Web exclusive posted August 6, 2008 at 10:49 a.m. CST 
 
 U.S. Democratic presidential candidate Barack Obama presented details of his <a href="http://www.newenergyforamerican.com">proposed energy policy</a> during a speech Aug. 4 at Michigan State University in Lansing, Mich. 
 
 The Illinois senator warmed up the audience by reminding them how dire the country's current energy needs are. He asked attendees to picture what the future will be like if no changes are made to the current policy and what the future will hold if "we face the realities of the 21st century by building a 21st century economy."

 
 Obama admitted his energy plan is ambitious. "Energy independence will require an all-hands-on-deck effort from America – effort from our scientists and entrepreneurs; from businesses and from every American citizen," Obama said. "We have to make a serious, nationwide commitment to developing new sources of energy and we have to do it right away."
 
 Obama's plan calls for a $150 billion federal investment with the goal of becoming energy independent from the Middle East and Venezuela within 10 years. The plan – New Energy for America – calls for an immediate $1,000 energy rebate for every family, paid for by profits from the big oil companies, with a more intensive long-term approach to follow.
 
 Obama said in the short-term the United States should also increase its production of oil and natural gas. That statement contradicted what Republican nominee John McCain supporter Rep. Eric Cantor, R-Va., predicted earlier in the day. In a statement posted on McCain's Web site, Cantor said Obama would "paint a picture of an energy plan that frankly is not based on developing more American energy supply." Rather Obama announced he supports the sale of 70 million barrels of light crude oil from the Strategic Petroleum Reserve for less-expensive crude and that the United States should demand oil companies begin drilling on 68 million acres of untouched potentially oil-rich land. 
 
 For the long-term, Obama's three-pronged energy independence plan consists of:
 
 1. Building more fuel-efficient cars and adding one million 150 mile-per-gallon plug-in hybrid cars to American roadways within six years. In order to achieve this goal, Obama suggested giving consumers a $7,000 tax credit for purchasing a plug-in hybrid car as well as offering $4 billion in tax credits and loans to American auto manufacturers to enable them to "re-tool their factories and build these cars."
 
 2. Setting a mandate requiring at least 10 percent of the nation's energy to be derived from renewable resources within four years. The current goal is to have 5 percent of the energy come from renewables within the same time frame. In order to double that requirement, Obama said he plans to continue to support federal tax incentives and government contracts for the development of second-generation biofuels. He also favors extending the Production Tax Credit for five years, modernizing the nation's utility grid, and investing in research towards safer use of nuclear power and coal technology.
 
 3. Reducing the demand for electricity by 15 percent in the next 10 years. Obama said California has set an example and will serve as the lead for the nation to follow. In order to lessen electricity demands, Obama said new buildings will be constructed to be 50 percent more efficient and utilities will be encouraged to restructure so that profits are based on how much electricity is saved rather then spent.
 
 If all steps are implemented, tangible results will be realized within four years, Obama said.

Obama details energy plan

Web exclusive posted August 6, 2008 at 10:57 a.m. CST 

 
 Continuing its move to using more environmentally-friendly and fuel efficient vehicles, Atlanta, Ga.-based media company Cox Enterprises Inc. has added nine International Durastar Hybrid Bucket Trucks to its fleet that are capable of running on various biodiesel blends. 
 
 With the thirteenth largest fleet in the country, Cox Enterprises is transitioning its fleet to lessen its impact on the environment by using flex-fuel vehicles (FFVs) and replacing existing vehicles with more fuel-efficient and or hybrid models. Cox Enterprises' fleet is comprised of more than 15,000 vehicles-257 of which are hybrids and 1,400 that are capable of running on biodiesel.
 
 Supplied by Navistar International Corp., the hybrid trucks will provide dramatic potential fuel savings of nearly 60 percent in utility-type applications when the engine is turned off and electric power still operates the vehicle. Diesel emissions are completely eliminated when the hybrid truck operates equipment, such as overhead utility booms, solely on the truck's battery power instead of requiring the engine to run. According to Cox Enterprises, the trucks will be running on either B5 to B20 blends. 
 
 Navistar hybrid trucks employ a parallel through-the-road, diesel-electric hybrid design supplied by Eaton Corp. It incorporates an electric motor/generator between the output of an automated clutch and input of the automated transmission. The diesel hybrid-electric system recovers energy during braking - called regenerative braking - which then adds power back into the driveline during propulsion and acceleration. Navistar produces International brand commercial and military trucks, MaxxForce brand diesel engines, IC brand school and commercial buses and Workhorse brand chassis for motor homes and step vans.
 
 "Cox Enterprise is taking a leadership role in the telecommunications industry when it comes to operating clean, green vehicles," said Jim Williams, director of new product sales and distribution for Navistar. "They'll save money on fuel, run quieter trucks and significantly reduce emissions in their communities."
 
 The biodiesel hybrid trucks will be used by Cox Enterprises' multi-service broadband communications and entertainment subsidiary, Cox Communications Inc. The hybrid trucks will be used in the following Cox Communications locations: Hampton Roads, Va.; New Orleans, La.; Oklahoma City, Okla.; Orange County, Calif.; Phoenix, Ariz.; San Diego; Springfield, Va.; and Rhode Island.
 
 From 2000 to 2007, Cox Enterprises reduced its carbon footprint by 10 percent. Cox Conserves is the company's national sustainability program designed to dramatically reduce its carbon footprint by an additional 20 percent by 2017. 
 
 Cox Enterprises is one of the nation's leading media companies and providers of automotive services. Major operating subsidiaries include Cox Communications Inc. (cable television distribution, telephone, high-speed Internet access, commercial telecommunications, advertising solutions and Travel Channel), Cox Newspapers Inc. (newspapers, local and national direct mail advertising), Cox Television (television and television sales representative firms), Cox Radio Inc. (broadcast radio stations and interactive web sites), Manheim Inc. (vehicle auctions, repair and certification services and web-based technology products and Cox Auto Trader (automotive publications and a majority stake in AutoTrader.com).

Cox Enterprises to use biodiesel hybrid vehicles

A federal judge has approved a settlement between Alabama Biodiesel and Black Warrior Riverkeeper that requires Alabama Biodiesel to cease illegal discharges of oil and grease, obtain a pollution permit mandated by the Clean Water Act, and pay $27,000 for a Supplemental Environmental Project in the Black Warrior River watershed. Black Warrior Riverkeeper claimed that Alabama Biodiesel violated the Clean Water Act on 20 different occasions between June 2006 and August 2007 by discharging oil from its 10 MMgy soy-oil-based production plant in Moundville, Ala., into an unnamed tributary of the Black Warrior River without a permit.

Alabama Biodiesel, Black Warrior Riverkeeper settle lawsuit

Web exclusive posted August 1, 2008 at 10:50 a.m. CST 
 
 Corn and soybean markets for 2009 contracts gained some support July 29 when the USDA announced it won't allow land to be released penalty-free from the Conservation Reserve Program to increase the acres available for seeding the 2009 crop. 
 
 Pointing to the drop in corn and soybean prices after record highs set last month and good growing weather, U.S. Secretary of Agriculture Ed Schafer said, "even with the damage and delays in planting caused by the floods, this year's corn crop is on track to be the second largest on record with an anticipated harvest of almost 79 million acres."
 
 Another factor considered by the USDA is that a pending drop in acres already is built into the new Farm Bill and existing contracts. Schafer said the 2008 Farm Bill lowered the cap on total number of acres allowed in the CRP program from 39.2 million acres to 32 million acres. "As a result, the 34.7 million acres now enrolled in the program will have to shrink," he said. "And looking out over the next few years, we have 1.1 million CRP acres scheduled to expire on Sept. 30 of this year, and that number jumps to 3.8 million acres on Sept. 30, 2009, and then 4.4 million acres on Sept. 30, 2010. So large blocks of land will be available for other uses, if land owners choose to pursue them."
 
 DTN agriculture reporter Chris Clayton commented in a recent webinar that the USDA's decision on doing an early-out program for CRP acres would be less likely after a court decision in Seattle regarding USDA's proposed haying and grazing program. "The judge was critical of USDA," he said. "They didn't do an environmental impact statement on the haying and grazing changes." 
 
 Clayton highlighted other changes in conservation programs in the 2008 Farm Bill. Understanding that acres will be coming out of CRP, Congress retooled an existing program, the Conservation Security Program, and renamed it as the Conservation Stewardship Program. The working lands program is authorized to enroll 13 million to 80 million acres per year. "It will effectively overtake CRP as the biggest conservation program at USDA," Clayton said. Farmers will receive payments for environmental practices such as leaving buffer strips to protect wetlands and rivers, erosion control practices and tillage practices. Unlike CRP, the CSP program will allow continuous signups. Rules for CSP are not likely to be out until late this winter, Clayton predicted.

USDA won't release CRP acres penalty free

A contractor died in an explosion May 18 at Greenlight Biofuels LLC in Princess Anne, Md. Two workers, one an employee of Michigan-based Diversified Mechanical Service Inc. and the other a subcontractor, were welding pipes at the idled plant when the explosion occurred. One worker died, and the other was uninjured. While the exact cause of the explosion is being investigated, Allen Cunningham, president of Greenlight Biofuels, said the safety features of the plant worked as designed. The 4 MMgy multi-feedstock biodiesel plant started production in November 2007.

Greenlight Biofuels explosion kills worker

Web exclusive posted August 6, 2008 at 11:05 a.m. CST 

 
 GreenHunter Biofuels Inc., a wholly-owned subsidiary of GreenHunter Energy Inc., has selected Cognis Corp.'s QTA System to allow plant operators to conduct biodiesel quality tests in a control room rather than having a chemist conduct such tests in a separate lab.
 
 GreenHunter's refinery, located along the Houston Texas Ship Channel, is a 105 MMgy biodiesel refinery with approximately 700,000 barrels of bulk storage capacity.
 
 Kerry Staller, a corporate engineer at GreenHunter, said the company chose the Cognis QTA system because it's fairly accurate and well within the capabilities of the typical chemical operator to do the analysis themselves. "We do not have a fully staffed quality control lab," he said. "When we are fully staffed, there will be one quality control manager to handle procedures and maintain instrument calibrations, but by and large, all of the analyses are done by the chemical operators. Our control lab and control consoles are in the same room, and the expectation is that the operators will run their own tests and adjust their processes accordingly."
 
 Staller said the Cognis QTA system is ideally suited for such an environment. "The analysis takes no more than two minutes, requires minimal sample preparation and gives trustworthy and repeatable results," he said, adding that since the device requires no lab supplies other than household isopropanol for cleaning, it doesn't require hazardous waste disposal or chemical inventory maintenance. 
 
 The Cognis biodiesel analysis begins by digitizing the light spectra of a biodiesel sample using infrared technology. The spectra are then sent via the internet, to Cognis' central database where algorithms convert the spectra into highly accurate standard quality measurements that are viewed online by plant personnel. 
 
 "With this type of analysis and control philosophy, operators get very rapid feedback on how their operations are proceeding and can make the necessary adjustments quickly, rather than waiting for a conventional lab to give them results," Staller said. "We can push our operations to control points which are more economical, and not settle for where operations are 'comfortable'." Staller also said by using this system, GreenHunter Energy can get early warnings that some systems may not be performing as expected, allowing early accommodations to avert off-spec production or downtime.

GreenHunter Biofuels selects Cognis system

The Jatropha World 2008 conference was held in Miami on June 9-11 and promised to bring participants up-to-date on jatropha developments internationally. The conference was meant to highlight the status of jatropha in several countries around the world via speakers from India, Brazil, the Philippines, Madagascar, Norway, the United Kingdom and elsewhere. 
 According to Charles Fishel, chief executive officer of Abundant Biofuels Corp., who is interested in jatropha as an economic development tool for third-world countries, the conference had an "air of excitement." He estimated attendance at between 400 and 450 people. "That was about 50 percent more than the conference organizers expected," he said. 
 According to Fishel, reasons for the excitement surrounding jatropha are fourfold: jatropha's absence from the "food-versus-fuel" debate, the low amount of mechanical energy it takes to harvest, added revenue from jatropha exports and profitable prices. 
 
 Highlights of the conference, according to Fishel, included new analysis of jatropha as an energy crop, and the feeling of openness on the part of investors and scientists. "There was the feeling that [conference attendees] were on the edge of something brand new and very exciting," he said. 
 
 Attendees also participated in a series of conference calls before the event began. The phone meetings allowed attendees to ask questions and raise issues before the conference. 
 
 New plans to cultivate jatropha were on the minds of many of the attendees. 
 
 In other jatropha news, D1 Oils, a U.K.-based biofuels technology company, announced in May its intention to carry out trials in Indonesia to assess the cultivation potential of Jatropha curcas in the poor soil conditions on the island of Sumatra, Indonesia. 
 
 D1 intends to work with the University of Bengkulu in South West Sumatra to test the performance of jatropha in acidic "ultisol" soil types. These soils, which are generally defined by their lack of nutrients, usually can't be used for sedentary agriculture without the aid of lime or fertilizers. 
 
 Jatropha curcas, which is well-adapted to poor-quality soils, will strive for better yields through a balanced application of fertilizers to support plant growth. With the help of the University of Bengkulu, the trials will compare the growth and yield of Jatropha curcas under different regimens of fertilizers to determine the right level of support for the best plant growth and yield. "Jatropha can be grown on a wide range of soil types, including marginal land, and grows in drier areas than other food oil crops," said Henk Joos, director of D1's plant science program. "We expect Indonesia to be a key area for Jatropha curcas cultivation, particularly in Sumatra and parts of Java where agricultural production is limited by low levels of soil nutrients."

 
 The Indonesian trials are the latest in a series of strategic research and development partnerships that D1 is developing worldwide. D1's objective is to gather data to improve the cultivation and productivity of jatropha. D1's cooperation with UNIB aims to produce a crop that Indonesian farmers can grow on poor soils with high commercial yields and without heavy applications of fertilizers.

Conference discusses jatropha, while D1 Oils plans to test alternative feedstock

Two things happened in the biodiesel industry in the past month that epitomized the polarized scale of good news versus bad news. Would you like the good news first or the bad news? I like to end on a good note, so I'll start with the bad.
 
 The Grocery Manufacturers Association unveiled its plan to support a media campaign that directly blames renewable fuels for the rise in food prices. By now, I think everyone-even the general public, not just the biodiesel industry-knows that's not entirely true. So for an association to get behind such a cause, this might not be the best move for it. Still, the renewable fuels industry will be sure to keep a wary eye on it. U.S. Sen. Chuck Grassley addressed the GMA's campaign when he spoke to National Biodiesel Board members at the organization's annual meeting in Washington, D.C., in June. "Worldwide economic growth, global weather problems, rising marketing costs and the weak U.S. dollar are all having a greater impact on food prices than biofuels," he said. I concur. For more details about the NBB meeting and other events going on within the association, go to the NBB section of our magazine starting on page 26. For more information on the GMA campaign, see our news story on page 17.
 
 Despite this campaign and other factors that continue to weigh heavily on the biodiesel industry, progress was made in terms of quality standards with ASTM International. In mid-June, three changes were made: a cold filtration test was added to the B100 specification (ASTM D 6751), the conventional petroleum diesel specification (ASTM D 975) can now contain up to 5 percent biodiesel, and new standards were created for blends between B6 and B20 for on- and off-road diesel. These changes are slated to take effect once they are officially published, estimated between September and November. At the same time, the furnace fuel specification for Bioheat (B5 in D 396) will take effect. For more information on the ASTM changes, see page 16.
 
 In this case, I think the good news far outweighs the bad news. These new quality standards, which follow the extension of the biodiesel tax credit (in the BIObytes section on page 16), give the industry political support that can help it to grow. On top of that, Canada just passed a national renewable fuels standard that calls for 2 percent renewable content in diesel fuel by 2012. There are a couple biodiesel producers in Canada that can help to meet that goal, but even Canadian Renewable Fuels Association President Gord Quaiattini admits that the United States could help the country to meet that quota, as well.
 
 All this just goes to show that when the biodiesel industry finds itself in a difficult spot (e.g., feedstock prices), it can create some good news out of the bad. This determination can only help further the use of biodiesel for many years in the future.
 
 Jessica Sobolik
 Managing Editor
 <a href="mailto:jsobolik@bbibiofuels.com">jsobolik@bbibiofuels.com</a>

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Progress in the Face of Adversity

The U.S. House of Representatives passed the Energy and Tax Extenders Act of 2008 on May 21 by a vote of 263 to 160. The bill includes many renewable energy tax provisions, including an extension of the current biodiesel tax credit. If passed by the U.S. Senate and signed into law by President George W. Bush, the bill would provide biodiesel producers with a $1-per-gallon incentive for another year, regardless of feedstock. A provision to close the "splash-and-dash" loophole and eliminate foreign producers from collecting the U.S. tax credit is also included in the legislation.

House extends biodiesel tax credit

The World Bioenergy Association was launched at World Bioenergy 2008, a conference in Jönköping, Sweden. The organization will be a global voice for bioenergy, and promote the use of bioenergy in a sustainable and economically efficient way. The Swedish Bioenergy Association (Svebio) created the organization to advocate for the bioenergy business on a global level. The organization is open for national and regional bioenergy associations, and bioenergy companies. For more information about the association, visit <a href="http://www.worldbioenergy.org">www.worldbioenergy.org</a> or contact Svebio's Kjell Andersson at +46 (0)70-4417192.

New group targets bioenergy promotion

Pinnacle Biofuels Inc., a new 10 MMgy biodiesel plant in Crosset, Ark., began production May 12. Currently, the facility uses locally available chicken fat and soybean oil (75 percent of production capacity), but it has capabilities to utilize a variety of animal fats and vegetable oils. The plant is utilizing a Greenline Industries Waterless Processing System. On June 2, GreenHunter Energy announced the inauguration of the company's Renewable Fuels Campus, which includes a new biodiesel refinery. The plant, now the largest in the United States, is capable of producing 105 MMgy and will use animal fats and vegetable oils as feedstocks.

Pinnacle Biofuels, GreenHunter Energy open new plants

Colorado's largest beer and wine distributor Republic National Distributing Co. has chosen Blue Sun Biodiesel as the fuel provider for its fleet. Republic National Distributing Fleet Manager Gregg Miller said although the price of the biodiesel is higher than ultra-low sulfur diesel, there are benefits that offset that. "We save money as we operate our trucks, and we reduce our carbon output," he said.  Statistics released by Blue Sun Biodiesel show that by using Blue Sun Fusion B20, drivers can save 22 to 40 cents per gallon due to improved fuel economy and reduced maintenance costs, based on more than 450 million miles of customer data since 2003.

Republic National Distributing contracts with Blue Sun

After overcoming a damaged propeller and driveshaft, monsoon conditions, and funding problems, Earthrace, a 78-foot trimaran fueled with biodiesel, set a new world record for circumnavigating the globe June 27. The journey was completed in 60 days, 23 hours and 49 minutes, beating the old record by nearly 14 days. Skipper Pete Bethune, a former oil worker, dedicated six years to breaking the record. "I hope that Earthrace and her adventure highlight to the world the importance of continuing to research and develop alternative fuel sources for global use," he said. For more information, visit www.earthrace.net.

Earthrace sets world record

With the cold filtration test issue finally settled, the long-awaited trio of ASTM standards for biodiesel were approved at the ASTM International meeting in Vancouver, British Columbia, in mid-June.

 
 A major stumbling block to wider acceptance of biodiesel was overcome with the final approval of a cold filtration test to be added to the B100 specification (ASTM D 6751). The test provides additional assurance to buyers that the B100 won't contain precipitates that can cause filter-plugging issues in cold weather. There was initial concern with the test within the biodiesel industry, according to Don Scott, technology and regulatory engineer for the National Biodiesel Board. "Everyone is comfortable that they can meet the specs, and the biodiesel will be a better product," he said.
 
 The tightened B100 specifications cleared the way for expanded biodiesel blends. The conventional petroleum diesel specification (ASTM D 975) can now contain up to 5 percent biodiesel, opening a new market for the biofuel as an additive. Scott explained that the updated standard means No. 2 diesel can now include B5 and still be considered the same fuel without labeling the blend.
 
 The third change creates new standards for blends between B6 and B20 for on- and off-road diesel. Scott explained the new standards will allow testing a blended biodiesel against the ASTM specifications for physical verification of quality, rather than relying solely upon paperwork. The new ASTM standards will also provide engine manufacturers with specifications to use in engine testing. Nearly all major automakers in the United States currently accept the use of at least B5, with a few such as Cummins, New Holland and Caterpillar accepting blends of B20 or higher, according to the NBB. Several more companies are expected to raise their approvals to B20 with the approval of the new standards.
 
