Australian Biodiesel Producers in “Melt Down”

By Tina Caparella

Several biodiesel production companies in Australia are calling on their federal government for greater support in order to bring their biodiesel industry out of its current crisis.

Australian Biodiesel Group, Ltd., (ABG) and Australian Renewable Fuels, Ltd., (ARF) have both shut down their plants in the wake of escalating feedstock prices, which has made the cost of producing the renewable fuel higher than it can be sold for. Tallow, used by both companies to produce biodiesel, has increased in price from less than $600 per ton earlier this year to over $900 per ton currently.

“As with other Australian biodiesel producers, ABG has experienced significant rises in raw materials costs over the second half of 2007,” the company stated in a press release. Combined with the Australian government’s lack of a biodiesel mandate or tax credits to encourage use, ABG has had to take drastic measures, including putting the company’s Narangba, Queensland, production facility on standby, retaining just enough personnel to facilitate a rapid return to production when demand and costs allow profitability. The plant manufactured 17.5 million liters (4.6 million gallons) of biodiesel in 2006, but is likely to produce less than 10 million liters (2.6 million gallons) during 2007.

ABG has also sold its Moree, New South Wales, oil crushing mill for $2.64 million (Australian) to ensure the company remains solvent while it works to put its biodiesel production on a sound footing. The mill was mothballed in December 2006. The company will also wind down its corporate office in Sydney, with remaining activities managed from the Narangba facility.

ARF is taking similar actions, placing its processing plants in Adelaide, South Australia, and Picton, West Australia, on “care and maintenance” pending a strategic review of the company’s options. It was anticipated that the outcome of the review will focus the company’s resources on opportunities in the United States.

“Without access to cheaper feedstocks, government policy intervention, or a willingness by customers to pay at a rate that recognizes the full cost inputs of biodiesel production in Australia, commercial operation in the current environment is not possible,” ARF stated in a press release. “There is a particular opportunity in New Mexico where there is greater feedstock diversity and where there is legislation to mandate the use of biodiesel.”

Mandates are “urgently needed,” according to ABG, which believes a government requirement that petroleum fuels have a small amount of biofuel added to them would secure the future of the Australian biodiesel industry. The company further stated that the benefit of a mandate, in comparison to subsidies, is that wild swings in demand and profitability are avoided.

Both companies emphasized that the restructuring and plant closures are intended as temporary solutions, but that further action will have to be taken if circumstances do not change over the coming months.

Meanwhile, despite Australia’s woes with rising tallow prices, Auckland-based Ecodiesel, Ltd., is setting up New Zealand’s first commercial-scale plant to turn that country’s tallow into biodiesel. According to news reports, production will commence in 2008 with an initial amount of 20 million liters (5.2 million gallons), with plans to double that by the end of 2009. New Zealand produces about 130,000 tons of tallow each year and is preparing to mandate the use of biofuel blends next year.

NBB Elects New Officers

The biodiesel industry has chosen Minnesota soybean farmer Ed Hegland to chair the National Biodiesel Board (NBB) for the next year. Hegland has served as a board member for the association since 2004, representing the Minnesota Soybean Research and Promotion Council, and was elected to the governing board last year.

Other officers elected to lead the board are Gary Haer, Renewable Energy Group, Inc., vice chair; Graham Noyes, Imperium Renewables, secretary; and Ed Ulch, Iowa Soybean Association, treasurer.

This was the first election held under NBB’s newly adopted structure to help ensure the industry’s ability to speak with one voice. The structure streamlines and clarifies NBB’s membership categories, guarantees more biodiesel producer seats on the governing board, and envisions an increasing proportion of biodiesel producer-leaders over time.

The following individuals were elected to fill the remaining positions on the 15-member governing board:
• Jim Conway, Griffin Industries
• Kris Kappenman, ADM
• Darryl Brinkmann, American Soybean Association
• Jeff Trucksess, Green Earth Fuels
• Bob Metz, South Dakota Soybean Research and Promotion Council
• Jake Stewart, Organic Fuels
• Denny Mauser, Western Iowa Energy
• Greg Anderson, Nebraska Soybean Board
• David Womack, Tennessee Soybean Promotion Board
• Robert Stobaugh, Arkansas Soybean Promotion Board
• Chuck Neece, FUMPA Biofuels

California Waste Fleet Goes Biodiesel

Allied Waste Services of San Mateo County, a waste services company serving communities south of San Francisco, CA, has converted its entire 225 heavy-duty truck fleet to biodiesel. The move makes Allied one of the largest users of B20 (20 percent biodiesel) in Northern California and will reduce the company’s local carbon emissions by more than 3.3 million pounds each year. The conversion will also replace some 80,000 gallons of diesel fuel each month.

Allied has sourced its biodiesel through Energy Alternative Solutions, Inc., of Watsonville, CA, which uses locally-collected waste cooking oil to produce biodiesel.

EPA Issues Guidance

The Environmental Protection Agency (EPA) has recently published “Guidance for Biodiesel Producers and Biodiesel Blenders/Users,” which explains preliminary actions EPA will take addressing biodiesel quality, harmonization of standards, and enforcement activities.

