Sigh of Relief Heard ‘Round the Biodiesel Industry

By Tina Caparella

Last year was a difficult year for the biodiesel industry as a blender’s tax credit of $1.00 per gallon that had been in place since 2004 ended December 31, 2009, making it cost-prohibitive for some biodiesel producers to continue operating. For those who were able to keep plants running, they did so at significantly reduced capacity. In all, the biodiesel industry produced less than half the alternative fuel in 2010 than it had manufactured just two years prior.

But after much haggling, the blender’s tax credit was finally included, along with a multitude of other credits, in the Tax Relief, Unemployment Insurance, Reauthorization, and Job Creation Act of 2010 signed into law just prior to the end of last year. The legislation retroactively reinstates the tax credit to January 1, 2010, and extends the incentive through 2011. The credit is structured in a manner that makes biodiesel price-competitive with conventional diesel fuel in the marketplace. The act also includes the reinstatement and extension of the alternative fuel mixture credit, which provides a 50-cent per gallon income tax refund for using animal fats as fuel in boilers.

While the industry celebrates the victory, it has its work cut out for it as the process of getting the tax credits extended beyond 2011 now begins. Biodiesel producers that had to shut down plants after the credit expired at the end of 2009 must now rehire employees, reacquire feedstock supplies, and restart equipment that has been idle, in some instances, up to a year. But the National Biodiesel Board (NBB) is confident that the tax credit will ensure the industry will be ready, willing, and able to meet the country’s advance biofuel goals in 2011, which were recently set by the Environmental Protection Agency (EPA).

“It would appear that the biodiesel industry is in a much better position to be successful in 2011 than at any time during 2010,” commented Jim Conway, Griffin Industries, Inc., and NBB treasurer. “Higher petroleum prices when coupled with excellent renewable identification number (RIN) values and now the $1.00 tax credit should make biodiesel competitive in the marketplace. The tax credit and RIN values when coupled with the renewable fuel standard mandate should make for a good year for those companies that are still financially prepared to do business.”

The mandate Conway refers to is the Energy Independence and Security Act of 2007, which amended the Clean Air Act to greatly increase the total required volume of renewable fuels each year, reaching a level of 36 billion gallons by 2022. To achieve these volumes, EPA calculates percentage-base standards each November for the following year based on gasoline and diesel projections from the Energy Information Administration. Based on the standards, each producer and importer of gasoline and diesel determine the minimum volume of renewable fuel that it must ensure is used in its transportation fuel.

The 2011 percentage standards for the four categories of fuel under EPA’s renewable fuel standard program, known as RFS2, include 800 million gallons of biomass-based diesel, of which biodiesel is the only fuel available in commercial quantities that meets the definition. Cellulosic biofuel volume for 2011 is 6.6 million gallons, advanced biofuel is 1.35 million gallons, and renewable fuel is 13.95 billion gallons.

Amtrak’s Tallow-powered Train a “Best Invention”

Right up there with the iPad, lab-grown lungs, and Google’s driverless car, Amtrak’s Heartland Flyer – a daily passenger train service between Oklahoma City, OK, and Fort Worth, TX – was named one of Time magazine’s “50 Best Inventions of 2010,” not because a diesel-powered locomotive is something new, but one that runs on a 20 percent biodiesel blend (B20) produced from beef tallow certainly is. Amtrak was recognized for its step towards a greener, low-carbon future by using biodiesel made from rendered beef fat that “burns cleaner than plant biodiesel.”

Last spring, Amtrak received a $274,000 grant from the Federal Railroad Administration to study the feasibility and effectiveness of using B20 in its Heartland Flyer locomotive. The project is in partnership with the Oklahoma Department of Transportation with state support from both Oklahoma and Texas. The biodiesel supplier is Direct Fuels of Euless, TX, which uses tallow from Texas beef processors as its feedstock.

The Heartland Flyer will operate exclusively on B20 for approximately 12 months. Amtrak will take detailed measurements on the General Electric P32-8 locomotive at the end of the year-long project to determine biodiesel’s impact on valves and gaskets. The company will also collect locomotive exhaust emissions data for analysis in accordance with U.S. Environmental Protection Agency test protocols. Previously conducted stationary locomotive engine testing showed a B20 blend reduced hydrocarbons and carbon monoxide each by 10 percent, cut particulates by 15 percent, and reduced sulfates by 20 percent.