 The three new standards will take effect once they are officially published, which is expected to be three to five months after the approval. In addition, the furnace fuel specification known as Bioheat (B5 in D 396) will take effect at the same time. The specification had been tabled at the ASTM meeting December 2007 while awaiting the outcome of the other three standards. 
 
 "It is quite remarkable that the big oil companies and engine makers on the committee have now joined forces with the biodiesel industry to help approve these standards," said Steve Howell, chairman of the ASTM Biodiesel Task Force. Howell and Stu Porter of BBI International Inc. were presented with awards of appreciation from ASTM at the Vancouver meeting for their dedication to leading the effort in developing the new standards.
 
 More than five years of research and consultation with the ASTM fuel experts went into the new standards. "We addressed the issues and concerns with solid, scientific research," said Joe Jobe, chief executive officer of the NBB. "Without the tremendous amount of scientific data provided by independent organizations like Southwest Research Institute, the National Renewable Energy Laboratory, the Coordinating Research Council and others-and the cooperation of the petroleum and engine communities-this would not have been possible."
 
 Preparing to meet the demand for testing, industry veteran Pacific Biodiesel Inc. has opened a new quality assurance laboratory named Pacific Biodiesel Technologies Inc. in Salem, Ore. State-of-the-art equipment will allow "PB Tech" to provide ASTM D 6751 certificates of analysis and to support a number of additional tests to evaluate biodiesel quality. Tests may be customized to the specifications of the customer. Service can be provided for one test, the BQ-9000 Critical Specification tests or the full ASTM D 6751 suite of tests. "If biodiesel is to succeed as an alternative fuel, it is imperative that all biodiesel producers adhere to high standards of consistent quality," said Bob King, president of Pacific Biodiesel.

ASTM enacts biodiesel blend standards

A coalition of industrial food producers and other special interest groups has launched a campaign to discredit the biofuels industry in the eyes of the public and policymakers. The effort, spearheaded by the Grocery Manufacturers Association, and a media campaign proposed by Glover Park Group was made public by U.S. Sen. Chuck Grassley, R-Iowa.
 
 The GMA represents more than 300 food, beverage and consumer household goods companies in the United States. Other groups backing the effort include the American Bakers Association, the American Meat Institute, Environmental Working Group, the National Cattlemen's Beef Association, the National Chicken Council, the National Council of Chain Restaurants, the National Pork Producers Council, and the Snack Food Association, among others.
 

 The GMA released a request for a public relations campaign to combat the Energy Independence & Security Act of 2007. The response to the GMA's request by the Glover Park Group lays out a strategy to undermine the biofuels industry over the next six months. To accomplish these goals, the proposal stated: "It is worth noting at the outset that the recommendation to take this fight beyond the confines of the Beltway and policy elites is relatively rare. ... That does not hold true here. … Congress and state lawmakers must be made to feel the political risk on this issue. We need to get the phones ringing from real voters." 
 
 Six U.S. senators held a press conference in Washington D.C., on May 22 to combat the disinformation campaign: Sens. Grassley; Kit Bond, R-Mo.; Byron Dorgan, D-N.D.; John Thune, R- S.D.; Ben Nelson, D-Neb.; and Ken Salazar, D-Colo. "The Grocery Manufacturers Association has an obvious self-interest in launching this campaign," Grassley said. "They need to blame someone for high grocery bills, but they've aimed their fire at a false target." Grassley later requested a meeting with 15 chief executive officers of GMA member-companies but subsequently canceled the meeting when only one CEO was willing to defend the group's actions.
 
 The National Biodiesel Board applauded Grassley's actions and castigated the GMA for launching the campaign. "Don't buy what the grocers are trying to feed you," said Joe Jobe, CEO of the NBB. Even with biodiesel made from soybean oil, "more than 80 percent of each soybean is still used for animal feed or food," he added. "Biodiesel's effect on the food supply is minimal, and to claim otherwise is nothing short of intellectual dishonesty."
 
 Commodity and Food Price Impacts - Meat
 <center><img src="/images/upload/20080714114850.jpg" alt="" /></center>
 The Coalition for Balanced Food and Fuel uses charts such as this one to back its argument about ethanol's impact on food prices.
 
 The Glover Park Group charged the GMA a $50,000-per-month retainer fee for six months to run the campaign, which is operating several anti-biofuels Web sites, including <a href="http://www.foodbeforefuel.org">www.foodbeforefuel.org</a>, <a href="http://www.foodb4fuel.org">www.foodb4fuel.org</a> and <a href="http://www.balancedfoodandfuel.org">www.balancedfoodandfuel.org</a>.

Lobbyists manufacture food-versus-fuel controversy

With the intent to expand its current yellow-grease recycling program, the city of San Francisco will begin utilizing previously discarded brown grease to produce biodiesel, a project being funded by a $1 million grant received from the California Energy Commission on May 29. 

 
 The San Francisco Public Utilities Commission, which runs the city's yellow-grease collection program and will manage the brown grease project, contributed a $1.7 million match to cover labor, equipment and other expenses involved in the construction of a pilot facility. The location of the new pilot plant will be at the public utilities commission's Oceanside Sewage Treatment Plant.
 
 Brown grease, typically disposed of at sewage treatment plants, is identified as the dark substance that remains in grill traps and grease interceptors under restaurant kitchen sinks. According to city officials, San Francisco contains an estimated 2.5 million gallons of brown grease-1 million more gallons than yellow. The current program collects yellow grease from restaurants to fuel city vehicles, buses and fire trucks.
 
 The refined brown grease can be converted into three grades of biodiesel, including high-grade certified biodiesel for vehicles, a lower-grade biofuel source used to run turbines and pumps at sewage treatment plants, and energy for cogeneration (capturing methane gas at the sewage plant to convert into electricity).
 
 Mayor Gavin Newsom said San Francisco's grease recycling program, which was launched in November 2007, has been an enormous success, although the city must continue to raise standards in regard to reducing greenhouse gas emissions and alternative energy exploration. "With this grant, our unique brown-grease-to-biodiesel plant will break new ground for sustainable fuel production in California and serve as a model for the entire state," he said. 
 
 Public Utilities Commission General Manager Ed Harrington claimed the project will create a "win-win" situation for ratepayers and the environment. "We will keep more grease out of the sewers and reduce our reliance on outside energy sources for our treatment plants," he said. 
 
 The brown grease pilot facility is expected to be completed in December.

San Francisco receives $1 million grease grant

Palmas del Ixcan, a subsidiary of Houston-based Green Earth Fuels LLC, is developing an environmentally responsible, economically sustainable and socially just palm oil plantation in Guatemala. The project will serve as a model for future plantation development by providing a needed influx of income into the region, while stemming harmful clear-cutting farming practices that have claimed a significant portion of primary-growth rainforest. 
 
 On May 21, U.S. Ambassador to Guatemala James Derham and Gregory Bafalis, president and chief executive officer of Green Earth Fuels, sowed the plantation's first palm seeds. "The environmentally responsible and sustainable practices being implemented at the Palmas palm plantations are quite remarkable," Derham said. "It is impressive that an American company has taken such a strong leadership role in the environmental and economic stability of Guatemala, setting a very high standard for other palm oil producers in the region to follow." 
 
 To eliminate future destruction of primary-growth rainforest, Palmas del Ixcan has allocated $3 million to establish a private reserve. According to Green Earth Fuels Executive Vice President Jeff Trucksess, the company is using satellite imagery to identify primary-growth forest within the plantation. "If it's primary rainforest, it stays, and we want documentation to stand by that," Trucksess said. 
 

 The Palmas del Ixcan plantation is also designed to provide sweeping economic and social benefits to the region. The project will provide an estimated 4,000 jobs, establish a savings and loan program for employees, offer resettlement packages to squatters, supply land and materials to build schools, create markets and wastewater management facilities, and provide services for public roads and fuel for villagers' machinery. 
 
 A 4,000-hectare (9,884-acre) Independent Producers Project will provide additional economic and entrepreneurial opportunities to those living in the region. This growers' co-op provides an opportunity for community members to become independent producers. Individuals can work their own piece of land and sell products to the company's crushing facility to earn extra income. "It's a way to improve the economics of the local people and give them the opportunity to work for themselves instead of just working for somebody else," Trucksess said. 
 
 "This Palmas project is just another example of the further advancement of our fully integrated business model," Bafalis said. "We are committed to ensuring global stability by incorporating economically viable, environmentally appropriate, and socially beneficial operations and management procedures into all aspects of our company's holdings."
 Palmas del Ixcan will continue to develop palm plantations and extraction plants in Guatemala over the next five to 10 years. Construction of the first extraction plant is slated for August 2009, with oil production to begin in 2010.

Palmas del Ixcan workers tend to palm plants.

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Guatemalan palm plantation offers environmental, social, economic benefits

The New Orleans Regional Transit Authority has purchased 39 buses as replacements in its fleet with plans to fuel them with biodiesel. The buses cost $385,000 each and are part of the city's greening effort. 
 
 Initial construction of the buses, conducted by Daimler's Orion brand, was completed in Mississauga, Ontario, with further manufacturing done in the company's facility in Oriskany, N.Y., where seating, engines, transmissions, axles, electrical wires, heating and air conditioning systems, and other components are installed. 
 
 "They're just being delivered," said Rosiland Blanco Cook, spokeswoman for the Regional Transit Authority at the end of June. "Twenty are in. The other 19 are expected shortly. We lost 200 [buses] during [Hurricane Katrina]."
 
 Biodiesel-powered buses have made a strong eco-friendly statement across parts of the country as transit systems show their support for the environment. "Other hybrids cost even more," Cook said. "In San Jose, they paid $2.5 million a piece." 
 
 The RTA said it understands that biodiesel fuel will cost a little bit more but expressed that a cleaner-burning fuel has many benefits. Cook said the move was well-thought out by the RTA. "We want to change," she said. 
 
 The expenses associated with the changes that the RTA has made are already in the budget, and according to Cook, the authority hopes federal money will also become available in the future to support the move.
 

 Obtaining a biodiesel supplier for the buses is also in the works. "We are in the procurement process right now to get the fuel," Cook said. 
 
 The transit authority may have similar plans for the future, but its funding is limited. "We haven't got our [Federal Emergency Management Agency] money yet," she said. "We'll probably buy more."

The New Orleans Regional Transit Authority purchased 39 buses to run on biodiesel.

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New Orleans RTA switches to biodiesel

Global Renewable Energy Network Corp. (GREEN), a Richmond, British Columbia-based biofuels company that delivers small-scale batch biodiesel processing units to rural communities that use indigenous feedstocks, sent its leadership team to Autopetro, an event in Ho Chi Minh City, Vietnam, on May 21-25. 
 
 According to Wilfred Victoria, vice president of marketing and communications for GREEN, the event provided a networking opportunity for businesses in Vietnam and Southeast Asia that are interested in serving the rapidly growing automotive market that anticipates using various biodiesel blends in the region. Vietnam is currently active in the production of biodiesel feedstocks as the region strives to find cost-effective alternative energy solutions. "We attended because we know that eventually automobile manufacturers will be coming out with 'green' cars using biodiesel extensively," Victoria said. "So, we're positioning ourselves there for people to know about us and our services." 
 
 GREEN, a joint venture formed by SITTM Technologies Inc. and TriBiotech Resources Ltd., introduced the company's Greenstar 1000 biodiesel batch processing equipment to various Vietnamese automobile dealers during the event. The system, which is adaptable for community-level biodiesel production, can use multiple feedstocks with up to 5 percent free-fatty-acid levels. The two companies hope their expertise in foreign market penetration and alternative energy will provide a strategic advantage that harnesses the opportunity for expansive growth in the new venture. "We're not like the typical big biodiesel refinery-type that costs millions of dollars," Victoria said. "We're basically a community-level biodiesel production organization able to offer biodiesel equipment and business to end-users-the farmers who can use it and sell the biodiesel, too."

GREEN President and CEO Rely Diego, right, meets with Tran Le Son, manager of the Vietnam Oil and Gas Industry, center, and San My Ha of Golden Fields, GREEN's distributor, at Autopetro in Vietnam.

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GREEN attends Vietnamese conference

Denmark-based Novozymes A/S has taken the lead role in a $3 million project to research and produce biodiesel using an enzymatic process. The project, which will take place over the next three and one-half years, is being financed by a grant through the Danish National Advanced Technology Foundation.
 
 The intention of the project is to develop a replacement technology to the chemical production currently being used by biodiesel companies around the world. "The chemical process demands raw materials of high quality that can often also be used as food," said Per Munk Nielson, project leader and senior science manager for Novozymes. "With a process based on enzymes, we will be able to use raw materials of poorer quality, such as animal fats, recycled restaurant oils and waste products-all materials that cannot be used as food."
 
 Nielson told Biodiesel Magazine that the project is a joint effort between Novozymes; the Danish Technical University; the University of Aarhus in Arhus, Denmark; and Emmelev Biodiesel. According to Nielson, the University of Aarhus will be in charge of enzyme kinetic studies and the investigation of methods for analysis to be used during the production process. The Danish Technical University will provide chemical engineers to design reactors and the operation parameters, as well as experts to conduct life-cycle assessments of production. Emmelev Biodiesel, a Danish biodiesel producer in Otterup, Denmark, will contribute process know-how to the development project.
 
 Novozymes, already known worldwide for its enzyme technology, will work to make enzymes for the biodiesel production process available at a cost-effective price. "We will require looking for enzymes that are not available to the market today, meaning we need to find lipases with sufficient stability in the process that can be reused for many production batches," Nielson said. "Recent new technology achievements make us believe it will be possible to match the catalyst costs similar to costs for chemical catalysts."
 
 Nielson mentioned several benefits of biodiesel produced from an enzymatic process in addition to the benefit of cheaper feedstocks with high free-fatty-acid contents. An enzymatic process can be run at lower temperatures, requiring less energy than traditional methods. Also, he said Novozymes expects enzymatic processing to have positive impacts on "environmental indicators," such as carbon dioxide levels.
 
 Nielson added that several scientific articles have stated that an enzymatic production method is technologically possible. However, current enzyme prices are too high for the process to be feasible. "We believe we can reduce the enzyme cost in this process significantly," he said. "Combined with a dedicated effort in process development at the universities, the enzymatic process can be cost-efficient."

Novozymes' corporate headquarters is located in Bagsværd, Denmark. Approximately half of Novozymes' 4,500 employees work in Denmark.

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Novozymes to make enzymes for biodiesel

The recent attacks from the Grocery Manufacturers Association blaming biofuels for rising food costs are deceptive and just plain wrong. The GMA's attacks are not based on sound science, sound economics or common sense. Rather, they are based on the GMA's desire to find an easy target for which to defend its profits.
 

 The NBB is committed to fighting the political and corporate interests that are more concerned with protecting their own profits over the health, security and pocketbooks of American families.
 
 I recently testified in a closed meeting of the Senate Democratic Steering and Outreach Committee, along with other renewable energy groups and Cal Dooley, president and chief executive officer of the GMA. One of the points I made that day was that crude oil prices have risen by 100 percent in the past 12 months. In 1974 after the Arab oil embargo, there were significant food price increases too, but at the time biofuels weren't around to blame for those increases. Energy prices are more than 30 percent higher now than they were in 1974, after being adjusted for inflation, but grain prices now are more than 100 percent less than they were in 1974 after being adjusted. 
 
 Meanwhile, Sen. Charles Grassley has spoken out forcefully about the driving force behind the uptick in food prices, saying, "The biggest culprit behind the rising food cost is $135 (per) barrel oil." Biofuels are currently contributing more than 8 billion gallons of fuel to the nation's fuel supply, without which fuel prices, and consequently food prices, would be even higher than they are today, according to a Merrill Lynch strategist.
 
 Since Grassley exposed the GMA's documented public relations smear campaign against biofuels, many others have joined him in his sharp criticism of GMA's efforts, including Sens. Byron Dorgan, D-N.D., John Thune, R-S.D., Ben Nelson, D-Neb., Kit Bond, R-Mo., and Ken Salazar, D-Colo. The senators recognize the critical role of biofuels to reducing our country's dependence on foreign oil and have expressed strong support for continued federal programs that encourage biofuel production and use. 
 
 In comments made recently to the National Biodiesel Board at our board meeting in Washington, D.C., Grassley strongly rebuked the GMA. He told NBB members that America's family farmers are producing more food and fuel than ever before and stressed the importance of keeping our energy dollars here at home.
 
 As a sustainable fuel that can be produced from non-food crops and waste sources such as used restaurant oils, biodiesel is an important part of America's energy solutions. Less than 5 percent of the world's soybeans are used for U.S. biodiesel production. Of that, more than 80 percent of each soybean is still used for animal feed or food. Biodiesel's effect on the food supply is minimal, and to claim otherwise is nothing short of intellectually dishonest. To allege, as some with the GMA have that U.S.-produced biofuels are contributing to starving people is reckless and outrageous. 
 
 The United Nations Food and Agriculture Organization has calculated that of the land that could be used for agriculture today, only 3.7 billion acres of 10.4 billion acres are used. Of that, only 1 percent of that area is used for biofuels, which includes ethanol.
 
 Further, the U.S. biodiesel industry makes huge investments in developing new oilseed crops as well as inedible products and waste sources. Non-edible raw materials such as algae, seashore mallow, mustard, camelina and jatropha all hold great promise for the future. Biodiesel is also stimulating significant investment in plant science research. For example, as much as a 10 percent increase in yields from existing soybean acres is expected soon.
 
 Despite the long-term sustainability of biodiesel and little connection to food prices, GMA persists in its smear and distortion campaign. As Grassley said in reference to the GMA campaign and other efforts to discredit biofuels tax incentives, "lifting the biofuels incentives won't ease food prices. By using less biofuel, we will in fact lift food prices. Who are they trying to kid?"

 
 The NBB won't be able to answer the GMA attacks dollar for dollar, but we are committed to ensuring that legislators and the American public know the truth about the benefits of biofuels. Because the GMA is willing to spend millions to protect their profits, the NBB will have to work extra hard to undo every mistruth they spread about our industry. 
 In the end, we are confident that Americans won't be buying what the GMA is selling for one simple reason: its wrong.

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Don't Buy What the Grocers are Trying to Feed You

In June, the ASTM International D02 Main Committee approved a trio of long-awaited ASTM specifications for biodiesel. After more than five years of extensive research and subsequent balloting by the ASTM fuel experts in the blended fuel balloting process, ASTM voted to approve three key sets of biodiesel specifications that should significantly bolster automaker support and consumer demand for biodiesel. Steve Howell, NBB technical director and chairman of the ASTM Biodiesel Task Force, was instrumental in this achievement (see "NBB technical associates awarded").
 
 The first is a new specification for blends of between 6 percent biodiesel (B6) to 20 percent biodiesel (B20) for on- and off-road diesel. The second includes changes to the existing B100 biodiesel blend stock specification, ASTM D 6751. The third covers finished specifications to include up to 5 percent biodiesel (B5) in the conventional petroleum diesel specification, ASTM D 975. 
 
 Automakers and engine manufacturers have been requesting a finished blend specification for B20 biodiesel blends for several years, with some citing the need for that spec as the single greatest hurdle preventing their full-scale acceptance of B20 use in their diesel vehicles. The new ASTM specifications for B6-B20 blends will aid engine manufacturers in their engine design and testing processes to optimize the performance of vehicles running on biodiesel.
 
 "The new ASTM spec for B6-B20 is a major building block in GM's efforts to elevate biodiesel as part of our overall energy diversity strategy," said John Gaydash, director of marketing for General Motors' fleet and commercial operations. "We are eager to work with the National Biodiesel Board on efforts to continue to ensure biodiesel fuel quality, as well as to increase our support for biodiesel use in our diesel vehicle lineup." Currently, GM accepts the use of B5 in all of its diesel vehicles and offers B20 use as a Special Equipment Option. 
 
 Automaker Chrysler LLC was instrumental in working with the ASTM task force toward B20 specification development and approval, having supported fleet use of B20 in its Dodge Ram diesel pickups since January 2006. "This action by the ASTM committee is a milestone in our nation's effort to expand the role of renewable fuels, including biodiesel, in addressing our energy, environmental and economic challenges," said Max Gates, Chrysler's safety and regulatory spokesman. "Chrysler LLC is committed to working with our partners in the transportation industry to build on this action and make biodiesel an alternative available to all of our customers."
 
 The main change to the existing B100 biodiesel blendstock specification was updating cold soak filtration testing to ensure the cloud point is still an accurate indicator of low temperature performance. The new version of the testing has been used successfully to gauge how B100 will perform in low temperatures when blended with petroleum at B20 or lower blends. Incorporating it into ASTM specifications ensures that all producers will use this testing procedure to ensure quality biodiesel. 
 
 The approval of ASTM specifications for inclusion of up to B5 in the regular diesel fuel pool also means that biodiesel could soon become more readily available at retail fueling stations nationwide. 
 
