "We could have just dealt with the problem by constantly releasing sewer blockages and addressing overflow issues, but we decided to take a preventative approach to the matter and actually work with restaurants to keep them from pouring oil down the drain," Ving says. "We offer free collection of waste cooking oil to any food service business in the city. They get to dispose of their oil for free and don't have a financial obligation to do the right thing." The program has been a good investment for the city thus far, costing $1.3 million per year, which is less than half the cost of annual grease-related sewer repairs.
 
 SFPUC General Manager Susan Leal says the program can be considered a success for two other reasons. "It has improved our wastewater processing and collection system," she says. "We've already seen results with fewer blockages in our sewers. The bigger effect we see is the fact that we are taking charge of what would have been a problem, turning it into a win for us and also serving as a model for other cities."
 
 The oil collection service is just one aspect of the city's master plant. The goal is to create a closed-loop system and become entirely self-sufficient, Ving says. At the same time that the SFGreasecycle program was started, the city began fueling its 1,500-vehicle fleet with B20. The biodiesel is made from soy oil squeezed from soybeans produced in the Midwest. As fleet operators and mechanics become more accustomed to biodiesel, the city plans to gradually raise the biodiesel in its fuel from B20 to B100. The city's fleet uses about 6 million gallons of diesel each year; this year 1.2 million gallons of that fuel will be biodiesel. Ving says they are working on creating a sustainable local biodiesel supply. 
 
 The city wants to switch to local producers in 2009. Ideally, those producers will create biodiesel from the city's collected waste oil and sell it back for use in San Francisco's fleet.
 
 Participation Level
 The city's master plan hinges on the success of the SFGreasecycle program. According to Ving, 1.2 million to 1.4 million gallons of waste oil is produced by San Francisco eateries each year. Of the 2,600 food-service establishments in the city, about 250 of them are participating in the grease recycling program. Ving says restaurants, museums, churches, synagogues and even a ship, the Vessel Cape Horn, have signed on to participate in SFGreasecycle through word-of-mouth advertising. "We're not rushing into signing every single establishment," Ving says. "We want to make sure we do it right and honor our commitments."
 

 One of the first restaurants to enlist in the program was Puccini and Pinetti, in downtown San Francisco. Executive Chef Keira Moritz says they called to sign up before the program had even begun. She can't think of anything negative to say about it. "Right now they're a little snippy with us because we keep moving the drums around back there," she laughs. "But it's going well. We like the boys who pick up the grease. They rock." The city provided the restaurant with four 55-gallon collection drums and empties them twice a month. According to Moritz, the restaurant generates 10 gallons of used fryer oil every day. She says the hospitality group that owns Puccini and Pinetti likes to take part in environmentally friendly practices. Before signing up for the city's program, the restaurant was paying $125 every month for a recycling company to haul the used oil away. By participating in SFGreasecycle, they still feel good about what happens to their used oil and they save money. 
 
 Farshid Asaddehghan, owner of Santorini restaurant on O'Farrell Street, recently signed up because he likes the thought of helping the environment, recycling and giving back to the community. Before participating in SFGreasecycle, he had to pay up to $150 a month to dispose of used fryer oil. Now, a biodiesel-fueled city collection truck stops by once every two weeks to empty the 55-gallon barrel of used oil behind the restaurant. The no-cost removal is "just another reason" to participate, says Asaddehghan, who thinks it would be worthwhile even if it wasn't free. There are no contracts for restaurant owners to sign, so they can call and cancel at any time. Asaddehghan believes most restaurants in his neighborhood are taking advantage of the free collection program. "Everyone in San Francisco is environmentally friendly," he says. "We're a small city but have lots of people and we all like to do what we can to help out."
 
 Once SFGreasecycle was launched, other grease collection companies began to offer free pickup, but restaurants still choose to sign on with the city, Ving says. "They see the trucks driving down the street and they want those trucks to be running on biodiesel rather than fossil fuels," she says. "They get the big picture. We want to keep our waste that has a high organic energy component right here in the city and utilize as much of it as possible and restaurant managers get that."
 
 Ving says the current focus of the program is to educate and reach out to area restaurants suspected of illegally dumping used oil into the city's drainage system. Restaurants that sign up are given advice on how to keep used cooking oil in good condition for reuse. "We want the oil to be as close to virgin oil as possible and restaurants have been really receptive," she says. Properly stored oil results in a near 1:1 ratio of oil to biodiesel. However, Ving says that even if the oil is not in prime condition it can still be utilized. "Because our collection station is located within our sewage treatment plant, we're able to use every drop of that material for some form of bioenergy. If it's not made into biodiesel, it can be discharged into our digesters for methane production which helps offset the amount of electricity we need to pull from the grid."
 
 Producers Benefit
 Tellurian Biodiesel Inc. is one of the city's local biodiesel suppliers. Joe Gershen, vice president of sales and marketing, says his company is also working on producing biodiesel from brown grease collected by the city. Tellurian recently acquired the technology to convert this low-cost feedstock into biodiesel and will be involved with a production pilot plant colocated with San Francisco's waste treatment facility. 
 
 The California Energy Commission awarded San Francisco a $1 million grant to develop a brown grease biodiesel demonstration facility. "We're very excited about this plant," Ving says. "The state asked us to develop a demo plant to show that it's possible for any sewage treatment plant to-with minimal upgrade-turn into an energy recovery facility." Ving says the goal is to run a successful ASTM-grade biodiesel facility for four years. Grant money will be matched by the SFPUC and private engineering partners. 
 
 There are several local producers who purchase used oil from the city and are potential suppliers for the future closed-loop system. Ving says producers currently pay the city 30 cents to $1.50 per gallon depending on the quality of the oil. Kumar Plocher, president of Yokayo Biofuels in Ukiah, Calif., says his company occasionally purchases from the city to supplement the waste oil it collects from its own clientele. "When we need it, it's a nice alternative to buying from renderers," he says. The prospect of the city buying back the 99.9 percent biodiesel produced at Yokayo is intriguing to Plocher. "We're a small company," he says. "If we started contracting with a city like San Francisco-pretty soon we wouldn't have any biodiesel to sell to anyone else." Although the possibility exists, Plocher wouldn't speculate, adding that the saturation of biodiesel producers in the area makes companies secretive about future plans.	 
 
 Residential Support

 Two trial residential collection events were held during the 2007 holiday season to coincide with the official launch of SFGreasecycle. The first event was held after Thanksgiving and consisted of one drop-off site at a Costco grocery store. Ving says the city collected 7,000 pounds of used cooking oil that day. "People brought it in Mason jars, coffee cans-whatever they had," she says. "It was a shocking, wonderful success."
 
 After the popular holiday drop-off events, a collection site was established at the San Francisco household hazardous waste facility. The site continues to bring in about 250 gallons of used oil every month, Ving says. "Residents want to do the right thing," she says. "They just want it to be a little easier." There is only one other used oil collection site available to residents. However, the city wants to increase that number and plans to have 12 sites in operation by October 2008, Ving says. A residential program is essential to the success of SFGreasecycle because it will reduce the grease that clogs city sewers and provide for more biodiesel production to fuel city vehicles, she says. Residents generate about the same amount of used cooking oil each year as restaurants do, which is why their participation is so important. It all adds up to the ultimate goal of having a closed-loop system that will stand as an example for municipalities around the world, Ving says. "Our intention is to show that any community in the world can import less fossil fuel into their community and export less waste," she says. 
 
 Kris Bevill is a Biodiesel Magazine staff writer. Reach her at <a href="mailto:kbevill@bbibiofuels.com">kbevill@bbibiofuels.com</a> or (701) 373-0636.

San Francisco is on its way to becoming an even brighter shade of green by starting a program to collect the waste fat, oil and grease (FOG) that clog city sewers and cost taxpayers 
millions, and turning it into biodiesel to fuel the city's fleet.

The 'FOG' is Lifting

When it comes to underground mines, the puff of black smoke emitted by diesel engines is an image that may soon be delegated to the history books. As of May 20, metal and nonmetal underground mines are required to reduce miners' personal exposure limits to diesel particulate matter (DPM) to a level where engine exhaust would barely be visible. A number of measures can be taken in a mine to achieve this including replacing old engines with the newer, low-DPM engines, fine-tuning diesel maintenance and using exhaust filters. Personal exposure can also be reduced by boosting ventilation rates in mines and installing sealed, environmental cabs on heavy equipment. 
 
 Switching to higher biodiesel blends is becoming a popular solution to reduce DPM levels, and in some cases, it's the only solution. In 2001, when the regulations were first proposed, a number of studies were done in mines, says Richard Nelson, director of engineering extension at Kansas Sate University. "They found that biodiesel took you from where you were, closer to these personal exposure limits in a big chunk." Bill Pomroy a spokesman for the Mining Safety and Health Administration says inspectors have seen DPM levels drop from 300 to 800 micrograms per cubic meter of air to 50 to 200 micrograms. The only change that was made was to switch from straight diesel to B100 (see charts on page 71).
 
 As the May 20 deadline approaches, some mines are already in compliance, dropping DPM levels to 160 micrograms per cubic meter of air, while others struggle, according to Pomroy. There are fewer than 200 metal and nonmetal mines (basically all mines that aren't coal mines) in the United States. Materials mined underground include gold, platinum, gypsum, limestone, salt and potash. 
 
 The Renewable Energy Group Inc. headquartered in Ames, Iowa, has been supplying biodiesel to one underground mining customer since 2004. Jon Scharingson, REG's director of marketing, says 15 to 20 mining companies across the country are already using biodiesel blends at some level. Because several of those companies operate multiple mines, those mining companies would represent 20 percent to 30 percent of underground mines currently using biodiesel. That leaves plenty of room for growth. "We'd anticipate that number increasing dramatically over the next six to 12 months," Scharingson says. The future looks even brighter as the mining industry is growing in response to record-high commodity markets.
 
 <center><img src="/images/upload/20080416102923.jpg" alt="" />

 <img src="/images/upload/20080416102938.jpg" alt="" /></center>
 Compliance charts from two mines show the difference in DPM exposure levels after introducing B100. The data is gathered by placing monitors on mine employees to measure their personal exposure. The charts show the levels of personal exposure to elemental carbon in micrograms per cubic meter of air, with each miner monitored indicated with a circle. The one data point for biodiesel above the dotted blue line in Mine B demonstrates that in some instances biodiesel alone will not be able to get the personal exposure limits to the mandated level. 
 SOURCE: MSHA
 
 The good news for biodiesel producers is that this growing market has the potential to use large quantities of biodiesel. In studying the mining market for the National Biodiesel Board, Nelson found Census Bureau data that indicates this group of mines uses 500 million gallons of distillates each year. Biodiesel will not replace all distillates, and not all mines are listed in the data because categories with just one or two players are not reported, he says. "A couple of mining companies we've had discussions with are using about 1 million gallons a year," Scharingson says, "It's not insignificant volumes we're talking about. Its lots of pieces of heavy equipment they're running around the clock."
 
 Underground Experiences
 In Iowa, Martin Marietta Materials Inc. owns five limestone mines that operate eight to 14 pieces of equipment underground at any time, ranging in size from 5- to 9-yard loaders, 40- to 60-ton trucks, drills and other diesel-powered equipment. "We tried various lower [biodiesel] blends with mixed results-5 percent, 10 percent, maybe up to 20 percent," says Todd Clock, vice president, general manager of the Des Moines district. "Once we found that it didn't do a lot for us, we went to B99 in late 2005." Filter plugging was the only problem that emerged initially during the transition. That was taken care of by installing a filter on the storage tank. Winter cold storage isn't an issue because the fuel can be stored underground. 
 
 Despite the success the company has had using biodiesel, there are some issues that need to be addressed. "My biggest concern now is cost," Clock says. "It certainly has become very expensive." High prices, and the possibility that the price of biodiesel could continue to rise for an extended period of time, prompted him to evaluate other options such as adding ventilation shafts. "We thought we had found the magic bullet," Clock says. "We did for a time." Even though it's not cheap to add a ventilation shaft, it may pay for itself in the long run if fuel costs continue to climb, he says. 
 
 Ironically, the renewable fuel is sometimes hard to procure, even though Marietta Materials' limestone mines are in the heart of biodiesel country. "There were some fuel shortages off and on in the summertime," he says. "[Our suppliers] would say, 'We're running low' or 'We can't get a tanker in for a week.' If I have any concerns, it may be we may not have the raw product available as soybean oil continues to be in high demand." 
 
 The Stillwater Mining Co. in south central Montana has one of the nation's largest underground diesel fleets, says Rick Collins, stationary maintenance superintendent and the company's DPM reduction project champion. The mining company runs 340 pieces of equipment with engines that range from 13 to 400 horsepower. After participating in biodiesel studies in 2003 and 2004, the company has been using B50 since April of last year. "Biodiesel alone doesn't achieve our goal, but assists in reaching the final limit," Collins says. 
 

 Stillwater Mining is combining B50 fuel with exhaust treatments to meet DPM limits in its palladium/platinum mines. While some mines rely on biodiesel alone, Collins says it makes more sense to combine soot filters with biodiesel because the improvements from biodiesel begin to level out at higher blends. "B20 has reductions at around 20 percent and B50 around 50 percent, but the gain in DPM improvements appears to tail off above 75 percent," he says.
 
 Like Clock, Collins also experienced some minor issues when the mine switched to biodiesel, with cost being the No. 1 concern. Interestingly, the surface operators notice a drop in performance while using the biodiesel blend when compared with No. 2 diesel. However, the company hasn't had any problems nor seen any big difference in engine performance when compared with No. 1 diesel. The company also had to make sure gaskets and hoses were upgraded to biodiesel compatible materials. "We had one minor issue where a hose didn't get changed on a fuel tank, and they recognized it before it blew out," he says. Stillwater Mining also found it challenging to find reliable supplies and a supplier willing to do what was needed to supply biodiesel year around. 
 
 Myth Busting for New Users 
 Scharingson says REG hasn't heard many complaints about winter biodiesel use primarily because the temperature in underground mines is generally a stable 50 degrees Fahrenheit.
 
 Equipment performance issues have also been minimal, he says. "We haven't heard any significant technical issues running biodiesel at 50 percent, 75 percent or 100 percent levels in this heavy construction equipment," he says. "The major OEMs (original engine manufacturers) supply this equipment-Caterpillar, Komatsu and Cummins-and we've been seeing good results in terms of performance, energy utilization and, obviously, the DPM reduction. There have been no negative reactions in terms of how the heavy equipment works at high percentages of biodiesel." 
 
