Biodiesel Tax Credits Extended,
Renderer to Build Biogas Plants

By Tina Caparella


The $700 billion Emergency Economic Stabilization Act, also known as the financial bailout package, approved by Congress and signed into law by President George Bush in early October not only pleased financial institutions, but was also welcomed by the biodiesel industry as a much anticipated energy tax package was tacked on.

Below are the biodiesel-related provisions in the energy tax extenders package:

• A one-year extension of the $1 per gallon biodiesel tax credit for first-use oils, the 10 cent per gallon small biodiesel producer tax credit, and the $1 per gallon production tax credit for diesel fuel created from biomass, through December 31, 2009.

• Provides that second-use oils (such as recycled cooking oil) qualify for the same $1 per gallon tax credit as vegetable oils and animal fats. Under current law, second-use oils receive a 50 cent per gallon tax credit. The new $1 credit goes into effect January 1, 2009.

• Eliminates the requirement that renewable diesel be produced using a thermal depolymerization process. Diesel fuel that is created by co-processing biomass with other feedstocks (e.g., petroleum) would be eligible for a 50 cent per gallon tax credit for alternative fuels. Previously, this fuel qualified for the $1 per gallon tax credit. This provision is effective upon date of the bill enactment, which was October 3, 2008.

• Closes the so-called “splash and dash” loophole, which is when foreign produced biodiesel is sent to the United States, splash blended to claim the tax incentive, then shipped to a third country for final use. The legislation provides that effective May 15, 2008, fuel produced outside the United States for use outside the United States does not qualify for the biodiesel tax credit.

Renderer to Build Biogas Plants

Sanimax, a renderer with facilities in Canada and the Midwest United States, and StormFisher Biogas, based in Ontario, Canada, plan to build eight biogas plants for a total investment of over $160 million. These plants will transform organic by-products from the food processing industry, restaurants, and institutions like schools into renewable energy and organic fertilizer. The two companies will jointly pursue partnerships with major food processing companies to source the material for the biogas plants, which will be located in the Great Lakes region.

Biogas plants naturally decompose matter into nutrient-rich solids and liquids, which can be used to help grow agricultural crops and residential gardens, or be turned into methane, a biological replacement for natural gas. Once operational, the companies estimate the eight plants will offset the carbon dioxide equivalent of 120,000 metric tons and divert half a million metric tons of by-products every year, creating enough energy to power 20,000 homes.

Additive Lowers Cloud Point in Tallow-based Biodiesel

A biofuel additive developed by researchers at Flinders University in Adelaide, Australia, lowers the temperature at which tallow-based biodiesel solidifies – a problem that can cause fuel flow difficulties and has constrained the acceptance of biofuels made from animal fats in colder climates. The additive can lower the cloud point by about five degrees Celsius, to around minus six degrees Celsius, or 21 degrees Fahrenheit.

Flinders’ industry partner, Meat and Livestock Australia, has secured a provisional patent over the university’s additive and is now commercializing the product with other industry partners that include the Midfield Group and Food Processing Equipment. The university’s research team will play a key role in the process as production of the additive is scaled up from laboratory to commercial quantities.

Alabama Awards Grants for Alternative Energy

Alabama Governor Bob Riley has awarded grants totaling $1.1 million to six local governments to harness fuel and energy from renewable sources. Half of the projects involve biodiesel.

Among the recipients was the city of Bay Minette, which will use a $195,000 grant to turn garbage and yard clippings into biodiesel that can be used to fuel city vehicles and equipment. The city will partner with Auburn University and Cello Energy, a local biodiesel producer, for the project.

The city of Enterprise is receiving a $200,000 grant to install and operate a facility to convert used cooking oil collected from area restaurants into biodiesel. The city will use the fuel in its diesel equipment and sell any excess to other municipalities in the area. Auburn University’s Center for Bioenergy and Bioproducts will assist with the project.

Henry County will use a $200,000 grant to establish a vegetable oil recycling program, which will collect used oil from restaurants, cafeterias, and catering services and convert it to biodiesel to fuel city and county government vehicles. The county will partner with Auburn University and the cities of Abbeville and Headline for the project.

ASTM Publishes New Biodiesel Specifications

Approved by ASTM International in June, four newly published standards provide quality assurance for biodiesel and biodiesel blends. The new and revised ASTM biodiesel standards, which take effect immediately, include the following:

ASTM D975-08a, Specification for Diesel Fuel Oils, used for on- and off-road diesel applications, was revised to include requirements for up to five percent biodiesel.

ASTM D396-08b, Specification for Fuel Oils, used for home heating and boiler applications, was revised to include requirements for up to five percent biodiesel.

ASTM D7467-08, Specification for Diesel Fuel Oil, Biodiesel Blend (B6 to B20), is a completely new specification that covers finished fuel blends of between six percent (B6) and 20 percent (B20) biodiesel for on- and off-road diesel engine use.