 "ASTM addressed the issues and concerns with solid, scientific research," said NBB CEO Joe Jobe. "Without the tremendous amount of scientific data provided by independent organizations like Southwest Research Institute, the National Renewable Energy Laboratory, the Coordinating Research Council and others, and the cooperation of the petroleum and engine communities, this would not have been possible."

ASTM approves blend specifications

In May, Sen. Charles Grassley exposed the campaign being waged by the Grocery Manufacturers Association to discredit biofuels. "It turns out that a $300,000, six-month retainer of a beltway public relations firm is behind the smear campaign, hired by the Grocery Manufacturers Association," Grassley said. Since then, many others have come to the defense of biodiesel.

 
 A few days after Grassley's initial remarks, the USDA released economic analysis that shows high energy prices, increasing global demand, drought and other factors-not biodiesel-are the primary drivers of higher food costs. The study went on to say biofuels production has cut consumption of crude oil by 1 million barrels per day, offering savings of $120 million per day. In addition, the USDA posted economic analysis and charts that document that "even with the current uptick in food price inflation, it is much lower than it was in the 1970s and early 1980."
 
 Grassley recently spoke to the National Biodiesel Board and reiterated his stance. "This campaign is led by an organization that should be a loyal member of the food chain," he said. "Instead, they are making biofuels the scapegoat to defend their own bottom line. The truth is that America's family farmers are producing more food and fuel than ever before."
 
 In a letter addressed to Sen. Jeff Bingaman, chairman of the Committee on Energy and Natural Resources, Secretary of Energy Samuel W. Bodman and Secretary of Agriculture Edward T. Schafer said it is clear that "biofuels are already moderating gasoline prices. That impact is likely to grow substantially as more biofuels come to market. Our preliminary analysis further suggests that current biofuels-related feedstock demand plays only a small role in global food supply and pricing. Moreover, the impact of biofuels on U.S. consumers is even smaller since the farm price of commodities accounts for less than 20 percent of U.S. consumers' food costs."
 
 Schafer pointed to the fact that oil prices have broken through a series of price ceilings this year. "Developing diversity in our portfolio of fuels is, if anything, an even more urgent matter than it has been in the past," he said. "And it is one that remains central to our energy security and our national security. The policy choices we have made on biofuels will deliver long-term benefits."
 
 In 2007, U.S. biodiesel production hit the 500 million-gallon mark, displacing 20 million barrels of petroleum imports. If the United States replaced 5 percent of its on-road petroleum diesel fuel with biodiesel, it would replace about 1.85 billion gallons of diesel fuel per year, or the entire amount of diesel fuel currently refined from crude oil imported from Iraq.

NBB Chairman Ed Hegland, left, and Grassley

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Biodiesel defenders support the industry

The biodiesel industry has elected two new members to its 15-member governing board. The National Biodiesel Board has chosen biodiesel producers Greg Hopkins of U.S. Biofuels and Scott Johnson of GEN-X Energy Group. 
 
 Hopkins, CEO of U.S. Biofuels, has 35 years of combined experience in the biodiesel and chemical engineering fields, and is involved in several chemical production associations. U.S. Biofuels, a multi-feedstock biodiesel producer, is based in Rome, Ga. 
 
 Johnson, president and CEO of GEN-X, has had extensive experience in the food processing industry in capacities ranging from operations to quality assurance. GEN-X is a multi-feedstock producer based in Burbank, Wash. 
 
 The governing board elected one of its members, Jim Conway of Griffin Industries in Cold Spring, Ky., as secretary. 
 

 The outgoing board members are Graham Noyes, outgoing secretary from Imperium Renewables in Grays Harbor, Wash., and Jake Stewart of Organic Fuels in Houston. 
 
 The governing board consists of biodiesel and feedstock producers. The November election was the first held under NBB's newly adopted structure to guarantee more biodiesel producers seats on the governing board.

NBB welcomes new governing board members

Doug Whitehead has taken on the role of director of operations for the National Biodiesel Board. In this role, Whitehead is responsible for planning, implementing, administering and reporting all contracts for funding and for subcontracting. He is also responsible for recruiting new members, assisting members with questions, and providing information and documentation to new and current members. In addition, Whitehead will continue managing the day-to-day operations for the AllThingsBiodiesel.com online marketplace, which he has done the past two years. 
 
 Whitehead is a graduate of the Professional School of Architecture at Kansas State University. As a business development/management consultant the past 17 years, he has worked with a wide range of non-profit and for-profit organizations. From "bricks-and-mortar" projects, technology, strategic planning, budgeting and issues management, Whitehead brings a diverse operations background to the NBB. He lives in Jefferson City, Mo., with his wife Alana and two children, Megan and Ross.

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Whitehead takes on new role

Two biodiesel advocates and NBB subcontractors have been recognized for their achievements. Steve Howell was presented with an award of appreciation from ASTM for leading the effort to continue to develop biodiesel blend specifications. As the NBB technical director and chairman of the ASTM Biodiesel Task Force, Howell has spent much of the past five years pulling together industry constituents, including testing organizations and petroleum and engine communities, to agree on quality specifications. This effort culminated in the successful passage of new ASTM specifications for B6-B20 blends, thus aiding engine manufacturers in design and testing to optimize performance when running on biodiesel. Howell has been with NBB for 15 years. 
 
 ASG Renaissance also received several awards for its work on behalf of the NBB. Jennifer Weaver and Brendan Prebo won a Gold Hermes Creative Award for their article "Driving on Biodiesel," which was published in the Winter 2007 edition of maxxTORQUE magazine. The Hermes Awards, presented by the Association of Marketing and Communications Professionals, is an international competition for creative professionals involved with the concept, writing and design of traditional and emerging media.
 
 ASG also brought home an Award of Excellence in the 2008 Renaissance Awards, presented by the Detroit Chapter of the International Association of Business Communicators for the NBB Biodiesel Training Toolkit. The entry was judged on innovation, creativity and effective visual communication. The IABC is the only global, multidisciplinary association dedicated to internal and external communications and boasts a worldwide membership of more than 15,400 professionals.

NBB technical associates awarded

Web exclusive posted August 6, 2008 at 11:19 a.m. CST 
 
 London-based Argent Energy has abandoned its plans to build and operate a biodiesel facility in New Zealand. 
 

 Argent Energy currently operates the United Kingdom's first commercial-scale biodiesel production facility near Motherwell, Scotland.
 
 The company recently completed a two-year feasibility study to determine whether or not to invest approximately $72 million into a biodiesel production project in New Zealand. Managing Director for Argent's New Zealand subsidiary, Dickon Posnett said the decision was reached not to proceed based on two major factors. He told Biodiesel Magazine that the current legislation favors ethanol by giving ethanol importers a break from the NZ42 cents per liter (approximately $1.20 per gallon) fuel excise duty. "Oil companies are being incentivized to import ethanol," Posnett said, adding that the excise duty relief is set to continue through 2012, which makes it "utterly uneconomic" for Argent Energy to continue with its project.
 
 Posnett also pointed to the tax credit given for American biodiesel as a major cause for distortion in the European and New Zealand markets and said it has prevented serious investors from entering the New Zealand market. According to Posnett, that has led, ultimately, to greater imports from Brazil.
 
 The proposed Argent facility was expected to use tallow as its primary feedstock. Although tallow is an abundant raw material in New Zealand, Posnett said that as long as the ethanol-based subsidy is in place, no company will build commercial-scale biodiesel production facilities in the country. Next month New Zealand lawmakers are expected to pass a biofuels bill which will require oil companies to blend certain percentages of biofuels beginning in October. However, Posnett said because of the current tax relief, oil companies will use as much ethanol as possible in order to claim the maximum amount of subsidy. "And ethanol-blended fuel is being sold at the same price as petrol," he said. "There are no biodiesel subsidies. The government is making a big mistake in not supporting a local industry from the outset. There are a number of contracts now in place for the importation of ethanol and infrastructure is being planned for the importation of biodiesel. Meanwhile, Argent is pulling out and there are no significant supply contracts for any of the smaller local tallow biodiesel payers."
 
 Posnett said he knows of only one small biodiesel production facility in New Zealand, and that plant uses canola oil as its feedstock. The few pilot plants that are using tallow feedstock are not producing enough to convince the oil companies to sign contracts with them, he said, adding that Argent would still consider investing in a New Zealand project if the government begins to level the biofuel playing field. Until then the company will continue to seek out expansion possibilities throughout the United Kingdom and elsewhere.
 
 "Argent Energy is not looking for a hand out," Posnett said. "But we find it difficult to invest where our competitors are awarded what amounts to penalty tries by the referee even before the game begins."

Argent Energy abandons New Zealand project

In June, the European Union formally initiated an investigation into trade complaints against the United States and the U.S. biodiesel industry. The complaints stem from antidumping and countervailing duty trade complaints filed by the European Biodiesel Board. In general, the antidumping case alleges that the U.S. industry is selling biodiesel in the EU at costs lower than sales made in the United States. The countervailing complaint alleges that EU biodiesel producers are being harmed by U.S. policy that supports biodiesel. 
 
 The National Biodiesel Board counters that the EBB's allegations are inaccurate. U.S. biodiesel exports are simply not the cause of the supposed difficulties facing the EBB's membership. Biodiesel producers in the EU produce from a more expensive feedstock and by their own admission have been negatively impacted by changes in EU member state policy. These factors should be the focus of the EBB's attention. 
 
 Manning Feraci, NBB vice president of federal affairs, issued the following statement in response to the EU's formal trade complaint: "The allegations of harm leveled by the European biodiesel industry in these trade complaints are baseless. It is disingenuous and hypocritical that several of the European biodiesel companies that joined in the complaints are the very entities actively involved in the trade of U.S. biodiesel.
 
 "The European biodiesel industry is not being harmed by U.S. competition. High feedstock costs, changes to EU member policies and in some cases poor business practices are the true issues facing European biodiesel producers. It is unfortunate that the EBB has found it politically expedient to blame the U.S. biodiesel industry instead of focusing its efforts on the true challenges facing its membership.
 
 "The EBB, despite the stated desire of the U.S. biodiesel industry to resolve this matter absent trade litigation, has chosen a protectionist ploy designed to block competition in the European market. The allegations made by the EBB are unfounded, and the NBB will not only vigorously defend the interests of the U.S. biodiesel industry, but will employ every tool available to challenge existing EU trade barriers that provide preferential treatment to European biodiesel producers," Feraci said.

 
 The European Commission has begun its investigation of the allegations. The commission has set a deadline to have provisional findings by March 13, 2009, which it will then present to EU member states. If the allegations are considered justified, then specific duties, called 'countervailing duties' in the case of subsidies and 'anti-dumping duties' in the case of dumping, will be assigned. During this process, the NBB will diligently work for the U.S. biodiesel industry to defend against these allegations.

NBB responds to European Commission complaint

Renewable Energy Group Inc. acquired U.S. Biodiesel Group in early June. With the transaction, REG acquired a 35 MMgy biodiesel production facility near Houston-renamed REG Houston-on a terminal site that was formerly operated by LBC Tank Terminals in Seabrook, Texas, and a liquid storage terminal in California. The deal came less than one month after REG closed a deal expanding its network through management and operation service agreements at a 45 MMgy facility in Danville, Ill.

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REG acquires U.S. Biodiesel Group

Blackhawk Biofuels LLC has acquired a 45 MMgy biodiesel plant currently under construction in Danville, Ill. The plant was purchased from Biofuels Co. of America LLC. Fifth Third Bank, Renewable Energy Group Inc. and Blackhawk Biofuels have provided financing and will complete construction of the facility. The plant was originally designed to operate using virgin vegetable oils as a feedstock, but Blackhawk Biofuels is planning to upgrade the process technology to allow the use of animal fats, as well. Production is expected to begin later this year.

Blackhawk acquires biodiesel plant

Nova Biosource Fuels Inc. posted a second-quarter revenue increase of $6.8 million and $8.7 million for its three months and six months ending April 30, respectively. Conversely, the company reported net losses of $6.4 million and $11.7 million for the three and six months ending April 30, respectively, compared with net losses of $6.7 million and $10.1 million for the same periods last year. 
 
 German biodiesel producer Petrotec AG posted a first-quarter sales of €15.7 million (US$24.3 million) compared with €16.3 million (US$25.2 million) during the same quarter a year ago. The company booked a first-quarter loss before interest, taxes, depreciation and amortization of €6.1 million (US$9.4 million).

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Nova Biosource Fuels, Petrotec post quarterly earnings

Houston-based Gulf Hydrocarbon Inc. has entered an offtake agreement with Methes Energies Canada Inc. to purchase the total biodiesel production of the company's new 6.6 MMgy facility in Sombra, Ontario. 
 
 Under the one-year, automatically renewable agreement, Methes Energies Canada can reserve 10 percent of its monthly production for other clients. The floating price that Gulf Hydrocarbon pays for the fuel will be based on the net price per gallon for regional ultra-low sulfur diesel in the United States.

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Gulf Hydrocarbon enters offtake agreement with Methes Energies

Houston-based Endicott Biofuels LLC has entered into a long-term, multi-plant technical collaboration with London firm Davy Process Technology Ltd. to use Davy Process Technology's resin-catalyzed esterification technology for feedstock-flexible biodiesel plants. Endicott Biofuels expects to have its first 30 MMgy plant in production by 2010, with plans to develop more facilities. Endicott Biofuels was the only biodiesel firm invited to submit full applications to the U.S. DOE loan guarantee program. The company has secured $40 million in equity financing from Houston-based Haddington Ventures LLC.

Endicott Biofuels partners with Davy Process Technology

Dutch companies AlgaeLink NV and KLM Royal Dutch Airlines will cooperate on a pilot-scale project to develop an alternative aviation fuel from algae. The exclusive agreement was announced at the Future Fuels Aviation Summit in London in April. "Because of our expertise in optimizing algae growth in a photobioreactor (PBR), and the extraction of biomass and oil out of the PBR, they came to us," said Hans van de Ven, managing director of AlgaeLink.

KLM, AlgaeLink to explore algae for jet fuel

Allegro Biodiesel Corp. has signed a definitive agreement with Consolidated Energy Holdings LLC to sell the company's wholly owned subsidiary Vanguard Synfuels LLC. Through the terms of the transaction, Consolidated Energy Holdings will assume Vanguard Synfuels' $2.9 million in senior secured debt, and all outstanding employment agreements between Allegro Biodiesel and Vanguard Synfuels. Allegro Biodiesel first announced the company's intent to sell its biodiesel plant in May due to financial distress, and the company aimed to complete the agreement with Consolidated Energy Holdings within several weeks.

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Allegro sells Louisiana plant

Encinitas, Calif.-based Community Fuels, formerly American Biodiesel Inc., has appointed Clifford Detz to the company's board of directors. Detz's experience includes 26 years with Chevron Corp., where he identified and negotiated more than 50 technology and commercialization collaborations with universities, federal laboratories and private companies. At Chevron, he managed the development and commercialization of a new type of reforming catalyst for gasoline production. Detz earned his doctorate in chemical physics from the University of Chicago and holds a bachelor's degree in chemistry from Brown University.

Community Fuels appoints board member

Graham Noyes has joined Stoel Rives LLP in its Seattle office. He said he sought out Stoel Rives, which represents several major U.S. renewable energy developers, because of its forward-thinking renewable energy practice and cutting-edge biofuels experience. He previously led Seattle-based Imperium Renewables Inc.'s sales and business development. In the past year, Imperium has experienced financial difficulties and was sued by a former employee, who claimed he was owed company profits.

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Noyes joins Stoel Rives

Richard "Hardy" Sawall, senior vice president of Midwest operations for Innovation Fuels Inc., has been appointed to the board of the Wisconsin Biodiesel Association. The WBA is a membership trade organization promoting the commercial development, production, marketing, distribution, and utilization of biodiesel and other renewable biofuels. "It's an honor to welcome Hardy to the board," said Tony Hartmann, president of the WBA. "We know that with his track record in our region, he will help us accomplish a great many things in the emerging biofuels industry." For more information about the Wisconsin Biodiesel Association, visit www.wibiodiesel.org.

Sawall joins WBA board

In June, the National Biodiesel Board met for its annual governance meeting in Washington, D.C. While the agenda included discussions of the legislative hurdles the industry needs to clear and appointments to the board, one highlight was the speech given by U.S. Sen. Chuck Grassley, R-Iowa. "Worldwide economic growth, global weather problems, rising marketing costs and the weak U.S. dollar are all having a greater impact on food prices than biofuels," he told meeting attendees.
 
 As the future market becomes increasingly difficult to predict, the senator's words may come as a comfort to the industry's current producers and offer confidence to the next generation of biodiesel producers, especially as the national renewable fuels standard is questioned. "Lifting the biofuels mandate or reducing the incentives won't ease corn or food prices because energy costs are a much greater factor, but using less biofuels will increase our demand for crude oil and raise prices at the pump even higher," Grassley said. "If high energy prices are the cause, how could decreasing the supply of energy be the solution?"
 
 While this debate goes on at Capitol Hill, plants continue to be constructed. In the past month, the biggest concern among builders has been weather in the Midwest, although none of the plants on this list reported work stoppages for that reason. 
 
 This month, no plants completed construction, although several companies are on the cusp. At Global Alternative Fuels LLC in El Paso, Texas, company President and Chief Operating Officer Carlos Guzman reported most of the remaining work at the site is confined to "piping and some finishing work." However, one factor delaying start-up is the offtake agreement that Global Alternative Fuels has with Western Refining, an independent oil refiner and marketer in El Paso. In order to receive the product, Western Refining needed to upgrade its load-out terminal, a project that was underway at the end of June. 
 
 Other projects, such as Alterra Bioenergy in Plains, Ga., and Tri-State Biodiesel in Brooklyn, N.Y., report slow and steady progress toward their goals. For Alterra, emphasis on finishing the plant has been diminished while the company focuses its energies on the start-up of its 15 MMgy plant in Gordon, Ga. According to Vice President Lisa Ryan, the company wants to realize success at its current plant in Gordon before the company diverts more resources to the project in Plains. For Tri-State Biodiesel in Brooklyn, this is the company's first plant. According to company Chief Executive Officer Brent Baker, the project slowed as the market became unfavorable, but he sees this changing. "We've been in a low gear, but we're coming out of it," he said. The project is still moving ahead but not at the speed Baker would like. Although completion is still slated for 2008, he acknowledged the deadline would be a challenge.

Projects Make Headway Despite Tough Market Conditions

While a growing number of U.S. car buyers understand how clean and efficient a brand new diesel car or light-duty truck really is, or is required to be, most people simply don't know how far diesel engines and their emissions control systems have come in the past 25 years. 
 
 In a small and unscientific survey conducted for the purposes of this article, one in six people surveyed said they would consider a diesel the next time they bought a new car. This person, who said they would consider a diesel vehicle, was the only one who made reference to the efficiency and ultra-low emissions standards making new U.S. diesels the cleanest in the world. This person said, "I'm especially interested in being part of the solution rather than the problem, and so if a diesel's efficiency, greenness, fuel [economy] and accessibility were advantageous, I believe I would consider a diesel." 
 

 The other five were not as informed and had lingering perceptions of the diesel cars and light-duty trucks that made the U.S. car-buyer scene in the early 1980s. The most common response from those remaining five individuals polled was something to the effect of, "Diesel fuel is too expensive, and diesels are dirty and gross." A couple of those people said the only diesels available were large pickup trucks and, today, they would largely be right-unless one of Mercedes Benz's many diesel options for U.S. markets were not out of price range. And then there's the Volkswagen Jetta of course, and a few others. One person who participated in the survey was asked whether they would consider a diesel if they knew it was up to 35 percent more fuel efficient than its gasoline counterparts. Their answer was an emphatic "Nope." 
 
 Whether people "know" about the improvements made in diesel technology and emissions regulations, or just perceive it, advocates don't care so long as U.S. consumers' interest and willingness to buy are heightened. Maybe promotional and marketing efforts to spread the word have not been strong enough yet. 
 
 Availability
 Allen Schaeffer, executive director of the Diesel Technology Forum, says there'll be many more product choices for U.S. consumers coming out of the dealer showrooms between now and the end of 2010. "At the Detroit auto show this year, there were 13 new models announced by a dozen manufacturers," Schaeffer says. "These are new light-duty diesel models for consumers coming out in the next 18 months. And you've got to remember where we're coming from-there are not a lot of choices now so if you add one or two diesel-powered engine options that is a huge step and commitment by the auto industry to bring these models forward." The first 50-state emissions certified Volkswagen TDI has made its debut, and the VW Jetta. Schaeffer says the BMW X5 will follow this fall, also as a 50-state certified vehicle. Next year, the BMW 335 will certify. Adding in today's four choices from Mercedes, then the larger Jeep Grand Cherokee, availability is increasing steadily despite record-busting $4.69 a gallon diesel fuel prices. "You'll see options from manufacturers who never offered a diesel before like Nissan, Honda and Acura TSX with a four-cylinder diesel which displays very strong performance, and the Audi Q7 later this year," Schaeffer tells Biodiesel Magazine.
 