 One of the biggest hurdles that must be overcome for biodiesel producers to get a stronger foothold in the mining market is to make operators aware of the fuel and to educate them on its benefits. "Biodiesel is a new fuel and they're not that familiar with it," Scharingson says. "To some extent we're doing myth busting. Once you sit down with them-most are engineers-and explain that this is similar to petroleum-based fuel products and talk about the attributes of the fuel and the parameters of the ASTM spec and our own internal 
 specs that REG has, they get very comfortable with it very quickly." Outside of the Midwest, in particular, there are misperceptions about cloud point and fuel gelling. "They just need education so they understand if the proper handling guidelines are in place, it's very similar to handling diesel fuel," Scharingson says.
 
 Nelson has been fielding calls from mines that are considering a switch. "The calls we get are on fuel quality, engine performance, warranties and how to handle B100," he says. He advises them to verify fuel quality by getting a certificate of analysis from the petroleum distributor showing that the fuel meets ASTM specifications and has acceptable cloud points. Maintaining quality in storage has not been an issue. "They turn the fuel over quickly," he says. As far as engine warranties are concerned, Nelson reminds questioners that OEMs don't warranty any fuel. "They don't warranty 100 percent diesel fuels either," he says. "They don't make the fuel-they don't supply the fuel." While the uninitiated have questions, Nelson adds, "Everybody I've talked to has had a pretty easy time making the transition."
 
 Nelson wants to study the mining industry's transition to higher biodiesel blends. While MSHA has data from studies showing the impact of biodiesel on personal exposure to DPM, he would like to document the impact, if any, on the equipment after the switch to B100 and provide that information to the NBB and the U.S. DOE. He submitted a proposal to collect data from a representative sample of mines to compare records on performance and maintenance before and after the switch to B100. 
 

 Susanne Retka Schill is a Biodiesel Magazine staff writer. Reach her at <a href="mailto:sretkaschill@bbibiofuels.com">sretkaschill@bbibiofuels.com</a> or (701) 738-4962.

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1109-1294330095.jpg

The nation's underground mines are turning to biodiesel to reduce diesel particulate matter levels to help comply with tighter air quality limits.

Gaining Traction

Visualize the market for biodiesel and you will see movement-trucks barreling down the road or maybe a locomotive. You may even think of a nice Mercedes sedan. But there is another market, one where biodiesel's clean- burning properties make it an easy choice. Biofuels Power Corp. operates a stationary turbine engine burning biodiesel that is helping to light up Texas while making the air cleaner.
 
 Biofuels Power started out with three 1.6 megawatt (MW) diesel-fueled generators it purchased from a utility in Virginia that had upgraded its facilities. These were the first 100 percent biodiesel fueled generators to be hooked up to the power grid in Texas, according to Fred O'Connor, the company's chief executive officer. The venture proved profitable, but changing economics of the biodiesel industry threw the company a curve ball. The Caterpillar generators, being reciprocating engines, needed fuel that met ASTM standards. When they were installed, ASTM quality biodiesel was selling for $1.50 to $2 a gallon. Today the price is more than $4.50. "Soy and all the oils are out of sight," O'Connor says. "It just blew our economics to hell. Therefore we acquired the turbine to prove that [economically producing electricity from bidiesel] could be done."
 
 Biofuels Power expanded by adding a 10 MW turbine generator. O'Connor says the company purchased a General Electric Frame 5 turbine from Egeland Air Force Base in Florida. The company installed the turbine at its site in The Woodlands, just north of Houston. The turbine allows Biofuels Power to use biodiesel fuel that doesn't meet the ASTM standard. "The turbine has a different character," O'Connor says. "What we were able to do is buy off-spec fuel and other waste streams such as used cooking oils and make fuels from that. It makes a lower grade fuel that I couldn't use in a diesel engine but I certainly can put it in a turbine. It makes the turbine a little more efficient based on the price of fuel."
 
 Using lower-quality biodiesel significantly cuts the amount of pollutants generated by the turbine. Biofuels Power brought in an independent testing lab to evaluate all of its generating equipment. The lab found that the Caterpillar engines produced significantly less of all the major pollutants using ASTM standard biodiesel. Testing on the turbine isn't complete yet, but preliminary results show a similar reduction. The one exception, O'Connor says, was for nitrogen oxides. The company is making a series of adjustments to the turbine to lower that final emission product. "It was just an incredible drop [in the Caterpillar generators]," he says. "Testing on the turbine is still going on but, just by virtue of the fuel, there's a drop in CO2 (carbon dioxide), there's no sulfur, the soot is down-all of it is coming down. They can't tell me the exact numbers, but compared with a diesel generator, we are able to knock 90 percent of the pollutants out."
 
 The turbines aren't as efficient as the Caterpillar generators. Those engines consume about 80 gallons of fuel per megawatt hour (MWh) of electrical power while the turbine takes more than 100 gallons of fuel per MWh. However, part of that is made up by the difference in fuel costs. "We go around the nation and around the world seeking out other fuels that people don't know what to do with," O'Connor says. We have closed down plants with inventory remaining, and so forth. We are out there seeking and buying these fuels that would be difficult to put in a diesel engine. But with a turbine, we can make it work."
 
 O'Connor says the company is taking another step towards improving the performance of the turbine by installing a heat recovery steam generation unit. "Basically we are going to take the exhaust off our turbine and generate power with it," he says. "We're going to nearly double the amount of power with the same amount of fuel. It's old technology called cogeneration that's been around for years and years. We're just doing it with renewable fuels. So we are continuing to go on, and as long as our investors continue to be pleased with our efforts I will still be here."
 
 Moving to Higher Blends

 To prove that a biofuels-based power company could be a successful proposition Biofuels Power had to move beyond the recommendations of the equipment manufacturers. At the National Biodiesel Conference in February, O'Connor shared a session with representatives of engine and turbine manufacturers who discussed how their companies were in the second year of a study using 20 percent biodiesel blends in their products. "We figured we didn't need to wait that long," O'Connor says. "The difference between us and other people is that we are doing it. We went out and did it with private investment. We didn't do it with government money. We have the support of a lot of business individuals who say, 'Let's see how we can make this work.'"
 
 O'Connor says that all of Biofuels Power's equipment was purchased used and out of warranty. One of the reasons for that is manufacturers haven't yet agreed to warranty their engines and turbines to run on 100 percent biodiesel. The older equipment is also less expensive, although more maintenance is necessary. The equipment is good, O'Connor says. "We just have to refurbish it, bring it to our area and install it," he adds.
 
 To carry out its vision of a completely biofueled power producer, the company will be installing a steam-powered turbine generator, O'Connor says. "So we will basically produce electricity using biofuels with three major types of generating equipment," he says. "So what we are doing No. 1, is proving that it works. No. 2, we're proving that the economics can work."
 
 Biofuels Power is happy to stay put and to be a player in the Texas electrical power market. Texas is unique in that it manages its own power supply grid. In other states, federal regulations dictate how independent power producers hook into the electrical grid, which is something O'Connor is glad to let others deal with. However, the company is reaching out and assisting those who want to follow in Biofuels Power's footsteps. "We have people who want us to bring them this technology in industrial parks, utilities, military bases and so forth," he says. The company has a subsidiary, Alternative Energy Consultants, to sell the technology across the United States and overseas.
 
 AEC mainly does business in Texas and international markets where it's easier to hook into the power grid. "Going in the federally regulated energy grid, you have to go into individual units, say for industrial parks or green housing centers and get permitted to supply that power directly," O'Connor says. "If we were in South Dakota, say, and had industry [feedstock] streams, we could put in a generating facility. But we would have to devise for you your own little grid, your own little power system. It can be done, and it's not that hard. But you won't be part of the federal grid."
 
 Biofuels Power is the demonstration site for AEC's efforts. O'Connor says a constant stream of visitors from across the United States and around the world come to see how their system works. "What those people are doing is bringing their technologies, gasification, algae and whatever, to us," he says. "Now that there is a place to make it work, they want to see how they can develop their technology with us. We are basically providing a semi-research center for renewable fuels."
 
 Their efforts have attracted attention from more than just potential customers. The Houston area is home to a couple of powerful congressmen, Reps. Nick Lampson, D-Texas, and Kevin Brady, R-Texas. Lampson sits on both the Science and Technology Committee and Energy and Environment Committee while Brady is a member of the powerful Ways and Means Committee. Lampson served on the company's advisory board. "They both have a tremendous interest in renewable energy," O'Connor says. "They have joined in a bipartisan way to support this effort. They have been to the plant several times and brought fellow politicians and other dignitaries with them to show that the facility is working."
 
 The congressmen see the Biofuels Power model as one worthy of duplicating not only because of its use of renewable fuels but also because it has lowered the level of pollution in an area where it's difficult to meet clean air standards. "A third reason they like our work is that we have moved out of the food chain," O'Connor says. "We are using animal fats and waste streams for fuel. We don't use soy or canola, and those things that the cattle growers are worried about. So we have three really strong advantages." 
 
 Jerry W. Kram is a Biodiesel Magazine staff writer. Reach him at <a href="mailto:jkram@bbibiofuels.com">jkram@bbibiofuels.com</a> or (701) 738-4962.

Biofuels Power's 10 MW GE Frame 5 turbine can operate on biodiesel that doesn't meet the ASTM specifications. This gives the company access to lower cost fuels.

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Most think of biodiesel as a motor fuel. But it is much more versatile and can drive steamships and, notably, gas turbines. A group in Texas has been pushing the frontiers of biofuel technology to bring electricity to the suburbs of Houston.

Gallons of Megawatts

Haiti, poorest country in the Western hemisphere, used to be known for its wealth. The Pearl of the Antilles, it was once the richest European colony in the Caribbean. Yet Haiti has seen much strife and instability and its riches have long since vanished.

 
 Once covered with lush woodland, Haiti is today more than 95 percent deforested because of unrelenting demand for firewood as cooking fuel. Only one-quarter of Haiti's energy comes from oil, mostly diesel, all of it imported. Nearly all the rest of the energy consumed in the country is from plant-based wood and charcoal.
 
 It is remarkable, then, that Steve Roberts envisions a thriving biodiesel industry in Haiti. Roberts, along with colleague Joe Foss, is the founder of Haiti Biodiesel, a nonprofit 
 organization with the mission of improving Haiti's economy.
 
 Roberts and others think the key to a burgeoning biodiesel industry and economic security for Haiti is a common weed that grows throughout the country: jatropha.
 "I got involved with biodiesel because some of the people I knew were driving biodiesel [powered] cars," says Roberts, a chemical engineer by training and a businessman who has 
 
 done previous work with a faith-based organization in Haiti. In the course of studying biodiesel he came across jatropha "and realized the plant had a lot of natural advantages to Haiti," Roberts adds. "It grows on marginal lands, it's a nonfood crop and it's native to that part of the world."
 
 Doubling Income?
 Haiti, a nation of 8.7 million, occupies the western half of an island shared with the Dominican Republic. Roberts and his group are working with the Integral Rural Development Organization, or ODRINO, a humanitarian organization in northwest Haiti. In March, they produced a test batch of what they believe to be the first biodiesel made from jatropha in the country. While the batch was admittedly small, Roberts thinks there is enough demand for biodiesel in Haiti to support a jatropha-based industry that would provide a substantial source of income to the country's poor farmers.
 
 Roberts' vision for Haiti Biodiesel is that it will serve as a center for jatropha education and research. The organization will teach farmers how to grow jatropha, collect the seeds and press the oil themselves in small presses acquired through loans. ODRINO will buy the oil and process it into biodiesel, which will power the country's cars, generators and other equipment.
 

 "We think the economics will work out that a guy can grow an acre or half-acre of jatropha and earn for themselves a significant amount from farming," Roberts says. "God willing, we'll double the income of the farmer."
 
 Natural Fence
 Haitian farmers already plant jatropha as a natural fence between rows of crops such as avocados and plantains. Jatropha's leaves and seeds are poisonous and keep foraging animals away. But little research has been done on the plant as a source for biodiesel in the country. The principal challenge for Roberts and others is figuring out how to grow the weed on a commercial scale.
 
 Building an industry from nothing won't be easy, but the political situation in Haiti makes possible what would have been out of reach five years ago. A United Nations mission that began in 2004 has provided some stability to the long-volatile country through the presence of armed peacekeepers headed by Brazil.
 
 In March of 2007, the United States signed an agreement with Brazil to promote biofuels production in Central America and the Caribbean through the sharing of research and the development of industry standards. 
 
 Jatropha holds considerable promise as a biomass crop for Haiti and could provide other benefits as well, according to Haiti's Ministry of Agriculture. "It's a good crop for Haiti," says Emmanuel Prophete, an agronomist in the Ministry of Agriculture's seed department.
 
 Land of Small Farms
 Since jatropha would have to be harvested by hand, production of the plant would be labor-intensive and create many jobs on an island where more than two-thirds of the population is unemployed. Moreover, jatropha will grow on mountain slopes and dry areas that cannot support food crops. The bush has been planted in other countries to prevent erosion-a chronic problem in Haiti.
 
 One acre of jatropha, the seeds of which are 40 percent oil, could produce about 200 gallons of oil-four times as much oil as an acre of soybeans, notes Prophete. Palm oil has a better yield per acre, but palm trees only grow in rainy climates, whereas jatropha thrives in Haiti's arid soil.

 
 "If we can generate economic activity in Haiti, that would be good for Haiti, especially if production is done by local farmers and farmer groups," Prophete says. "That money, instead of being exported to oil-producing countries, would stay in country."
 
 Others agree that any plans for a biodiesel industry in Haiti would have to incorporate and benefit the country's many subsistence farmers. "Haiti is a land of small farms," says Kathleen Robbins, the director of clean energy at Phoenixville, Pa.,-based Green Microfinance LLC, a company that promotes environmentally sustainable microenterprises around the world.
 
 Participating in the Revolution
 Robbins is also the founder of Jatropha Pepinye, a non-profit Haitian business in the community of Terrier Rouge in northeast Haiti that grows and sells jatropha seeds for energy and economic development. "The idea is that the small farmer participates in the revolution and doesn't end up working on a large plantation for a dollar a day," Robbins says.
 Robbins' route to jatropha was roundabout. In 2006, she tried to start a program in which Haitians would use small loans to start businesses renting cell phones. But the diesel generators that power cell-phone towers in Haiti often go dry because operators can't afford to buy imported diesel fuel.
 
