Long-awaited Renewable Fuel Standard Finalized

By Tina Caparella

Almost a year after the Environmental Protection Agency (EPA) proposed new regulations for the National Renewable Fuel Standard (RFS) program for 2010 and beyond, the agency has taken thousands of comments into consideration and released a more soy oil friendly, albeit complicated, program that establishes new annual volume levels of renewable fuels to be used in transportation fuel. The rule makes changes to the program as required by the Energy Independence and Security Act (EISA) of 2007 and will apply to domestic and foreign producers and importers of renewable fuel used in the United States.

The biodiesel industry excitedly welcomed the new rule, known as RFS2, because not only does it put in place yearly volume requirements, but also addressed the industry’s concern over EPA’s life cycle analysis (LCA) of soy oil. In the proposed rule, EPA calculated that biodiesel produced from soy oil reduced greenhouse gas (GHG) emissions by 22 percent compared to petroleum diesel, while biodiesel produced from waste greases reduced emissions by 80 percent. Based on peer review results as well as other comments received on the proposed rule, the agency updated its modeling on the LCA of soy oil and ultimately revised the final rule to show soy-based biodiesel reduces emissions by 57 percent and waste grease-based biodiesel lowers GHG by 86 percent.

Under RFS2, advanced fuels must reduce GHG emissions by 50 percent over their petroleum fuel counterparts, unless a production plant was constructed prior to 2007. Plants constructed before 2007 (grandfathered plants) would be excluded from the GHG emissions levels up to individual state or federal air quality permit levels if specified in the permit, or the actual level of production if the permit did not specify volumes. Plants built after 2007 and plant expansions would have to meet the 50 percent GHG reduction. According to Chuck Neece, FUMPA Biofuels, the way the standard is written will encourage use of animal fats and waste greases to meet GHG standards for newer plants.

The final rule revises the annual renewable fuel standard and makes the necessary program modifications as set forth in EISA, of which several are notable. First, the required renewable fuel volume continues to increase under RFS2, reaching 36 billion gallons by 2022. EPA estimates this amount of renewable fuel will displace seven percent of the expected annual gasoline and diesel consumption by 2022, and reduce GHGs by 138 million metric tons, equivalent to removing 27 million passenger vehicles from the road. For 2010, the RFS volume standard is 12.95 billion gallons, which combines the 2009 and 2010 requirements.

The program was also expanded beyond gasoline to cover all transportation fuel (gasoline and diesel) intended for use in highway vehicles and engines, and non-road, locomotive, and marine engines. These provisions apply to refiners, blenders, and importers of transportation fuel (with limited flexibilities for small refiners), and their percentage standards apply to the total amount of gasoline and diesel they produce for such use.

EPA has specified four separate categories of renewable fuels: biomass-based diesel, cellulosic biofuel, advanced biofuel, and renewable biofuel. Biodiesel falls under the biomass-based diesel category as does renewable diesel if the fats and oils used are not co-processed with petroleum diesel. These fuels, and advanced biofuels, defined as any renewable fuel except corn starch-based ethanol, must meet the 50 percent life cycle GHG threshold, while cellulosic biofuels must meet a 60 percent GHG threshold. A renewable fuel, such as ethanol derived from corn starch, is required to reduce GHG emissions by 20 percent. These threshold levels only apply to fuel produced in new facilities.

While the new rule is quite complex and contains many new requirements, including a third-party engineering review, one such condition is tracking and reporting certain renewable fuel feedstocks. EISA changed the definition of renewable fuel to require that it be made from feedstocks that qualify as “renewable biomass,” which generally applies to two sectors: agricultural (planted crops and crop residues) and non-agricultural (planted trees and tree residues, animal waste material and by-products, slash and pre-commercial thinnings from non-federal forestlands, and separated yard or food waste, including recycled cooking oil and trap grease). Beginning July 1, 2010, which is when the RFS2 takes effect, renewable fuel producers using non-agricultural feedstocks must maintain documents from feedstock suppliers that the feedstock is a renewable biomass and supply quarterly reports to EPA. The document from the supplier to the producer must verify that the product is indeed animal fat or waste cooking oil and is meant to prevent the illegal conversion of palm oil or other non-sustainable feedstock into a different category. 

“It is not meant to place a burden on the rendering industry but to control pirates,” said Neece. “A rendering facility would be able to certify the source by their internal documentation as an on-going business that collects waste grease or animal by-products and holds applicable state permits for that business.”

For agricultural feedstocks, no recordkeeping is necessary as EPA will monitor agricultural land data yearly to determine if the baseline level of approved agricultural land (402 million acres established in 2007) is exceeded or not. If the yearly data exceeds the baseline, then the recordkeeping and reporting requirements imposed on the non-agricultural sector would then be required.

More information on EPA’s RFS2 rule can be found at www.epa.gov/otaq/fuels/renewablefuels/regulations.htm.

Biofuel Funding Available After Grants Dished Out

The U.S. Department of Agriculture (USDA) is making remaining fiscal year (FY) 2009 funding available through three USDA programs to promote increased production of biofuels and bioenergy. The programs are authorized under the Food, Conservation, and Energy Act of 2008, otherwise known as the farm bill.