 "One thing to remember is that diesel emissions regulations in the United States are the lowest in the world," says Brian Kahnert, vice president of marketing and government relations for NxtGen Emission Controls Inc. based in Canada. NxtGen developed a small-scale syngas reformer-refinery technology shrunk down and designed to fit underneath the hood of a car. The syngas mixes with fuel to help diesel particulate filters regenerate, and in nitrous oxide treatment systems could mix with the noxious pollutants to produce nitrogen and water from the tailpipe. The company hopes Tier One, exhaust suppliers to the original engine manufacturers, will pick up on the NxtGen technology. 
 
 <center><img src="/images/upload/20080714121720.jpg" alt="" /></center>
 NxtGen developed a syngas system for diesels as part of an overall emissions control strategy. 
 The company has been in discussions with Tier One, suppliers to the original engine manufacturers. 
 SOURCE: NXTGEN
 
 "We really see an opportunity to deliver a product for North America that would be compelling to both manufacturers and car buyers because it integrates the best features of things like clean fuels, biodiesel," Kahnert says. "We have a lot of prospective customers coming to us, wanting to use our systems with biodiesel and, in fact, we're going to do field trials in California later this year on biodiesel use for on- and off-road vehicles." He says for clean diesels to be accepted by U.S. consumers, the emissions controls must be hassle-free and not require driver intervention, such as filling up a separate tank with urea. "Our system does not require driver intervention," Kahnert says. "The third key part of developing a diesel product that's compelling to buyers is advanced engine controls that increase fuel economy and reduce GHG (greenhouse gas) emissions. The public wants and is interested in fuels like biodiesel, and they're interested in gaining an understanding that automobiles had catalytic converters 30 years ago and that the next generation of converters is coming to diesel engines. And it's going to require an integrative system of after-treatment and engines to improve fuel economy and reduce GHG." 

 
 Something also to remember is that, given these U.S. regulations, all these new diesel engines and light-duty vehicles coming to North America must comply with the most stringent regulations in the world. "Asian, Japanese and European manufacturers have plans to bring diesel vehicles to North America," Kahnert says. "I believe they will come to market in the next two or three years-some by 2009 and a lot more by 2011-but the question out there is, will the Big Three respond with their own diesel products? It appears they are in fact developing a new generation of light-duty diesels to be launched in North America." General Motors highlighted its new 2009 Cadillac CTS turbo diesel coming to showroom floors soon-in Europe.
 
 The Viability Half
 "We'll certainly have more available product, but it's hard to imagine a more challenging time to bring out diesels when the price spread between gasoline and diesel fuel is what it is today," Schaeffer says. "I think any reasonable person would have to say a consumer that's thinking about buying a diesel has got to pause and ask if diesel fuel prices are so much higher than gasoline, what is the payback?" 
 
 The record-high fuel prices, the situation with energy in this country as a whole, and the extremely weak dollar have forced people to reconsider their driving habits and vehicle preferences. "There's been a lot of media coverage lately, even on hybrid payback," Schaeffer says. Some of the payback from when a buyer starts to see a monetary return on his investment in the form of fuel savings versus the hybrid's higher upfront selling price, is not for 12 to 14 years into ownership, he says. "So we're starting to see a little more truth behind these alternatives (hybrids) to gas vehicles, and fuel prices are really a driving force behind that," Schaeffer says. Diesels are not excluded from mathematical investigations by U.S. consumers whose pocketbooks are hurting. Those considering a diesel will crunch the numbers. "Today, diesel is a break-even proposition," Schaeffer says. "A diesel car is about 35 percent more efficient than its gasoline counterpart. Even if diesel fuel was $1.30 more a gallon than gasoline, you're still ahead at the end of the day by choosing diesel." The price spread between gas and diesel in some places is approaching that number. "Theoretically diesel is a better deal and we're trying to get people to understand the longer-term math about the investment in diesel, and fuel prices are clearly going to influence people asking, 'Should I think about a diesel?' And once they start down that road, we can talk about the longer term benefits and payback period," Schaeffer says. 
 
 So what about the auto makers? If they see a chance to pull out, will they take it? Maybe for extraneous long-term concept models still on paper, but the time and investment it takes for an auto company to move from engineered clay molds and computer modeling to fabrication of production castings on the assembly line is long and high, and sometimes it would be easier to stop a 900,000-ton freight train in its tracks than getting an auto company to pull out shortly before production is scheduled to begin. 
 As far as the consumers go, Schaeffer concludes, "There's no question that with the economy and fuel prices, people are going to be nervous about bringing on these products, which are going to be using some of the most expensive fuel out there. But I don't think anybody thinks these conditions are going to persist forever." 
 
 Kahnert forecasts with surety, "Diesel is coming to North America. Almost every marketing and forecasting agency says within the next five years diesel engine use in automobiles will climb from somewhere between 2 percent and 10 percent. It's a very significant increase and people are going to adopt diesel only if it's clean and fuel efficient."n 
 
 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.

NxtGen's "black box" syngas system shown here is designed not for new cars but retrofitting older diesel vehicles to help clean the exhaust stream. SOURCE: NXTGEN

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The Audi Q7 diesel is expected to meet the 50-state emission certification later this year, and will be available on U.S. showroom floors. SOURCE: AUDI

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Passenger diesels were a hard sell in the United States more than a generation ago. Even though the diesels of today are not those of yesterday, will the experience be different this time around?

Drumming Up Demand for Diesels

While in the minds of many Americans Florida is beaches, Disney World and Cape Canaveral, in reality it is one of the nation's agricultural powerhouses. Biofuels pioneers are looking for ways to take advantage of the bounty of byproducts the state has to offer to feed the energy needs of its expanding population. This has led to the development of projects which would make fuel from citrus peels, sugarcane bagasse and livestock manure. A new project is taking another agricultural operation-fish farming-and using the byproducts to create feedstocks for biodiesel production.

 
 Neptune Industries Inc. and its subsidiaries have come up with a way to solve a long-standing problem in aquaculture-how to keep the fish excreta and uneaten food from becoming a pollution problem, says company Chief Executive Officer Ernest Papadoyianis. The company's invention, called the Aqua-Sphere, keeps this waste out of the environment and collects it so it can be used for other purposes. One of those purposes is algae production for biodiesel feedstock.
 
 Enter the Aqua-Sphere
 Neptune Industries, which was founded in 1998, is primarily a technology development company with an emphasis in aquaculture, Papadoyianis says. The company was started by Papadoyianis and his partner and Neptune's chief operating officer Sal Cherch. They first investigated the feasibility of using Florida's quarry lakes for aquaculture-fish farming. The lakes were formed in the pits where limestone and other minerals were mined. "These lakes are an untapped resource," Papadoyianis says. "Most are privately owned and once the mining companies dig down (as far as their permit allows) that's it. After that, they can leave the lake open and pay the taxes on it as an industrial mine, or they can close the mining permit and mitigate the lake, which is expensive. Once you're done it's a liability you have to clean up." Raising fish in the lakes after mining has ceased allows the operation to be zoned as agricultural property and saves a significant amount of money in taxes, postpones mitigation and produces revenue.
 
 Neptune started to raise fish in the lakes using traditional aquaculture equipment, cages and net pens. The company also raises its trademark hybrid striped bass in a land-based raceway system. Testing showed that the water quality in the lakes was good. Pilot projects in three lakes, however, turned up several problems with the equipment. They had high levels of predation and fry escaping as turtles and alligators gnawed through the nets. They also saw that all the fish waste and uneaten feed went out into the lake and hurt the water quality. 
 
 "Isolating the crop from the outside environment was a real issue," Papadoyianis says. "The straw that broke the camel's back was when we had a lake turn over." Many lakes have a thermocline, a sharp division between warm, oxygen-rich water near the surface and cold, oxygen-poor water near the bottom. Under certain meteorological conditions, these two layers can mix, causing the oxygen level in the whole lake to plummet. Because the fish weren't isolated from the environment, the operation lost several cages of tilapia and hybrid striped bass in a matter of hours.
 
 Papadoyianis notes that salmon farmers' operations in shallow ocean waters faced similar problems with toxic algae blooms, and pressure from environmental groups and regulators to reduce the waste nutrients going into the environment. "Our vision is that the aquaculture industry is going to be using water acres instead of land acres," he says. "With limited water resources, we feel the future is going to be using what we see as underutilized resources like quarry lakes, impoundments, mineral mines and estuaries. 
 If you had a system that was eco-friendly you could utilize a lot of areas that right now could not be permitted for aquaculture with net pens because of the pollution."
 
 To solve these issues, the company developed the Aqua-Sphere, a solid walled containment system. The system uses a low-energy, low-head pumping system called an air lift to deliver oxygenated water to the fish and collects waste and uneaten food in a filter system at the bottom. Neptune's land-based fish farm requires a 200 horsepower pump while the air-lift system uses a 2 horsepower blower. The Aqua-Sphere also has hinge points that allow it to flex with ocean currents and waves. Ten 30-foot diameter Aqua-Spheres can produce 1 million pounds of fish per year.
 
 The Future of Fish Farming and Biofuels

 Papadoyianis sees the future of traditional aquaculture being limited, somewhat ironically, by a lack of fresh water. Systems that rely on aboveground tanks and groundwater will face increasing competition for resources from industrial and municipal water users. He sees that same competition inhibiting biofuels production. "You have a system where you can take advantage of all these surface water acres," he says. "It could be done not only in quarry lakes but in bays, estuaries and even in the ocean."
 
 Neptune Industries also sees its system as a way for fish farmers to diversify their income. Instead of having a waste stream that contaminates the environment or needs costly disposal, combining the Aqua-Sphere with algae production creates a second income stream by producing feedstock for biodiesel. Papadoyianis also sees benefits to the biodiesel industry as aquaculturists move into algae production. "The way I see it, buying a piece of land and constructing an algae facility and having a whole staff just to produce the algae will make your cost of production go way up," he says. "We are looking at this as a secondary crop that doesn't take a huge secondary investment. For a medium-sized operation you can basically use the same staff as you have for the fish operation.
 
 The process could be diversified even further as the company develops a third product, an insect-based fish food it calls Ento-Protein. The product would replace food currently made from fish meal, which has more than doubled in price since 2006, and is made from insects grown on agricultural waste and industrial coproducts, including distillers dried grains from ethanol plants. Papadoyianis foresees using the algae cake remaining after the oil is extracted as another feedstock for the Ento-Protein operation.
 
 Systems Approach
 "We always looked at the Aqua-Sphere with an eye toward full integration, using all the parts of the system," Papadoyianis says. "We never looked at the waste as a liability but rather as an asset." Neptune first used the waste for anaerobic digestion. The waste was pumped into barrels and fermented and the resulting methane was captured. The remaining digested waste was used for producing hydroponic herbs and vegetables. The company's newest application uses the waste to fertilize algae which can be used as a biodiesel feedstock. "Fish waste is a great fertilizer," he adds. "It's not acidic at all like horse and cow manure and you have a lot of nitrogen from the high protein. So it makes a great fertilizer for any plant whether it is algae or seaweed or plants."
 
 Michael Joubert, the farm's manager, who was interested in the potential of using algae to produce biodiesel, started experimenting with what Papadoyianis calls a floating sock system. "We send the fish waste into these floating algae tubes," Papadoyianis says. "The beauty of the system is that these clear vinyl socks are very, very cheap. You can buy the tubing in huge rolls and it floats on the surface of the water."
 
 Neptune Industry's algae system is uncomplicated and takes advantage of the Aqua-Sphere's environment. Long strips of plastic tubing are suspended on a frame of PVC piping and water and the fish waste fertilizer are circulated through the system. The system floats so the algae get all the sunlight it needs. Because the tubes are partially submerged, the system maintains a constant comfortable temperature for the algae. "It is basically a closed system," Papadoyianis says. "You put the waste, which is the fertilizer, and the algae innoculum in, and it circulates around in a huge manifold. The water traverses literally thousands of feet as it circulates around. It gets the sunlight and keeps cool so you have the best of all possible worlds."
 
 The first test of the system used the dominant species of algae growing in the lake where the company was doing the work. That species wasn't feasible so Neptune is working with an undisclosed company to provide algae species that have high-oil content. The company began testing using the new algae species in mid-June. While Papadoyianis could not say which company was providing the algae innoculum, he did say it was developing systems for extracting algae oil. "It's a good marriage because we are working on the production system and harvesting, and they are working on how to extract and refine that oil," he says. Neptune is still in the design stages of creating a harvesting system that will separate the algae from the water.
 
 Papadoyianis believes Neptune Industries and its partner will be at the point where they can harvest algae and start oil extraction on a test scale before the end of the year. The company has received a three-year grant from the state of Florida to support its work in algae production. Papadoyianis believes the company will have a commercial version of the algae production system up and running well before that grant runs out. "I think in the next 12 months and maybe sooner we will have the system refined and will be able to take it to market as a commercial system," he says.

 
 Among the challenges to scaling up the system will be keeping the algae culture pure, Papadoyianis says. Although the algae socks are a closed system, being submerged in lake water will allow opportunities for native species to contaminate the operation. Another issue of concern is working out the proper amount of waste from the Aqua-Sphere to fertilize the system. But Papadoyianis' main concern is separating the algae from the water after production. "I known we can raise the algae with no problem," he says. "It's going to be the separation that will be the problem."
 
 The work being done by Neptune Industries is being supported by a $158,000 Farm to Fuel Initiative grant from the Florida Department of Agriculture. The company has also been encouraged by Miami and Dade counties as the local governments want to transition all county vehicles to biofuels in the next five years. "They are very, very committed to doing that," Papadoyianis says. "They wrote a nice letter to the state for us supporting our research. So it is a big issue in south Florida." 
 
 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.

Neptune Industries grows hybrid striped bass for restaurants and retailers. The waste from the fish and uneaten food fertilize the company's algae production system.

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The AquaSphere is a solid walled containment system that protects the fish from the environment and makes it simple to collect the fish waste for reuse.

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Neptune's first application for fish waste was for methane produced by anaerobic digestion. The remaining compost fertilized a hydroponic garden.

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The Neptune Industries bioreactor is deceptively simple. The PVC frame and vinyl tubing is supported and cooled by the lake water, offering low cost construction and an ideal environment for algae production.

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The steep rise in fuel prices is creating opportunities for entrepreneurs to innovate and discover new low-cost feedstocks for biofuels production. Neptune Industries, a Florida company, is looking to collect waste generated byits fish farming operation to fertilize algae production for biodiesel feedstocks.

From Fish Farm to Fuel

Mark Rosenzweig, owner of San Jose Tallow, was driving home through suburban San Jose, Calif., one mid-April day when he noticed a pumper truck pulling into a shopping center. He was immediately suspicious. Rosenzweig knew the only eatery in that center was a Burger King because he held the contract for grease removal. "I followed him until he pulled into the Burger King where I watched him steal the grease," he says. 
 
 Rosenzweig is no stranger to grease theft. "It's a common problem out here," he says. He told Biodiesel Magazine that in one week during the month of June his workers came across four empty grease bins at various locations. "Somebody's still out there stealing," he says and adds that the problem has only gotten worse as the wholesale price for grease has gone up. "Ten years ago we couldn't give this stuff away and we were charging to pick it up and now all of sudden people are stealing it. It's gone full circle."
 
 Rosenzweig suspects the thieves are a combination of home brewers and commercial operators. "I don't think the home brewers are hitting it as much as some of the new start-up bio-companies," he says. It's hard to tell who is responsible for the thefts because once it's gone, grease is hard to track. Rosenzweig reports all of his company's theft experiences, but that's pretty much where the investigation ends. 
 
 It was a combination of luck and intuition that led Rosenzweig to follow the strange pumper truck that April day, which ultimately led to the truck driver's arrest after Rosenzweig called the police. "What's really funny is I had a hard time convincing the police department that it was a crime," he says. "They had no idea that it was against the law." A former law enforcement official himself, Rosenzweig had to explain to the police officers what sections in the vehicle code were violated before they could arrest the alleged grease thief.
 

 The National Renderers Association consists of 49 member companies that represent about 95 percent of the rendering capacity in the United States and Canada. Association 
 President Tom Cook told Biodiesel Magazine that grease theft has most certainly been a problem for several of its members. "It is on the rise," he says. "It is [happening] just about everywhere." Cook confirms that the rising price of grease, plus an increase in the number of people trying to make their own biodiesel are factors in the increase in theft incidents. "I think some people are just out there to steal and I think some people just don't realize that it's a valuable commodity that's sitting in the back alley behind a restaurant," he says. "It's not something just for the sake of taking. But some people think they can."
 
 Baker Commodities Inc. is one of the oldest rendering companies in the country and has always had to deal with a certain amount of theft, according to company Vice President Dennis Luckey. However, "there's no question that it's increased now with the value of yellow grease being where it is," he says. It's hard for him to say who the main culprits are behind the rise in theft, but Luckey says "smaller biodiesel interests" are certainly adding competition to the market. 
 
 Baker Commodities offers its services in the Northeast and on the West Coast, but Luckey couldn't say if one part of the country deals with more theft than others. "Certain areas of the country have always had theft," he says. 
 
 Deterring Grease Thieves
 Restaurant owners have to become more engaged with the grease collection process and pay more attention to who has their hand in the "cookie jar," so to speak, to reduce the number of grease thefts. Cook says more vigilant restaurant owners and/or managers will help alleviate the problem, and as the price goes up they should pay more attention to the fact that there is something valuable in their collection bins. According to Cook, some rendering companies have formulas to determine how much restaurants get paid for their yellow grease, depending on the finished product.
 
 Luckey says they will, for the most part, continue to leave preventative work up to the restaurants. "We're hoping the restaurants will start to take a bigger interest now that in most markets these places are being paid for it," he says. "Its value is lost to them now and we're hoping they'll pay more attention to it, try to secure it better and be more proactive when it comes to reporting thefts." Because of rising demand and high wholesale prices, Baker Commodities now pays most of its accounts for their used grease.
 
 Rosenzweig says he asks the restaurants he works with to keep an eye on their grease bins, but restaurant owners have other things to do besides watching out for someone stealing what they deem is garbage. Most of the grease he collects, he gets for free, so restaurants don't tend to care who takes it, as long as the bin is empty when it's supposed to be, he says.
 
 As far as prosecuting criminals goes-Baker Commodities tries, but it is difficult. The company places locks on its bins, but drivers sometimes find the locks have been broken, allowing the thief access to the grease inside. The company has considered doing investigative work to track down the thief in some instances. Cook agrees that prosecution is difficult and suggests that law enforcement isn't even really aware of the problem, adding that "it doesn't hit high on the priority list of some of these people."
 

 Therefore, perhaps precautionary measures on the part of the collection company are needed to most effectively prevent theft.
 
 Rosenzweig has started padlocking its accounts' grease containers again. They had padlocked their containers in the past, but stopped because the locks were expensive. It seems that now that it is a small price to pay compared with the money lost when product is removed by thieves.
 
 Cook isn't sure about the practicality of using padlocks on bins as far as the restaurant workers are concerned. As an alternative, he knows of one instance where the rendering company has provided containers that can actually be placed inside the restaurant, as opposed to out back where anyone can help themselves. "Renderers are fairly entrepreneurial and they're competitive," he says. "If it gets to be more serious than it is, they'll find ways to overcome."
 
 The Producers
 Theft can be doubly hard for biodiesel producers because companies collect their own yellow grease as well as purchase some from collection companies. Gonzales, Calif.-based Energy Alternative Systems Inc. is one of San Jose Tallow's biggest customers. Richard Gillis, EASI president and chief executive officer, says for biodiesel producers it comes down to knowing the supplier and trusting them. Gillis says it's common for his company to get calls from someone claiming they have thousands of gallons of grease to sell. "We want to know who they are, where they are and where they got it," he says. "If we're uncomfortable, even a little bit, we won't buy anything. We don't deal with folks we're not familiar with." 
 
 Joe Gershen, vice president of sales and marketing at Tellurian Biodiesel in southern California, says they have not yet been directly affected by grease theft. He points to a correlation between increasing reports of gasoline theft and grease theft to produce biodiesel as a possible sign of the times. However, Tellurian works closely with Baker Commodities and he agrees that grease theft is becoming a problem for the industry. Home brewers taking grease for personal use has been an issue for some time, but, the emergence of more organized groups petitioning restaurants for their yellow grease is beginning to surface as the real issue. "[They] are trying to develop a green appeal to restaurants who want their used cooking oil to go to a good environmental use, which is not a bad thing, in and of itself," Gershen says. However, collection companies have already been working with biodiesel companies for some time, so the grease is often already going toward a good end-use and restaurants may not realize that, he says. "The rendering industry are the original recyclers and don't get the credit they deserve for that contribution," Gershen says.
 
