By Tina Caparella
After a year of collaboration, Tyson Foods, Inc., and oil company ConocoPhillips have formed a strategic alliance to produce and market renewal diesel fuel using beef, pork, and poultry fat. But some are opposed to the fuel’s eligibility for tax credits.
Tyson will make capital improvements this summer in order to begin pre-processing animal fats from some of its rendering facilities later this year. ConocoPhillips also will begin the necessary capital expenditures to enable it to produce the fuel in several of its refineries. Production is expected to begin in late 2007, ramping up through spring 2009 to as much as 175 million gallons per year.
“This strategic alliance is a big win for the entire agricultural sector because it paves the way for great participation of fats and oils in renewable fuels,” said Richard L. Bond, Tyson president and chief executive officer. According to news agencies, Tyson, which formed a renewable energy unit late last year, has said it has access to about 2.3 billion pounds of animal fat annually – the equivalent of 20,000 barrels a day of feedstock that can be turned into renewable fuel. The company has said this venture will use more than half of the fat it currently sells as a commodity.
Using a proprietary thermal depolymerization production technology, the animal fats will be processed with hydrocarbon feedstocks to produce a renewable diesel fuel that meets all federal standards for ultra-low-sulfur diesel. According to the companies, the addition of animal fats improves the fuel’s ignition properties, while the processing step improves its storage stability and handling characteristics. The properties of the fuel also allow it to be transported via existing pipelines.
The processing technology was developed at ConocoPhillips, culminating in a successful test at the company’s Whitegate refinery in Cork, Ireland. The company began commercial production of renewal diesel using soybean oil in Ireland late last year.
Tyson and ConocoPhillips will be using a $1 per gallon U.S. tax credit to make the renewable diesel fuel produced in the United States cost effective.
“It’s not profitable without the $1 per gallon tax credit,” ConocoPhillips Chief Executive Officer (CEO) James Mulva said at a news conference. “With the tax break, it’s barely commercial.”
But the biodiesel industry, whose growth has been stimulated by federal policy measures including tax credits, recently cautioned Congress that integrated oil companies claiming the $1 per gallon tax incentive for renewable diesel will stunt the growth of the biodiesel industry and increase the profits of large oil companies. Scott Hughes, National Biodiesel Board (NBB) director of Government Affairs, told Congress’ Committee on Energy and Commerce Subcommittee on Energy and Air Quality at a hearing in April that the Internal Revenue Service’s recently issued interpretation of the Energy Policy Act’s renewable diesel tax credit provision expanded the definition of renewable diesel to allow large integrated oil companies to claim the tax credit as part of the traditional refining process using existing petroleum refineries and raw vegetable oils or animal fats. NBB said renewable diesel is not biodiesel and does not offer many of the benefits that biodiesel does, such as adding to refining capacity, improving certain performance characteristics, reducing emissions like particulate matter when burned in a diesel engine, and adding jobs to the economy.
“If oil companies want to subsidize their existing petroleum refineries with this product, then the merits of that process and fuel should be evaluated and debated before Congress, and not through an exploitation of an ambiguity in the tax code,” NBB CEO Joe Jobe said. He added that NBB hopes to see congressional legislation passed that will close the tax loophole.
ConocoPhillips is investing $22.5 million in an eight-year research program at Iowa State University dedicated to developing technologies that produce biorenewable fuels. The company will make an initial $1.5 million grant this year to support Iowa State researchers, with additional grants of $3 million per year for seven years.
“We believe the key to a secure energy future is the efficient and effective use of a diverse mix of energy sources,” said ConocoPhillips’ Mulva.
Robert Brown, the Iowa Farm Bureau director of Iowa State’s Office of Biorenewables Programs, said ConocoPhillips is especially interested in converting biomass to fuel through fast pyrolysis, a process that uses heat in the absence of oxygen to decompose biomass into a liquid product. This so-called bio-oil can be used as a heating oil or can be converted into transportation fuel at petroleum refineries. Brown said the oil company will also sponsor studies of other thermochemical technologies that produce biofuels.
Chevron to Turn Restaurant Grease into Power
Chevron Energy Solutions, a Chevron subsidiary, has begun engineering and construction of an innovative system at the city of Rialto, CA, wastewater treatment facility that will transform wastewater sludge and kitchen grease from local restaurants into clean, renewable power.
The system includes a 900-kilowatt fuel cell power plant manufactured by FuelCell Energy that will generate electricity without combustion using methane, a biogas produced naturally on-site by the organic materials contained in wastewater. Also at the Rialto facility, a fats, oils, and grease (FOG) receiving station will offer restaurant grease hauling companies a disposal alternative while providing a revenue stream to the city through “tipping fees” paid by haulers. The fuel cell plant and other energy-efficient improvements at the plant will reduce greenhouse gas emissions by 11 million pounds of carbon dioxide annually, equivalent to removing 1,080 cars from the road each year.