The six-page document states that EPA is currently updating its 2002 biodiesel review of then available test data, which concluded that nitrogen oxide emissions slightly increased with biodiesel, with currently available test data. It also indicates that EPA plans to increase enforcement efforts to ensure that biodiesel producers are complying with the agency’s standards, in particular, ensuring that all biodiesel meets ASTM D6751.

Europe Threatens Legal Action

The European Biodiesel Board (EBB) is “strongly condemning” what it calls the unfair subsidizing of U.S. biodiesel exports into the European Union (EU). EBB explains that under U.S. federal measures adopted in 2004, biodiesel can be subsidized up to $300 per ton (U.S. dollars) only by adding a “drop” of diesel fuel to biodiesel, claiming the maximum subsidy for a “B99” (99 percent biodiesel) blend. Such a blend can then be exported to Europe where it is eligible for European subsidies and often sold as “pure biodiesel” at a substantial discount, in some cases at a lower price than for raw materials purchased by the EU biodiesel industry.

The U.S. blenders credit is not restricted to biodiesel produced and consumed in the United States, resulting in a surge of B99 exports to the EU, including from foreign producers who are importing biodiesel into the United States and taking advantage of the tax credit before shipping their commodity to Europe, which is called a “splash and dash” loophole. The EBB estimates that some 190 million gallons of U.S. methyl esters have entered the EU since January 2007, compared to 24 million gallons in 2006.

“Indeed, the splash and dash practice represents only a very minor share [less than 10 percent] of the overall B99 shipments that are reaching Europe,” states an EBB press release. “The most part of B99 is coming from U.S. producers, using U.S. agriculture raw material. The strong support measures enjoyed by U.S. farmers explain the permanence of this unfair practice.”

The EBB claims that EU biodiesel producers are experiencing dumping competition from B99 blends, disrupting the margins of European biodiesel producers.

“This is why, unless the situation is solved very shortly by the U.S. legislator [sic], the EU biodiesel industry will initiate a comprehensive legal action against this unfair trade practice in the form of a joint anti-dumping and anti-subsidy complaint, possibly supported by a WTO [World Trade Organization] complaint,” EBB states. “The EU biodiesel industry is urging the European Commission to take the necessary actions to counter and then eliminate unfair B99 subsidized exports, a trade practice that is clearly breaching WTO rules and threatening the concept of international trade in biodiesel.”

Canada Invests in Biodiesel Industry

Canada’s federal ecoAgriculture Biofuels Capital (ecoABC) initiative will contribute $638,559 (Canadian) to help build a biodiesel plant in Aldersyde, AB, Canada. The plant has also received direct equity investments from farmers totaling $275,000.

Western Biodiesel, Inc., has begun construction and will operate Aldersyde’s new $8 million biodiesel plant, which is expected to begin production in December and produce 19 million liters (5 million gallons) of biodiesel annually using canola oil and tallow. The project will help Canada meet its target of two percent renewable fuel content in diesel fuel and heating oil by 2012. The ecoABC initiative was first launched by the Government of Canada in April 2007.

Alberta’s provincial government is also supporting the production of clean, renewable energy with its $209 million Bio-energy Producer Credit Program. Every liter of ethanol and biodiesel or kilowatt hour of bio-generated power produced commercially could be eligible to receive the credit, which is available to producers in Alberta between April 1, 2007, and March 31, 2011.

The Bio-energy Producer Credit Program is the centerpiece of the Alberta Government’s $239 million Nine-point Bio-energy Plan. Two other grant programs – the Bio-refining Commercialization and Market Development Program, and the Bio-energy Infrastructure Development Program – account for an additional $30 million to promote the development of an economically viable bio-energy market in the province.

In October, the province awarded nearly $5 million to two companies using funds from the Bio-refining Commercialization and Market Development Program and the Bio-energy Infrastructure Development Program.

More than $4 million was approved for Canadian Bioenergy Corporation’s biodiesel plant near Edmonton. Canadian Bioenergy has partnered with U.S.-based Renewable Energy Group, Inc., to construct the 225 million liter (60 million gallon) per year facility, which is adjacent to Bunge Canada’s oilseed crushing plant. The plant will be owned and operated by Canadian Bioenergy, and is expected to be in production by June 2009.

The Smoky Pork Development, Ltd., plant near Falher will receive more than $900,000 in province support to develop and improve an existing bio-gas facility to generate power and heat as well as improve water remediation capacity at the site.
Famed Astronaut to Speak at Conference

Jim Lovell, the Apollo 13 spacecraft astronaut most notable for relaying the message, “Houston, we have a problem,” will share his story with the biodiesel industry as the keynote speaker during the National Biodiesel Conference and Expo February 3-6, 2008, in Orlando, FL. Lovell and his crew modified the lunar module attached to their spacecraft to allow a safe return to Earth after an explosion of the oxygen system crippled Apollo 13.