 Another concern for restaurants that decide to deal with a new, lesser-known company is the possibility of a no-show. Tellurian fields several calls each month from restaurants that have full grease bins on a Friday afternoon because the collection company they chose to use either stopped showing up or had consistency issues with pick-up dates, Gershen says. 
 
 The end result is that as prices continue to increase for both bulk grease and fuel, theft incidents will increase. Collection companies and biodiesel producers need to take measures to operate consistently and to educate grease providers in order to protect their product. 
 
 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.

Dumpsters used to store yellow grease are usually found behind restaurants, often as far away from the back door as possible. Some are concealed behind privacy fences, but many are out in the open to allow the collector easy access to the dumpster. T

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Biodiesel producers aren't the only ones feeling the sting of high feedstock prices. As the cost of biodiesel feedstocks increases, grease thieves have started to take notice. Grease thefts are on the rise across the country.

Grease: Worth Its Weight in Gold?

Palm oil has taken the lead in world production of vegetable oils in recent years and is now poised to lead in another area. It is the first commodity to develop a certification program to meet the emerging market demand for sustainable production. This concept is not new to the food industry-certification systems have existed for years in niche markets such as organic, kosher and halal. Certified sustainable palm oil is charting new territory for commodity crops, however, by expanding the areas of concern far beyond environmentally friendly production practices to include corporate social responsibility, and conservation of natural resources and biodiversity. 

 
 Developing the criteria for sustainable palm oil production in a matter of four years is no small feat. In 2001, the Roundtable for Sustainable Palm Oil brought all the stakeholders to the table-including nongovernmental organizations (NGOs) that have been severely critical of the industry. The process began when the World Wildlife Federation hired a Dutch consultant to explore the possibility of creating what is now the RSPO. The palm oil industry got involved at the start of the process. The 2003 inaugural meeting held in the Malaysian capital, Kuala Lumpur, attracted 200 people from 16 countries. The goals of the RSPO were to develop definitions and criteria for the sustainable production and use of palm oil, and to facilitate implementation of sustainable best practices. The RSPO executive board members reflect the varied stakeholders in the process: four represent palm growers, two processors or traders, two manufacturers, two retailers, two bankers or investors, two NGO representatives for environmental or nature conservation issues and two NGO representatives with social and developmental concerns. By 2005, the preliminary principles and criteria were ready for a dozen oil palm plantations to test the applications on the ground. The revised principles and criteria were adopted in November 2007 at Roundtable 5, witnessed by 540 delegates from 28 countries. The RSPO stage that is currently unfolding is the development of national implementation plans applying the general principles and criteria to each palm-oil-producing nation's individual situation. The national plans are made available for stakeholder comments and approved by the executive committee. Similarly, certification agencies submit their operational plans to be approved as a certifier for RSPO.
 
 The Eight Principles
 The final document developed by the roundtable includes eight general principles that are further explained in subpoints termed criteria. The first RSPO principle calls for a commitment to transparency. Oil palm growers and millers are asked to provide adequate information to other stakeholders on issues relevant to RSPO criteria. Secondly, the industry is required to demonstrate compliance with applicable laws and regulations, a requirement partly aimed at land-use issues. Complying with environmental and, material handling regulations are also included in the criteria. 
 
 Players in the Sustainable Palm Oil Supply Chain
 <center><img src="/images/upload/20080714014703.jpg" alt="" /></center>
 
 The third and fourth principles won't require a big change for businesses, as they are based on common contemporary agricultural practices. Principle three calls for a commitment to long-term economic and financial viability, which is demonstrated by a three-year business or management plan. (Individual small landholders are exempt from the third principle.) Principle four calls for the use of appropriate best practices by growers and millers. This involves keeping fertility management records, creating strategies for fragile soils, managing water quality, using integrated pest management, and developing occupational health and safety plans. 
 
 The next three principles reflect the interests of the NGO stakeholders, who have long advocated for consideration of conservation and social issues. The palm oil industry has taken a beating from NGO critics who decry the loss of tropical rainforests, publicize the plight of the endangered orangutan whose native habitat has been planted to oil palm and advocate for displaced indigenous people. Principle five calls for environmental responsibility and conservation of natural resources and biodiversity. Oil palm growers are being asked to identify the environmental impacts of their management plans, and to develop plans to mitigate negative impacts and promote positive ones. High conservation value habitats must be identified and protected. Waste is to be minimized and the use of renewable energy maximized.
 
 Principle six calls for the industry to act responsibly toward employees, individuals and communities affected by the production and milling of palm oil. The RSPO extends this principle beyond employee relations such as nondiscrimination, fair pay and working conditions, to include social impacts on communities. Much like the environmental impact assessments called for in principle five, oil palm growers and mills are asked to evaluate the impact of their operations on communities and to develop a process where the community is involved in the evaluation and any resulting mitigation plans.
 

 Principle seven calls for the creation of a comprehensive independent social and environmental impact assessment before the establishment of new oil palm plantings. While new plantings are not banned, the criteria lays out the need for an analysis of the impact on communities, indigenous populations and impacts on the watershed and the identification and protection of high-value conservation areas.
 
 Lastly, the eighth principle calls for a commitment to continuous improvement in key areas of activity which include such things as reducing chemical use, pollution, emissions and waste, and improving environmental and social impacts.
 
 Preparing to Comply
 Because of the comprehensiveness of the RSPO principles, some large oil palm plantations believe it may be years before they can fully comply across all of their operations. The biggest challenge may be in small landholders getting certified, most of whom have 20 acres or fewer. Educating the small landholders and helping them develop the necessary recordkeeping is expected to take time. Their contribution to total production is not insignificant. In Malaysia, 40 percent of the nation's palm oil production comes from those small landholders, many of whom participate in processing and marketing cooperatives. However, many plantations comingle small landholder fruit bunches for processing and will be required to document adherence to the principles and criteria for certification. 
 
 In April, the Malaysian Palm Oil Council sponsored the first International Palm Oil Sustainability Conference to highlight new research and developments on environmental issues and to continue the dialogue within the industry on the challenge of complying with the principles and criteria which they helped to write. Speakers at the conference boiled down the RSPO principles and criteria, indicators and guidance statements that make up the 53-page document into this catch phrase: sustainability means people, planet and profit. In one sense, the RSPO certification process is calling for a system of documentation and auditing analogous to the accounting standards followed by most businesses today, where certified public accountants audit the books. The RSPO expands the concept into new fields of expertise. Sabarinah Mazurky, certification executive with the Malaysian firm QAS International Sdn Bhd, says the RSPO scheme will likely require an ecologist to verify that the areas of high-conservation value have been properly identified and the management plan is complete. Sociologists may also be needed to evaluate the company's approach to handling community issues. She described her organization's approach to setting up a certification system for the RSPO at the sustainability conference.
 
 Other speakers at the conference addressed the challenges of complying with the standards. Many of the plantations participating in the RSPO are 50 to 100 years old and have long incorporated British sensibilities on social issues inherited from the colonial period, says Joshua Mathew, senior manager of agronomy at the IOI Corporation Bhd.'s research center. "However, these old estates have no documents for environmental and social impact assessments, and action plans to mitigate negative impacts." He says preparing the required documentation for the RSPO certification process will be a "mammoth task" and believes there should be flexibility in applying the new standards. "One cannot expect perfect procedures to be in place in every aspect of plantation management," he says. "A minimum benchmark lower than perfect is required, at least at this early stage of the certification process of RSPO oil, followed by continuous improvement programs as stated in principle eight." Mathews predicts oil palm expansion will be hampered because of the lack of personnel with experience and practical expertise to create the impact assessments required by principle seven. 
 
 Over its 150 year history, Sime Darby Bhd. has continually made improvements, says Senior Vice President Syed Mahdhar Syed Hussain. With a recent round of mergers, Sime Darby is the world's largest palm oil producer employing 102,000 people in its offices and plantations covering 560,000 hectares (1.4 million acres) in Malaysia and Indonesia. Most of the improvements Hussain detailed in his presentation at the sustainability conference dealt with agronomic advances in palm oil production. The palm oil industry has been roundly criticized for its use of burning to clear and replant land, which Hussain admits his company practiced some 30 years ago. Once the negative impacts became clearer and burning was outlawed in Malaysia, the practice was discontinued. "Now we know," he says. "The biggest sin is knowing and not doing anything different." Sustainable practices adopted in recent years at Sime Darby include integrated pest management measures such as encouraging owls for rodent control, water management and effluent treatment to protect water resources and the recycling of mill byproducts for energy or fertilizer. Since June 2007, the company has created conservation areas in each of its plantation estates, setting aside 18,000 hectares (44,000 acres). The company has also established a 400-acre Heritage Park to house a gene bank of the 3,000 tree species found in peninsular Malaysia. 
 
 Like Sime Darby, Wilmar International Ltd. has set aside 5 percent of its planted area, or about 10,000 hectares (25,000 acres) for conservation, according to Simon Siburat, coordinator of RSPO initiatives for Wilmar. Additionally, the company has adopted a zero-burn policy for replanting acres and is utilizing biomass for energy. The company has three Clean Development Mechanism projects in Indonesia registered with the United Nations Framework Convention on Climate Change which are generating carbon credits. The projects include biomass energy plants using waste products from palm mills. New projects are in development to trap methane from oil mill effluent pods for power generation.
 
 Corporate social responsibility needs to go far beyond looking after plantation and mill workers' welfare through the provision of housing and amenities, recreation, and health and safety programs, Siburat says. Wilmar, and other plantation companies, are building schools for the children of migrant workers and providing free education. Wilmar has a pilot project to convert flood-prone land to paddy fields for rice cultivation for local food production. In another project, plantation harvesters can purchase buffalo at subsidized rates to increase their work productivity, and thus their incomes.

 
 Siburat says that the harsh reality of being in business today is the loss of public trust. There is a growing outrage with corporate behavior, he says. "The community license to operate is no longer automatic." Even bankers are beginning to include sustainability performance as criteria for investment decisions. Hussain agrees that corporate social responsibility is important, but adds, "if we don't make money we are dead. We are proud of our achievements, but we know this is a very long journey." 
 
 As the palm oil industry begins its journey towards full sustainability, the rest of the biofuels industry will be watching to see how the RSPO framework influences the other efforts to define sustainable biofuels worldwide. 
 
 Susanne Retka Schill, a Biodiesel Magazine staff writer, was hosted by the Malaysian Palm Oil Council on a tour of the Malaysian industry. Reach her at <a href="mailto:sretkaschill@bbibiofuels.com">sretkaschill@bbibiofuels.com</a> or (701) 738-4962.

Under the RSPO, oil palm plantations are being asked to inventory any rainforest fragments and develop plans to enhance wildlife habitat for the endangered orangutan and other tropical species.

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Sustainability is an all-encompassing, hard-to-define term that is acquiring fuller meaning for the palm oil industry as it prepares to ship the first certified sustainable palm oil to European markets.

Sustainability = People + Planet + Profit

America's primary renewable transportation fuel industries-ethanol and biodiesel-have followed a somewhat similar growth pattern. Both had meager beginnings before growing gradually through farmer investment and government policy. Both also share a similar footprint as many biodiesel plants are in the Corn Belt. Now both are negatively affected by high feedstock costs, and they're looking to each other for a solution. 
 
 Using corn oil from the ethanol industry to produce biodiesel seems like a logical connection. Typical yellow dent corn contains 4 percent to 4.3 percent oil on a dry-weight basis. 
 
 Ethanol producers could extract the oil, which could then be pretreated and turned into biodiesel. The concept is quickly moving from the drawing board to the field.
 
 VeraSun Energy Corp., one of the nation's largest ethanol producers with more than 1 billion gallons of annual capacity, is on the leading edge of the ethanol industry's efforts to provide corn oil to biodiesel producers. In April, the company held a ceremonial groundbreaking for an oil-extraction facility at its Aurora, S.D., plant. The Aurora plant's oil-extraction facility is under construction and start-up is anticipated in the fourth quarter of 2008. "The exciting thing is, you're able to generate two renewable fuels from one kernel of corn," says Keith Bruinsma, VeraSun's vice president of corporate development. 
 

 VeraSun intends to implement the technology at two additional plants. Bruinsma says they've applied for permits in Iowa for 100 MMgy plants in Fort Dodge and Charles City. At press time, neither project had a definite timeline. "We're evaluating those two locations," Bruinsma says.
 
 It should be noted that VeraSun isn't the only ethanol plant considering or implementing corn oil extraction, and Crown Iron Works Co., which is providing the Aurora plant's technology, isn't the only company offering extraction technology. However, the two are pairing on the largest project to extract corn oil from distillers grains. The Aurora site is becoming a site of firsts-it was the first 100 MMgy new-generation dry-grind plant when it opened in 2003. Now it's becoming the largest plant to extract corn oil from its distillers grains. It appears to be part of a growing trend in the industry.
 
 VeraSun began looking at corn-oil extraction technology in late 2004, when corn was $2 per bushel and ethanol and distillers grains were profitable end products. Now corn prices have risen and many producers are looking at widening their product line. "[Corn-oil extraction] adds another revenue stream to the bottom line," Bruinsma says. 
 
 Minneapolis-based Crown Iron Works is providing the equipment, which utilizes hexane-based solvent extraction. The equipment will be housed in an enclosed building in an approximately 80- by 120-foot area outside the plant's fence line. The distillers grains goes through the dryer in the ethanol plant and is transported via conveyor to the extraction site. The facility also includes on-site storage for corn oil.
 
 The Aurora plant site had plenty of room for the facility, Bruinsma says. The facility was already undergoing approval for a separate improvement project, so permitting went smoothly.
 
 End-Use Options
 VeraSun has attracted a great deal of interest from biodiesel producers for its corn oil, although an offtake agreement wasn't finalized at press time, Bruinsma says. Alan Weber, vice president and founder of biodiesel consulting company MARC-IV LLC, says the more feedstock that's available on the market, regardless of its end use, will result in lower prices for biodiesel producers. Although VeraSun is targeting the biodiesel industry, some producers may aim for industrial or food-grade users, especially if the corn oil is removed from the plant's front end.
 
 Renewable Energy Group Inc. is taking the steps necessary to convert crude corn oil into biodiesel. The Ames, Iowa-based company builds and manages a network of commercial-scale biodiesel facilities. Using crude corn oil was a natural progression for REG, which is the nation's largest biodiesel marketer. "Well over two years ago we started to see that it was obvious soybean oil supplies were going to get stressed and probably go beyond what they could supply us," says David Elsenbast, REG's vice president of procurement. 
 REG has been using corn oil from ethanol production for more than 18 months, says Brad Albin, REG's vice president of manufacturing. Currently three plants in the company's network are capable of using the feedstock. Albin says they have 90 MMgy to 130 MMgy of capacity available to process corn oil.
 

 VeraSun's Aurora plant produces 380,000 tons of distillers dried grains per year, enough to produce an estimated 8 MMgy to 9 MMgy of corn oil, leaving 360,000 tons of what the company calls corn distillers meal. Bruinsma says the meal holds nutritional values that may allow it to be fed at higher inclusion rates than distillers dried grains in some diets. Research is being conducted to determine its full feed value. "We are utilizing four different Midwest-based universities doing studies," Bruinsma says. 
 
 It's obvious that even one company's capacity, such as VeraSun, offers great potential for biodiesel producers, and it's likely the industry will continue to evaluate the break-even prices of crude corn oil. Interest is clearly growing.
 
 Feedstock Variation
 Distillers grains from ethanol plants may vary from plant to plant and even from within the same plant, depending on the production process. A similar effect occurs when corn oil is extracted from the back end of a plant. "Corn oil quality is variable, just like it is with all feedstocks," Albin says. 
 
 Feedstock variability creates processing problems for biodiesel producers, and the challenges with corn oil also vary on how it's extracted. All feedstocks come with their own opportunities. Whether from a front-end or back-end process, corn oil has issues, Albin says. "If you don't pretreat it correctly, it won't meet current ASTM specs," he says.
 
 Albin says corn oil is priced at or a little more than animal fats. However, pretreatment costs are higher because the corn oil has to be cleaned up. The key concerns with corn oil are its insoluble content, moisture, free fatty acids, sterols and waxes. "It's not a soy only plant, animal fat only business," Elsenbast says. "We feel that the answers to biodiesel feedstock needs are dealing with a lot of different feedstocks. When we develop technologies for biodiesel plants, we engineer pretreatment capabilities that allow us to use corn oil and to deal with high levels of FFAs and other challenges."
 
 The efficiencies of de-germing corn or de-oiling distillers grains also vary. Some reports tag the range of available corn oil from 0.5 to 1.5 pounds per bushel. Using 1 pound as a benchmark, the ethanol industry has the capacity to produce more corn oil than the amount of fuel the entire biodiesel industry produced in 2007. That influx of feedstock would be welcomed in the biodiesel industry, which has been suffering from historically high soybean oil prices the past few years. 
 
 Oil removed from the front end of the ethanol process can make food-grade standards, but the process is capital intensive. Back-end extraction typically removes the oil via centrifuge and provides less oil than front-end de-germing. "With greater than 8 billion gallons worth of ethanol production, there is around 800 million gallons of corn oil locked up in the process," Albin says. 
 

 As VeraSun and other plants begin to implement the technology, its synergistic nature appears to be a blessing for both industries. Albin predicts that the few plants implementing corn oil extraction technology are only the beginning. It's only a matter of time and choosing which company's technology works best. "Between now and the first portion of '09, that curve will be unbelievable," he says. "It's hard to talk with anyone who isn't in the process of making a selection." 
 
 2004 U.S. Vegetable Oil Production <center><img src="/images/upload/20080714015313.jpg" alt="" /></center>
 SOURCE: BUREAU OF THE CENSUS AND AGRICULTURAL MARKETING SERVICE
 
 
 Dave Nilles is contributions editor for Biodiesel Magazine. Reach him at <a href="mailto:dnilles@bbibiofuels.com">dnilles@bbibiofuels.com</a> or (701) 373-0636.

Corn oil from distillers dried grains contains a variety of impurities, some of which have settled out and are visible at the bottom of the bottle.

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GreenShift's corn oil extraction system installed in an ethanol plant

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Ethanol and biodiesel have more in common than just a geographical footprint. With corn oil, the industries are edging closer to a relationship that could aid both as feedstock prices rise.

A Synergistic Pairing

In a few short years the biodiesel industry has experienced an evolution that takes many commodity industries decades to realize. Constantly changing domestic and international policy, tremendous investment in production capacity, and extreme fluctuations in commodity prices have driven both opportunity and stress in the industry. Industry observers and market participants are painfully aware of the often negative consequences presented by commodity price risk in the biodiesel market. The only certainty in biodiesel is that uncertainty will continue, even as new policies such as the biodiesel mandate take effect.
 
 The new renewable fuels standard (RFS) signed into law in December 2007 establishes a domestic biodiesel mandate. The mandate requires the domestic consumption of 500 million gallons of biodiesel in 2009 and expands to 1 billion gallons of biodiesel use by 2012. The final EPA rulings that will dictate specific details of the mandate have yet to be finalized. Just as these rules are uncertain, so too is the ultimate impact the mandate will have on the industry.
 
 This article will review the current challenges faced by biodiesel producers, the expectations moving into the 2009 biodiesel mandate, strategies for mitigating commodity risk in this environment and steps for moving forward with a structured commodity trading and risk management program. 

 
 Current Market Situation, Mandate Outlook
 Global demand for food and fuel is causing supplies of biodiesel feedstocks to dwindle and prices to rise to new highs. Additionally, the high gross margins that incentivized investment have disappeared and left a glut of global biodiesel production overcapacity in their wake. In the current environment, only the least-cost producers are able to produce fuel at a positive margin. The market is rationing demand for oils and fats by keeping feedstock prices high and biodiesel margins low. Margins are kept low enough that idle biodiesel capacity can't be put into production. If this demand destruction weren't taking place it would take only a short time until biodiesel producers depleted global feedstock supplies by way of their substantial processing capacity. Assuming biodiesel policy stays constant for the balance of 2008 it is reasonable to conclude that this rationing process will continue. 
 
 At least 500 million gallons of domestic biodiesel consumption is assured in 2009 by way of the RFS biodiesel mandate. Although this mandate infers a level of certainty for the industry, barring policy safety valves, mandate economics and capacity utilization can be expected to look much like the 2008 situation. At press time, changes were expected for the biodiesel tax credit as well as for international trade of biodiesel. These policy changes could severely limit U.S. exports of biodiesel and make the domestic market much more vital to the ongoing operation of U.S. biodiesel producers.
 