 Imported fossil fuels constitute about a quarter of Haiti's energy consumption per year, but account for three-quarters of its energy costs, according to the country's Bureau of Mines and Energy. In 2006, Haiti joined the PetroCaribe alliance, which allows nations to buy cheap oil from Venezuela. But this type of assistance is not an ideal long-term solution for Haiti, according to Robbins. Producing biodiesel from jatropha would dramatically reduce the cost of importing oil while at the same time improving the country's energy security, she says.
 
 Capital, Markets Needed 
 For a biodiesel industry to be successful in Haiti, the country must attract private companies as well as aid from international organizations and development banks, Robbins predicts.
 
 One company already on the ground in Haiti is Jatropha Interbanx SA, a subsidiary of Houston-based Interex Global LLC. Jatropha Interbanx was recently approved for a grant by the United States Trade and Development Agency, an independent foreign-assistance intermediary funded by the U.S. Congress. The grant will allow Jatropha Interbanx to research the commercial feasibility of jatropha-based biodiesel production in Haiti and to establish jatropha-growing cooperatives.

 
 "We expect that there will be a lot of local demand [for biodiesel], inasmuch as all of the petroleum products are imported," says Donald Nicholas, chief executive officer of Interex Global.
 
 The company will create a jatropha center just north of Port-au-Prince, Haiti's capital. The center will serve as a model farm and a place to train and educate farmers in how to cultivate jatropha. Within 10 years, the company hopes to establish 10 regional jatropha farms with a total of 200,000 hectares (494,000 acres) of planned jatropha cultivation, Nicholas says.
 
 Interex Global has also talked with Peoria, Ill.,-based Caterpillar Inc. about testing and developing equipment to run specifically on biodiesel made from jatropha.
 Working with farmers individually will be essential for success in Haiti, says Nicholas. "You have to train people how to grow it, what to look for, how to take care of it," he explains. "Then you have to give them a place to sell it."
 
 The best model for growing jatropha for biodiesel in Haiti is one that includes the coordination of many small-farm cooperatives, Nicholas thinks. This method has led to success in Brazil's biofuels industry. Jatropha Interbanx will work with ABPPM, the Brazilian association of jatropha growers, to develop a model that will work for Haiti.
 
 Cross-border violence
 If all goes well, Haiti could serve as a bellwether for development of biodiesel industries throughout the Caribbean and Central America. The native plants grow naturally in a "jatropha belt" of countries, Nicholas notes. Any of these could have the potential to support a biodiesel industry.
 
 While each country has its own economic climate and unique set of challenges, investors would certainly be encouraged by the success of a biodiesel industry in Haiti, a country as beset by hardship as any.
 
 "What people are globally looking for from jatropha is that first commercially viable, commercial-scale project," says Carla Tully, an investment officer at the Inter-American Development Bank, a regional lender that funds development in Latin America and the Caribbean "It doesn't matter where it is. What matters is that it works commercially. Other countries that see Haiti do it successfully, other investors are going to look at that and say, 'Wow, maybe we can do that here.'"

 
 An additional benefit of a biodiesel industry in Haiti could be better relations with its neighbor, the Dominican Republic, says Johanna Mendelson Forman, a senior associate at the Center for Strategic and International Studies in Washington, D.C. The two countries have a history of cross-border violence, but a common interest in biofuels production would be a powerful way to encourage both countries to foster peace, Forman thinks. She has talked to organizations in both Haiti and the Dominican Republic and says her inquiries about biofuels met with a positive response. "Frankly, the whole issue of renewable energy and the environment is an islandwide issue," she says. "You can use this as part of the binational discussions."
 
 Meanwhile, Roberts says Haiti Biodiesel expects to install its first biodiesel facilities in Haiti later this year. It will build a small biodiesel plant, producing a few thousand gallons per year.
 
 Even that small output means much work must be done first, including testing varieties of jatropha in different soil types to see what combination yields the best seeds for oil production.
 
 A key step will be persuading skeptical farmers to cultivate what to them looks like a weed. However, once the farmers have seen for themselves the benefits of growing jatropha, Roberts says, they are quick to get on board.
 
 "The folks that have seen us make biodiesel and have run it in their engines, they're excited as can be," Roberts claims. "That you can take a plant like that and make fuel for their engines, they couldn't quite get that until we showed them how do to it." 
 
 
 Eric Kroh is a Chicago-based journalist who writes and creates multimedia content about biofuels and the environment.

A biodiesel industry will make use of old-fashioned muscle power for crushing jatropha seeds.

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The Western hemisphere's poorest nation faces the same dire problems with fuel cost that the rest of the world encounters. But for once Haiti may have a head start. Its farmers already work with a native plant called jatropha.

Can Biodiesel Power Haiti?

In the past five years, developers, researchers, small production facilities and financiers of projects in the biofuel industry argued in different forums that it was important for the Mexican government to enact a biofuels law to provide the certainty needed for the development of the biofuels market. It now appears that the old saying "be careful of what you wish for, you may just get it" is completely applicable for this legislative development. The Law for the Promotion and Development of Biofuels, which was published Feb. 1, 2008, in the Federal Official Gazette, became effective Feb. 6, 2008. Several surprises were offered for those same advocates of regulations and instruments.
 
 The biofuels law clearly states in its title that its main objectives are the promotion and development of biofuels in Mexico. However, it does not create a direct incentive for those that desire to participate in this nascent industry. Most of the content of the biofuels law is aimed at describing the prerogatives of different ministries within the federal administration to regulate the development of the biofuel industry in Mexico.
 

 For example, the biofuels law mandates the formation of an Inter-Ministerial Commission for the Development of Biofuels with the participation of the following ministries: Energy (SENER), Environment & Natural Resources (SEMARNAT), Agriculture, Cattle, Rural Development, Fisheries and Food Supply (SAGARPA), Economy (SECON) and Tax Collection and Administration (SHCP). Another of its main objectives is to promote and regulate the development of the agricultural sector in Mexico. This law is aimed to fully expand on constitutional articles 25 and 27 section XX that discuss the state planning tool of the federal executive to orient the economic development and the development of the rural sector in Mexico. It is also aimed at devoloping the national policies for the promotion, marketing and use of renewable energy. 
 
 In the past, one of the main discussions among potential developers of biofuel projects in Mexico was the potential interference by the state-owned oil and gas monopoly (PEMEX) in the development of this market. This was the consequence of the market not being regulated and being open to anyone that would risk participating in it. There was a lingering risk of the potential legal recharacterization of biofuels as part of the traditional fuel market dominated by PEMEX.
 
 The most positive aspect of this biofuels law is the fact that it generates an independent legal definition for biofuels and a separate legal framework for their regulation that is not to be limited by traditional fossil fuels laws being applied.
 
 Biofuels are described as the "fuels obtained from biomass derived from organic material in the following activities: agriculture, cattle activities, forestry activities, aquaculture, algaeculture, fisheries products, households, commercial, industrial, from microorganism, enzymes, and derivatives of the foregoing that are produced by technological sustainable processes that comply with the specifications and quality norms issued by the competent authorities." Further, this law defines biogas as the "gas produced by the biological conversion of biomass as a consequence of the decomposition process."
 
 The regulation of this sector would in the medium to long-term allow energy companies, producers and individuals to participate in the development of a new regulatory framework for a new alternative energy market.
 
 It would be possible to develop several projects for mass production, distribution and marketing of biofuels in Mexico after obtaining the applicable permits.
 
 SENER will be responsible for overseeing the development of this market and it will effectively regulate those companies and individuals that may produce, store, provide transportations services, transport by pipelines and market biofuels in Mexico.
 
 SENER has been empowered with the exclusive authority to dictate the criteria for the acquisition of biofuels to PEMEX, its subsidiaries, the Federal Electric Commission and Light & Power Company. Further, it will be responsible for designing the introductory program for biofuels in Mexico that will allow the use of ethanol mixed with gasoline and direct distribution of biodiesel to the general public. Companies that produce a biofuel that may substitute a traditional fuel may be authorized to produce, store or market it in Mexico, and as long as they secure all the applicable permits, they may freely enter and compete in this market.

 
 SEMARNAT was expressly entrusted with overseeing the environmental impact of those facilities devoted to the production, storage, transportation, distribution and marketing of biofuels. This effectively expands the catalog of federally-regulated activities contained in article 28 of the General Law of Environmental Equilibrium and Protection. It will also regulate all activities involving biofuels that may generate air emissions, wastewater or waste. The biofuels law expressly prohibits changing the zoning from forestry to agricultural for the production of crops devoted to this industry. Therefore the production of crops for the biofuel industry will be limited to those areas where the prior authorized use was agricultural, limiting the expansion of potential biofuel production areas.
 
 The incentives and programs to be developed by federal, state or municipal authorities under this law will be aimed at 1) the development of the infrastructure required for the production of crops, 2) local farmers and crops' producers, 3) individuals and companies that contribute to the development and modernization of the infrastructure required for biofuel production, and 4) researchers and developers of technology for biofuel production.
 
 The biofuels law makes reference to other programs that are already being developed for the promotion of the agricultural sector and it establishes the parameters and general guidelines to be followed by the ministries that form part of the Inter-Ministerial Commission for the Development of the Biofuels market, in coordination with federal, state and local governments, to generate new incentives and benefits for project developers.
 
 It appears that Congress did not evaluate the potential impact of the biofuels law on projects that are currently being implemented in Mexico that generate, store or use biogas such as landfill projects, manure treatment systems and management of organic wastes (as provided in article 3 and 24 of the biofuels law). This is especially relevant because biogas is considered to be part of the broader definition of biofuels as provided by the biofuels law. As a result, once SENER publishes its guidelines and criteria for such permits, new biogas projects should secure said permits. Consequently, the requirement to secure a permit from SENER for the production or storage of biofuels may have a negative impact 
 on biogas projects with registrations pending under the Kyoto Protocol's Clean Development Mechanism.
 
 This is especially relevant for the current administration because more than 80 percent of the Clean Development Mechanism projects that have received a letter of approval by the Mexican Inter-Ministerial Climate Change Commission are for capturing, storing or using biogas. As of Jan. 23, 2008, the Mexican Designated National Authority issued 154 of its 184 letters of approval to projects that would sequester or reduce methane/biogas to the atmosphere.
 
 As part of the validation process, the Designated Operational Entities that are charged with verifying the Clean Development Mechanism registration and emissions reductions of qualifying projects may potentially require evidence that the project developer has secured the applicable permits from SENER. Fortunately, all five ministries that participate in the newly formed Inter-Ministerial Commission for the Development of Biofuels are also part of the Inter-Ministerial Climate ChangeCommission and SENER play an active role on both commissions. SENER, if it so chooses, has the authority to exclude these projects of the permitting process by expressly exempting them from the licensing requirements in the regulations related to the licensing process (as provided in section IV of article 12 of the biofuels law).
 
 The biofuel law provides for the following sanctions: 1) fines that range from 1,000 to 100,000 days of minimum wage (approximately $5,000 to $500,000), 2) cancellation of the permits, 3) temporary or definitive, partial or total shutdown of the facilities.
 
 Although Mexico has yet to participate in large-scale biofuels projects, there is a tradition in several areas of the country and specific industries for the direct use of biomass and biogas. With the enactment of the biofuels law a first step has been taken to assure predictability of the legal framework for this market. However, there will be a transitional period during which each authority will set up its specialized teams and will work together on the commission and to develop the regulations, guidelines and Official Mexican Standards for the operation of this market. This adjustment period may be confusing for both the facilities that are already using biomass and biogas and for investors planning to start-up new projects. Each authority will have to face an adjustment or trial-and-error period until they effectively set up the regulations, directives, requirements and standards for biofuel projects. The previous could bring instability to decision makers-instability that could cause certain investments to flee to other countries.

 
 The objectives of this law are laudable. However, it falls short of delivering immediate incentives to promote the development of these alternative fuels in Mexico.
 Energy companies that have already developed the know-how and technology abroad or in Mexico for biofuel production and commercialization could clearly expand their horizons and consider Mexico as a viable market for mass commercialization, distribution or production of biofuels.
 
 Further, Mexico will grant companies privileged access to the North American, European, Japanese and Latin American markets. Prior to a regulation of biofuels in Mexico, the greatest fear among players in this sector was the potential re-interpretation of the existing norms for fossil fuels to expand their scope to incorporate biofuels. This was particularly important, because prior to the enactment of the biofuels law, PEMEX, as the preponderant player in the national energy market, could easily hinder the marketing of biofuels substitutes to its traditional fuel portfolio. Under this independent legal structure, other energy companies and start-ups could directly participate in the development of the biofuel market as long as their product proves to be competitive compared with the current fossil fuels offered in Mexico.
 
 Mexico has a wide array of topographic and climatic conditions that range from tropical forests in the southern part of the country, vast coastal areas, a mild climate in the central 
 part of the country, and mountainous areas and arid regions that will allow the adaptation of several varieties of crops that have been used in other latitudes for successful biofuel projects. In addition, Mexico has already issued a law that will regulate the use of genetically modified organisms (the Biosafety Law for Genetically Modified Organism) that may potentially open the door for the use of specific types of energy crops under controlled conditions.
 
 Mexico's current administration has established as part of its National Strategy on Climate Change the need to diversify its fuel alternatives and to introduce the use of biofuels. It has also evidenced that due to the fact that biofuels do not have a constitutional limitation for the participation of private investment, it wishes to open this sector to both national and foreign investment. 
 
 The biofuels law, notwithstanding its shortcomings, provides a foundation for the development of a viable alternative energy market in Mexico. Unlike the traditional fossil fuel sector that depends on the state-owned companies in Mexico, the biofuels law is setting the basis for the establishment of a differentiated legal framework for biofuel projects, which may open the door to the creation of new incentives that shall generate the direct participation of private developers, with the federal government serving as a regulator and promoter for the development of this market. 
 
 Raul Felix is the coordinator of the Climate Change & Renewable Energy Practice in Mexico for Baker & McKenzie. Reach him at <a href="mailto:raul.felix@bakernet.com">raul.felix@bakernet.com</a> or +52 (656) 629 1300.

