Obama Administration Gets Aggressive in Support of Biofuels

By Tina Caparella

In early May, President Barack Obama took steps to further his administration’s commitment to advance biofuels research and commercialization. Specifically, he signed a Presidential Directive establishing a Biofuels Interagency Working Group, made available additional recovery act funds for renewable fuel projects, and announced his administration’s notice of a proposed rulemaking on the Renewable Fuel Standard (RFS).

The Biofuels Interagency Working Group, co-chaired by the secretaries of agriculture and energy and the administrator of the Environmental Protection Agency (EPA), will work with the National Science and Technology Council’s Biomass Research and Development Board in undertaking its work. The working group will:
• develop the nation’s first compre-hensive biofuel market development program;
• coordinate infrastructure policies impacting the supply, secure transport, and distribution of biofuels; and
• identify new policy options to promote the environmental sustainability of biofuels feedstock production, taking into consideration land use, habitat conservation, crop management practices, water efficiency and quality, as well as lifecycle assessments of greenhouse gas (GHG) emissions.

Also in his directive, Obama called on U.S. Department of Agriculture Secretary Tom Vilsak to aggressively accelerate the investment in and production of biofuels by refinancing existing investments in renewable fuels to preserve jobs in ethanol and biodiesel plants, renewable electricity generation plants, and other supporting industries; and making renewable energy financing opportunities from the Food, Conservation, and Energy Act of 2008 available within 30 days.

To accelerate advanced biofuels research and development, the U.S. Department of Energy (DOE) will provide $786.5 million from the American Recovery and Reinvestment Act. The monies will also provide additional funding for commercial-scale biorefinery demonstration projects.

Specifically, $480 million will go towards work to validate integrated biorefinery technologies that produce advanced biofuels, bioproducts, and heat and power in an integrated system. DOE anticipates making 10 to 20 awards for refineries at various scales and designs, all to be operational in the next three years. DOE will make available $176.5 million to increase the federal funding ceiling on two or more demonstration- or commercial-scale biorefinery projects that were selected and awarded funding within the last two years. Under DOE’s Biomass Program, $110 million will support fundamental research in key program areas and $20 million will be used for ethanol research.

Perhaps most important to the biodiesel industry in all this is EPA’s proposed rule to outline its strategy for increasing the supply of renewable fuels, poised to reach 36 billion gallons by 2022, as mandated by the Energy Independence and Security Act (EISA) of 2007. In 2022, the proposal would require 16 billion gallons of cellulosic biofuels, 15 billion gallons annually of conventional biofuels, four billion gallons of advanced biofuels, and one billion gallons of biomass-based diesel.

To achieve the volume requirements, each year EPA calculates a percentage-based standard that refiners, importers, and blenders of gasoline and diesel must ensure is used in transportation fuel. For the first time, some renewable fuels must achieve GHG reductions compared to the gasoline and diesel fuels they displace. Refiners must meet the requirements to receive credit toward meeting the new standards.

The thresholds would be 20 percent less GHGs for renewable fuels produced from new facilities, 50 percent less for biomass-based diesel and advanced biofuels (i.e., biodiesel), and 60 percent less for cellulosic biofuels. EPA has some flexibility to adjust these GHG percentage thresholds downward by up to 10 percent under certain circumstances.

The agency has analyzed the lifecycle GHG impacts of the range of biofuels currently expected to contribute significantly to meeting the volume mandates through 2022. A suite of peer-reviewed process and economic models of the domestic and international agricultural sectors were used to determine direct and indirect emissions.

According to EPA’s draft lifecycle GHG emission reduction results, soy-based biodiesel, at a 22 percent discount rate, would not meet the 50 percent reduction threshold, while waste grease biodiesel, at an 80 percent discount, would. Animal fat is not listed in the draft results. EPA will be asking scientists to review its analysis before the assessments are made final.

There will be a 60-day comment period on the RFS proposal once it’s published in the Federal Register. During the comment period, EPA will hold a public workshop on lifecycle analysis to assure full understanding of the analyses conducted, the issues addressed, and the options that are discussed.