 
 <center><img src="/images/upload/20080714014146.jpg" alt="" />
 Figure 1. Expanding margins with call options
 source: WILL BABLER, FIRST CAPITOL RISK MANAGEMENT LLC
 
 <img src="/images/upload/20080714014153.jpg" alt="" />
 Figure 2. Expanding margins with put options
 source: WILL BABLER, FIRST CAPITOL RISK MANAGEMENT LLC</center>

 
 Producers who succeed under mandate economics will be in the same category as those producing fuel today in the difficult non-mandated market. The mandate will be met by least-cost producers and all remaining production beyond the mandate will be subject to rationing. This rationing is a function of overall global feedstock supply and demand where the market still must curb demand and incentivize supply in order to initiate the multi-year process of rebuilding ending stocks. 
 
 Several common characteristics define the least-cost producers expected to succeed today and in the future: large capacity and economies of scale, the ability to process multiple feedstocks, and superior logistics including substantial storage and access to truck, rail and water transportation. The bulk of biodiesel production is expected to come from these players while a small amount may originate from well-positioned, small-scale niche market producers. 
 
 Regardless of production capacity, it is also critical that biodiesel producers have expertise in commodity trading and risk management in order to be a competitive least-cost industry participant. The ability to successfully execute on physical and financial commodity transactions allows producers to make incremental cost savings on feedstock purchases and realize incremental value on biodiesel sales. Further, executing on financial hedging strategies is necessary to control costs and optimize pricing and planning decisions that would otherwise be impacted by rapidly fluctuating commodity prices. If commodity price volatility is not controlled it can result in financial losses and leave producers uncompetitive and priced out of their market. 
 
 Hedging Strategies
 Many characteristics of least-cost producer status are constrained by initial investment decisions related to the scale, capabilities and location of the biodiesel production asset. On the other hand, managing commodity price risk is a management issue which is only constrained by available transaction types, expertise and working capital.
 
 Fortunately for the biodiesel industry there are many hedging tools available in the physical and financial markets to manage price risk. The available hedging tools for feedstock and biodiesel include futures and options, swaps, and cash-forward, index and basis contracts. This article will not discuss these tools in detail, but suffice it to say that transactions allowing fixed, minimum or maximum price or any combination thereof are available to a biodiesel producer who understands financial hedging tools and makes appropriate deals in the cash markets.
 
 From a management standpoint, the primary objective of any hedging strategy is to capture opportunity and minimize risk. In a market undergoing rationing, or in a market subject to overcapacity and mandate economics, hedging is required to limit risk on basic physical transactions as well as to strategically take advantage of price volatility. 
 
 Under current conditions and future mandate economics it is reasonable to assume that biodiesel prices will remain relatively correlated to feedstock prices. This is also likely to only allow for a small margin for least-cost producers. However, both the feedstock and fuel markets are prone to dislocations in correlation. Volatility events can drive short- to medium-term changes in individual commodity prices and consequentially in biodiesel profit margins. Past events have been driven by credit market crashes, investment fund liquidation and weather. In the future many other unknowns will drive price volatility and associated breakdowns in correlation. Any breakdown in correlation, where feedstock and biodiesel prices move in opposite directions, can present an opportunity to increase biodiesel profit margins or alternatively put producers at risk of substantial financial losses. Hedging tools can be used to lock in opportunity as well as mitigate losses during these events.
 

 The most direct way to gain favorable exposure to un-correlated events, or other significant price moves where prices remain correlated, is through option hedging. Options are price risk management tools that give the purchaser the equivalent of minimum or maximum price insurance. For example, a biodiesel producer purchasing a call option on soybean oil has paid a premium today to ensure that their feedstock price doesn't move higher than a certain level in the future. Conversely, a producer purchasing a put option on diesel fuel price has paid a premium today to ensure that their biodiesel price (via an index or basis contract) doesn't fall below a certain level in the future. In the context of correlated input and output commodity prices, Figures 1 and 2 demonstrate how option hedging may be able to expand margins when markets become volatile. Figure 1 shows how margins can be expanded in an environment of rising prices and Figure 2 shows how margins can be expanded in an environment of falling prices. In both cases it is assumed that feedstock and fuel left un-hedged would remain correlated. 
 
 Diversification in hedging with options can help mitigate the risk that premium will be lost if markets move sideways or in the opposite direction of the hedge. By balancing and diversifying hedge positions to take advantage of favorable volatility on both fuel and feedstock it may be possible to increase the frequency in which margins can be enhanced. This is an important consideration when looking to implement strategies with the profit and loss profiles demonstrated in Figures 1 and 2.
 
 Next Steps
 Managing commodity price risk is a complex topic. There are many economic, strategic and technical issues that must be understood prior to implementing a hedging program. Therefore, we believe it is of the utmost importance that biodiesel producers work to understand their commodity risk, take steps to structurally position their plant to be least cost and develop in-house expertise and/or work with partners who can develop and execute on a structured commodity risk management program.
 
 Today's biodiesel market is a difficult one for producers and even the 2009 mandate doesn't drastically change the underlying fundamentals. The future outlook for biodiesel is likely to remain challenging and in our view the most competitive industry participants will be those who actively seek to mitigate price risk and expand margins through a structured commodity trading and risk management approach. 
 
 Will Babler leads First Capitol Risk Management LLC's biodiesel commodity risk management operations. Reach him at <a href="mailto:wbabler@firstcapitolrm.com">wbabler@firstcapitolrm.com</a> or (815) 777-1129. Trading in futures and options entails significant risks that must be understood prior to trading. This article is not a solicitation for the purchase or sale of any futures or options instrument and past results are not indicative of future performance.

Hedging Overcapacity, Mandate Economics: Strategies for Managing Biodiesel Commodity Risk

Imagine a three-way chicken and egg question. What came first: the chicken, the egg or the nest? That is the latest conundrum facing anyone trying to get started in the biodiesel business. How does one ensure that over a plant's life that production will find an open market, access to feedstock, will not contravene local ordinances, and will have a trained and efficient pool of employees? 
 
 The best answer begins with feedstocks because they determine how far and how fast one can adapt to changing market conditions. Feedstock prices typically represent approximately 85 percent of the price of biodiesel. Never assume that the present choice of feedstock will be available, acceptable or within a reasonable price range when needed. 

 
 Take the case of palm oil. Many countries are now considering legislation to ban palm-based biodiesel because of the food-or-fuel campaign being so relentlessly pursued in the "civilized" world. For example, in the United States few question the food-versus-fuel argument when it comes to soy oil, and soy is so much more useful than palm since it serves as the basis for so many other products, contains one-half to one-third of the oil compared to palm, and is healthier. As a biodiesel producer, be aware that ecologists in some parts of the world are not in favor of using existing plant and animal life for transportation purposes.
 
 On the other hand, a small country like Liberia could be completely energy independent using only locally available palm oil, a cold crushing facility and a medium-sized biodiesel plant. Fully 80 percent of their potential production is overgrown through neglect, wars and disease, but what remains could power generators, trucks and buses and revive the economy, replacing $18 per gallon fuel with $1.45 biodiesel. 
 
 Feedstock Flexibility, Pricing
 Predicting new feedstocks is an arcane science. Jatropha came out of nowhere, and there is much talk of camelina and algae. Will the new processors be able to handle these newer oils? Will animal fats be cheaper? How will they be prepared for production? A multi-feedstock processor is recommended because as long as the chosen feedstock meets the basic chemical composition criteria, one can probably make biodiesel out of it without too many constraints. Be aware, however, that a "small" change can hide a lot of rework, so if the processor is flexible then the programming can adapt the catalyst, feedstock and methanol equation quite easily to meet immediate requirements. If not, plan to spend quality time with a plant designer. 
 
 Even the new oils may come with a high price on the learning curve. Jatropha is not the easy conversion it was thought to be and we are hearing stories from places such as Mozambique and Peru that the oil itself needs careful monitoring, let alone harvesting and crushing. It may be cheap, but there may be a reason for that. Algae oil is slowly appearing in experimental reactors and ponds, but the jury is still out on the ideal mono-cell, the way to harvest the oil and how to create a sustainable economic model for the colorful scum.
 
 Lowering the feedstock price is an essential tactic for new installation, and one way to do that is to blend different oils so that the free fatty acids and other levels are within acceptable transesterification limits. Not all units can handle blends, and some blends, such as chicken fat and soy, or coconut and palm, can be exotic. These are actual requests that Euro Marketing Tools has fielded from places such as Fiji and Liberia, areas where mistakes will be hard to correct and changes impossible to implement. The term blending does not mean mixing the various oils as they head into the processor. It means a homogeneous blending of all the components so that the output does not contain pockets of one or the other feedstock. That blending comes with a price. Blending requires a centrifuge or two ahead of the processing plant.
 
 As far as exotic oils and strange blends go, wise plant manufacturers will protect themselves in one of two ways. The first is to test run the plant for final delivery on its approved oil, most often virgin soy, and provide the buyer with the keys to the plant only after it has run on that oil and produced ASTM or EN standard fuel for a specific number of hours. The second is to request a sample of the oil that will be run in the plant and have enough adjustments built into the system to allow for other oils to be used. Always get the second option because there are many ways that the future of the facility will hinge on the ready acceptance of alternate feedstocks. Again, most of the plants built over the past four years are probably running on a different feedstock than originally planned, and high on that list are waste vegetable oil and animal fats.
 
 Feedstock flexibility and availability are not the only considerations; there are volume considerations. The facility is expected to run continuously at near capacity, but what if there are climactic considerations, availability issues, local ordinances and other reasons to slow down production? What if, as happened recently in a facility in France, for religious reasons a 100,000-ton-per-year unit was not allowed to blend non-kosher animal fats because the glycerin offtake would be unsellable in Africa? That is where the ability to run portions of the plant is an essential consideration. The modern modular facilities have multiple production lines. This has two advantages. The first was just discussed, and the second is that there can be no single-source failures leading to a complete system shutdown with the attendant horrors of an idle plant while the single large processor is repaired. 
 

 Continuous production on multiple lines can be slowed or even stopped on two of the lines for whatever reason, and startups are simpler because the facilities can be brought on line sequentially. Each line can be tailored to perform specific tasks to meet clear goals. One can be highly productive for glycerin offtakes, the others strictly for ASTM biodiesel.
 
 Robert Luiten, chief executive officer of Zenergy International Inc., started his operation with a clear idea of what biodiesel and the energy world would entail. "We decided right from the start that every one of our facilities would enable flexibility and ability to act on opportunities to ensure profitability at all times," he says. "We will be opening world-scale facilities in France, Malaysia, both sides of the United States, South America and possibly Africa with a clear understanding that all our facilities will have an underlying mission of allowing any feedstock at any time and without national limits. Each facility will be ecologically clean, have a small footprint, be standardized across the globe, allow for expansion to meet specific needs and will be logistically optimized. There is no other way to meet the challenges coming at us in the biodiesel market."
 
 The Steep Learning Curve
 Feedstock issues are the first step. Processor technology issues are another. After they're settled, the next step is deciding what size facility is needed. Usually the best option is to determine the optimal feedstock availability and add 20 percent more capacity to ensure that by the fifth year of operations the plant is capable of meeting an increase in demand. The increase may tax available financing, but it will be worth it in the long run. A number of facilities have hardly completed startup when the owner applies to double capacity. It makes no difference if the plant was a 10,000-ton unit or a 100,000-ton unit. The need to grow is universal; the demand for product steadily increases. 
 
 Also, take credit for a steep learning curve. What was an insurmountable obstacle at the start has now turned a project into random and routine. This new knowledge will allow one to negotiate better prices, get in contact with local, national and international businesses, increase a credit limit and provide a host of new services. 
 
 If one is unable to swallow the 20 percent increase, a better tactic is to drop down 15 percent in size to locate in a more comfortable zone with a facility that allows doubling in size with little additional inputs further down the line. Discuss this with the plant designer so that he or she can incorporate redundant sections, larger capacities and adequate foundations to support the eventual increase. Also make sure that the selected design can be upgraded in an easy operation that will not require new buildings, controls and additional employees. Stacking key components and over-sizing blenders, dryers, pumps and piping is best done earlier rather than later.
 
 Other roadblocks to getting the most for the money include a too-small site, access restrictions and local ordinances. This is where long-term planning comes in handy.
 Locating the plant in relation to a number of factors can be crucial. The plant site will play a key role in the type of facility. In the United States we are seeing a move toward smaller regional facilities located near specific feedstocks, within walking distance of a crusher and serviced by a rail spur with load and offload racks. These operations address the crucial issue of feedstock and biodiesel transportation, and are built and operated by a local or regional group. Financing is often from a local branch of a large bank and the whole operation rapidly becomes a source of community pride, jobs and taxable income. 
 
 At the opposite end of the spectrum, and not competing with the local facility, are the huge, multinational companies who build larger facilities in or near ports because they intend to tap into the international feedstock pool immediately. Where a plant is placed is not related to size, but be aware that the location can influence a lot of decisions down the road. 
 A final note on what is really a shallow review of the changing face of biodiesel production: make sure to understand every aspect of a new venture. From legislation and incentives on the books, upcoming rules and regulations, public opinion trends, who your friends are and will be, automotive buying habits, shipping conditions, ecological impacts and other trends. Biodiesel people are an open and friendly group as a whole. Do not hesitate to call and ask. There are Web sites, government agencies, corporations and journalists waiting for your call.

 
 Make the call, and then build the plant. 
 
 Peter Brown is a principal with Euro Marketing Tools. Reach him at <a href="mailto:peter@euromarketingtools.com">peter@euromarketingtools.com</a> or (408) 206-7035.

Building a biodiesel plant today requires feedstock flexibility. Biodiesel from palm oil fruit has been much more of a source of food-versus-fuel arguments than soy oil, which is the predominant U.S. biodiesel feedstock.

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Oil from soybeans is the predominant U.S. feedstock. However, animal fats and waste vegetable oil are becoming more common due to higher vegetable oil prices.

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The Changing Face of Biodiesel Production

In recent years, lawmakers in the United States and the European Union have embraced biofuels as a key element of their respective strategies to combat climate change and promote energy independence. However, just as these two major markets are beginning to agree on technical standards for biofuels, as shown in the white paper on "Internationally Compatible Biofuel Standards" that the United States and EU lauded at the recent EU-U.S. Summit of 2008, controversy is emerging in both markets on the tough question of how to show that biofuels represent life-cycle greenhouse-gas emissions savings as compared to traditional fossil fuels. The issue is sensitive because the greenhouse-gas emissions savings of different biofuels vary substantially.
 
 Life-cycle greenhouse-gas emissions analyses for renewable fuels seek to quantify the greenhouse-gas emissions created by the manufacture of the fuel, including its inputs, through transportation to the consumer, use and disposal. In the United States, under the 2007 Energy Independence and Security Act, biofuels only qualify for the new renewable fuels standard (RFS) if all carbon emissions associated with their production and use result in emissions savings of at least 20 percent. In the EU, the Proposed Directive on the Promotion of Energy from Renewable Sources provides that biofuels must represent emissions savings of at least 35 percent in order to be taken into account in the EU's renewable energy targets. These emissions savings thresholds have become mired in controversy. Technical challenges in measuring life cycle emissions savings, combined with political uncertainty in both jurisdictions, threaten to stall implementation of these thresholds in both markets. The controversy also may threaten international trade and investment flows in biofuels.
 
 U.S. Implementation Challenges
 Under the 2007 Energy Independence and Security Act, renewable fuels must meet life-cycle greenhouse-gas emissions reduction targets for renewable fuels in order to qualify for the RFS. Any renewable fuel produced in a facility under construction as of December 2007 must meet a threshold 20 percent reduction from a 2005 baseline, which is generated by measuring the 2005 life-cycle greenhouse-gas emissions of traditional fuels. Beginning in 2009, the subcategories of renewable fuel created by the act (cellulosic biofuel, advanced biofuel and biodiesel) must meet life-cycle greenhouse-gas emissions reductions of between 50 percent and 60 percent from the 2005 baseline before consideration for the RFS.
 Compliance with these thresholds cannot be determined, however, without a resolution of just how to measure life-cycle greenhouse-gas emissions. The act obligates the U.S. EPA to complete a rulemaking by December 2008, which would establish the appropriate model and inputs for estimation of life-cycle greenhouse-gas emissions and finalize emissions reduction targets. The controversy surrounding how best to measure life-cycle greenhouse-gas emissions, coupled with the shifting political landscape, make it unlikely that consensus will be reached by the December deadline. 
 
 The sheer complexity of the analysis, including disagreements as to the appropriate methodology for measuring greenhouse-gas emissions, will make EPA's rulemaking a difficult endeavor. Indeed, the EPA decided against using a life-cycle greenhouse-gas emissions analysis in 2007 because of the complexities and uncertainties inherent in such an analysis. In its rulemaking establishing the 2005 RFS, the EPA determined that "the current state of scientific inquiry surrounding life-cycle analyses is not sufficiently robust to warrant its use." The science has not developed sufficiently over the past year to allow for consensus on this issue, and any rulemaking on the issuance of uniform methodology is likely to be controversial.

 
 In order to undertake a comprehensive rulemaking on a controversial topic, the EPA will need time to consider the science and the policy objectives of the RFS, and the agency has limited time remaining this year to conduct a thorough analysis. The EPA indicated earlier this year that it will not issue a proposal for comment until late summer, which would give the agency less than four months to consider lengthy and complex comments and publish a final rule-an unlikely feat. The impending change in presidential administrations is an additional complicating factor. The Bush administration's self-imposed deadline for issuing proposed regulations passed on June 1 and final regulations will not be published until after Nov. 1. Although there may be some flexibility in these deadlines, it is unlikely that a significant final rulemaking such as this one will be published in the final days of the Bush administration. Thus, a new administration will have to address the issue, further delaying publication of a final rule and creating additional uncertainty for the biofuels industry as the 2009 requirements for the RFS approach. 
 
 EU Implementation Challenges
 The biofuels market in the EU reflects similar uncertainties. The comparable legislation in the EU is the Proposed Directive on the Promotion of Energy from Renewable Sources, introduced in January and currently the subject of heated debate. The Proposed Directive provides, at Article 15.2, that biofuels must represent greenhouse-gas emissions savings of at least 35 percent in order to be counted toward the EU's renewable energy targets. Article 17 specifies a variety of tests for determining whether a given biofuel meets this savings threshold. First, for most biofuels "production pathways" used in the EU, the Proposed Directive specifies deemed "default" emissions savings percentages. For example, the deemed emissions savings percentage for rapeseed biodiesel, one of the principal biofuels produced in Europe, is 36 percent, just above the required threshold. In the case of palm oil biodiesel produced outside the EU, the Proposed Directive specifies a deemed emissions savings percentage of 16 percent, well below the required 35 percent threshold.
 
 For biofuels for which no deemed emissions savings percentage is provided, the Proposed Directive provides a complicated formula for calculating emissions savings. In a nutshell, the formula attempts to capture, for each distinct biofuel production pathway, emissions resulting from eight processes along the field-to-tailpipe pathway. These include emissions from cultivation and processing of the raw material, and emissions from the transport, distribution and use of the fuel. The formula then compares the total emissions to a fossil fuel comparator. The comparator must be based on fossil fuel data as gathered by the EU, or if those data are not available, a specified value of 83.8 grams of carbon dioxide equivalent per megajoule (gCO2eq/MJ).
 
 However, it remains far from clear that the proposed 35 percent greenhouse-gas emissions savings threshold, or the methodology proposed for calculating emissions savings, will become law. The draft is currently under review as part of the EU's "Co-Decision" procedure, in which both the EU Parliament and Council may propose changes. The Parliament has already proposed a major shift in direction for EU biofuels policy, urging more analysis of the impact of biofuels incentives on food security and environmental sustainability in developing countries where biofuels are produced. Also, industry groups have sharply criticized the 35 percent emissions savings threshold. In a recent position paper on the Proposed Directive, the European Biodiesel Board raised multiple concerns with the 35 percent threshold, arguing, among other things, that the current methodology for calculating greenhouse-gas emissions savings is overly restrictive and could exclude biofuels production pathways that will be critical in reaching the EU's overall greenhouse gas reductions goals.
 
 Another European biofuels industry group, the European Bioethanol Fuel Association, has also raised multiple criticisms of the Proposed Directive. One is that the proposed comparator used to calculate compliance with the 35 percent emissions savings threshold (83.8 gCO2eq/MJ) is based on light conventional crude oil, rather than more polluting oils also widely used in fossil fuel production. Accordingly, the comparator should be adjusted upward to properly account for the use in fossil fuels of oil other than light conventional crude. 
 
 In light of the controversy surrounding the 35 percent greenhouse-gas emissions savings threshold, the Proposed Directive in its current form should be seen as the opening salvo in a debate that will take many months to resolve, and may well result in final legislation in a substantially different form.
 