Assessing the Impact of Mexico's Biofuels Law

The interest in renewable fuels created from crops has skyrocketed worldwide. Biodiesel producers are required to maintain stringent control of their process to ensure finished product meets or exceeds the quality parameters set forth by U.S. and European standards-setting organizations (ASTM D 6751 and CEN 14214, respectively). Most biofuel producers want the ability to conduct quality testing during the manufacturing process rather than risking unnecessary waste by testing after the fact.

 
 Until recently, biodiesel producers had no real testing options available other than wet chemistry reference methods such as gas chromatography, Karl Fischer moisture analyzer and other physical test equipment. These methods can be costly, time-consuming and skill-intensive. The growing demand for alternative fuels, and the need for more streamlined production processes, has spiked interest in near-infrared instrumentation as a more efficient and less costly analysis technique for improving quality and decreasing out-of-spec product. 
 
 Near infrared uses a portion of light energy to determine molecular composition in a wide variety of materials. Unlike traditional reference methods, near infrared can analyze samples in seconds, rather than hours. Near-infrared devices use wavelengths of 800 to 2,500 nanometers. Throughout these regions, the near-infrared energy interacts with carbon-hydrogen, nitrogen-hydrogen and oxygen-hydrogen bonds in the sample, producing a "fingerprint" spectrum which can then be correlated to traditional reference assay results.
 
 Near infrared is an indirect measurement for qualitative and quantitative analysis. It is necessary to have a calibration which mathematically relates the spectra measured by the near infrared to a reference measurement such as from gas chromatography. Once a mathematical model is developed and implemented, samples which are similar to the model database will then be predicted accurately for future measurements. A wavelength range of 1,000 to 2,500 nanometers is typically used for biodiesel analysis as there are strong features throughout this range. 
 
 Most traditional reference instrumentation must be kept in a stable laboratory environment, away from the process line. New near-infrared instrumentation is much more rugged and flexible, even fully portable in some instances. Therefore, it can be used wherever the analysis is needed. Near infrared can even be configured as part of an online system with a probe measuring constant changes in a process, providing real-time information for better decision making to help reduce cost or time. The degree of operator training required to analyze normal samples is much lower with near infrared than for traditional reference methods. This means that instead of needing a laboratory technician to process samples with reference assays, a production worker can successfully perform the analysis at-line or in-line using near infrared.
 
 <center><img src="/images/upload/20080416104421.jpg" alt="" /></center>
 Three typical B100 spectra are shown in a transmittance spectral format.
 SOURCE: ASD INC.
 
 It is important to note that while there is no set number of samples required for a calibration model, creating a robust and accurate model does greatly depend on the diversity in the raw ingredients and other inputs, variation from the process, and differences in the primary reference data all being factored into the process. A reasonable plan might include 50 to 100 initial samples followed by routine additions of samples over a two-year period.
 
 A common question seems to be "Can I just use an existing calibration or spectral library from the instrument manufacturer rather than building my own?" It is extremely important to realize that this approach is only plausible if the near-infrared instrument set-up, including the sampling accessory, is nearly identical. Equally important is ascertaining that the samples in the existing library are the same, or very similar to, the samples at the new installation. The best strategy is to treat any existing library or data set not directly built using intended samples in the intended location as a starting point only, with the understanding that it may be necessary to add additional samples with the new inputs from the new location.

 
 Building a Calibration Model
 Once the testing points, or locations in the process, have been determined, it is necessary to build the calibration model. This process does not need to be difficult or confusing once clear steps are identified. The key challenges in the creation of a robust and accurate calibration are 1) selection of a diverse set of samples, 2) obtaining accurate and reproducible reference assays, 3) calibration equation development chemometric modeling tools (many commercial software programs are available for creating near-infrared calibrations), and 4) validation and maintenance of the model. 
 
 Traditional chemistry methods can be expensive, so it is important to maximize efficiency and create the best possible calibration. In practice, four techniques are generally used to select samples for calibration development-random, composition-based, spectral-based, and a combination of the first three methods.
 
 With random selection there may be samples which have already been characterized by the traditional reference methods, and use of these characterized samples is the optimal use of the previous expenditure. Biodiesel, however, changes over time, so minimal time between production of the sample and the spectra collection on the near infrared is important. With this approach, however, the range of composition may not be adequately represented by the existing samples, and many of the samples may be nearly identical either spectrally or from their composition. Additionally, if data hasn't already been developed for these samples, it is also the most expensive approach.
 
 The second approach is to use known information regarding the samples as a selection criteria. This approach is excellent for covering the expected range of composition, but can also be expensive. In this scenario, many samples would be expected to have similar compositional results so they wouldn't be used. This approach is frequently used after a base calibration has been developed with random samples. The predicted values are then used as a screening tool to submit additional samples for reference assay.
 
 The third approach evaluates the near-infrared spectra of new samples to determine which samples should be analyzed by the reference assay method. The spectra are examined with chemometric tools to structure the spectral population to cover the greatest diversity. Samples selected by this process are then submitted for traditional reference analysis. This approach is the most cost-effective, and it can potentially produce the best calibration in the shortest amount of time. This approach, however, is also the most labor intensive because all sample spectra must be reviewed.
 
 Typically, most people use a combination of all three techniques to build their initial calibration. This begins with recently analyzed samples from the routine quality control testing to build a base calibration, then add samples that are at the extremes in composition, and finally, select samples based on the spectral characteristics. The samples in a calibration should also be actual production samples rather than a blend of two or three samples. Calibrations based only on limited numbers of actual samples will have a high correlation, but frequently will also have a higher percentage of analyzed samples outside of the calibration model, thereby resulting in higher error than anticipated. 
 
 Achieving Accuracy

 To achieve accuracy, the samples used for model development must be adequately representative of the actual product to be measured. For example, if the raw input is soybean oil, then the calibration should also use similar soy oil spectra. If animal-based fat will be used then it is important to have the same or similar animal-based fats in the original calibration set. Each raw material will have an impact on the finished B100 characteristics, so matching the calibration to the inputs used is extremely critical. Additionally, different processing conditions of the plant used to create the original calibration may also cause disparities in a calibration until the unique samples at the new location have been added into the model.
 
 It is critical to use a laboratory which is accustomed to producing reference assays. It is also important to know the error associated with each reference assay. Previously analyzed samples and/or blind replicates (the same sample with a different identification number) should be submitted periodically to the reference lab to determine this error. 
 
 Validation of a calibration model is necessary whether using a new or existing model. This can be accomplished while building the model simply by holding back a portion of the sample data and then using it for validation.
 
 Following validation, the model is ready to predict the actual process samples. It is important to note that near infrared does not replace the need for a traditional reference method. It does, however, greatly decrease the frequency that the expensive reference assay is required. The calibration model must also be updated anytime a change occurs in the incoming feedstock, raw materials, processing conditions or instrument set up. Additionally, periodic validation will help to ensure that the model continues to be accurate.
 
 Near infrared is a rapid, accurate, non-destructive, cost-effective, user-friendly tool for quality and process control. It provides the ability to conduct more frequent and comprehensive testing with portability, flexibility, and a lower level of skill and training requirement. By strategically implementing near-infrared technology, biodiesel producers can greatly increase their potential to not only meet the stringent quality standards, but also increase their bottom line by significantly reducing operation costs and the risk of out-of-spec product. 
 
 Dan Shiley is an applications chemist at ASD Inc. in Boulder, Colo. Reach him at (303) 444-6522.

Demystifying Near-Infrared Analysis for Biodiesel Production

It is no news to the Biodiesel Magazine reader that the outlook for biodiesel is considerably different than it was one or two years ago. With soybean oil, traditionally the bulk of the biodiesel feedstock, at close to 60 cents per pound, only biodiesel projects with access to lower-cost feedstocks are currently financeable. Nonetheless, the desire to create viable alternatives to petroleum diesel remains strong. As a result, activity continues in biodiesel development, although primarily in smaller plants. What issues should those plants consider? In today's tough conditions, it is important to keep in mind a few fundamentals in developing any project.

 
 Business plans. Now more than ever, anyone proposing a biodiesel project must have a very tight business plan. Investors-both equity and potential lenders-already nervous as the country faces an economic downturn, are skeptical. Business plans must first identify feedstock costs and procurement. Unless there is a plan to procure economical feedstock on a reliable basis, nothing else is likely to matter. Not only must the business plan discuss possible sources of feedstocks, but the project should be prepared to come forward with actual term sheets or other letters of commitment from vendors demonstrating that feedstock can be sourced economically and consistently. In addition to production costs, the plan must identify operating costs, including equipment, land, construction, permitting, labor, inputs and financing, and utilities. Given that the lending community is now extremely cautious on biodiesel, any business plan will need to succinctly and persuasively demonstrate why its project is different from other biodiesel projects the lender may have considered or with which it is otherwise familiar.
 
 Raising capital. With new plants likely to be smaller ones that can take advantage of niche feedstocks, projects will still probably need to obtain capital from a number of small individual investors rather than a handful of large ones. In these smaller projects, it can be easy to overlook the need to maintain compliance with federal and state securities laws. However, compliance is as important for the smaller projects as it is for the larger ones. Investors need to be informed of all material information and risks via disclosure materials presented to them in conjunction with the investment opportunity. 
 
 In tougher times, developers often seek the assistance of a broker-dealer or other "finder" who may help secure project financing. It is important to know the distinction between broker-dealers and finders. Broker-dealers are required to be registered with federal securities regulators because they are engaged in effecting securities transactions. Finders are not registered because they have a limited scope of permissible activities. That scope is often unclear so developers using finders need to exercise great care to avoid having an unregistered finder improperly sell securities, which could result in a violation of applicable law and loss of any monies raised.
 
 Joint ventures. Developers are also currently considering partnering with strategic players in the biodiesel industry in an effort to take advantage of opportunities to make their projects more efficient, profitable and attractive to lenders. Joining with a feedstock source is the most obvious choice. A producer of vegetable oil, animal fat, waste grease or other feedstock may view participation in a biodiesel plant as an opportunity to capture a greater share of the return formerly going to brokers, rendering operations and end users. Structuring such arrangements as a win-win for all participants requires financial, legal and industry expertise. 
 
 With crude oil now selling for more than $100 per barrel, the need and desire for viable, renewable alternatives to petroleum products will only intensify. Biodiesel will continue to be part of these alternatives. Getting through this period will take fortitude, ingenuity and a continued focus on the fundamentals.
 
 Todd J. Guerrero is an attorney practicing with the Agribusiness and Energy Group at Lindquist & Vennum PLLP, a leading provider of legal assistance on renewable energy projects across the country. Dean Edstrom is an attorney serving Lindquist & Vennum's Emerging Companies and Private Capital practice. For more information, visit <a href="http://www.lindquist.com">www.lindquist.com</a> or call (612) 371-3211.

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Biodiesel Project Fundamentals

Web exclusive posted April 16, 2008 at 12:24 p.m. CST 

 
 Des Moines, Iowa-based Bratney Companies has announced the availability of a new bolt-on crude corn oil pretreatment process. The pretreatment technology is designed to filter our impurities and produce two end-products: refined corn oil and fatty free acid.
 
 "This process takes crude corn oil recovered post-fermentation from the back end of dry grind ethanol plants and makes it suitable for biodiesel production," said Paul Bown, spokesman for Bratney.
 
 Brown said the crude corn oil pre-treatment technology will help biodiesel plants financially. "Crude corn oil pretreatment represents a potentially lower cost feedstock compared to other alternatives" he said. 
 
 Bratney Companies is a family owned business which provides engineering, construction, and equipment solutions to seed, grain, milling, and food businesses. Bratney Companies is the U.S. partner of CIMBRIA SKET, a biodiesel technology provider based in Germany. "Our partnership with CIMBRIA SKET allows us to bring the most widely used biodiesel production technology to U.S. companies along with new processes such as the crude corn oil refining capability we are introducing now," Brown said.

Bratney Companies offer crude corn oil pretreatment process

Web exclusive posted April 16, 2008 at 12:29 p.m. CST 
 
 Biodiesel technology provider and producer Greenline Industries Inc. has successfully secured a $20 million Series A preferred stock financing round with Leaf Clean Energy Co., a publicly traded London-based $400 million clean energy fund which focuses on investment opportunities in North America. 
 
 According to the company, "this initial investment will allow Greenline Industries to accelerate research and development to improve upon its existing technology and add new products to reduce the costs to produce biodiesel."
 
 Founded in 2002, Greenline Industries' mission is to decentralize power within the biodiesel production process. The company is considered the world leader of U.S. EPA award-winning patented waterless biodiesel processors.
 

 "We are honored to be partnered with Leaf Clean Energy since it brings Greenline Industries access to the global European Patent Convention (EPC) experience of The Shaw Group Inc. and the carbon market expertise of EEA Fund Management Ltd. through Energy & Climate Advisors, Leaf Clean Energy's appointed representative," said Greenline Industries Chief Executive Officer John Kinney. "Our customers benefit from having access to financing and services that no other biodiesel equipment provider can offer."
 
 With offices in the U.S., Brussels, Romania and Argentina, Greenline Industries has sold more than 30 biodiesel production lines with a total production capacity of 200 MMgy. In October 2007, Greenline Industries signed a business development agreement with San Francisco-based Oil Sources Holding Group Inc., to build a 60 MMgy biodiesel facility in Miami. Oil Sources Holding Group is a sustainable energy consortium focused on harvesting, producing and distributing renewable fuels in the United States and South America. According to Greenline Industries, the project is expected to come online early 2009.
 	
 For more information on Greenline Industries and its operations, visit <a href="http://www.greenlineindustries.com/index.html">www.greenlineindustries.com/index.html</a>.

Greenline Industries raises $20 million in first-round financing

Web exclusive posted April 16, 2008 at 12:32 p.m. CST 
 
 U.S. Rep. John Shadegg has proposed legislation to close a biodiesel loophole which he says has cost U.S. taxpayers millions of dollars in lost fuel subsidies.
 
 On April 4 Shadegg, R-Ariz., introduced legislation to close a blenders tax credit provision which he said allowed importers to collect millions of dollars in domestic tax credits for biodiesel that never got consumed in the United States. Shadegg called the loophole a "scam" that allows foreign fuel tankers to enter a U.S. port, splash their fuel shipment with a minimal amount of vegetable fuel, qualify for the $1 per gallon blenders credit, then dash off to a foreign port to sell the biodiesel.
 
