By Tina Caparella
In 2003, Minnesota lawmakers passed a law requiring all diesel fuel sold in the state to contain at least two percent biodiesel 30 days after eight million gallons of biodiesel production capacity in the state is documented, but not before July 1, 2005. On August 23, 2005, Minnesota Agriculture Commissioner Gene Hugoson authorized publication in the August 29, 2005, edition of the Minnesota State Register, that the state has at least eight million gallons of biodiesel production capacity, resulting in the statewide two percent biodiesel fuel mandate becoming effective September 29, 2005. Minnesota is the first state in the United States to require biodiesel fuel be blended with petroleum diesel fuel for public use.
The first biodiesel plant to contribute to that eight million gallon capacity was Farmers Union Marketing and Processing Association, or FUMPA. The company’s Redwood Falls, MN, plant, with a capacity of three million gallons per year, began producing biodiesel in late 2004. The facility sits adjacent to the company’s rendering plant, Central Bi-Products, which provides one of several feedstocks used to produce the biodiesel, mainly poultry fat.
The other five million gallon capacity required by law was easily met by two Minnesota plants that are now producing fuel that meets American Society of Testing and Materials Standard D 6751: SoyMor’s plant in Albert Lea and Minnesota Soybean Processors’ facility in Brewster. Each plant has a 30 million gallon capacity.
According to news reports, Minnesota consumes 800 million gallons of diesel each year. The two percent blend will mean the state will use at least 16 million gallons of biodiesel per year for this new requirement.
IRS Clarifies Tax Incentive Issues
The International Revenue Service (IRS) has issued a modified guidance document for the biodiesel federal excise tax credit. The credit amounts to one dollar per gallon for “agri-biodiesel,” such as that produced from animal fats, and 50 cents per gallon for biodiesel made from recycled cooking oil. The credit is taken at the blender level with the intended effect of lowering the cost of biodiesel to consumers in taxable and tax-exempt markets.
Although this document is not the final rulemaking, it amends the initial guidance document (IRS Notice 2005-4) published in December 2004, by clarifying several specific issues. Those include, among other things:
• Clarification that a “biodiesel mixture” is a mixture of biodiesel and diesel fuel containing at least 0.1 percent (by volume) of diesel fuel (e.g., one gallon of diesel fuel blended with 999 gallons of biodiesel is a biodiesel mixture);
• Clarification that a biodiesel mixture includes both dyed and un-dyed fuel, meaning the incentive will apply in the heating oil market as well as the off-road market;
• Clarification of the biodiesel certification process for sales of biodiesel through a reseller, creating a mechanism so that the tax incentive claimant may obtain the required biodiesel certificate directly from the biodiesel producer or indirectly from a biodiesel reseller;
• Provisions for commingling of biodiesel and agri-biodiesel;
• Clarification on eligible feedstocks for agri-biodiesel (palm and fish oil will qualify for the agri-biodiesel incentive); and
• Clarification on applicable forms to claim credit and credit calculation.
The IRS guidance document can be viewed at http://nbb.org/news/taxincentive/Biodiesel%20Notice%202005-62.pdf.
Canada Creates Online Biofuels Quality Registry
In support of the Government of Canada’s Biodiesel Initiative, the Alberta Research Council, Inc., (ARC) has teamed up with Natural Resources Canada (NRCan) to create an online Biofuels Quality Registry.
Biodiesel producers and end-users can register on the Biofuels Quality Registry Web site, an extranet site hosted by ARC, to have their products tested for quality. The site is established as the national database into which analysis results of candidate biofuels are entered.
NRCan will provide a partial rebate on the cost of the analysis, which averages $1,400, to encourage more small- and medium-size producers, as well as end-users, to have biodiesel analyzed on a regular basis. This is a two-year program with $100,000 available per year.
A Biofuels Technical Steering Committee consisting of representatives from ARC, NRCan, and Environment Canada will approve all applications for incentives. NRCan and Environment Canada will use the information collected to support research and policy activities.
The results obtained from the fuel quality tests of biodiesel will be entered into an accessible database that will track biodiesel quality metrics, thus developing an industry protocol and standard for biofuel analysis. ARC’s Fuels and Lubricants Group, a nationally recognized accredited laboratory, will perform the fuel testing.
NRCan will use the information gathered by the registry to develop a set of specifications for biofuels in Canada and help establish a quality benchmark for biodiesel. All results will be confidential and specific to the user. The extranet site can be found at www.biofuels.arc.ab.ca.
Glycerin Award Amount Increased
The National Biodiesel Board (NBB) has approved funding to double the amount of the Glycerin Innovation Award beginning in 2006, increasing the award from $2,500 to $5,000.