 Prospects for Transatlantic Friction?

 The United States and the EU have made considerable progress in developing and harmonizing biofuels standards. This ongoing work is intended to-and should-facilitate increased biofuels investment and trade. However, divergent approaches to life-cycle emissions analysis in the United States and the EU may drive a new wedge into the economic relationship between these two major biofuels markets. Biofuels market uncertainty is likely to persist until the United States and EU can settle on methodologies for measuring biofuels life-cycle emissions. 
 
 Kenneth J. Markowitz is senior counsel, Bernd G. Janzen is counsel and Emily C. Schilling is an associate in the Washington, D.C., office of law firm Akin Gump Strauss Hauer & Feld LLP.

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Measuring the Total Carbon Footprint of Biofuels Through Life- Cycle Analysis

Like many other companies weathering the current economic downturn, biodiesel producers must look beyond traditional cost-cutting measures to remain financially viable. While manufacturing and transportation costs are big targets for penny-pinching, producers should also spend time reviewing existing insurance policies and reevaluating claims procedures in an effort to decrease expenses and minimize exposure to risk.
 
 How might a slowing economy affect the relationship I have with my insurance company?
 In a slowing economy, one can expect increased scrutiny of claims, with the result being that claims typically paid quickly in a robust market are likely to meet resistance in a slow one. In addition, the time-value of money dictates that certain claims paid during good times might, in an economic downturn, be litigated with the goal of a discounted settlement, or to take advantage of the lengthy time required to resolve disputes in court. Expect increased claim scrutiny as insurers try to better manage their cash flow. Policyholders should maintain strong relationships with their insurance brokers, and if possible, their claims adjusters. Your broker and insurer want to write coverage to bring in premiums. With an established relationship to rely on, you may encounter a less hostile environment if you need to make a claim.
 
 Will a softening economy provide any opportunities for policyholders? Is now a good time to review my coverage? 
 The insurance industry-like many segments of American industry-is currently in a "soft market" and will be for at least the immediate future. This means that demand has decreased and, as a result, competition among carriers for business has increased. If you are in the market to purchase or expand insurance coverage, this may be an excellent time to reevaluate coverage pricing and options. Because of a decrease in demand and a surplus of products, a soft insurance market generally means that insurers will lower their rates to attract business. Therefore, it is possible to secure existing or even higher levels of coverage at significantly reduced rates. In addition, insurers may develop new types of coverage programs to differentiate themselves from the competition, and the opportunity to obtain specialized coverage can be greater in a soft market than a hard market. In a soft market, insurers also tend to be less stringent with their underwriting standards, resulting in opportunities to obtain coverage generally not available during a hard market. 
 
 At what point in a potential claim situation should I begin talking with my attorney? 

 Consult with your attorney as soon as you learn of a potential claim that may be covered under your insurance policy. In any claims situation, insurers are potential adversaries until they unequivocally waive any and all rights to deny their duties under the insurance policy, including their duties to defend, pay defense costs without recoupment, and indemnify for settlements or judgments. This express waiver is rarely granted. Typically, insurers reserve the right to deny coverage on any and all grounds based on future developments and, in some jurisdictions, can remain silent about whether they are reserving rights. 
 
 This potentially places you and your facility in a difficult situation, because an insurer might steer the investigation and development of a case in a way that fabricates support for fact-dependent coverage defenses, such as those based on the knowledge or intent of executives or employees, notice of claim or occurrence, purported misrepresentations in the insurance application, or apportionment of damages. In an effort to deny or diminish coverage, the insurer might use communications made by your employees in a way in which they were never intended to be used. The insurer might even try to obtain privileged or protected communications to which no adversary would be entitled. Your attorney should be able to advise you about the potential coverage defenses associated with the claim, help you communicate carefully with the insurer, and assist you in protecting privileged information. 
 
 Lindquist & Vennum's offices are in Minneapolis and Denver. For more information, visit <a href="http://www.lindquist.com">www.lindquist.com</a>

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Insuring a Facility in a Slowing Economy

Web exclusive posted July 29, 2008 at 2:51 p.m. CST 
 
 Chhandak Basu, a biological sciences assistant professor at the University of Northern Colorado, has received a $49,643 grant from the Colorado Office of Economic Development and International Trade to study the viability of using biodiesel derived from a tropical tree. The university will match the funds, bringing the total amount of grant money to nearly $100,000.
 
 During a two-year collaborative project through the Bioscience Discovery Evaluation Grant Program, Basu is cloning the genes responsible for the production of oleoresin, a diesel-like fuel, produced in the copaiba or "diesel tree." The genes will then be transferred into plants and algae to determine which plants are compatible and can produce the most biodiesel. Basu has been working on the project with University of Tennessee-Knoxville Professor C. Neal Stewart Jr., Ph.D.
 

 According to Basu, oleoresin from genetically modified plants could potentially be mass-produced and used without further refining fuel automobiles. "The agricultural/physiological aspects of oleoresin have been studied extensively, but not the molecular biology part, not the genes responsible for this type of synthesis," Basu said. 
 
 The diesel tree itself does not grow well outside of tropical environments, making it unlikely the trees could ever become a reliable source of large-scale biodiesel production. Standing at roughly 40 feet tall, it would take more than ten years of growth for the tree to produce a significant amount of fuel. Even then, a single tree would likely produce approximately 4 or 5 gallons of oleoresin every 6 months. The oleoresin is tapped from the trees in a way that is similar to collecting sap to make maple syrup. One benefit of the substance is that, unlike oil from traditional biodiesel feedstocks such as soybeans, oleoresin doesn't have to be refined or manufactured before it's used.
 
 Basu and two graduate research students will transform Arabidopsis, a small non-invasive flowering plant, and algae with oleoresin genes. Genetic material for use in the study was collected from the copaiba tree by Basu during a trip to the University of Puerto Rico, San Juan. 
 
 Basu said Arabidopsis was chosen in part because if successfully modified it would not negatively affect food supplies or strain the economy. The plant is generally referred to as a weed and considered useless. However, due to its six week seed-to-seed life cycle, five chromosomes and small genome size, it's relatively easy to genetically modify, making it a popular choice to use in laboratory experiments. "If [the process] works in Arabidopsis, it will also work with all in that family and other grasses," Basu said. 
 
 "I hope that within a year from now the proof of concept could be presented in an international journal," Basu said. "My main goal is to show that this works." He is hopeful that the oleoresin proof of concept will provide economic opportunities that will eventually lead to a partnership to deliver the biofuel.
 
 "I'm really grateful to the state's Office of Economic and International Trade and UNC for offering support," Basu said. "It was a tremendous motivational boost for the lab." Basu said biodiesel created from this process could provide a cheaper alternative to rising gas prices and become part of the solution to ease U.S. dependence on foreign oil. "This can be a tool in the toolbox," Basu said. "There's so much wealth in this country that we should find a homegrown solution to address energy concerns. And if I'm successful here, we can spread the technology to the developing nations."

Chhandak Basu, a biological sciences assistant professor at the University of Northern Colorado, demonstrates the method to analyze plant DNA samples with a state-of-the-art NanoDrop spectrophotometer./PHOTO: BARRY LAPOINT, UNC.

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The copaiba tree produces an oleoresin similar to diesel./PHOTO: CHHANDAK BASU.

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Colorado researchers study biodiesel tree

Web exclusive posted July 17, 2008 at 3:25 p.m. CST 

 
 The U.S. DOE has announced they will provide $850,000 to support the National Governors Association's work to enact energy policies at the state level. The funds will be used to help develop and deploy cleaner sources of energy to power vehicles, homes, and workplaces more efficiently.
 
 "Today's announcement furthers the unprecedented energy cooperation between DOE and the nation's governors as we work together to advance clean, reliable, and affordable supplies of energy," said DOE Assistant Secretary Alexander Karsner. 
 
 The funding will support the securing of a clean energy initiative set forth by Minnesota Gov. Tim Pawlenty, whose NGA chairmanship ended July 14. "Ethanol and biodiesel are certainly fuels that are on the table that the governors are looking at," said Christopher Cashman, spokesman for the NGA. "One of the national summits that we held as part of the initiative (last December) was to focus on increasing alterative fuel access in the state," he said, adding that the focus will also reach vehicles that could use that fuel.
 
 "[We will look at] what states can do to perpetuate clean fuels like ethanol and biodiesel in the future," Cashman said.
 
 Although Pawlenty's term as chair ended Monday, his efforts will remain in place. "NGA is still working towards securing a clean energy initiative," Cashman said. "The money that DOE has committed to us is to support the work of that initiative."
 
 The $850,000 represents one year of funding for a five-year plan; more funding will be issued in the future, Cashman said. 
 
 Pennsylvania Gov.Ed Rendell has now begun his tenure as chair of the NGA and he too will begin an initiative. "He's going to use his tenure as chair of NGA to focus on building America's infrastructure," Cashman said.

NGA receives DOE funds to enact energy policies

Web exclusive posted July 23, 2008 at 9:00 a.m. CST 
 

 Algae biofuels in Hawaii are one step closer to reality with the announcement of the joint development of a commercial-scale microalgae facility on the island of Maui. 
 
 HR BioPetroleum, Alexander & Baldwin Inc., Hawaiian Electric Co., and Maui Electric Co., subsidiaries of Hawaiian Electric Industries Inc. announced July 16 that they have signed a memoranda of understanding to develop a commercial-scale microalgae facility on the island of Maui. The facility will produce lipid oil to be used in producing biodiesel and other products, such as animal feed.
 
 Under agreement, HR BioPetroleum will be responsible for overall project management, including obtaining financing, construction and operation of the microalgae facility. Alexander & Baldwin will provide land adjacent to the power plant operated by Maui Electric Industries where the algae production ponds and processing plant will be built. Hawaiian Electric and Maui Electric will lead in determining the permitting and construction needs for piping to carry stack gases containing carbon dioxide to feed the algae facility. 
 
 According to Hawaiian Electric, the first phase of the commercial facility could be in operation by 2011 if preliminary milestones are met as planned. Those factors include confirmation of algae performance data from HR BioPetroleum's pilot and demonstration facilities, receipt of required regulatory approvals, formation of a special purpose entity, project financing and the signing of definitive agreements with the parties involved.
 
 In 2007, HR BioPetroleum and Royal Dutch Shell PLC formed a separate joint venture to operate a demonstration facility in Hawaii to grow marine algae and produce oil for conversion into biodiesel. The goal is to produce biofuel feedstocks while simultaneously reducing industrial emissions of carbon dioxide.
 
 Hawaii-based Alexander & Baldwin, which has divisions involved in real estate, ocean freight, sugar and coffee, has been producing renewable energy in Hawaii for more than 100 years using biomass and hydro-electric generations on both Maui and Kauai, according Allen Doane, chairman and chief executive officer. "We are excited about the promise of algae as another renewable energy source and we look forward to the potential reduction in imported oil and greenhouse gas emissions it represents."
 
 "This project entails some uncertainty," said Karl Stahlkopf, Hawaiian Electric senior vice president for energy solutions and chief technology officer. "Stepping forward to be a first implementer of a new idea always does. However, it unites the best of the new Hawaii high-tech industry with two long-established Hawaii infrastructure companies in a unique partnership."

Hawaii companies to build microalgae facility

Web exclusive posted July 23, 2008 at 9:23 a.m. CST 

 
 The unexpected closure of F&S Oil Inc., a biodiesel production facility in Waterbury Conn., on March 7 has resulted in a chaotic situation. 
 
 A series of court motions were filed July 15 in Hartford Superior Court by Carlton Helming, a forensic accountant with Wallingford, Conn.-based Helming and Co. P.C., which was appointed receiver of the company in March.
 
 A notice of sale for the facility is scheduled for August 12. Helming said because there has been tremendous interest in the plant, the auction date was moved from July 29 to August 12. "Prospective bidders are having experts flown in from all over the country," he said.
 
 Helming said the value of the business could range between $4 million to $12 million. "It depends on feedstock-type and quality," he said. "Experts and estate documentation indicate virgin soy oil can be processed at 8 million gallons per year and yellow grease or tallow can be processed at 4 million gallons per year, with a better financial spread. The attraction of this plant is that it was designed to be flexible to handle a variety of feedstocks."
 
 According to the auction notice Helming and Co. estimate that F&S Oil invested not less than $4 million in facility design, engineering, and construction, and the equipment purchases and leases located at the facility. Onsite storage includes 20,000 gallons for feedstock, 8,000 gallons for glycerin, 8,000 gallons for methanol, 3000 gallons for nitrogen and 100,000 gallons for B100 finished biodiesel. Bidders must pay a $2,500 non-refundable deposit to participate in the auction.
 
 A report filed by Helming's firm with the court on July 8 indicates that the process has been cumbersome due to record-keeping issues by F&S Oil. "This has been a most challenging assignment due to the companies having been shut down and the receiver limited to access to many former employers and/or other sources of information. In addition, most financial records do not appear to have been adequately reconciled for the past two years (some as many as five)," it said. 

 
 Among the findings in Helming and Co.'s report:
 	<ul><li>F&S Oil's record-keeping practices did not follow proper procedure, consumer prepaid deposits were not properly secured, bonded, hedged or secured. </li>
 	<li>Financial books, records, accounting and reports of F&S Oil are complex, difficult to reconcile, in diffuse locations, voluminous and hardly transparent.</li>
 	<li>The business practices and administration of the affairs of F&S Oil are complex, seemingly arbitrary and informal.</li>

 	<li>There are multitudes of "financial transactions" in favor of insiders.</li>
 	<li>The company engaged in various non-transparent, non-ordinary course and substantial business transactions, asset dispositions and "investments.</li></ul>
 
 Creditors are not allowed to initiate legal proceedings against F&S Oil until the court lifts the stay that's currently in place. As far as any wrong-doings or illegal activity on any one's part, Helming said, "[It] is too premature to be definitive. We are aware of those allegations and need time to investigate."

F&S Oil to be auctioned

Web exclusive posted July 23, 2008 at 9:27 a.m. CST 
 
 Terra Bioenergy LLC held a groundbreaking ceremony on July 17 designating the beginning of construction on a new biodiesel plant in Saint Joseph, Mo. Initially, the facility will produce 15 MMgy, but the company hopes to expand to its full capacity of 30 MMgy as profitability and the market allow.

 
 "Our plant is designed to use a wide range of materials including animal fat as well as soy type feed stock," said David Holcombe, chief executive officer of Terra Bioenergy. "The ratio will be determined by economic conditions and profit margins." 
 
 Holcombe said the company doesn't feel financially "stressed" over current economic conditions. "The flexibility designed in our processing system allows us a competitive advantage," he said.
 
 Although early site preparation began in June, bad weather conditions have slowed construction. The plant, which is scheduled for production by late February 2009, will employ 25 to 30 people.

Terra Bioenergy breaks ground on Missouri plant

Web exclusive posted July 23, 2008 at 9:32 a.m. CST 
 
 Regina, Saskatchewan-based <a href="http://www.cangreenfuels.ca/">Canadian Green Fuels Inc.</a>, which is planning to build a biodiesel plant in McLean, Saskatewan, announced the execution of a non-cancellable purchase order contract for the sale of CGF's biobased products to an unnamed U.S. or Canadian client. "This is a 90-day contract for the company worth between $15 million and $20 million," said CGF Chief Development Officer Troy Metz. 
 
 CGF recently launched its MOPO brand of fuels, fuel conditioners, and environmentally friendly canola-based additives and lubricants such as chain lube and cutting oil. Furthermore, construction of its 50 MMgy biodiesel facility is slated to begin soon, Metz said. The plant, which will also produce bio-oil and bio-additives, will take approximately 10 months to build and is slated to be completed by June 2009. It will be able to take in any oil, such as canola, corn and soy, as feedstocks. The site will also include a crushing plant, which will be able to process 1,200 metric tons of oilseeds per day. In the meantime, CGF is in contact with a number of securities brokers with the intention to advance its cash flow and financing needs that will be used toward the facility. 
 
 In order to mitigate the risks of a fluctuating commodities market, CGF is working with Kansas City, Mo.-based FCStone to establish a working relationship and a risk management contractual agreement.
 

 Dynamo Electric and Mechanical has been appointed as project development partner and lead on the biodiesel plant. P3 Architecture Inc. is providing key advisory services and leading the environmental assessment, while GreenLine Industries LLC will provide a majority of the infrastructure technology for the biodiesel processing systems. Once operational, the plant will become Canada's largest biofuel producer. The facility will recycle its own energy to run its operations, and waste products resulting from the crushing process will be sold as byproducts. 
 
 To prepare for its future biodiesel production, CGF entered into a joint venture with <a href="http://www.algodynecorp.com">Algodyne</a> to build and operate a fleet of retail biofuels stations in western Canada.
 
 Additionally, Metz said CGF has partnered with the University of Regina and the Saskatchewan Forest Center to move forward with the innovation of biofuels production and other environmental studies. As a result, CGF has created Canada's first biofuel and petroleum technology research center in Regina, which is actively pursuing areas such as biomass gasification and how climate exchange credit systems can positively affect the ethanol and biodiesel industries. CGF, along with its partners, will look to commercialize some of these practices in the future, Metz said. "We're really trying to look at this as an industry and say we've got an integrated approach that keeps innovation alive and opportunity profitable," he said.

CGF inks biobased products contract

Web exclusive posted July 23, 2008 at 12:23 p.m. CST 
 
 Natural Innovative Renewable Energy of Breda, Iowa, plans to build a 60 MMgy biodiesel plant in the Roth Industrial Park in South Sioux City, Neb. The plant will be capable of producing biodiesel from multiple feedstocks, but the company plans to begin biodiesel production using beef tallow provided by Beef Products Inc., a local meat processor.
 
 According to Natural Innovative Renewable Energy spokesperson Jim Venner, the company also anticipates producing 55 million pounds of glycerin per year to be marketed and sold to the cosmetic and pharmaceutical industry. The plant is expected to bring 36 new jobs to South Sioux City.
 
 Venner said the decision to use beef tallow as a feedstock was necessary given the high price of soybeans. "Soybean prices have really stressed the biodiesel industry," he said. "Animal fat is our alternative choice."
 

 Venner said Natural Innovative Renewable Energy plans to break ground as soon as possible. The plant is expected to be completed within 18 months of groundbreaking.

Beef tallow to be used at Nebraska plant

Scientists at Mississippi State University are embarking on a novel research project to convert shrimp and seafood processing parts that are not used to fill our stomachs into what someday could fuel our diesel engines.
 
 The project is funded by the Mississippi-Alabama Sea Grant Consortium (MASGC). The National Sea Grant College Program, administered by the National Oceanic and Atmospheric Administration (NOAA), is a federal/state partnership that matches NOAA Sea Grant experts and resources with state academic institutions. The MASGC, which was created in 1972, is one of 30 sea grant programs in the United States. In addition to MSU, consortium members include Auburn University, Dauphin Island Sea Lab, Jackson State University, University of Alabama, University of Alabama at Birmingham, University of Mississippi, University of Southern Mississippi and the University of South Alabama.
 
 The goal of the research project is to find a higher value for the millions of tons of shrimp and other seafood waste that gets processed each year near in the Gulf Coast areas of Mississippi, Alabama and Louisiana, according to Todd French, an assistant microbiologist at MSU who is a lead on the project.
 
 "What we're trying to do is find pieces to the puzzle and find something that has a higher value than their byproduct currently has where a lot of times they have to pay to truck off," French said.
 
 Seafood-based biodiesel production would be a boon for existing shrimp processors looking to eliminate some of their disposal costs, which have been estimated at about $145,000 per producer. As a building block for fuel, the waste also would bring additional income streams from the products it's used to create. 
 
 French said that the research is focusing on taking advantage of an n-acetyl glucosamine called chitin that's innately found in seafood, such as shrimp, crab and lobster shells. Researchers intend to take the processed seafood waste, pretreat it with an acid and add it to vats of bacterium called Oleatinous, a mixture French refers to as his "bugs". The microorganisms eat the chitin, convert it into fat (or lipids) and store it, which can subsequently be sequestered as a viable oil feedstock intended for biodiesel production. 
 
 According to French, the oil produced by the microorganisms is similar to canola oil and corn oil. He said the process is already underway with synthetic seafood ingredients at MSU. The real seafood waste will arrive sometime in August from Gollott's Seafood in Biloxi, Miss. 
 In addition to using chitin from shrimp and seafood waste, French said the process would also allow seafood processors to recycle wastewater used in seafood processing back into the process for continued operations, including feeding glycerin back into the system to get more oil input.
 
 "Obviously, if the glycerin market is there you want to get the highest value for that," French said. "But, if it's not you can feed it back to the bugs. We've proven that." 
 

 French added that although the project is small-scale at the moment, the long-term impact of the project once data verified economic and logistical feasibility should prove itself out in the coming years, French said. 
 