ASTM D6751-08, Specification for Biodiesel Fuel Blend Stock (B100) for Middle Distillate Fuels, used to control 100 percent biodiesel (B100) quality prior to blending with conventional diesel fuels, was revised to include a requirement that controls minor compounds using a new cold soak filterability test. Prior to being approved by ASTM, the cold soak filterability test was opposed by some biodiesel and rendering industry members because animal fats can sometimes test poorly under this procedure even though they are problem-free in cold weather.

Biodiesel Board Elects Leaders

The National Biodiesel Board (NBB) has reelected Minnesota farmer Ed Hegland to chair its governing board and chosen new leadership representing various feedstock producers of biodiesel. Doug Smith, Baker Commodities, and David Lyons, Louis Dreyfus Commodities, are newly elected to the NBB board.

“I feel honored to serve on the governing board representing the rendering industry,” Smith said. “I bring the perspective of using animal fats and recycled greases as feedstocks as the board increasingly focuses on diversification.”

Besides Hegland, other officers reelected to lead the board are Gary Haer, Renewable Energy Group, Inc., vice chairman; Jim Conway, Griffin Industries, secretary; and Ed Ulch, Iowa Soybean Association, treasurer. Smith’s appointment gives the rendering industry two voices on the 15-member board.

Commentary Released on Biodiesel Production

The Council for Agricultural Science and Technology (CAST) has released a new CAST Commentary – Convergence of Agriculture and Energy: III. Considerations in Biodiesel Production. This new commentary reviews the technology of biodiesel production in the United States and outlines major issues and policy implications associated with its expanded production and use. Specific topics address the biodiesel production process, quality requirements and concerns, general characteristics of biofuels, economics of biodiesel production, and balance of energy.

“Quality concerns have been addressed, and most fuel today integrates easily into the existing diesel fuel infrastructure,” said Task Force Chair Dr. Jon Van Gerpen, University of Idaho-Moscow. “Further expansion of the industry will require new or larger sources of vegetable oils and animal fats that can be produced at prices that allow biodiesel to compete with petroleum-based diesel fuel.”

The full text of the commentary is available online without charge on the CAST Web site at www.cast-science.org. CAST is an international consortium of 37 scientific and professional societies.

California Reduces Fees for Home Producers

A California Assembly bill signed into law by Governor Arnold Schwarzenegger has changed the state’s existing legislation regulating transporters of inedible kitchen grease to reduce the registration fee for individuals transporting used cooking oil for personal, noncommercial use as an alternative fuel. The legislation lowers the $300 registration fee for private users by 75 percent. Fees are $300 per year per vehicle.

The new law specifies that an individual shall not transport more than 55 gallons of inedible kitchen grease per load for personal use, and have no more than 165 gallons in their possession or control at any time. The legislation also states that an individual cannot take any grease from a container owned by another registered transporter, someone under contract with a registered transporter, or a renderer or collection center.

The Pacific Coast Renderers Association was instrumental in establishing the grease transporter law nearly a decade ago in an effort to prevent grease theft. PCRA did not oppose this new bill as it allows the California Department of Food and Agriculture to continue to keep track of all grease collectors in the state, which is especially prevalent in case of a spillage incident.

EBB Asks for Registration of Biodiesel Imports

The European Biodiesel Board (EBB) is requesting the European Commission (EC) introduce a system of registration for all biodiesel imports into the European Union (EU). The action follows a legal complaint filed by EBB in April of this year to the EC against unfair subsidized biodiesel exports from the United States, what is often referred to as “splash and dash.” The EC launched an investigation into the unfair subsidies this past summer.

According to the EBB, there is “an urgent need to put a halt to the flooding of the EU [biodiesel] market by heavily subsidized and dumped biodiesel, if we want to secure the short-term viability of the EU biodiesel industry.”

EBB states that in the first seven months of 2008, a surge of imports of 99 percent biodiesel (B99) reached 850,000 metric tons, more than 80 percent of the volume imported in all of 2007 (1.05 million metric tons). Despite the U.S. government closing the “splash and dash” loophole with the October passage of an energy tax package, EBB claims the core of the import problem remains U.S. produced biodiesel, which makes up some 90 percent of the volume entering the European market.

“The volumes of U.S. produced B99 are and will continue to increase if nothing is done to stop the real reason of the problem, i.e., the unfair tax credit granted to U.S. produced biodiesel, which is then exported to Europe at a dumped price,” EBB stated.

EPA Releases Environmental Manual for Biodiesel Facilities

The Environmental Protection Agency (EPA) Region 7 has developed a user-friendly manual that identifies environmental regulatory rules and requirements for the construction and operation of biodiesel production facilities. The manual provides practical examples to ensure compliance with environmental regulations. A contact directory of key federal and state officials is included, and EPA Region 7 staff members are available to answer questions.

The manual is available on the Region 7 agriculture Web page at www.epa.gov/region07/priorities/agriculture.

Jet Flight Powered by Biofuel

Green Flight International President and Chief Executive Officer Douglas Rodante and chief pilot Carol Sugars became the first flight crew to successfully cross the United States in a jet powered predominantly on what the company refers to as biofuel. The record-setting flight originated in Reno, NV, and concluded in Leesburg, FL, on November 1, 2008, after a total flight time of 11 hours, 13 minutes, and altitudes ranging from 13,000 to 17,000 feet.