 "Not only is it costly for American taxpayers, but this scheme has flooded the European diesel market to the point that the European Trade Commission is being urged to retaliate in the form of sanctions against the United States," Shadegg said. His office estimates the credit has cost U.S. taxpayers $300 million in lost revenue. "The figure could jump up to $600 million this year – that's $900 million in two years alone!" Shadegg said, adding, "Congress, in failing to fix the problem, knowingly allows this to continue."
 

 However, Shadegg's legislation would also prevent U.S. biodiesel exports from receiving the blenders' credit because he doesn't want U.S. taxpayers to subsidize fuel costs abroad, an aide to Shadegg said. The Splash and Dash Correction Act would only allow fuel consumed in the United States to be eligible for the tax credit.
 
 "This could spur domestic markets but in the short term, it could be more damaging for the current production facilities," said Rick Kment, a biofuels analyst for Data Transmission Network. "A significant amount of our biodiesel production is designed for overall export because we produce around three times more than we actually use domestically." And Kment said for an industry struggling to achieve profitability with high feedstock costs, the legislation may "significantly hinder any growth" in the U.S. biodiesel economy.
 
 Kment cautions that the legislation is currently pending and because there's strong support for domestic production of biofuels due to the Energy Independence and Security Act of 2007, whether Shadegg's bill gets support as "stand-alone" legislation has yet to be determined. There could be numerous compromises and amendments attached before the bill is actually passed, Kment warns.
 
 "It's a broad stroke for just the one issue of blending," he said. "Right now no one really knows how much of the industry production overall is utilized in splash and dash versus exports in general. It's a pretty elusive number from what I've seen."

Arizona representative proposes legislation to close splash and dash loophole

Web exclusive posted April 16, 2008 at 12:34 p.m. CST 
 
 Golden, Colo.-based Blue Sun Biodiesel has closed on an unsecured $3 million loan. According to the privately held biodiesel producer, the loan was made by a private individual. 
 
 "With the failed M-Wave merger and its attendant funding, we needed to arrange interim funding to assure the uninterrupted supply of B100 for our growing customer base and this facility will provide that assurance", said Blue Sun Chief Executive Officer Jeff Probst. "We will use these funds to acquire, blend and distribute our branded Fusion™ and M-Tech industry specialty fuels to our customers in 14 western states."
 
 Blue Sun Fusion™, the company's flagship product, is available at numerous retail pumps throughout Colorado, Wyoming, New Mexico, Nebraska, Utah and Idaho. Blue Sun Fusion™ is a blend of premium B20 and Blue Sun's proprietary additive package specifically tailored for regional climates and seasons.
 
 Blue Sun is also in the process of finalizing a separate credit instrument to support continued infrastructure development. According to the company, it intends on using the infrastructure credit instrument this year to support fuel terminal development at up to 10 planned blending-terminal locations which will support the distribution network for Blue Sun B100 and B20 blends. 

 
 Meanwhile, Blue Sun has delayed the startup of its biodiesel plant in Clovis, N.M., which is currently under construction, until later this year "due to unfavorable market conditions", according to Blue Sun President and Chief Operating Officer Michael Miller. 
 
 "With soy and canola oil prices so high right now, we believe that attractive toll-blending rates can be secured in the short term, thus mitigating the need to rush completion of this plant," Miller added.
 
 Blue Sun's joint venture company, Ares Blue Sun Development LLC, began construction on the $20 million, 15 MMgy biodiesel facility early last year, which was originally expected to start production in March.
 
 "We remain committed to its commissioning for the fourth quarter this year, but, in the meantime, we want to be mindful of the current market conditions as well," Miller said.
 
 To learn more about Blue Sun Biodiesel, visit their Web site, <a href="http://www.gobluesun.com/index.php">www.gobluesun.com/index.php</a>.

Blue Sun Biodiesel closes on $3 million loan

Web exclusive posted April 16, 2008 at 12:36 p.m. CST 
 
 On the afternoon of April 1, Mark Rosenzweig, owner of San Jose Tallow, was driving home through suburban San Jose, Calif., when he noticed a pumper truck pulling into a shopping center. Rosenzweig knew the only restaurant in that center was a Burger King that has contracted for grease removal with his company. "I followed him until he pulled into the Burger King where I watched him steal the grease," Rosenzweig said.
 

 Rosenzweig first called the restaurant to double-check that no one else was authorized to remove grease, and then he called the police. "He had no valid DOT (Department of Transportation) sticker, no valid state of California grease pick-up sticker, no license, no nothing," Rosenzweig said. "He was just out stealing grease."
 
 Rosenzweig is no stranger to grease theft. "It's a common problem out here," he said. "In fact I had two calls this morning. One of our tanks was emptied out over the weekend that we didn't authorize, so there's somebody else out there stealing. It's happening out here with some good regularity. Ten years ago we couldn't give this stuff away and we were charging to pick up and now all of sudden people are stealing it. It's gone full circle."
 
 David Richardson, the driver of the pumper truck, was employed by Restaurant Oils of America, based in Las Vegas. ROA owner Ned Cruey told Biodiesel Magazine that the situation was just "a misunderstanding." According to Cruey, the driver was at the location only to offer the company's services to the manager and that's why he produced a blank contract when the manager approached him. "He assumed it was OK to try and get some grease and it was real hard," said Cruey. "[The collection container] was like 300 gallons and he got like 10 gallons [into the truck]. Then 14 cop cars showed up. The poor guy was traumatized." 
 
 Cruey said their only intention was to attempt to gain some customers in that area so the company could begin routing into California. He added, that the company had been "checking into it" for a couple of weeks. Rosenzweig said the truck had been seen in other local communities in the two weeks prior to the driver's arrest. But he argues that the driver was doing more than recruiting clients. When police stopped the truck the tank was half-full, suggesting that grease had been removed from multiple sites. 
 
 "What's really funny is I had a hard time convincing the police department that it was a crime," Rosenzweig said. "They had no idea that it was against the law." He, who had to explain to the police officers what sections in the vehicle code were violated, said there needs to be a training program for law enforcement to educate them on what to look for so they will be able to spot suspicious activity near grease containers.
 
 Rosenzweig said most grease thieves are probably "home brewers" that take the grease back to their garages to make biodiesel. However, when industrial vehicles are used for taking grease, as in this case, he assumes it's being transported across state lines to be resold. 
 
 To prevent theft at his collection sites, Rosenzweig educates customers, encouraging them to lock their grease containers and question strange vehicles that come to collect grease. If they suspect a possible theft, he tells them to call the police. Rosenzweig also trains employees to keep an eye out for "suspiciously empty" collection containers.
 
 So how can biodiesel producers protect against purchasing unlawfully collected feedstock? Gonzales, Calif.-based Energy Alternative Systems Inc. is one of San Jose Tallow's biggest customers. EASI president and chief executive officer Richard Gillis said it comes down to knowing the supplier and trusting them. He personally knows Rosenzweig and has done business with his company for many years. Gillis said it's up to producers to research the companies they do business with. "The more and more companies that get involved in this business…you know fuel is supply and demand and some companies get predatory," Gillis said. "We're in an area of this industry's growth where there is some predatory buying going on as far as yellow grease and things. It's very tough competition."
 
 Gillis said it's common for his company to get calls from someone claiming they have thousands of gallons of grease to sell. "The first thing they have to do is talk to my oil and fats guy," he said. "We want to know who they are, where they are and where they got it. If we're uncomfortable, even a little bit, we won't buy anything. We don't deal with folks we're not familiar with."

 
 Cruey said many of the biodiesel producers ROA does business with were "not thrilled" to read a story alleging his company was involved in grease theft. One of them called Cruey to say they didn't want to receive any of his shipments for a few months. "He said they didn't want to be a part of some kind of criminal conspiracy and I said 'there's no criminal conspiracy'," Cruey lamented. "We wanted to do something that would be a green company…that takes what would be a waste pretty much and turn it into biodiesel." 
 
 Cruey bailed Richardson out of jail and hired a lawyer, who Cruey said is confident the case will be dismissed. Richardson could face charges ranging from stealing inedible grease to grand theft.
 
 Rosenzweig will continue on with his business as usual, minus some feedstock. He wasn't allowed to retrieve the grease from ROA's pumper truck. "It's sitting in [ROA's] truck at the impound I would imagine," he said. "It's too bad."

Restaurant Oils of America driver caught greasy-handed

Web exclusive posted April 16, 2008 at 3:55 p.m. CST 
 
 Four Scania buses fueled entirely by Neste Oil Corp.'s second-generation biodiesel NExBTL began running in Helsinki, Finland, in April. It's the second stage of a plan to improve the Finnish capital's air quality. 
 
 The three year project was launched in September. During the first stage a number of buses operated by Helsingin Bussiliikenne, the city's biggest bus company, ran on a 30-percent blend of NExBTL with fossil diesel.
 
 NExBTL is a high-end renewable diesel, with properties similar to gas-to-liquid diesel fuel produced by the familiar Fischer-Tropsch catalytic process of synthesizing hydrocarbons and their oxygen derivatives through the controlled reaction of hydrogen and carbon monoxide.
 
 Neste processes NExBTL from a mixture of animal fats and rapeseed oil, both originating in Finland, and from imported palm oil. Its 57 MMgy (170,000-ton) plant in Porvoo, Finland, went into full production in the final quarter of 2007.
 

 "Our aim is to expand the use of NExBTL renewable diesel to hundreds of buses in the Helsinki area during the period of the project," Sami Oja, sales manager for Neste Oil's Biodiesel division, told Biodiesel Magazine.
 
 "We have already observed clear reductions of nitrogen oxides (NOx) particulate, carbon monoxide and hydrocarbon emissions in the initial stage of the project," said Oja. "With 100 percent NExBTL, we expect to see even better results."
 
 Unlike the first-generation fatty acid methyl ester (FAME) biodiesels, "NExBTL does not require any modifications to the engine, and can be used in blends or as a pure fuel," said Oja. "It is a paraffinic biobased diesel fuel, and from the chemical aspects, it is a 100-percent pure hydrocarbon."
 
 Neste says NExBTL is free of aromatics and sulfur, which means lower emissions compared with fossil diesel. "It has a very high cetane number, which enhances the burning process in diesel engine and improves engine efficiency," Oja added. "It also has the benefit of being stable, and is without a use-by date."
 
 The Helsinki project will study emissions and long-term effects of pure NExBTL on bus engines. During the project, tailpipe output will be recorded and the engines optimized to the fuel.
 
 Neste acknowledges the cost of producing second-generation biodiesel is greater than first-generation, but nevertheless it has planned more production capacity, including a second plant at Porvoo, Finland, which is slated to open in 2009. A joint venture with the Austrian oil company, OMV, for a 68 MMgy (200,000-to) plant at OMV's refinery in Schwechat, Austria, is still under study, with the earliest start date of 2011.
 
 Meanwhile, the largest NExBTL plant of all is pending. Neste, based in Keilaranta, Finland, announced in November it would invest $871 million dollars U.S. (€550 million) in a 271 MMgy (800,000-ton) facility that will open in Singapore in 2010. The plant will use palm oil as its primary feedstock, certified by the Roundtable on Sustainable Palm Oil, Neste said.

Finland: Buses burn pure NExBTL

Web exclusive posted May 6, 2008 at 11:21 a.m. CST 
 
 World Energy Alternatives LLC announced May 5 that Michael Laznik has joined the company as its chief financial officer. Previously Laznik was employed by FTI Consulting as its director of corporate finance. 
 

 "With more than ten years in the biodiesel industry, World Energy is a formative player that stays on the cutting edge," Laznik said. "This industry, and World Energy's place in it, is going to look very different in the next few years. With the essential role that financing is going to play in this transition, I'm excited to be part of it."
 
 A leading biofuels supplier, World Energy develops new energy sources and markets to expand the global energy supply. For more information, visit <a href="http://www.worldenergy.net">www.worldenergy.net</a>.

World Energy hires Michael Laznik as chief financial officer

Web exclusive posted April 16, 2008 at 3:57 p.m. CST 
 
 Seaboard Foods, a U.S. pork producing company, has announced the official start up of its subsidiary biodiesel plant – High Plains Bioenergy. The facility, located in Guymon, Okla., conducted start-up procedures in March. The first product shipment was delivered during the second week of April, according to company spokesman David Eaheart.

 
 The plant is expected to produce 30 MMgy annually, although Eaheart wasn't sure if the plant would reach nameplate capacity by the end of this year. The project has cost Seaboard more than $40 million to date. Final cost totals have yet to be released. 
 
 High Plains is colocated with Seaboard's pork processing facility to more easily use pork fat. The High Plains facility was designed to use multiple feedstocks, but Eaheart said anything other than pork fat will depend on its availability and market price. Pork fat is the plant's feedstock of choice for now.
 
 Eaheart said the biodiesel facility is part of Seaboard's plan to be a fully vertically integrated company. Seaboard owns everything from the farms on up, he said, so it "makes sense" to begin producing biodiesel with pork fat from the processing plant. "Biodiesel adds to the element of using everything," he said. It was hard for Eaheart to say whether the biodiesel project would have been successful were it not for the convenience of using Seaboard's available pork fat as feedstock because the project "worked for many reasons."
 
 Biodiesel produced at the facility meets ASTM D6751 specifications, according to High Plains. Eaheart said they are not BQ-9000 certified but will be as soon as possible. Oklahoma City-based Musket Corp. will serve as High Plains' distributor.
 
 Seaboard Foods is a major exporter of pork to Japan and Mexico. The company employs people in Oklahoma, Kansas, Colorado, Texas, Montana and Utah.
 
 A grand opening for High Plains Bioenergy is planned for April 24. For more information on the biodiesel facility, visit their Web page, <a href="http://www.highplainsbioenergy.com">www.highplainsbioenergy.com</a>.

Pork processor opens biodiesel plant

Web exclusive posted April 16, 2008 at 3:59 p.m. CST 
 

 Central Carolina Community College has hired biofuels instructor Andrew McMahan to develop curriculum for a new biofuels associate degree program. McMahan was previously a biofuels instructor at Guilford Technical College located in Jamestown, N.C. 
 