In Rialto, a Los Angeles suburb of about 100,000 residents, forecasted population growth necessitated the expansion and upgrade of the city’s aging wastewater treatment facility. The project, which costs $15.1 million, is eligible for a $4.05 million rebate on the fuel cell plant cost from California’s Self-Generation Incentive Program, administered by Southern California Gas. The remaining cost will be self-funded through energy cost savings and FOG station revenues, without any impact on local taxpayers.
Chevron Energy Solutions will proceed with engineering and construction of the project over the next few months. Project highlights include installation of the FOG-receiving station; repairs to the current digester equipment, where methane is naturally produced from organic matter; a new automation system and controls; a high-efficiency boiler; and three 300-kilowatt fuel cell units that will convert methane into hydrogen and then use the hydrogen to generate power electrochemically. In addition, the residual waste heat from the fuel cells will be put to work to warm the digesters to human body temperature to stimulate further methane production.
Canada’s Government Launches Initiative
Chuck Strahl, Minister of Agriculture and Agri-Food and Minister for the Canadian Wheat Board, launched the ecoAgriculture Biofuels Capital (ecoABC) initiative at the site of a new biodiesel facility under construction in Calgary, AB, Canada in late April. The $200 million plan will increase renewable fuel capacity by helping agricultural producers construct or expand transportation biofuel production facilities.
To help lower emissions and reduce greenhouse gases, Canada’s new government has committed to ensuring all gasoline in Canada contains an average of five percent renewable fuel by 2010, and all diesel fuel and heating oil contain an average of two percent by 2012. The government expects a potential increase in renewable fuel capacity of 1.5 billion liters (396.2 million gallons) with ecoABC.
The new federal four-year initiative will provide repayable contributions of up to $25 million (Canadian) per project to help farmers overcome the challenge of raising the capital necessary for the construction or expansion of biofuel production facilities. Funding for the ecoABC initiative was initially announced in December under the name Capital Assistance Formation Program. Budget 2007 will allocate another $2 billion (Canadian) over seven years to support the production of renewable fuels in Canada.
Cummins Approves B20 Blends
Cummins, Inc., has approved a 20 percent biodiesel blend (B20) for use in its 2002 and later emissions-compliant ISX, ISM, ISL, ISC, and ISB engines. This includes the recently released 2007 products.
Cummins was able to upgrade its previous position on the use of biodiesel, which was limited to five percent blends only, for three key reasons. First, ASTM International specification D6751 now includes an important stability specification for 100 percent biodiesel. Second, the availability of quality fuels from BQ-9000 Certified Marketers and Accredited Producers is growing rapidly; and third, Cummins has completed the necessary testing and evaluations to ensure that customers can reliably operate their equipment with confidence using B20 fuel.
Further information about the use of biodiesel for Cummins products can be found at everytime.cummins.com.
Groundbreaking Ceremonies Held
Nova Biosource Fuels, Inc., held its official groundbreaking ceremony in mid-April at the site of its planned biodiesel refinery in Seneca, IL, amidst a good turnout of city, county, and state government officials. Notable guests included Congressman Jerry Weller, Illinois Senator Gary Dahl, and Representative Careen Gordon, as well as contractors and suppliers, including David Kaluzny II, Kaluzny Bros., Inc., whose subsidiary, Lipid Logistics, will provide the plant’s feedstock of animal fats and recycled vegetable oils.
Upon completion, the $68 million facility located on 54 acres at the former Seneca Naval Shipyard will have a 60 million gallon per year biodiesel production capacity, employ about 30, and is scheduled to be operational by this fall. ConAgra Trade Group will be the plant’s offtake purchaser.
Another groundbreaking ceremony took place in Detroit, MI, in mid-May at the site of Biodiesel Industries’ sixth facility. The new plant, which includes the involvement of NextEnergy and DaimlerChrysler, will emphasize biodiesel research, development, and production, and have the capacity to produce 10 million gallons per year of biodiesel using a variety of feedstocks, including crude, refined, and recycled vegetable oils and animal fats.
EPA Establishes Renewable Fuel Program
In step with the Bush Administration’s call to increase the supply of alternative and renewal fuels nationwide, the U.S. Environmental Protection Agency (EPA) has established the nation’s first comprehensive Renewable Fuel Standard (RFS) program.
Authorized by the Energy Policy Act of 2005, the RFS program requires that the equivalent of at least 7.5 billion gallons of renewable fuel be blended into motor vehicle fuel sold in the United States by 2012. The program is estimated to cut petroleum use by up to 3.9 billion gallons and cut annual greenhouse gas emissions by up to 13.1 million metric tons by 2012 – the equivalent of preventing the emissions of 2.3 million cars.