Jet Flight Powered by Biodiesel

Aviation history was made in early October in Reno, NV, when an L-29 military aircraft piloted by Carol Sugars and Douglas Rodante succeeded in completing the world’s first jet flight powered solely by 100 percent biodiesel. The Czechoslovakian-made aircraft is rated to fly on a variety of fuels including heating oil, making it the preferred platform for testing biodiesel in jet engines.

The experimental test flights were first conducted with a blend of jet fuel and biodiesel. The engine data was measured and the performance evaluated and found acceptable for continued use, eventually resulting in the use of 100 percent biodiesel. Flight tests were conducted up to an altitude of 17,000 feet showing no significant differences in performance compared to conventional jet fuel.

The test program was conducted by Green Flight International and Biodiesel Solutions, a biodiesel producer in Sparks, NV. Green Flight International was conceived by Rodante in April 2006 to serve as a platform for future development in the use of environmentally-friendly fuels in aviation and elsewhere.

New Holland Supports B100

New Holland has announced it supports the use of 100 percent biodiesel (B100) in all equipment with New Holland-manufactured diesel engines, including electronic injection engines with common rail technology, making nearly 80 percent of its products with diesel engines available to operate on B100. New Holland has also asked other suppliers of diesel engines used in the company’s products to test and approve higher levels of biodiesel.

In addition to extensive testing and development within the company, New Holland has been involved in an ongoing research project in collaboration with Penn State University to put B100 to the test under real-life conditions. Penn State’s College of Agriculture is operating new, unmodified New Holland tractors on 100 percent biodiesel on their 1,500-acre research farm. After nearly two years of use, the tractors have performed with no adverse effects in performance or maintenance.

Seaboard Foods Building Biodiesel Plant

Construction is well underway on a Seaboard Foods biodiesel plant in Guymon, OK, that will have the capacity to produce 30 million gallons annually. The renewable fuel plant will use animal fats, including pork fat from the company’s Guymon pork processing facility, and vegetable oils as the feedstock. The biodiesel plant will be part of the recently created High Plains Bioenergy, a wholly-owned subsidiary of Seaboard Foods focusing on renewable energy sources from the company’s integrated system.

The plant will use Desmet Ballestra technology and is expected to be operational in 2008.

Turbine Plant Powered by Biodiesel

Safe Renewables Corporation has begun supplying biodiesel for what it claims is the nation’s first, 100 percent biodiesel-powered electricity generating turbine plant. Located on a portion of the company’s 250-acre property in Conroe, TX, the plant, owned and operated by Biofuels Power Corporation, will produce up to 10 megawatts of electricity for delivery directly to the grid. Safe Renewables will supply up to one million gallons per month of biodiesel for the turbine plant. The feedstock will primarily be poultry fat, sourced from large poultry processing operations in Texas.

Tyson Selects Renewable Fuels Plant Site

Dynamic Fuels, LLC, a company created this past summer by Tyson and Syntroleum Corporation, has selected an existing industrial site in Louisiana to build a plant to produce synthetic fuels from renewable feedstocks such as animal fat and grease. The specific location in Louisiana has not yet been disclosed.

Construction is expected to start in 2008 with completion set for early 2010. The project, which will cost up to $150 million, is expected to produce 75 million gallons of fuel a year from animal fats, greases, and vegetable oils supplied by Tyson. The unblended fuel can be used as a premium fuel in existing diesel engines with no engine modifications required, and can also be upgraded into ultra-clean, high quality synthetic jet fuel.

Tyson and ConocoPhillips also continue to move forward with plans to convert animal fats into renewable diesel fuel (see “Biodiesel Bulletin,” June 2007 Render). Capital investment for phase one, testing protocols, and the establishment of pre-processing conditions are complete and production is expected to begin in December. Tyson will provide tallow from its Amarillo, TX, beef complex to the ConocoPhillips refinery in nearby Borger, TX.

UPS to Use Biodiesel in Vehicles

Along with adding 306 alternative fuel vehicles to its “green fleet,” United Parcel Service (UPS) is launching an initiative to use biodiesel fuel in its ground support vehicles at the UPS Worldport air hub in Louisville, KY.

The biodiesel initiative is being launched with the support of a $515,000 federal grant that will help offset some of the cost of building a fuel infrastructure at the airport, which will provide a five percent biodiesel blend of fuel to run 366 ground support vehicles starting early next year.

Wisconsin Funds Renewable Energy

The Wisconsin 2007-2009 state budget includes a $26 million renewable energy package that provides incentives for the distribution of biodiesel, an income tax credit for biodiesel producers in the state, and a $4 million grant towards the development of a soybean crushing facility.

The push for support of the biodiesel credit and incentive package during the budget process was largely led by the Wisconsin Soybean Association and the Wisconsin Biodiesel Association. Landmark Services Cooperative recently announced it would match any investment made by the state toward a soybean crushing facility in Evansville, WI, up to $4 million. Wisconsin soybean farmers have been working for 15 years to bring a crushing facility to the state, which is the 13th largest soybean producer in the country, but the only one of these states without its own soybean processing facility.

Biofuels Bulletin – December 2007 RENDER | back