 At its September 2007 meeting, the North Carolina Community College System's Board of Trustees granted Central Carolina Community College the distinction of becoming the first in the state to offer a biofuels associate degree program. The two-year program, "Alternative Energy Technology: Biofuels," will start in the fall of 2008. The North Carolina Community College System's BioNetwork Center has given CCCC a $58,190 grant to develop the program's curriculum.
 
 Since 2002 the Continuing Education Department at CCCC's Chatham County Campus in Pittsboro, N.C., has offered a biofuels class, an automotive technology class geared towards the use of biofuels, and a renewable energies class. 
 
 The program will train students to work in three areas: using vegetable oils to produce biodiesel; primarily corn-based ethanol production; and the production of biofuels from biomass including grasses, landfill and hog waste. The courses will include biofuels analytics, biofuels waste management and renewable energy technology. As part of the interdisciplinary approach, students will also take courses in chemistry, electrical control systems, welding, bioprocessing practices and small business development. 
 
 McMahan said graduates of the program are expected to qualify for numerous positions within the industry including plant technician, plant manager, lab technician, sales manager, process coordinator or business owner.
 
 "It's very exciting," he said. "When it's up and running, I hope to feel that we've done a service for North Carolina, for the agriculture community, for the service community and the community at large."
 
 Ground has been broken for a new $3.8 million Sustainable Technologies Classroom and Lab Building on the Chatham Campus, which will house the biofuels program. Students will train on equipment used in both biodiesel and ethanol production including a seed crusher, small-scale biodiesel reactor and ethanol production facility. In addition, the building itself will be built to the U.S. Green Building Council's Leadership in Energy and Environmental Design silver standards and will include the utilization of fuel production byproducts for heat.

North Carolina community college hires biofuels instructor, offers biofuels degree

Web exclusive posted April 16, 2008 at 4:15 p.m. CST 
 
 The USDA adjusted its price forecasts downward from the previous month's projections for soybeans, soybean oil and soybean meal in the April 9 World Agricultural Supply and Demand Estimates report. 

 
 The U.S. season-average soybean price range is projected at $10 to $10.50 per bushel, down 30 cents on the high end of the range. The soybean meal price is projected at $315 to $335 per short ton, down $5 on the low end and down $15 on the high end of the range. The soybean oil price is projected at 50 to 54 cents per pound, down 3 cents on both ends of the range.
 
 Despite record high soybean prices, exports have remained strong, especially to China, where imports from the United States are likely to exceed the 2004-2005 record. U.S. soybean exports for 2007-2008 are increased 50 million bushels to 1,075 million this month reflecting strong year-to-date shipments. Soybean crush is raised 5 million bushels to a record 1,840 million bushels, mainly on stronger-than-expected soybean meal and oil exports. Seed use is raised to reflect expected plantings for 2008 reported in USDA's March 31 Prospective Plantings report. U.S. soybean ending stocks are raised 20 million bushels to 160 million, still down sharply from the record level set in 2006-2007.
 
 Global oilseed production for 2007-2008 is projected at 390.8 million tons, up 0.7 million tons from last month. Most of the global increases are due to increases for soybeans in Iran, sunflower seed in Turkey, and cottonseed in India. Soybean production estimates for South America are unchanged. Global 2007-2008 oilseed ending stocks are raised 2 million tons to 57.2 million, due mostly to higher soybean stocks in the United States, Brazil and Argentina. Brazil's stocks are raised due to lower crush and soybean export prospects. Higher soybean stocks in Argentina reflect reduced crush resulting from lower projected soybean meal exports.
 
 In contrast to soybeans, the USDA raised its projected season average farm price for corn in this month's report. As new crop futures pushed over $6, the WASDE report projected a $4.10 to $4.50 per bushel season average price at the farm, compared to last month's projections of $3.75 to $4.25 per bushel. Record use during the first six months of the 2007-2008 marketing year and prospects for smaller-than-expected production in 2008 are expected to support cash and futures prices near current record levels through the summer.

USDA adjusts soy prices down in supply-demand report

Web exclusive posted April 16, 2008 at 4:16 p.m. CST 
 
 Renewable Energy Group Inc. announced April 9 it had trademarked product quality specifications for all biodiesel produced at a REG plant. REG introduced three products under the trademarked name REG-9000. They are REG-9000-1, REG-9000-5 and REG-9000-10. 
 
 "The 9000 refers to the fact that it comes from BQ-9000 certified plants," said REG's Director of Marketing Jon Scharingson, referring to BQ-9000, the quality assurance program developed by the National Biodiesel Board. "The 1, 5 and 10 refers to [the temperature in Celsius of] the cloud point. A lot of customers buy based on feedstock, but feedstock shouldn't matter. We're promoting the attributes of the fuel."

 
 REG said all three products offer improved oxidation stability and enhanced purity compared to other B100 biodiesel available in today's marketplace. The products adhere to specific product specifications that exceed ASTM D 6751 biodiesel specifications. For example, they require reduced free and total glycerin levels, a reduced acid number, reduced sulfur content and reduced free water and sediment. REG's specifications also require that internal tests are performed, which are currently not required by ASTM. These include tests for monoglycerides, diglycerides and triglycerides, tests for total biodiesel moisture and a cold soak filtration test, which indicates how well the biodiesel will perform in cold weather. The product specifications for each of the REG-9000 products are available at <a href="http://www.regfuel.com">www.regfuel.com</a>.
 
 REG said the new specifications were developed in response to customer demand. "Many customers have their own internal specifications," Technical Manager Dave Slade said.
 
 "This was our attempt to issue spec that was as tight, or tighter than many of the customer specifications." Scharingson added, "we figured, if we can meet customer specifications at all of our plants, we should make it public that we're cranking out much higher quality."
 
 Scharingson said REG is able to meet this level of quality because it's committed to continuous improvement. "What differentiates us is we are continuously making product improvements," he said. "Some people don't change their engineering once they start churning out biodiesel, but we have a tremendous effort to improve the quality of our biodiesel. One of the fruits of this labor is the REG specification that we released."
 
 REG, which is based in Ames, Iowa, has seven plants in production, three under construction and one in development.

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REG trademarks advanced quality specifications for its biodiesel

Web exclusive posted April 16, 2008 at 4:18 p.m. CST 
 
 Northwest Missouri Biofuels, located in St. Joseph, Mo., announced April 7 that it had completed a 10 MMgy expansion, bringing the plant's operating capacity to 15 MMgy. It took approximately six months to install a 10 MMgy processor, provided by Greenline Industries LLC, said Pat Lappe, chief operating officer for Progressive Energies, which provides management services for Northwest Missouri Biofuels and others in the biofuels industry. 
 

 The biodiesel plant is a multiple feedstock facility, but since February the company reported that animal fat has been the sole feedstock, and will continue to be so. "As a biodiesel feedstock, animal fat presents greater challenges due to its variability in quality and chemical make-up from truckload to truckload," Lappe said. "With our quality control processes and experience with this product, we are able to procure sufficient feedstocks and produce a consistent end product meeting ASTM specifications."
 
 On the same day the expansion was announced, an accident in which two employees were trapped in a railroad tanker car ended in one fatality. The St. Joseph, Mo., police department told Biodiesel Magazine it received a call on April 7 from the biodiesel plant. One employee, Ryley Pearl, was overcome with fumes while inside a railroad tanker car and perished. St. Joseph Police Captain Kevin Castle said the plant manager, Max Bottorff, attempted to go into the tanker to assist but was also unable to get out of the tank. Firefighters were able to get the men out of the tank, Castle said. In propitious timing, the fire department had been training that day for closed space rescues, and was able to go straight from training to a real life situation. The Occupational Safety and Health Administration is investigating the incident. More details on the nature of the accident were not available at press time. Lappe said the accident has not disrupted production.

Northwest Missouri Biofuels expands production, has fatal railcar accident

Web exclusive posted April 16, 2008 at 4:22 p.m. CST 
 
 To have all the cooking oil used by fast food restaurants is a biodiesel producer's dream – and for one company that dream has become a reality. California-based biodiesel marketer Tellurian Biodiesel has partnered with fast food supplier Golden State Foods to recycle used cooking oil from McDonald's and other quick-service restaurants into high-grade biodiesel.
 
 The new venture, Encore BioRenewables, is expected to open its first production facility in southern California in early 2009. Joe Gershen, president of Encore and vice president of sales and marketing at Tellurian, was reluctant to release the plant's specific location, adding that all Encore facilities will be strategically located in urban areas closest to feedstock and end-users. The plant's production capacity is expected to be 5 MMgy, with the option to increase to meet demand.
 
 Golden State Foods, headquartered in Irvine, Calif., is a $3.3 billion company that services quick-service restaurants world-wide. It has distribution centers on both the east and west coasts, as well as in Texas, Wisconsin, Illinois, Nevada, Arizona, Hawaii and Egypt.
 
 Tellurian currently has offices in San Francisco and Los Angeles. 
 

 "Our focus is to recycle second-use fats and oils," Gershen said. "This joint venture with Golden State Foods really speaks to that real sustainable solution for doing biodiesel. That's been our [Tellurian] focus - to create the most sustainable biodiesel."
 
 Gershen added, "we don't get into the food versus fuel debate. Although there's a lot of flaws in the argument. We just think it makes sense to use sustainable [feedstocks] first."
 
 Tellurian's acquisition of Superior Process Technologies should be finalized this spring and will provide Encore with the process to turn lower grade waste oils from Golden State Foods into biodiesel that meets or exceeds ASTM and EN specifications, said Gershen.
 
 Tellurian is also working on technology to convert the least desirable brown grease, which comes from the grill and fryer traps, into biodiesel. Gershen said Encore will be able to produce biodiesel from brown grease but will probably need to have separate collection sites and possibly other production locations. "We would certainly look at that," he said. "But I think we're going to have plenty of feedstock for the 5 [MMgy] and to expand beyond that." 
 
 Encore has the potential to produce 100 MMgy system-wide using feedstock acquired through the collaboration with Golden State Foods, Gershen said.
 
 Encore will employ a closed-loop system – in that Golden State Food's fleet will be fueled with biodiesel produced by Encore from feedstock collected from Golden State Food's customers. Bill Sanderson, Golden State's corporate vice president of finance, said the company's fleet consists of 250 tractors in 11 markets around the United States. Some of the company's vehicles are already being fueled with various blends of biodiesel and the switch to BioRenewable's fuel will happen "where its economical," he added. The company currently fuels its Illinois vehicles with B11, B20 in Hawaii and in the Los Angeles area with a B2 blend.
 
 Sanderson said he's "very excited about the green initiative" being taken on by Golden State. "We wish we were open today, given the current market," he said. "We're happy to help our customers, including McDonald's and Starbucks, achieve their social and environmental responsibilities."

Encore BioRenewables to recycle cooking oil into biodiesel

Web exclusive posted May 9, 2008 at 6:58 p.m. CST 
 
 While global oilseed ending stocks continue to shrink, production is projected to recover from last year's decline in global oilseed production in over a decade, according to the USDA World Agricultural Supply and Demand Estimates report released Friday, May 9. The report projects global oilseed ending stocks for 2007-'08 at 56.7 million tons, down 0.5 million tons from last month's figure. Most of the decrease is due to lower projected soybean stocks in the United States resulting from a 15 million bushel increase in projected exports. Soybean stocks for Brazil and Argentina are projected at a combined 39.8 million tons, down 1.5 million from 2006-'07.
 
 Global oilseed production for 2008-'09 is projected at 423 million tons, up 32.2 million tons from 2007-'08. Oilseed production is projected to recover from the first year-to-year decline in global oilseed production since 1995-'96. U.S. oilseed production gains account for 40 percent of the global increase. Total foreign supplies are projected to increase by 4 percent from 2007-'08.
 
 U.S. oilseed production is expected to be up 16 percent in the 2008-'09 crop year, with USDA projecting 93 million tons. Higher soybean production accounts for most of the increase. Peanut production is also projected higher, while production of sunflower seed, canola, and cottonseed are each projected to decline from last year. Soybean production is projected at 3.1 billion bushels, up 520 million bushels from 2007-'08. Soybean supplies are projected at 3.3 billion bushels, up just 3 percent from 2007-'08 despite higher planted area. Most of the production gains are offset by sharply lower beginning stocks.
 
 Soybean crush is projected to increase less than 1 percent to 1.85 billion bushels, reflecting a small increase in domestic soybean meal use and a projected decline in soybean meal exports. Domestic consumption of soybean oil is projected to increase only slightly as higher biodiesel use of soybean oil is mostly offset by a continued decline in food use. Biodiesel production is projected to use 15 percent of total soybean oil production for 2008-'09 compared with 14 percent in 2007-'08. Soybean exports are projected at 1.05 billion bushels, down 40 million from 2007-'08. Ending stocks for 2008-'09 are projected at 185 million bushels, up 40 million from 2007-'08, leaving the stocks-to-use ratio at a relatively low 6 percent.
 
 The U.S. season-average soybean price for 2008-'09 is projected at $10.50 to $12 per bushel, compared with $10 per bushel in 2007-'08. Prices are expected to remain firm due to relatively strong corn and soybean oil prices. Soybean meal prices are forecast at $280 to $340 per short ton, compared with $315 per ton for 2007-'08. Soybean oil prices are projected at 50 to 54 cents per pound compared with 52 cents per pound for 2007-'08.

Global oilseed stocks continue to shrink

Web exclusive posted April 17, 2008 at 12:55 p.m. CST 
 
 BBI International Inc., based in Salida, Colo., has announced that Angela Damman is now the vice president of international business development, a newly created position. She will oversee global expansion for the company and develop new business for BBI's service areas including project development, conferences and events, media and publications. To date, BBI's international expansion includes opening full offices in Kitchener, Ontario, and Brisbane, Australia.

 
 Previously, Damman was the vice president of conference and events for BBI, focusing on ethanol, biodiesel, energy, agriculture and environmental industry development projects in many regions of the world, including China, India, Europe, Canada, and South America, as well as over 30 states in the United States.
 
 Prior to joining BBI International, Angela worked on renewable energy-related projects for the Department of Energy Great Lakes Regional Biomass Energy Program, the Wisconsin Energy Bureau and the Minnesota Department of Agriculture. She also served as a board member for the Midwest Renewable Energy Association. 
 
 Damman has a bachelor's degree in business administration with a specialization in international studies from the University of Wisconsin and has participated in a graduate studies special enrollment at the University of Wisconsin-Stevens Point, College of Natural Resources.