Applications for remaining FY 2009 funding under the Biorefinery Assistance Program (Section 9003), which uses loan guarantees to develop, construct, and retrofit commercial-scale biorefineries, are due by June 1, 2010. Applications are also being accepted for remaining FY 2009 funding under the Repowering Assistance Program (Section 9004), which provides payments to biorefineries that were in existence when the farm bill was passed to replace the use of fossil fuels in their operations with renewable energy from biomass. Biorefineries must apply by June 15, 2010.

Those producers eligible under the Bioenergy Program for Advanced Biofuels (Section 9005) may also apply to receive payments from remaining FY 2009 funds, with applications due by May 30, 2010. During the first round, USDA awarded $14.5 million to 123 companies in 34 states at the end of last year. Payments are based on the amount of biofuels a recipient produces from renewable biomass, such as vegetable oil and animal fat, and animal, food, and yard waste material.

Among the recipients under the Bioenergy Program for Advanced Biofuels were five biodiesel producers in Iowa: Central Iowa Energy, LLC, $114,239; Iowa Renewable Energy, LLC, $216,592; Renewable Energy Group, Inc., $727,132; Western Dubuque Biodiesel, LLC, $253,695; and Western Iowa Energy, $298,475. Three other Iowa biodiesel producers received amounts totaling $34,000.

Other U.S. biofuel producers that received funding include:

• American Proteins, Inc., Georgia, $32,935
• Archer Daniels Midland Company, North Dakota, $385,062
• Blackhawk Biofuels, LLC, Illinois, $258,309
• Cargill, Inc., Minnesota, $269,307
• Fumpa Biofuels, Minnesota, $25,793
• FutureFuels Chemical Company, Arkansas, $544,785
• Griffin Industries, Inc., Kentucky, $17,278
• High Plains Bioenergy, LLC, Oklahoma, $329,457
• Mid-America Biofuels, LLC, Missouri, $538,101
• Nova Biosource Fuels, Inc., Illinois, $239,740

A complete list of recipients is on USDA’s Web site at www.usda.gov.

Canadian Producer Goes Public

Biox, Inc., has become the first privately held Canadian biodiesel company to go public on the Toronto Stock Exchange. Biox designed, built, and operates a 60 million liter (15.8 million gallons) per year multiple feedstock biodiesel production facility in Hamilton, ON. Currently the company primarily uses animal fats and used cooking oil to produce biodiesel.

Engineer Group Revises Testing Standard

The American Society of Agricultural and Biological Engineers (ASABE) has revised its standard for testing biodiesel fuel.

ASAE EP552.1, Reporting of Fuel Properties when Testing Diesel Engines with Alternative Fuels Derived from Plant Oils and Animal Fats, covers the reporting of testing of any alternative fuels derived from plant oils and their blends with petroleum diesel for use in diesel engines. The original document was developed in the 1990s. Since that time, with the rapid growth of the biodiesel industry, the procedures and practices in reporting the testing of such alternative fuels have evolved considerably. The revised document reflects current practices and international standards, with input obtained from experts in industry, academia, and public service.

ASTM International standards dictate U.S. biodiesel’s quality while this new standard contains many references to ASTM and serves as a laboratory guide for proper testing procedures and reporting.

Founded in 1907 and headquartered in St. Joseph, MI, ASABE is an educational and scientific organization dedicated to the advancement of engineering applicable to agricultural, food, and biological systems. The society is recognized worldwide as a standards developing organization for food, agricultural, and biological systems, with more than 225 standards currently in publication.

Conformance to ASABE standards is voluntary, except where required by state, provincial, or other governmental requirements, and the documents are developed by consensus in accordance with procedures approved by the American National Standards Institute. ASABE comprises 9,000 members from more than 100 countries.

GM’s New Duramax will have B20 Capability

General Motors’ (GM’s) new lineup of heavy-duty diesel pickups will have 20 percent biodiesel (B20) capability. The automaker’s new Duramax 6.6 liter turbo diesel engine has been substantially revised to allow use of B20 and to meet strict new emissions standards effective in 2010. The new Duramax will power the redesigned 2011 Chevy Silverado and GMC Sierra heavy-duty pickup trucks as well as the Chevrolet Express and GMC Savana full-size vans.

To make the Duramax 6.6 liter engine and its fuel system compatible with B20, GM upgraded some seals and gasket materials to withstand the ester content of biodiesel and included an upgraded fuel filter that includes a coalescing element that improves the separation of water that may be present in the fuel. Also, additional heating of the fuel circuit was added to reduce the chance of fuel gelling or waxing that could plug filters.

The diesel engine’s particulate regeneration system features a downstream injector that supplies fuel for the regeneration process, greatly reducing potential oil dilution, important with using biodiesel. According to GM, downstream injection saves fuel and works better with B20 than in-cylinder post injection.

Global Biodiesel Market Worth Billions by 2014

According to a new market research report published by MarketsandMarkets, the total global biodiesel market is expected to be worth $12.6 billion by 2014, out of which the European and Americas market will account for nearly 55.6 percent and 28.6 percent of the total revenues, respectively.