Cold Soak Testing Requirement Delayed

The Internal Revenue Service (IRS) has extended the deadline to September 30, 2009, requiring biodiesel to meet the requirements of ASTM International D6751 passed in October 2008 in order to claim the one dollar per gallon tax credit. The October 2008 biodiesel standard includes a cold soak filtration test. IRS did not provide a reason for the delay, but some in the industry say the testing is flawed and inaccurate, often providing false readings. Reports are that a new, more feedstock-equal test method will be released later this year.

However, producers and marketers certified under the National Biodiesel Board’s BQ-9000 program must meet the new D6751 requirements to remain eligible for their certification status.

California Adopts Low Carbon Fuel Standard, Expands Biodiesel Storage Rule

In late April, the California Air Resources Board (CARB) adopted a regulation that will implement Governor Arnold Schwarzenegger’s Low Carbon Fuel Standard calling for the reduction of greenhouse gas (GHG) emissions from California’s transportation fuels by 10 percent by 2020. The new regulation is aimed at diversifying the variety of fuels used for transportation. It will boost the market for alternative-fuel vehicles and achieve 16 million metric tons of GHG emission reductions by 2020.

According to CARB analyses, to produce the more than 1.5 billion gallons of biofuels needed, over 25 new biofuel facilities will need to be built, creating more than 3,000 new jobs, mostly in the state’s rural areas. The regulation requires providers, refiners, importers, and blenders to ensure that the fuels they provide for the California market meet an average declining standard of “carbon intensity.” This is established by determining the sum of GHG emissions associated with the production, transportation, and consumption of a fuel, also referred to as the fuel pathway.

CARB is using the Greenhouse Gases, Regulated Emissions, and Energy Use in Transportation, or GREET, model to estimate the GHG reductions for each fuel. Under the model, biofuels produced from waste or recycled feedstocks will offer significant GHG emission reductions when substituted for petroleum diesel, as much as 80 to 95 percent for biodiesel or renewable diesel produced from animal fats or recycled cooking oils. CARB is in the process of finalizing its models and should have estimates completed by November 2009.

“It is expected that biodiesel produced from local California waste feedstocks may be the most cost-effective means of quickly reducing GHG emissions,” said Fred Wellons of Tellurian Biodiesel and the California Biodiesel Alliance.

Seeking to enhance private sector and federal investment into alternative fuel production and distribution, California is also providing funding to assist in the early development and deployment of the most promising low-carbon fuels. The Alternative and Renewable Fuel and Vehicle Technology Program, managed by the California Energy Commission, will provide approximately $120 million dollars per year over seven years to deploy the cleanest fuels and vehicles.

Schwarzenegger issued the executive order requiring a low carbon fuel standard in early 2007. It directed the state to drive down GHG emissions from the transportation sector, which accounts for 40 percent of the state’s total GHG emissions. The regulation is designed to increase the use of alternative fuels, replacing 20 percent of the fuel used by cars in California with clean alternative fuels by 2020, including electricity, biofuels, hydrogen, and other options.

More information on California’s Low Carbon Fuel Standard is available at www.arb.ca.gov/fuels/lcfs/lcfs.htm.

In a separate action, California’s Water Resources Control Board adopted emergency regulations to provide an interim variance for underground storage tanks containing certain biodiesel blends. The resolution passed on May 5, 2009, raises the current five percent biodiesel (B5) storage allowance up to 20 percent biodiesel.

California’s current 25-year-old law requires the storage of any chemical in underground tanks to be tested and independently certified as being compatable with the tank materials, a process that can take up to two years. With the exception of B5, underground storage tanks manufactured to date and in use in the state have not received independent testing approval for biodiesel or other biodiesel blends as required by State Water Resources Control Board regulations. With California looking to biofuels to reduce its GHG emissions, the board determined it was necessary to adopt the new regulation to allow more widespread use of biodiesel in the state. California has strict laws on underground tanks due to past experiences from earlier designed tanks leaking substances that contaminated ground water.

Nova Biosource Files Bankruptcy

In late March, Nova Biosource Fuels, Inc., and certain of its subsidiaries filed voluntary petitions for relief under Chapter 11 of the U.S. Bankruptcy Code in the U.S. Bankruptcy Court for the District of Delaware. The companies are seeking approval from the court to continue to manage their properties and operate their businesses as “debtors-in-possession” under the jurisdiction of the bankruptcy court. Certain of the company’s subsidiaries were not included in the Chapter 11 filing.