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BBI's Damman named vice president of international business development

Web exclusive posted April 17, 2008 at 1:05 p.m. CST 
 
 Canadian Green Fuels Inc. is investing approximately $50 million to become the largest biofuels processing plant in the world. 
 
 Chief Executive Officer of Canadian Green Fuels, Mike Shenher announced April 4 plans for the largest biofuels processing plant in Canada. The multi-million dollar project includes building a new plant and upgrading the existing Canadian Green Fuels plant in Regina, Saskatchewan. 
 
 "We expect these plants to have the capacity to produce 240 million liters (63 MMgy) of biofuel products a year and be considered a "green" plant, as all aspects of the plant and waste products are used to create revenue," Shenher said, adding total revenue from the two plants could bring potential revenues of approximately $300 million per year.
 
 The new plant, which is expected to produce approximately 52 MMgy (200 million liters), will run on energy it creates and is expected to produce biodiesel, biofuels, bio-oil, and bio-additives. The plant will crush 1,200 metric tons daily, and operate equipment that can crush any oil seed. 
 

 The sheer scale of the facility puts the operation at an elevated level, Shenher said. "This is a world-class facility as it marries two major operations by including one of the largest oil seed crushing facilities in the country with the largest biofuel processing and production system."
 
 Shenher said Canadian Green Fuels is well positioned to be leaders of the multi-billion dollar facility and industry. "What makes this real is that we are currently operational, earning revenues and producing in the market," Shenher said.
 
 In addition to the announcement of the planned facility, Canadian Green Fuels introduced Troy Metz as the company's new chief development officer. "Troy was brought on to globalize Canadian Green Fuels and to take us public," Shenher said.
 
 "Once we hit the ground, our model expects that we could begin building profitability with 90 days of starting the equipment," Metz said. "A plant this size would probably need in excess of 460 metric tons a year of oil seed and what makes us unique is our capability to crush any oil yielding seed, not just canola."
 
 Metz believes the plant will create what he calls an "oil patch [of] above ground oil" and said this will bring revenue, jobs opportunities and growth for the province.

Canadian Green Fuels plans to build largest biofuels processing plant

Web exclusive posted April 17, 2008 at 1:09 p.m. CST 
 
 Final preparations are being made as the Earthrace team sets their sights on a new world record for a powerboat to circle the globe running 100 percent on sustainable biodiesel fuel, with a net zero carbon footprint. The Earthrace will hit the big blue sea April 27 from the Vulkan Shipyard in Sagunto, Spain.
 
 The crew of the 78-foot vessel hopes to complete the voyage in less than 65 days – which, if accomplished would easily come in under the present record of 74 days, 23 hours, and 53 minutes, set in 1998 by the United Kingdom boat Cables & Wireless Adventurer.
 

 "This time it's really happening and we're all raring to go," said Pete Bethune, a skipper on Earthrace. "Our new team is working really well together and we have the skills we need on board [as well as] the ground-crew to break the record."
 
 The original start date in March was delayed by La Nina weather patterns; a second start date didn't occur because of a European Union customs delay that interrupted the Portuguese supplied biofuels from reaching all the re-fueling locations on the vessel's route. 
 
 The team has been preparing to make the potentially record-breaking journey. During a 12-hour sea trial in the Mediterranean a problem was found with one of the steering pumps, which Bethune said has been fixed. 
 
 "We owe so much to our sponsors and the thousands of supporters of Earthrace around the world and we're determined to succeed for al of them," Bethune said. "Breaking the record will help to further increase awareness and debate about biofuels and renewable energy solutions, and that, in the end, has always been my goal."

Vessel plans to circle globe using biodiesel

Web exclusive posted April 17, 2008 at 1:12 p.m. CST 
 
 Archer Daniels Midland Co. has filed a federal antitrust lawsuit in Minneapolis, alleging that five major railroads conspired to fix fuel surcharges, costing the agribusiness giant $250 million since 2003. ADM is seeking triple damages.
 
 The suit names Union Pacific Railroad Co., of Omaha, Neb.; BNSF Railway Co., of Fort Worth, Texas; CSX Transportation of Jacksonville, Fla.; Kansas City Southern Railway Co., of Kansas City, Mo.; and Norfolk Southern Railway Co., of Norfolk, Va. In the suit, ADM alleges that chief executive officers of the five railroads conspired, through their membership as board members of the Association of American Railroads, to select identical factors to trigger the fuel surcharges, which moved in lock step instead of varying as they should have. Surcharges are levied to help railroads recover unanticipated costs when fuel prices rise, but ADM alleges the railroads used the surcharges to boost their profits. The association is not a party in the suit. ADM claims the five CEOs used their membership in the association "as an instrument to develop, organize and conduct their conspiracy."
 
 "All AAR activities have been carefully conducted with antitrust laws foremost in mind," said AAR spokesman Tom White. "AAR is confident it has fully complied with all antitrust laws and regulations."
 
 ADM is a major rail shipper, using railroads to transport soybeans, corn, wheat, canola, biodiesel, ethanol, soybean oil, soy meal, corn sweeteners and flour. It filed the lawsuit in Minneapolis because in 2007 the "defendants carried more than 98,000 rail cars for ADM that either originated or terminated in Minnesota," the complaint alleges. Although the surcharges themselves aren't illegal, ADM alleges the conspiracy to set them was in violation of antitrust laws.

 
 "The allegations in this case do not have any merit and we intend to vigorously defend" them, said BNSF Railway spokesman Patrick Hiatte.
 
 "We have independently and unilaterally developed our fuel surcharge program to recover cost of diesel fuel when this major cost of our operations began to escalate rapidly over the last several years," said Union Pacific Railroad spokesman James Barnes. "We're confident that we've complied with all laws in formulating a fuel surcharge program that's fair, that's equitable and easy to administer for Union Pacific and its customers."
 
 ADM claims the conspiracy began around 2003 when the railroads changed the shipping rate index. The change "enabled the defendant railroads to impose agreed-on price increases that did not correspond with the actual unanticipated increases in fuel costs" from market fluctuations, the complaint asserts. The railroads used the fuel price increases to conceal "across-the-board rate increases," the suit alleges.
 
 ADM, as evidence in its claims, said that in January 2007 the Surface Transportation Board issued an administrative decision that stated the railroads' methods for calculating fuel surcharges were unreasonable. The railroads were deregulated in 1980 and the 35 Class 1 carriers at that time eventually dwindled to seven. The five defendants, and two Canadian carriers not named in the suit, are those Class 1 shippers.
 
 The Surface Transportation Board is an economic regulatory agency that Congress charged with resolving railroad rate and service disputes, as well as reviewing proposed railroad mergers. It doesn't regulate rail shipments such as those named in the lawsuit. 
 
 The railroads say the plaintiff has mischaracterized those 2007 findings.
 
 Barnes said that even when Union Pacific Railroad didn't agree with the Surface Transportation Board's conclusions about the rate structures, it still implemented revisions of its rate policies in response to the 2007 report. 
 
 Because there are other rate structure lawsuits currently pending against the five railroads in various courts seeking class action status, Barnes and Hiatte said all pre-trial discoveries will be consolidated in a Washington D.C. federal district court. "Resolution of these actions could take several years," Barnes said.

ADM sues five major U.S. railroads, alleging price fixing

Web exclusive posted April 17, 2008 at 3:03 p.m. CST 

 
 The Malaysian Minister of Plantation Commodities and Industries Yang Berhormat Datuk Peter Chin Fah Kui announced the formation of a Malaysian Palm Oil Wildlife Conservation Fund at the opening ceremonies of the first International Palm Oil Sustainability Conference on Monday, April 14, in Sabah, Malaysia. 
 
 The fund is a collaborative effort of the Malaysian government, the Malaysian Palm Oil Council, Bursa Malaysia (the country's financial market) and the Borneo Conservation Trust. One of the first projects for the new $6.25 million research and conservation fund will be surveying the orangutan population in the Malaysian state of Sabah on the island of Borneo. Sabah is the biggest palm producing state in Malaysia, and also home to populations of orangutans in remnants of virgin tropical rain forests.
 
 The Malaysian Palm Oil Council hosted the first International Palm Oil Sustainability Conference to bring together approximately 600 industry players from Southeast Asia, Australia, Europe and the United States to discuss the emerging issues surrounding sustainability. Topics included sustainability, corporate social responsibility, certification for adherence to international sustainability goals, wildlife conservation care, life cycle analysis and carbon balance. 
 
 "The demand and expectation of customers for sustainable palm oil are all familiar to us," MPOC Chairman Dato Seri Lee Oi Hian said in his opening remarks at the conference. "This is our single most important current challenge, or threat." Malaysia is the world's largest exporter of palm oil and the second largest world producer of palm oil after Indonesia.

Malaysian Palm Oil Council creates wildlife fund

Web exclusive posted April 18, 2008 at 1:40 p.m. CST 
 
 American Ag Fuels, rocked by an explosion at its biodiesel plant in January, resumed production April 15 at the expanded plant in Defiance, Ohio.
 
 "We've had a great comeback and we're just now getting back into production," said American Ag Fuels Chief Executive Officer Steve Lankenau. The plant went from a capacity of less than 2 MMgy before the explosion to 7 MMgy. It will use multiple feedstocks, including soy oil, palm oil and choice white grease, Lankenau said.
 
 "We have temporary loading facilities and we're in the process of rebuilding a permanent loading and unloading operation," he said. The Jan. 3 fire and explosion, which rocked the plant's loading facility and shattered windows in adjacent businesses, injured four people including a police officer responding. Lankenau said two of the three injured plant workers are back on the job. The third worker sought employment elsewhere but has recovered, he said. The police officer was treated for minor smoke inhalation, Lankenau said.

 
 Fire officials believe glycerin vapors may have been ignited when a spark from the loading facility's overhead garage door triggered the freak incident. Several blocks were cordoned off, and a two-block area surrounding the plant was evacuated. Debris from the explosion rained down on adjacent power lines, which arced and caused a brief power outage. Numerous agencies responded and quickly contained the fire before it involved the glycerin tanks. Fire officials said the safety valves on the tanks operated as designed and prevented more serious damage.
 
 Lankenau said the plant has been working with their insurance company and permitting officials to design and build a safer loading facility, which should be operational this summer, he said. It will be used to unload raw material and haul away finished material.

Ohio biodiesel plant back on line, three months after explosion

Web exclusive posted April 23, 2008 at 11:47 a.m. CST 
 
 Green Plains Renewable Energy Inc., an Omaha, Neb.-based company that operates a 50 MMgy corn ethanol plant in Shenandoah, Iowa, announced April 14 it has received preliminary approval for a $2.3 million grant to fund research and development of algae production for biofuels.
 
 The approval came from the Iowa Power Fund which promotes energy independence in the state. The grant would allow Green Plains, in cooperation with GreenFuel Technology Corp., a Mass.-based venture-backed firm with expertise in algae-based biofuels, to conduct a 195-day test to determine the viability of algae production at the Green Plain's Shenandoah plant. By siphoning carbon dioxide from the plant to feed the growth of algae, the company estimates it can grow 17.6 pounds of algal biomass each day.
 
 "Algae production compliments ethanol production," said Wayne Hoovestol, chief executive officer of Green Plains. "The algae project involves recycling heat and water while mitigating carbon dioxide. Additionally, there is strong evidence to suggest that Iowa has ideal environmental conditions for commercial algae production."
 
 If the test is successful, the project could be expanded for feasibility and commercialization.
 

 "We are especially excited about the Green Plains project because of the natural synergies between the algae and ethanol industries," said Cary Bullock, vice president of business development for GreenFuel Technology. "The Green Plains project provides an opportunity to use an operational ethanol plant to further the body of knowledge of algae-based biofuels."

GPRE approved for algae-based biofuel R&D grant

Web exclusive posted April 23, 2008 at 11:51 a.m. CST 
 
 Innovation Fuels has received a Permit Award of Excellence from the Passaic Valley Sewerage Commissioners (PVSC) for its 2007 operations. The award recognizes companies that properly dispose of wastewater and comply with operating regulations. 
 
 Tom Grossberger, Technical Director for Innovation Fuels, was presented with the award by PVSC's Executive Director, Bryan Christiansen, during the Thirteenth Annual Awards breakfast on April 11th in Newark, NJ. 
 
 "We are very pleased to receive the Permit Award of Excellence from the PVSC, a group that, like Innovation Fuels, understands the importance of environmental preservation," said John Fox, CEO for Innovation Fuels. "This accomplishment reinforces our mission to maintain excellent operational proficiency and expertise as well as our commitment to our customers and the community."
 
 Innovation Fuels' New York Harbor refinery produces 950,000 barrels annually. The company manufactures, markets and distributes biodiesel to customers around the world.

Innovation Fuels awarded for operational excellence

Web exclusive posted April 23, 2008 at 12:22 p.m. CST 
 
 A Maryland-based nonprofit has been established to promote the interests of the advanced biofuels industry. The organization, Advanced Biofuels USA, which has a pending application for IRS 501(c)5 agricultural organization status, plans to give individuals, farm co-ops, start-up companies and large producers the opportunity to work together to advance common objectives.
 

 "The goal of Advanced Biofuels USA is to show the American people and their elected representatives that U.S. farmers and researchers together can produce sustainable and economical biofuels that will directly replace all types of transportation fuels including gasoline and jet fuel," said founder Joanne Ivancic. "We aim to focus on advanced biofuels made from sustainable non-food feedstocks."
 
 Bob Kozak, president of Atlantic Biomass Conversions and a founding member of the organization, said he hopes other companies on the cutting-edge of technology will come on board. "All of us working in the trenches know we need help telling our story in Washington but we don't have the time or money to do it right," he said. "I think Advanced Biofuels USA will be a great 'force-multiplier' for us all."
 
 For more information, visit <a href="http://www.AdvancedBiofuelsUSA.org">www.AdvancedBiofuelsUSA.org</a>.

Advanced biofuels organization formed

Web exclusive posted April 24, 2008 at 12:45 p.m. CST 
 
 Privately owned agri-giant Cargill, Inc. reported net earnings of $1.03 billion in its 2008 third quarter ending Feb. 29, up 86 percent from $553 million in the same period a year ago. Earnings in the first nine months totaled $2.9 billion, a 69 percent increase from $1.71 billion the previous year.
 