The report, Global Biodiesel Market (2009-2014), states that increasing environmental concerns and the need for energy independence have led to the biodiesel market, and that despite the economic recession, global biodiesel production totaled 5.1 billion gallons in 2009, a 17.9 percent increase over 2008 levels. The expected market growth in 2014 will primarily be dependent on the availability, quality, and yield of feedstock, as it accounts for 65 to 70 percent of the cost of biodiesel production.

Europe is currently the world’s largest biodiesel market, and is expected to be worth $7 billion by 2014, with the growth being driven mainly by governmental initiatives.

Hawaiian Producer Receives Loan Guarantee

Big Island Biodiesel, LLC, in Hilo, HI, has been selected to receive a $5 million loan guarantee to construct a $10 million, 2.64 million gallon per year biodiesel production plant in Keaau. The funding is made available through the American Recovery and Reinvestment Act authorized through the U.S. Department of Agriculture’s Rural Development’s Business and Industry Guaranteed Loan Program. Fifty-three other rural businesses also received funding, with a total of $144 million in loan guarantees.

The new Hawaii project is the brainchild of Robert King, president of Pacific Biodiesel, Inc., which produces biodiesel on Maui and Oahu. Various feedstocks will be used at Big Island Biodiesel’s plant, including jatropha oil from a sizeable farm nearby, used cooking oil, and trap grease.

Hawaii has established an alternative fuel standard with the goal of providing 10 percent of highway fuel demand from alternative fuels by 2010, 15 percent by 2015, and 20 percent by 2030.

REG Acquires 75 Million Gallons of Capacity

After the successful completion of asset purchase and consolidation agreements with commercial-scale biodiesel plants in Newton, IA, and Danville, IL, Renewable Energy Group (REG) has become North America’s largest wholly-owned biodiesel manufacturer and marketing source.

In late February, shareholders in Central Iowa Energy, LLC, a 30 million gallon per year facility in Newton, IA, and Blackhawk Biofuels, LLC, a 45 million gallon per year plant in Danville, IL, voted in favor of an all-stock transaction, making both facilities wholly-owned by REG. The transactions bring REG’s manufacturing capacity to 122 million gallons per year. The facilities have been renamed REG Newton and REG Danville.

REG’s Chairman and Chief Executive Officer Jeff Stroburg cited demand by major petroleum distributors and oil refiners as a key factor in the decision to move forward with plant consolidation.

Shipping Company to Test Biodiesel

Maersk Line and Lloyd’s Register will partake in a two-year program to test the feasibility of biodiesel for use in powering marine engines. The study will take place onboard the Maersk Line container ship, Maersk Kalmar, and is being partly funded by the Dutch government and coordinated by Maersk Maritime Technology.

The biodiesel used in the testing will be based on sustainable crops grown in temperate regions or recycled oils. Initially, the scope of the study will involve using a blend of between five and seven percent biodiesel, with the blend percentage steadily increased.

“One of the aims of the tests is to establish the degree to which issues experienced by the automotive industry in the use of biodiesel will be duplicated onboard a ship, in particular the impact on storage stability, handling, and its subsequent use in the engine,” said Kim Tanneberger, of Lloyd’s Register’s Strategic Research Group. “Where adverse effects are rising, it is hoped to find solutions to overcome them.”

“Exploring the behavior of our engines and storage tanks and knowing the change in air emissions by using biodiesel blends onboard will give us valuable knowledge of the opportunities and challenges,” said Lasse Kragh Andersen, senior environmental specialist at Maersk Maritime Technology.

Shuttle Buses to Use Biodiesel

Enterprise Holdings’ entire fleet of more than 600 Alamo Rent-A-Car, Enterprise Rent-A-Car, and National Car Rental airport shuttle buses across more than 50 North American markets will begin using at least five percent biodiesel this spring. Further, the company began converting buses in nine markets to 20 percent biodiesel (B20) in February as a first step toward a goal of shifting its entire fleet to B20 over the next five years, with at least 50 percent changed over by the end of 2011.

“This investment in biodiesel follows our commitment to our customers and our business to use our fleet to help grow the clean fuel market,” said Lee Broughton, director of corporate identity and sustainability for Enterprise Holdings. “By embracing alternative fuels and engine technologies, they have a greater opportunity to become commercially viable. Biodiesel’s benefits to the environment support our commitment to environmental stewardship, as well as our sustainable approach to managing our business for long-term success.”

In addition to embracing biodiesel and other alternative fuels, Enterprise Holdings also provides strong support for renewable fuels research. In 2007, the company’s owners, the Taylor family, made a $25 million grant to the Donald Danforth Plant Science Center in St. Louis, MO, to create the Enterprise Rent-A-Car Institute for Renewable Fuels. Led by researcher Dr. Richard Sayre, scientists work at the institute to develop alternatives to finite fossil fuels by finding new ways to create fuel from renewable, reliable plant sources.

Biofuels Bulletin – April 2010 RENDER | back