 "We had some preliminary data where we used pure n-acetyl glucosamine, but not with the actual shrimp shells, just to prove the concept," French said. "Obviously, we hope the data holds up that [shrimp processors] would find a pilot system and, believe me, every one of those shrimp processors would love to have us on site to find a higher value used for that material."

Mississippi State University Professors Todd French, left, Rafael Hernandez and Guochang Zhang stand near a machine that transports shrimp hulls to a Dumpster at C.F. Gollott and Son Seafood in D'Iberville, Miss. A team of scientists at MSU are study

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At the C.F. Gollott and Son Seafood factory in D'lberville, Miss., shrimp are prepared to drop into a machine that removes the heads and shell./PHOTO: Melissa Schneider, Mississippi-Alabama Sea Grant Consortium.

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As part of the process, shrimp waste, which includes shells and heads, make their way out of the factory and fall into a large dumpster./PHOTO: MELISSA SCHNEIDER, MISSISSIPPI-ALABAMA SEA GRANT CONSORTIUM.

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MSU scientists study seafood as a feedstock

Web exclusive posted July 23, 2008 at 9:39 a.m. CST 
 
 A Snohomish County, Wash., initiative to raise and process locally grown oilseed crops for the production of biodiesel continues to move forward. The Snohomish County Farm-Grown Fuel Project, a partnership between public and private organizations, plans to establish a regional facility to produce canola oil which can be a feedstock for biodiesel. The USDA has announced that two organizations will receive more than $125,000 in federal grants to assist with the overall effort.
 
 Under the USDA Rural Development's Rural Business Enterprise Grant Program, the Sno/Sky Agriculture Alliance has been selected to receive a $96,806 grant to develop a canola seed storage and pre-crushing processing facility in Monroe, Wash. In addition, the Seattle-based Institute for Washington's Future received a $28,650 grant to examine the feasibility of harvesting oilseed crops in the Snohomish River Valley. The institute is looking to help establish an oilseed harvesting operation in the valley, which the institute said is one of the barriers to oilseed production in the area. 
 
 According to Ryan Hembree, agricultural coordinator for the county project, the overall goal of the Snohomish County project is to harvest between 1,000 and 1,200 acres of canola annually to produce canola oil, which ultimately will be processed into biodiesel to power the Snohomish County fleet of diesel-powered vehicles. Working with the Washington State University Extension Service, a farmer's cooperative in the county has planted between 350 and 400 acres of canola this year and hopes to have 1,000 acres in production by 2010, Hembree said. So far, the county's pilot project has revealed that canola can be grown at much higher yields in the county than was anticipated.
 
 The county has a grain dryer that can process 12 tons of grain per hour and is in the process of purchasing a seed crusher and oil press that can process 24 tons of oilseeds per day. Hembree said the grain dryer is powered by methane which is produced from an old county landfill that has been capped and is expected to produce methane for 10 more years. Hembree said the plan is to find a private party to lease the equipment from the county on a per-ton fee basis and provide processing services to the farmers. The drier will be operational in early August; the seed crusher and oil press are expected to come on line later this fall. The oil will be sold to a local biodiesel processor, Hembree said, and the county will purchase biodiesel from that processor. The processor has not been chose yet.
 
 Snohomish County has been actively looking for ways to help farmers develop additional cash crops, Hembree said. Much of the land where canola is being grown for the project previously was fallow and Hembree adds that canola is a great crop for the area because it sets down a long tap root and breaks up the soil. Farmers who plant canola one year can see a significant increase in rotational crops, like potatoes, the next year, he said.

Federal grants fuel Washington biodiesel initiative

Web exclusive posted July 23, 2008 at 9:43 a.m. CST 

 
 A $1.7 million new biodiesel research facility will be built in Catawba County, N.C. Researchers from Appalachian State University in Boone, N.C., will be moving into the county's EcoComplex, a facility designed to promote economic development in the green energy, green business, agricultural, and environmental sectors, according to Barry B. Edwards, Catawba County's director of utilities and engineering. The facility, which is located near the county's Blackburn Landfill, will use energy produced within the EcoComplex to operate the landfill.
 
 The university plans to lease the new 5,000-square-foot research facility for biodiesel testing and will grow test crops near the landfill to determine which crops produce the best oils in the local climate. 
 
 The Appalachian State University project has received more than $1 million from the Golden LEAF Foundation, the U.S. DOE, the University of North Carolina General Administration and the North Carolina Biotechnology Center.

New research facility to be built in North Carolina

Web exclusive posted July 29, 2008 at 4:18 p.m. CST
 
 According to the nonpartisan Center for Responsive Politics, corn and soybean farmers have spent $2.3 million on lobbying since 2007 in order to get their messages through to the U.S. Congress. 
 
 A comprehensive review of biofuels lobbying, titled <a href="http://www.opensecrets.org/news/2008/07/power-struggle-division-within.html">"Power Struggle: Division Within Biofuels Community Complicates the Energy Equation"</a> and written by Luke Rosiak, was published July 24 in the center's Capital Eye newsletter on its <a href="http://www.OpenSecrets.org ">www.OpenSecrets.org </a>Web site.

 
 The nonprofit organization compiles information provided by lobbyists to the federal government on their lobbying expenditures and periodically reviews different industries. 
 
 In the article, Rosiak covers a number of the players with interests in various issues, and the individuals and lobbying efforts involved. Corn ethanol and sugar policies are discussed, along with the controversy over the definition of renewable diesel and efforts to protect biofuels subsidies and tax credits. 
 
 In the presidential campaign, the article reports, presumptive Republican presidential candidate Sen. John McCain of Arizona, has said he would eliminate the tariff on Brazilian ethanol as well as subsidies for American corn ethanol. Presumptive Democratic presidential candidate Sen. Barack Obama of Illinois would do neither, but emphasizes development of cellulosic technology. Rosiak reveals that Obama has received $76,000 from corn, soybean, sugar and alternative energy producers, compared to $17,300 for McCain.
 
 Rosiak's article is part of a series in the Capital Eye Reports that is pulling research conducted by the Center for Responsive Politics to investigate the interests driving the energy debate on Capitol Hill. To read those reports visit: http://www.opensecrets.org/capital_eye/.

Nonpartisan group reviews biofuel lobbying

Web exclusive posted July 30, 2008 at 10:18 a.m. CST 
 
 On July 28, Massachusetts became the second state this month to pass biofuel-friendly legislation. Gov. Deval Patrick signed the Clean Energy Biofuels Act into law at Mascoma Corp. headquarters in Boston, ushering in what Massachusetts officials hope will be an era of new growth for the state's clean energy technology sector.
 
 Earlier this month, Pennsylvania passed a budget that included a biodiesel-blending mandate and an extension of the current biodiesel production subsidy. To read that story, <a href="http://www.biodieselmagazine.com/article.jsp?article_id=2516&q=pennsylvania&category_id=16">click here</a>.
 

 "The world is waiting for the next generation of clean, renewable alternatives to petroleum fuels, and Massachusetts is poised to deliver," Patrick said. "This new law will help us develop advanced biofuels and get them to market, without driving up food prices. We want these new fuels in our tanks and these new jobs in our economy here in Massachusetts."
 
 The act includes the following provisions: 
 	<ul><li>An exemption from the state gasoline excise tax for cellulosic ethanol. The current state gas tax is 21 cents per gallon. The exemption will go into effect on Jan.1, 2009. Because cellulosic ethanol has yet to be produced commercially in Massachusetts, there is not expected to be any immediate takers of this provision. However, the tax exemption is effective until Dec. 31, 2017.</li>
 	<li>A mandate requiring all home heating fuel and diesel to be a B2 blend of biodiesel in 2010 and B5 by 2013. The act allows for the Massachusetts Department of Energy Resources to delay content requirements for home heating and diesel fuel if it is determined there are no fuels available to meet the standards. </li>
 	<li>The state is required to develop a Low Carbon Fuel Standard, similar to the standard currently being developed in California.</li></ul>
 
 There are currently no operating biodiesel production facilities in Massachusetts. According to Biodiesel Magazine's recently conducted proposed plant list, Berkshire Biodiesel is expected to break ground on its 52 MMgy facility in Pittsfield, Mass., in early 2009.
 

 Gov. Patrick acknowledged Massachusetts has had virtually no role in the current corn-ethanol and biodiesel industries. However, cellulosic technology companies Mascoma Corp. and SunEthanol Inc. are both headquartered in the state.
 
 Bruce Jamerson, chief executive officer of Mascoma, said he is "thrilled" to see Massachusetts demonstrate a commitment to biofuel development. Jamerson was also a member of the Advanced Biofuels Task Force created to advise legislators on the bill's content.

Massachusetts passes biofuels bill

Web exclusive posted July 23, 2008 at 9:45 a.m. CST 
 
 <a href="http://www.earthbiofuels.com">Earth Biofuels Inc., </a> a producer, distributor and marketer of biodiesel, has announced a restructuring of debt in order to lessen the monetary load at its Durant, Okla., biodiesel production facility. By transferring debt to another facility, the company has reduced the secured debt on the Durant plant by $4 million.
 
 Earth Biofuels is most famously known for its BioWillie brand of biodiesel, promoted fervently by country singer/activist/company shareholder Willie Nelson. 
 
 Last year, the company underwent a hearing to prevent its involuntary bankruptcy after a petition was filed by a group of shareholders, according to Earth Biofuels Corporate Communications Director Shawne Horn. In early July, the company announced its subsidiary, Earth LNG, would become its own publicly traded company. Horn said Earth Biofuels retains a 70 percent ownership of the liquefied natural gas company. 
 

 As a result of the spin-off, Earth Biofuels was able to transfer $4 million of debt owed on the Durant facility to the $34 million promissory note held on the liquefied natural gas facility in Topock, Ariz.
 
 According to Horn, the monetary shuffle was made in order to help the company refocus its efforts on biodiesel production. "We are trying to realign our focus and get back into biodiesel production and distribution with an eye toward cellulosic ethanol technology," she said. The company is pursuing an engineering upgrade for its Durant facility to allow for the pre-treatment of high free fatty acid feedstocks. The company is also planning to increase production at the facility to 20 MMgy.
 
 Horn acknowledges the recent difficulties experienced by Earth Biofuels and likens it to problems experienced by biodiesel companies throughout the industry. "We are just so thankful that because we've maintained enough diversity the company is still alive and now we can really throw our weight behind biodiesel," she said.

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Earth Biofuels restructures debt

Web exclusive posted Aug. 23, 2008 at 12:00 p.m. CST 
 
 The future of algae is aglow, if the claims of Origin Oil are correct. The company presented its photobioreactor technology at the National Algae Association Business Plan Forum on July 17 in The Woodlands, Texas. 
 
 "We just filed our fifth patent and that signaled our sort of coming out party," said Riggs Eckelberry, president and chief executive officer of Origin Oil Inc. "It was the first time we have discussed our technology in detail and discussed our vision."
 
 Origin Oil's algae production system incorporates several unique innovations. "Algae has always been one of those promising things that is just a few years away," Eckelberry said. "We discovered there are a number of speed bumps in the process that add up to be a show stopper. If you have a problem with every step, it adds up to something that just doesn't work. Our approach was not to think of algae as a crop but as an industrial process."
 
 The company calls the first patented step "quantum fracturing" which creates micronized bubbles to carry carbon dioxide and other nutrients to the algae. Eckelberry said this system is a very efficient way to deliver elements necessary for growth to the algae. "We launched the company with that original patent," Eckelberry said.
 
 The second stage of the process uses the company's Helix Bioreactor. The system differs from most photobioreactors in that it's lit internally by low power LEDs which are tuned to the red and blue frequencies that deliver the most energy to the algae. Eckelberry said these LEDs could be powered by wind, solar or other renewable resources. "We strongly prefer indirect lighting," he said. "We love the sun, but we don't want to have direct sunlight. Algae only consumes a small part of the sun's spectrum, less than 10 percent. Some of the other rays are actually harmful to the algae. We believe that if you can get the right wavelength to the algae cells, then you will have much more efficient growth."

 
 The final step in the process uses the Quantum Fracturing process to harvest the algae. Creating the microscopic bubbles also creates ultrasonic waves and heat. Combining these effects with low power tuned microwaves disrupts the cell wall of the algae, releasing the oil which can then be skimmed off. 
 
 The first implementation of the company's technology will be deployed in transport containers which are commonly used in shipping. This will allow Origin's customers to work with the system on a modular basis, adding units as necessary. This setup will be used as the company optimizes the system to the point where it can be implemented on an industrial scale. "The problem with this industry is that everybody wants to do it," Eckelberry said. "We said we will build a standard module that can be used for entry level applications. People can easily get a turnkey algae production system that is stackable, scalable and transportable."
 
 As the applications of the system grow and develop, Origin Oil will license its designs to companies who want to build large scale systems. "After (scaling up to) more than six or seven units, you really want to go to a custom application, more like a brewery," Eckelberry said. "We want to help you build that brewery. It will be more a 'powered by' solution rather than our company building all these facilities."
 
 The National Algae Association was recently formed by Barry Cohen. He deemed the association's quarterly forum a success with more than 250 attendees. "The conference is far beyond my expectations," Cohen said. "We have doubled in size since our last conference. Algae is taking off as a feedstock that doesn't affect the food channel. With the price of feedstocks going up, algae is going be something that will help the biodiesel industry."
 
 Eckelberry agreed with the assessment of the meeting. "I was amazed at the energy of the conference," Eckelberry said. "The corridors were just overwhelmed with people. There was a combination of very smart scientific people and businesspeople, funders and entrepreneurs. It was quite a mix."

Origin Oil's carbon dioxide observation tube within the Helix Bioreactor./PHOTO: ORIGIN OIL INC.

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Origin Oil's unique internally lit Helix Bioreactor is key to its claims to have a workable industrial scale algae production system./PHOTO: ORIGIN OIL INC.

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Origin Oil presents at algae conference

Web exclusive posted July 23, 2008 at 10:20 a.m. CST 
 
 Researchers from Wales-based Cardiff University are leading a £1.86 million ($3.7 million) project that will investigate using glycerol, a coproduct of biodiesel production, to create value-added chemicals that could improve the environmental benefits and economic viability of the biofuel. The research team will be headed by Graham Hutchings and David Knight, professors in the Cardiff University's School of Chemistry. 
 
 For every ton of biodiesel manufactured, approximately 200 pounds of glycerol is produced. The rising production of biodiesel around the world has caused an international surplus of glycerol, which is often incinerated. This overabundance of glycerol is expected to increase as European Union nations step up biofuel production in order to meet the goal of replacing 5.75 percent of their fuel usage with biofuels by 2010. 
 

 "We are developing second-generation technologies that we hope will overcome the limitations of the present methods," Hutchings said. "We aim to make value-added molecules from glycerol, which not only has environmental benefits, but has positive implications for biodiesel manufacture and the biofuel supply chain. This research will also serve to further inform the current debate about the use and sustainability of biofuels by taking a whole life-cycle approach."
 
 The project builds on a previous study that identified a viable specialty chemical that can be derived from glycerol. The research is being funded, in part, by the Technology Strategy Board, a business-led executive non-departmental public body established by the government. The Cardiff team will work with researchers from London-based Imperial College and Cambridge University, and in partnership with Scionix Ltd., Tessenderlo Fine Chemicals Ltd., Ciba U.K. PLC, Oxford Catalysts Limited, Sasol Technology U.K. Ltd. and Vertellus Specialties (U.K.) Ltd.
 
 "The Technology Strategy Board invests in important research and development projects in which business and researchers work together to deliver new technology-based products and services," said John Whittall, lead technologist for the Technology Strategy Board. "We are therefore delighted to support this ground-breaking project, which is an excellent example of first-class collaboration between companies and academic institutions."

Cardiff University explores glycerol uses

Web exclusive posted July 24, 2008 at 11:35 a.m. CST 
 
 BBI International Inc. has named Rafael Nieves as its director of international business development. In this newly created position, Nieves' primary role is to generate business for the company on a global scale, particularly in Latin America and the Caribbean. He will oversee the company's Latin American representatives, including those located in Mexico, Argentina and El Salvador. Nieves will assist in developing business for BBI International's project development and media and events divisions. 
 
 "As BBI looks to expand its global outreach it's important that we focus on the best opportunities and Latin America is poised to be just that," Nieves said. 
 
 Nieves, who has been employed by BBI for three years, formerly served as the company's manager of international business development. He has a doctorate degree in microbiology from Colorado State University and a Masters in Business Administration degree in international business from the University of Denver.

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BBI names Nieves as director of international business development

Web exclusive posted July 29, 2008 at 11:37 a.m. CST 
 
 The Minnesota Biodiesel Task Force is in the process of forming a technical committee to study the status of cold flow problems and solutions in the biodiesel industry. The committee will deliver a report to the state's Next Generation Energy Board, which in turn will make recommendations to the Minnesota legislature.

 
 In a recent meeting of the task force, the members also reviewed the changes in ASTM biodiesel standards and laws passed by the Minnesota legislature. According to Ralph Groschen, an agriculture marketing specialist for the Minnesota Department of Agriculture, the implementation of the standards will effect how Minnesota's laws will be implemented. "It was very important that the B5 standard was incorporated in the D975 standard," he said. "That won't be acted upon until everything is finalized, but it is likely to happen. Having a specification pinned down for B6 through B20 was very important as well."
 
 Minnesota's legislature raised the state's biodiesel mandate from 2 percent to 5 percent starting in 2009. The mandate will be increased in increments up to 20 percent by 2015.
 
 Another major development was the tentative adoption of the wet soak filter method for testing cold flow in biodiesel. The Minnesota legislature instructed the task force to create a technical committee to discuss cold weather issues related to biodiesel. Plans are for the committee to start meeting in late July or early August and have recommendations for the Next Generation Energy Board by January 2009. "That group will be made up of technical folks who will be able to discuss what problems we can anticipate and what can be done about those," Groschen said.
 
 Several years ago Minnesota biodiesel producers were bombarded with complaints of their fuel causing filter clogging problems around the state. While the problems were traced to off-spec fuel, the specter of that winter still remains over the biodiesel industry. Groschen said the situation was more complicated than just some bad batches of biodiesel. "It wasn't like biodiesel didn't cause some of the problems, but there were a lot of factors that year," he said. "It reminds me of when ethanol first came in. That was about the time the oil companies had to take lead out of the fuel so they were adding all kinds of things to get the octane back. But ethanol got the blame when there were problems." Groschen pointed out that there was a shortage of number one diesel fuel that year because of hurricanes in the Gulf of Mexico. That was also about the time the industry was forced to switch to ultra-low sulfur diesel. "Some of the problems had to do with biodiesel but a lot of things didn't," he said.
 
 The technical committee will create recommendations to make sure that the cold weather problems with biodiesel won't reoccur in future years. According to Groschen, the industry has already taken a proactive approach to preventing future cold flow problems. "We don't expect a lot of big changes to be made at this point," he said. "We are pretty sure that a lot of the issues we suffered from have been identified or solved. All of our biggest Minnesota producers are now BQ-9000 certified. The biggest problem we see is for product that comes from out of state. We think that is our biggest exposure." Groschen said the Minnesota Department of Commerce will also be stepping up its inspection of biodiesel to head off any potential problems. 
 
 The future increases to the biodiesel mandate will be contingent on the industry having a handle on quality control and well as the availability and cost competitiveness of sufficient quantities of biodiesel.

August 2008

Business Briefs

REG acquires U.S. Biodiesel Group

Blackhawk acquires biodiesel plant

Nova Biosource Fuels, Petrotec post quarterly earnings

Gulf Hydrocarbon enters offtake agreement with Methes Energies

Endicott Biofuels partners with Davy Process Technology

KLM, AlgaeLink to explore algae for jet fuel

Allegro sells Louisiana plant

Community Fuels appoints board member

Noyes joins Stoel Rives

Sawall joins WBA board

Columns

Progress in the Face of Adversity

Featured

Drumming Up Demand for Diesels

From Fish Farm to Fuel

Grease: Worth Its Weight in Gold?

Sustainability = People + Planet + Profit

A Synergistic Pairing

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

Business Briefs

REG acquires U.S. Biodiesel Group

Blackhawk acquires biodiesel plant

Nova Biosource Fuels, Petrotec post quarterly earnings

Gulf Hydrocarbon enters offtake agreement with Methes Energies

Endicott Biofuels partners with Davy Process Technology

KLM, AlgaeLink to explore algae for jet fuel

Allegro sells Louisiana plant

Community Fuels appoints board member

Noyes joins Stoel Rives

Sawall joins WBA board

Columns

Progress in the Face of Adversity

Featured

Drumming Up Demand for Diesels

From Fish Farm to Fuel

Grease: Worth Its Weight in Gold?

Sustainability = People + Planet + Profit

A Synergistic Pairing

August 2008