Solely sponsored over the last three years by the Soap and Detergent Association (SDA), the Glycerin Innovation Award recognizes outstanding achievement for research into new applications for glycerin with particular emphasis on commercial viability. Administered by the American Oil Chemists’ Society (AOCS) Industrial Oil Products (IOP) Division, the award goes to the individual researcher (not the company or organization). SDA is the trade association representing manufacturers of household, industrial, and institutional cleaning products; their ingredients and finished packaging; and oleochemical producers.
“With the dramatic increase in biodiesel production, increased high-value uses for glycerin will assist in the profitability of biodiesel operations,” said Joe Jobe, executive director of NBB. For every 10 pounds (or about 1.4 gallons) of biodiesel, one pound of glycerin is produced.
“Worldwide biodiesel production has already driven glycerin prices low enough to where it is now re-taking market share of other lower priced petroleum related polyols like ethylene glycol and propylene glycol,” said Steve Howell, technical director for NBB and division chairman for AOCS’ IOP. “There is a natural floor for glycerin prices that we are pretty much at worldwide. Most prospective biodiesel companies are already taking this into account in their economics but higher-value glycerin uses would only help both the new biodiesel businesses and the existing oleochemical businesses who produce glycerin by-product.”
Illinois Again Boosts Biodiesel Use
Illinois Governor Rod Blagojevich signed yet another measure into law to boost the use of biodiesel throughout the state. House Bill 112 requires state government, county and local governments, school districts, universities and community colleges, and mass transit agencies to fuel their diesel vehicles with at least two percent biodiesel beginning July 1, 2006. This is the second bill the governor has signed this summer to promote the alternative fuel. The previous bill makes biodiesel fuel blends of 20 percent or higher eligible for the state’s alternative fuel rebate and infrastructure grant programs (see “Biodiesel Bulletin,” June 2005 Render).
State facilities already use two percent biodiesel in accordance with an executive order issued by the governor in 2004. Local governments, community colleges, and mass transit systems will now join the state in using the fuel.
New Uses for Biodiesel By-product
Galen Suppes, a University of Missouri-Columbia chemical engineering professor and chief science officer of the university-based Renewable Alternatives, has developed a process for converting glycerin, a by-product of the biodiesel production process, into propylene glycol, which can be used as nontoxic antifreeze for automobiles. Currently, ethylene glycol is prominently used in vehicular antifreeze and is both toxic and made from petroleum.
Suppes said the new propylene glycol product will meet every performance standard. While other research groups are involved in this topic, Suppes said his process works at a lower pressure and temperature than the other groups, and creates a higher yield. He added that this technology can reduce the cost of biodiesel production by as much as 40 cents per gallon of biodiesel. Renewable Alternatives is licensing the technology to three biodiesel plants, with a fourth one in the works. The National Science Foundation and Missouri Soybean Farmers are helping to fund the research.
According to scientists at the U.S. Department of Agriculture’s Agricultural Research Service (ARS), glycerol and an agricultural commodity called citric acid can be chemically combined to produce biodegradable polymers that could be used in produce packaging and other products.
Justin Barone, a chemist at the ARS Environmental Quality Laboratory in Beltsville, MD, made the discovery while studying processes for improving the effectiveness of insecticides that contain citric acid as an active ingredient. Citric acid washes away very quickly in the environment, limiting its effectiveness.
Barone found that molecules containing hydrogen and oxygen – such as glycerol, sorbitol, or polyethylene glycol – reacted with citric acid to produce polymers with citric acid groups in them. The materials formed are biodegradable polyesters. Further study showed that the viscosity of the material can range from the consistency of paint to a slow-to-dissolve, glasslike product, depending on how the chemical reaction takes place.
Trucker-friendly Web Site Debuts
In response to a growing demand for biodiesel information by over-the-road truck drivers, the National Biodiesel Board has created a new Web site geared towards this group at www.biotrucker.com. Willie Nelson Biodiesel, the company formed by the singer and biodiesel promoter, as well as the recent federal biodiesel tax incentive, played a substantial part in increasing the interest of truckers.
Truckers will have access to facts, news, and availability of biodiesel, as well as other general trucking news. They will also be able to join discussion boards and check road, traffic, and weather conditions, along with other links useful to their industry.
Wisconsin School Buses Get Grants
Senate Bill 39 was recently signed into law by Wisconsin Governor Jim Doyle, providing the state’s school districts an incentive to use biodiesel in their school buses at virtually no expense to the district.
The bill directs the state Department of Public Instruction to apply for a Clean School Bus USA Grant, a program administered and funded by the Environmental Protection Agency. The grant would be available to all school districts in Wisconsin and would allow a participating district to recover any increased costs associated with introducing and using biodiesel as a supplement or replacement for petroleum diesel fuel.
The bill had unanimous support, passing the Senate on a 31-0 vote and 98-0 in the Assembly.
Biodiesel Bulletin - October 2005 Render