The flight traveled 1,776 miles of the 2,486 miles powered on 100 percent biofuel, which Rodante described as a mixture of 75 percent soy oil and 25 percent animal fat. Only 710 miles of the flight were powered by a mixture of 50 percent biofuel and 50 percent standard jet fuel in an effort to compare performance data and demonstrate the capability of blending biofuel with existing jet fuel supplies.

Rodante and Sugars first piloted a jet aircraft powered entirely on biofuel in October 2007. According to a company press release, the Federal Aviation Administration has expressed interest in using the test program as a template to assess future generations of aviation fuels.

Lab Proficiency Series for Biodiesel Feedstocks Available

The American Oil Chemists’ Society (AOCS) is introducing a new analytical proficiency test series for the biodiesel industry and its suppliers in early 2009.

The AOCS Biodiesel Feedstock Quality series is designed to assess the proficiency of labs at measuring the most common aspects of feedstock quality before esterification to biodiesel. The new proficiency series will test cleanliness (insoluble impurities), purity (unsaponifiable matter, soap in oil), impurities (water, acidity, sulfur, phosphorus), oxidative stability (oil stability index), and fatty acid composition. It will not include analytical parameters measured in the ASTM InterLaboratory Cross-Check Program for Biodiesel.

AOCS estimates there will be eight samples in the series, including pure and blended plant feedstocks, pure and blended animal feedstocks, and blends of plant and animal feedstocks. For more information, contact Gina Clapper, AOCS Technical Services, at (217) 693-4809, or e-mail gina@aocs.org.

Nova Biosource Plant Suffers Fire

In late September, Nova Biosource Fuels’ biodiesel refinery in Clinton, IA, suffered a fire while the plant was idled for routine maintenance. The cause of the fire is under investigation, with preliminary assessments pointing to a build-up and ignition of methanol vapors in a column during a ventilation process required as part of the maintenance activities. No plant personnel were injured, although one fire fighter received minor steam burns as a result of exposure to steam created during the fire fighting efforts.

As of early October, the length of time for repairs was estimated to exceed 60 to 90 days. Because the plant was idled for maintenance, there was no biodiesel on site. In addition, all feedstock and consumable supplies were undamaged and were transferred, along with some plant operators, to Nova’s biodiesel refinery in Seneca, IL.

Neste Oil Honored for Renewable Biofuel

Hart Energy, an energy publishing and consulting group, named the recipients of its eighth annual Energy and Environment Excellence Awards, which recognize companies with achievements in technology and innovation made across the entire energy cycle. Among the six recipients was Neste Oil in the renewable fuels category.

Neste Oil has developed a renewable biofuel – NExBTL – using a proprietary conversion process for crude vegetable oils and animal fats. The company is also investing in the development of biofuel technology using gasification of biomass and Fischer-Tropsch synthesis.

Renewable Energy Group Receives Award

The Iowa Power Fund Board has awarded Renewable Energy Group (REG), Inc., $740,000 for a $1.2 million project to conduct research on alternate sources of feedstocks, moisture absorption, and methods to measure low levels of particulate matter in biodiesel. REG will work with Iowa community colleges to provide product samples and internships for students. The biodiesel producer is headquartered in Ames, IA.

Renewable Fuel Standard Increased for 2009

Refiners, importers, and certain blenders of motor vehicle fuels will be required to blend in a total of 11.1 billion gallons of renewable fuel next year, which includes approximately 500 million gallons of biodiesel and renewable diesel. This renewable fuel standard equates to 10.21 percent of the gasoline expected to be used during 2009.

The Energy Independence and Security Act (EISA) of 2007 established the annual overall renewable fuel volume targets, reaching a level of 36 billion gallons in 2022. To achieve these volumes, the Environmental Protection Agency (EPA) calculates a percentage-based standard by November 30 for the following year. Based on the standard, each refiner, importer, and non-oxygenate blender of gasoline determines the minimum volume of renewable fuel that it must ensure is used in motor vehicle fuel. The 2008 standard was 7.76 percent, equating to roughly nine billion gallons.

EPA is developing a proposed rule to implement other renewal fuel standard program changes and analyses mandated by EISA.

School District, County to Turn Frying Oil into Fuel

In South Carolina, the School District of Pickens County’s Student Nutrition Services program and Pickens County’s Solid Waste and Recycling Division have formed a partnership to recycle the school’s cooking oil to make biodiesel for county vehicles.

Because of the emphasis on nutrition, the school cafeterias do not fry many foods anymore but still produce enough used cooking oil that it needs to be disposed of. The school district previously paid a company to pick-up the grease and dispose of it. Now, the county will collect the used oil and process it into biodiesel using equipment housed at the Pickens County landfill. According to a news report, Pickens County Administrator Chappell Hurst said when the project is at full speed, it will probably save close to $500,000 a year, depending on the price of oil. Hurst said the equipment and building will cost about $145,000. County officials are also contacting universities and restaurants in the area as possible sources for used cooking oil.


Biofuels Bulletin – December 2008 RENDER | back