 Four of Cargill's five business segments increased earnings from the third quarter of 2007. The largest earnings contribution came from its origination and processing segment, which sources, processes and distributes agricultural commodities and provides supply chain and risk management services to customers globally. The industrial segment, which benefited from global demand for fertilizers, also increased earnings substantially. 
 
 According to Cargill spokeswoman Lisa Clemens, the company's earnings from producing, trading and distributing biodiesel and ethanol globally impacted less than 3 percent this third quarter's earnings report.
 
 Results in agriculture rose largely due to improved performance of Cargill's global animal nutrition operations. Earnings in the risk management and financial segment were mixed but down overall from the third quarter a year ago.

 
 "Demand for food in developing economies and for energy worldwide is boosting demand for agricultural goods, at the same time that investment monies have streamed into commodity markets," said Cargill Chairman and Chief Executive Officer Greg Page. "Relative to demand, world grain stocks today are at their lowest levels in 35 years. Prices are setting new highs and markets are extraordinarily volatile. In this environment, Cargill's team has done an exceptional job measuring and assessing price risk and managing the large volume of grains, oilseeds and other commodities moving through out supply chains for customers globally."
 
 Paige said Cargill's global assets, market insight, diversification and risk management skills have served the company well. "Our business model gives us the wherewithal to remain customer focused in a very challenging operating environment."
 
 Adding to its animal protein capabilities, Cargill acquired Freemans of Newent, a United Kingdom chicken processing business. The company is being integrated into Cargill's global poultry operations.

Cargill reports strong third quarter 2008 earnings

Web exclusive posted April 24, 2008 at 12:53 p.m. CST 
 
 Direct Fuels, the largest independent regional fuel distributor and specialty refiner in North Texas, has opened a biodiesel production facility at its Euless, Texas, fuel terminal. Direct Fuels is one of two biodiesel producers in North Texas, but is the only one colocated at a fuel terminal, which allows for blending of biodiesel into petroleum to occur in accordance with customer need. The facility has a potential output of 10 MMgy. 
 
 Production at the plant began in March and offer blends ranging from B5 to B100. Warren Bonham, president of Direct Fuels, said the timing of the facility's production comes at a good time. "The opening of our biodiesel facility is very timely, as petroleum-based diesel prices soar to record highs," he said.
 
 The facility will utilize production technology, allowing significant flexibility in terms of feedstock choice, which will begin with various animal fats but will change depending on market conditions. 
 
 In January Direct Fuels opened an 11-acre ethanol distribution complex in Euless, Texas. 
 

 Bonham said the facility's location is important, allowing for almost half of 2008's revenue to be generated by renewable and recycled fuel. "The plant is centrally located in the DFW Metroplex and offers diesel retailers and distributors easy and convenient access to both alternative fuels, as well as petroleum fuels, Bonham said. "With our fully operational biodiesel and ethanol operations, combined with our existing transmix operations, we expect more than 40 percent of our 2008 revenue to be generated from renewable and recycled fuel."
 
 As part of the biodiesel operation, Direct Fuels has constructed a dedicated in-house laboratory facility. Bonham said the company is committed to producing a very high quality product and the laboratory allows real-time testing to ensure that all biodiesel produced will meet the appropriate product specification. 
 
 Direct Fuels announced it has also begun the process of obtaining BQ-9000 accreditation from the National Biodiesel Accreditation Program. The company hopes to complete the rigorous assessment of their facilities by the end of the year.

Direct Fuels benefits from biodiesel production facility at its fuel terminal

Web exclusive posted April 25, 2008 at 9:25 a.m. CST 
 
 The Chicago Board of Trade, a subsidiary of CME Group, has submitted a petition to the Commodity Futures Trading Commission for approval to clear corn basis swaps and calendar swaps for corn, wheat and soybeans. The products are to be traded over-the-counter (OTC) and cleared through CME Clearing, which joined in the petition.
 
 "These new Cleared OTC Grain Swaps, which can be used as a complement to our highly liquid grain futures and options contracts, will be subject to position accountability, transaction reporting and margining and risk management standards that are comparable to highly successful futures contracts," said Robert Ray, CME Group's managing director of international sales and commodity and equity products. "As such, these new products will enhance risk management practices, improve transparency in the OTC grain swaps market and reduce counterparty credit risks for market users."
 
 Corn basis swaps are additional tools to help the grain industry better manage overall risk. The swaps also help buyers and sellers manage the risk of price differentials between futures delivery points and local markets. Calendar swaps, which are based on the average daily settlement price for the corresponding underlying futures contract during the final month of clearing the swap, offer another method of managing price volatility. The exchange must receive a CTAFC exemption to clear the agriculture swaps, as required by the Commodity Futures Modernization Act of 2000. Pending CFTC approval, the swaps will be available later this year.
 
 For more information on CME Group, visit <a href="http://www.cmegroup.com/">www.cmegroup.com/</a>.

CME Group requests CFTC approval to offer cleared OTC grain swaps

Web exclusive posted April 25, 2008 at 10:31 a.m. CST 

 
 The National Biodiesel Board chief executive officer called a Time magazine article "a distorted, inaccurate picture of biofuels." 
 
 The April 7 article, The Clean Energy Myth, by Time senior correspondent Michael Grunwald, paints a devastating picture of the rush to convert the forests of the Amazon and savannas of the Cerado in biofuel crop farms. He also points out that according to recent scientific reports, when deforestation is taken into account, biofuels, and particularly ones made from food crops, don't provide the greenhouse gas emission savings they've been touted to provide.
 
 In a letter to Time, NBB CEO Joe Jobe countered the Time article. "The overwhelming body of data demonstrates the carbon benefits of biofuels. For every unit of energy it takes to make domestic biodiesel, 2.5 units are gained, giving biodiesel the highest energy balance of any liquid fuel," Jobe said. "It also has a 78 percent life-cycle carbon dioxide reduction. In 2007 alone, biodiesel's contribution to reducing greenhouse-gas emissions was the equivalent of removing 700,000 passenger vehicles from America's roadways."

 
 "The U.S. biodiesel industry strongly opposes rain forest destruction and nonsustainable agricultural practices," Jobe said, in response to the article's description of deforestation and land use changes. "It is implementing a major initiative to enhance the overall sustainability of biodiesel production."
 
 In his letter, he also highlighted the benefits of biofuels to the U.S. economy. "Biodiesel increases our renewable-energy supply, adds well-paying, green jobs to the economy and reduces carbons and other emissions. I am proud to work in an industry that addresses these critical issues facing our nation and world."

NBB responds to Time magazine article

Web exclusive posted April 25, 2008 at 10:34 a.m. CST 
 
 The U.S. Department of Agriculture and U.S. Department of Energy secretaries said the Time magazine article, The Clean Energy Myth, misses the mark. The April 7 article by Time senior correspondent, Michael Grunwald, paints a devastating picture of the rush to convert the Amazon forests and savannas of the Cerado into biofuel crop farms. He also points out that according to recent scientific reports, when deforestation is taken into account, biofuels, and particularly ones made from food crops, don't provide the greenhouse gas emission savings they've been touted to provide.

 
 In a joint letter to Time, USDA Secretary Ed Schafer and DOE Secretary Samuel W. Bodman said the article was a one-sided and scientifically uninformed piece that ignored the potential of second- and third-generation biofuels to reduce greenhouse gases and the ability of modern agriculture to responsibly manage land use. 
 
 Furthermore, they challenged the basis of the article. "The Science magazine article (by Searchinger et al) on which Time relies has been thoroughly rebutted by leading scientists at the Department of Energy's Argonne National Laboratory," they wrote. "Time owes its readers the totality of facts to avoid misinformation."
 
 The agency heads pointed to the work being done in their agencies to meet the food and energy demands of the future. "For many decades, the U.S. has worked with farmers and the scientific community to increase crop yields, reduce the intensity of pesticide and fertilizer use, improve water productivity and promote conservation tillage that reduces erosion and sequesters carbon. Substantial progress continues in all these areas and was not sufficiently addressed," the letter said. "Last year alone our agencies invested more than $1 billion in research, development and demonstration of next-generation-biofuels production from nonfood feedstocks, which remains the core U.S. strategy. Our government is committed to advancing technological solutions to promote and increase the use of clean, secure, abundant, affordable and domestic alternative solutions."

USDA, DOE secretaries: Time article misses the mark

Web exclusive posted April 25, 2008 at 10:43 a.m. CST 

 
 Amyris, a California-based technology company, and Crystalsev, one of Brazil's largest ethanol distribution and marketing companies, are joining forces to produce renewable diesel from sugarcane on a commercial-scale by 2010. Once production begins, the companies plan to produce 1 billion gallons of renewable diesel worldwide within five years.
 
 The joint venture, Amyris-Crystalsev Pesquisa e Desenvolvimento do Biocombustiveis Ltda, will be based in Brazil and will employ local producers and sugarcane mills. Amyris will hold the majority stake in the venture and will provide the technology needed to produce the product. Crystalsev, which will hold the remaining stake in the new company, will contribute its commercialization expertise to the project.
 
 A separate agreement was made between Amyris and Santelisa Vale, the second largest ethanol and sugar producer in Brazil and majority owner of Crystalsev, to supply 2 million tons of sugarcane crushing capacity for the venture. Santelisa will also provide technical and engineering expertise on the conversion of traditional ethanol plants into renewable hydrocarbon fuels plants.
 
 "This partnership represents a historic first for the global transportation fuels industry," said John Melo, chief executive officer at Amyris. "By securing a significant supply of the most sustainable feedstock and collaborating with our world renowned partners Crystalsev and Santelisa, we now have the ability to take our pioneering technology out of the lab and rapidly scale production toward supplying the needs of the worldwide renewable fuels market."
 
 The renewable diesel produced by Amyris-Crystalsev will be made using Amyris' technology to create hydrocarbons through sugar fermentation. Because the hydrocarbons have the same molecular structure as traditional petroleum fuels, the company said its renewable diesel will be compatible with the current infrastructure. Today's engines will be able to use the fuel with no modifications necessary and, according to the Amyris, the renewable diesel will also be usable in jet engines.
 
 Amyris-Crystalsev plan to open a research and development facility in Campinas, Brazil, in June and a pilot plant in the same location by early 2009. The facilities will be strategically located between Brazil's largest city, Sao Paulo, and the country's sugarcane region.
 
 According to Amyris, the project's technology can also be used with a wide variety of feedstocks. Plans are being made to expand feedstock options as well as to make the technology available to other sugar-ethanol producers in the future.
 
 Amyris is a privately-held company whose investors include DAG Ventures, Khosla Ventures, Kleiner Perkins Caufield & Byers and TPG Biotech. 

 
 Crystalsev produces more than 2.4 million tons of sugar annually and employs 30,000 people in Brazil. 
 
 Santelisa Vale is the first company in Brazil to achieve energy cogeneration from bagasse. The company expects to crush 18 million tons of sugar cane in 2008 and will also produce 25 million bags of sugar and 770 million liters (about 203 million gallons) of ethanol.

A sample of Amyris' renewable diesel sits beside a sample of petroleum diesel./PHOTO CREDIT: Amyris

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Amyris, Crystalsev form joint venture to produce renewable diesel by 2010

Web exclusive posted April 25, 2008 at 1:30 p.m. CST 
 
 Neste Oil Corp. has changed its biodiesel division's name to trumpet the unit's trademark product. The Renewable Fuels Division – Neste's fresh version for the biodiesel unit – makes NExBTL, which Neste claims is more efficient and cleaner-burning than fossil diesel and rival biodiesel products. Neste's proprietary process creates NExBTL from animal fats, rapeseed oil and palm oil.
 
 Based in Keilaranta, Finland, the firm is testing NExBTL in buses in Helsinki, Finland, the country's capital. In 2007 the company announced it would invest €550 million ($1.1 billion U.S.) in an 800,000-metric ton (271 MMgy) facility expected to open in Singapore in 2010. When completed, it will be the world's largest NExBTL plant.

May 2008

Business Briefs

Beacon Energy acquires Smithfield BioEnergy

MonitorTech to provide emissions-monitoring system to Louis Dreyfus

REG tries to stay ahead of biodiesel downturn

PerkinElmer launches biodiesel platforms

GreenHunter closes tank storage leasing transaction

RINXchange exceeds 1 million RIN trades

Green Country Biodiesel sells equipment

Petrobras creates biofuels unit

Hielscher Ultrasonics wins biodiesel technology innovation award

Aquaflow hires aviation specialist

Bzdek leaves Blue Sun to launch Symbios Technologies

Sure Seal appoints biofuels sales manager

Columns

Trends Emerge in Unofficial Biodiesel Survey

Featured

Builder's Risk Coverage: An Ounce of Prevention is Worth a Pound of Cure

Biodiesel Production Trends Survey 2008

Understanding the Post-Injection Problem

A Man on a Mission

Will RINs be the Next Environmental Currency?

The 'FOG' is Lifting

Gaining Traction

Gallons of Megawatts

Can Biodiesel Power Haiti?

Earthrace begins voyage using sustainable fuels

May 2008.css-7jxktu{position:absolute;bottom:0px;left:0px;right:0px;height:3px;border-radius:3px;background-color:var(--chakra-colors-brandBlack);}

Business Briefs

Beacon Energy acquires Smithfield BioEnergy

MonitorTech to provide emissions-monitoring system to Louis Dreyfus

REG tries to stay ahead of biodiesel downturn

PerkinElmer launches biodiesel platforms

GreenHunter closes tank storage leasing transaction

RINXchange exceeds 1 million RIN trades

Green Country Biodiesel sells equipment

Petrobras creates biofuels unit

Hielscher Ultrasonics wins biodiesel technology innovation award

Aquaflow hires aviation specialist

Bzdek leaves Blue Sun to launch Symbios Technologies

Sure Seal appoints biofuels sales manager

Columns

Trends Emerge in Unofficial Biodiesel Survey

Featured

Builder's Risk Coverage: An Ounce of Prevention is Worth a Pound of Cure

Biodiesel Production Trends Survey 2008

Understanding the Post-Injection Problem

A Man on a Mission

Will RINs be the Next Environmental Currency?

The 'FOG' is Lifting

Gaining Traction

Gallons of Megawatts

Can Biodiesel Power Haiti?

Earthrace begins voyage using sustainable fuels

May 2008