Biodiesel Production Falls, but Animal Fat Usage Remains Strong

The National Biodiesel Board released U.S. biodiesel production fig-ures for March 2009 and if the downward trend continues through the rest of the year, the industry will produce only half of the 700 million gallons produced in 2008.

The NBB attributes the production of only 30 million gallons of biodiesel in March to the absence of the federal Renewable Fuels Standard. The board points out that of the 176 plants capable of producing nearly two billion gallons of biodiesel annually, many sit idle and at least 20 have gone out of business.

Despite the decline in biodiesel production, U.S. Census Bureau data shows the use of animal fats in biodiesel production has remained constant. According to Kent Swisher, National Renderers Association, the data is actually misleading because both lard and edible tallow were not reported in February and March. He believes if average monthly use of edible tallow was consumed, than the percent of animal fats used in February was over 30 percent, and in March jumped to 45 percent.

Minnesota Pumps Up the Volume

On May 1, 2009, Minnesota became the first state in the nation to require five percent biodiesel (B5) in all diesel fuel, an increase from the two percent blend that has been in place since 2005. The new blend will require about 40 million gallons of biodiesel per year. Currently, Minnesota’s biodiesel industry has more than 60 million gallons of biodiesel capacity.

“Minnesota recognized early on that biodiesel could deliver powerful environmental and economic benefits,” Minnesota Agriculture Commissioner Gene Hugoson said. “We know from experience that the fuel helps our air quality, our farm economy, and our effort to achieve greater energy independence.”

Increasing the amount of renewable fuel used in the state will reduce vehicle emissions that are harmful to the environment and health. B5 usage in Minnesota will prevent 139 tons of particulate pollution and 330,000 tons of lifecycle greenhouse gases from entering the air each year – the equivalent of taking more than 55,000 cars off the road. Because of recent changes to ASTM International standard D975 for diesel fuel, blends of up to five percent biodiesel are legally categorized as diesel fuel, eliminating any operational or potential warranty concerns.

This year’s biodiesel blend increase is part of Minnesota Governor Tim Pawlenty’s plan to make the state the first in the nation to require 20 percent biodiesel in all diesel fuel by 2015. The next increase in the state is a 10 percent blend due to take effect in 2012.

Pearl Harbor to Use Biodiesel in Ferries

Naval Station Pearl Harbor and the National Park Service launched the first USS Arizona Memorial biodiesel ferry boat in April, the first of five boats that will ultimately replace the existing 20-year-old U.S. Navy-operated tour boats that transport 1.5 million visitors per year to and from the memorial in Honolulu, HI.

The boats were acquired through a Federal Transit Administration grant and State of Hawaii matching funds, which required procurement of boats that demonstrate clean fuel technology. The environmentally friendly, state-of-the-art boats incorporate Tier 2 diesel engines and a blend of off-the-shelf clean fuel propulsion technologies consisting of biodiesel fuel, diesel oxidation, and fuel-borne catalysts to reduce emissions. Pacific Biodiesel will provide the biodiesel, which is produced from locally-collected used cooking oil. A 20 percent blend will be used in the fleet.

Each boat will be named in honor of five Medal of Honor recipients from the Pearl Harbor attack, with the first boat named John W. Finn. Finn was a chief aviation ordnanceman stationed at Naval Air Station, Kaneohe Bay, and is the oldest living Medal of Honor recipient from the attack.

Report Discusses Argentine Biodiesel Industry

A new report released by the Argentine Renewable Energies Chamber examines the state of the biodiesel industry in Argentina, which was among the top five biodiesel producers and two largest exporters in the world in 2008. The report, “The State of the Argentine Biodiesel Industry,” available at www.argentinarenovables.org, notes that going into 2009, the industry faced weak markets, increased trade conflicts and protectionism, and is in need of solutions.