The RFS program will promote the use of fuels such as ethanol and biodiesel and promote advanced technologies that will help make renewable fuel cost-competitive with conventional fuels. The program requires major U.S. refiners, blenders, and importers to use a minimum volume of renewable fuel each year between 2007 and 2012. The minimum level or “standard” that is determined as a percentage of the total volume of fuel a company produces or imports will increase every year. For 2007, 4.02 percent of all the fuel sold or dispensed to U.S. motorists will have to come from renewable sources, roughly 4.7 billion gallons.
The program is based on a trading system that provides a flexible means for industry to comply with the annual standard by allowing renewable fuels to be used where they are most economical. Various renewable fuels can be used to meet the requirements of the program and more fuel can be used if producers and blenders chose to do so.
The RFS brings the United States closer to President George W. Bush’s “Twenty in Ten” goal to reduce gasoline consumption 20 percent in 10 years. The achieve this goal, the Bush Administration’s Alternative Fuel Standard (AFS) proposal builds on the RFS and requires the use of 35 billion gallons of renewal and alternative fuels by 2017 – nearly five times the RFS target of 2012. The AFS proposal will displace 15 percent of projected annual petroleum use in 2017 through the use of fuels including corn ethanol, cellulosic ethanol, biodiesel, methanol, butanol, hydrogen, and other alternative fuels.
More information on the RFS is available at www.epa.gov/otaq/renewablefuels/.
NRA Forms Biofuels Committee
Always looking toward the future, the National Renderers Association (NRA) took a step forward this spring with the inauguration of a new committee that will focus on biofuels.
Thanks to a strong response from NRA members for nominations to the committee, the following individuals were appointed to the new NRA Biofuels Committee: Chuck Neece, Central Bi-Products, committee chairman; Robert Griffin, Griffin Industries, committee vice chairman; Doug Anderson, Smithfield Foods; James M. Andreoli, Baker Commodities; Ridley Bestwick, West Coast Reduction; Scott Bunz, Con Agra Foods; Jeff Gay, Protein Products; Stan Gudenkauf, American Proteins; Jeremy Goodfellow, Sanimax Industries; Todd Moser, Rothsay; Howard Murray, Kendallville Fertilizer Co.; David Nuttle, Perdue Farms; Rita Schneider, HRR Enterprises; John Setchell, Mendota Agri-Products; Mike Smith, Valley Proteins; Randy Stuewe, Darling International; and Jeff Webster, Tyson Foods.
The committee held their first meeting in late April, and a report on the outcome is available in the article “Biofuels, International Market are Top Priorities of Industry” on page 14 of this issue of Render.
New Mexico Mandates Biodiesel Use
Governor Bill Richardson continued his aggressive efforts to make New Mexico the “clean energy state” by enacting several bills, including Senate Bill (SB) 489 that requires all diesel fuel sold in New Mexico to contain five percent biodiesel by July 1, 2012. State agencies, political subdivisions of the state, and public schools will be required to use fuel that contains five percent biodiesel beginning July 1, 2010.
The governor also signed SB 463 that includes several tax incentives originally proposed as separate bills. Among them is a biodiesel fuel production tax incentive.
San Francisco to Become Grease Hauler
At the launch of the city’s first commercial B20 (20 percent biodiesel, 80 percent petroleum diesel) fuel station in late April, San Francisco, CA, Mayor Gavin Newsom announced a new program beginning this fall that will pick-up waste oil from the city’s restaurants, deliver it to a biodiesel processing facility, and reuse the recycled oil as a biodiesel source for the city’s vehicles. The grease collection program will result in an estimated 1.5 million gallons of biodiesel per year.
Each year, the San Francisco Public Utilities Commission (SFPUC) spends $3.5 million responding to more than 2,500 grease-related blockages in the city’s sewer system. The new SFPUC “FOG to Fuel” program will offer the waste oil pick-up service for free to restaurants who comply with the program standards.
“We’re not trying to put anyone out of business,” said Lewis Harrison, SFPUC Water Pollution Prevention Program manager, referring to the multitude of grease haulers currently serving the city. “Our goal is to recycle the oil and keep it out of the drains.” The city is also contemplating a local ordinance to require recycling of waste cooking oil similar to laws adopted in Hawaii.
The recycling program will use city workers and trucks to collect the waste oil from San Francisco’s 2,600 restaurants and deliver it to a city-owned and run transfer station where it will be dewatered and filtered before being sold to a biodiesel producer yet to be determined. SFPUC plans to then purchase the finished biodiesel back from the producer for use in the city’s fleet.
As of the end of April, 39 percent of San Francisco’s fleet had converted to using a biodiesel blend, well ahead of the 25 percent expected at that point, and 100 percent of Norcal Recycling/Waste Management’s fleet had converted to using biodiesel. The announcement came one year after Newsom set an aggressive goal of converting 100 percent of San Francisco’s diesel fleet to running on a biodiesel blend.
Biodiesel Bulletin - June 2007 Render