Currently, the Argentine biodiesel industry is operating at half its installed capacity, and since October 2008, the industry has seen a sharp decline in demand coupled with softening prices. The report states that the recently enacted tariffs on U.S. biodiesel by the European Union could open a window of opportunity for the Argentine biodiesel industry, which primarily uses soy oil for production. The report proposes allowing Argentine biodiesel producers to supply the domestic market instead of only being able to export, and advancing the date of a five percent biodiesel blend in the nation’s diesel supply by six months.

Renewable Energy to Consolidate with Three Plants

Renewable Energy Group has entered into agreements to consolidate with three commercial-scale biodiesel plants. Involved in the transaction are Western Iowa Energy, which operates a 30 million gallon per year facility in Wall Lake, IA; Central Iowa Energy, LLC, which operates a 30 million gallon per year facility in Newton, IA; and Blackhawk Biofuels, LLC, which operates a 45 million gallon per year facility in Danville, IL.

Ownership of the operations of all four companies will be consolidated in a new holding company to be named Renewable Energy Group, Inc. The consolidated company will be owned by the current members of the three acquired companies and current Renewable Energy Group investors, including Bunge North America, ED&F Man, Natural Gas Partners, NGP Energy Technology Partners, US Renewables Group, and West Central Cooperative. The transaction is subject to customary shareholder and regulatory approvals.

Demand by major petroleum distributors and oil refiners was a key factor in the decision to consolidate the plants. All three facilities utilize multiple feedstocks to produce biodiesel.

In a separate announcement Renewable Energy Group has entered into an exclusive marketing agreement with Maple River Energy, LLC, a five million gallon per year biodiesel facility in Galva, IA, that recently began production. Under the agreement, Renewable Energy Group will market the biodiesel through its national distribution and infrastructure program. A multi-feedstock facility, Maple River Energy is currently producing biodiesel from soybeans.

Students Awarded for Used Cooking Oil Project

Seven high school students and their teacher have won a grand prize of $50,000 in grants and scholarships for their biodiesel processor that has produced more than 100 gallons of biodiesel from used cooking oil donated by local restaurants.

The “Thornridge Biodiesel” team from Thornridge High School, Dolton, IL, competed against 48 other teams in the second annual Lexus Eco Challenge, an educational program and contest that inspires and empowers middle and high school students to learn about the environment and take a stand to improve it. The Thornridge students won because they not only built a small biodiesel refinery, but they educated the surrounding community about how the alternative fuel helps the environment, according to Nancy Hubbell, the philanthropy manager for Lexus.

Of the $50,000, the seven students will split $35,000 for scholarships, the school will receive $10,000, and the students’ physics teacher, who oversaw the project, will get $5,000.

A total of $1 million in prizes was awarded to 16 teams for projects that addressed the topics of land, water, and air/climate. The competition is sponsored by Lexus and Scholastic.

Soybean Board Promoting Soy Biodiesel

The United Soybean Board (USB) will be using up to $100,000 of soybean checkoff funds to work with selected U.S. Department of Energy (DOE) Clean Cities chapters to assist in promoting soy biodiesel and soy-based products. The Clean Cities program is a government-industry partnership sponsored by DOE and has more than 90 local chapters across the country that work in their local areas to reduce petroleum consumption.

USB is asking Clean Cities applicants to develop programs that communicate the benefits of soy biodiesel through education, demonstrations, and promotional activities in suburban and urban areas. The checkoff also partners with Clean Cities chapters to promote biobased products. R

University to Transform “Biotrash” into Bioenergy

In a new campus initiative, vegetable oil from deep fryers in campus dining halls, animal bedding, farm waste, and other sources of “biotrash” will be transformed into fuels for use on the campus of Cornell University, Ithaca, NY.

The Cornell University Agricultural Experiment Station has launched the Cornell University Renewable Bioenergy Initiative (CURBI), an ambitious plan to use 57 campus waste streams and other biomass resources to generate bioenergy to keep Cornell humming in economically, environmentally, and socially sustainable ways.

A feasibility study – funded by the New York State Energy Research and Development Authority in partnership with Cornell and launched in January by the engineering firm Stearns and Wheler – is assessing the engineering, economic, and environmental viability of the technologies being considered by CURBI. The study will look at anaerobic digestion, high-efficiency direct combustion, and other “stackable” renewable energy technologies so that waste products from one system can be used by another.

Biofuels Bulletin – June 2009 RENDER | back