China Exempts Biodiesel Taxes

China has exempted consumption taxes on biodiesel made from animal fats or vegetables oils, according to a Ministry of Finance and State Administration of Taxation announcement in news reports. The new policy is retroactively effective from January 1, 2009. Taxes already paid will be refunded.

The move is aimed at boosting the renewable resources sector, easing demand for petroleum, and protecting the ecological environment, and will save biodiesel producers about $135 per ton. The announcement also said this action will help guard against waste edible oils being reused for human consumption so to ensure food safety.

Darling, Valero Proposed Project Receives Loan Guarantee

A proposed renewable diesel project between Darling International, Inc., and Valero Energy Corporation has received a $241 million loan guarantee from the U.S. Department of Energy (DOE). The DOE conditional commitment offer to Diamond Green Diesel, LLC, the proposed joint venture between Darling and Valero, will support the construction of a 137 million gallon per year renewable diesel facility in Norco, LA, about 20 miles west of New Orleans. Valero Energy plans to direct the design, construction, and operation of the project and market all of its output, while Darling International will supply the feedstock, primarily animal fats and used cooking oil, to the facility, which will be adjacent to Valero’s St. Charles refinery near Norco.

The project is estimated to create 700 jobs during peak construction and over 60 jobs during operation. The facility is expected to nearly triple the amount of renewable diesel produced in the United States. In addition, the plant will fulfill almost 14 percent of a national mandate to boost production for biomass-based diesel.

Commencement of the project is contingent, among other things, on the execution by all parties of a definitive loan guarantee agreement, an acceptable final cost estimate for construction of the facility, and the final approval of Darling’s and Valero’s respective boards of directors.

Millions for Biofuels Producers

The U.S. Department of Agriculture (USDA) announced millions of dollars in investments in 33 states to support the production and usage of advanced biofuels. The payments are authorized under the Farm Bill’s Section 9005, the Bioenergy Program for Advanced Biofuels, and are based on the amount of advanced biofuels a recipient produces from renewable biomass, other than corn kernel starch. Eligible examples include biofuels derived from cellulose, crop residue, animal fats, vegetable oil, biogas (landfill and sewage waste treatment gas), and animal, food, and yard waste material.

The producer payments are intended to provide a financial incentive to biorefineries, a step USDA said is necessary towards meeting the nation’s renewable energy needs.

Many of the recipients produce biodiesel, including:
• Central Iowa Energy, LLC, Iowa, $80,571
FUMPA Biofuels, Minnesota, $18,191
• Greenlight Biofuels, LLC, Alabama, $13,211
• Griffin Industries, Inc., Kentucky, $12,186
• High Plains Bioenergy, LLC, Oklahoma, $232,360
• Imperial Western Products, Inc., California, $38,865
• Lake Erie Biofuels, LLC, doing business as Hero BX, Pennsylvania, $275,742
• Minnesota Soybean Processors, Minnesota, $398,974
• Nova Biosource Fuels, Inc., Illinois, $169,084
• Renewable Energy Group, Inc., Iowa, $695,014
• Western Dubuque Biodiesel, LLC, Iowa, $178,926
• Western Iowa Energy, Iowa, $210,509

Complete list of recipients is available on the USDA Web site at

Minnesota Offers Scholarship

The American Lung Association in Minnesota and the Minnesota Soybean Growers Association will award a $1,000 scholarship to a high school senior who submits a winning essay touting the benefits of biodiesel. This is the fifth year for the Minnesota Clean Air Choice Scholarship essay contest, which helps raise awareness of biodiesel in the state. The contest is open to all high school seniors in Minnesota who are continuing their education after high school. The second place essay will receive a $500 scholarship.

In 2005, Minnesota became the first state to require nearly all diesel fuel sold to contain a two percent biodiesel blend. This requirement has now increased to five percent, and will increase to 10 percent in 2012 and 20 percent in 2015. Essay topics can be of the writer’s choosing, or discuss biodiesel’s benefits to Minnesota, the opportunities and challenges to expanding biodiesel’s use, or how the student can impact biodiesel use in their area.

Essay entries are due by March 30, 2011, to the American Lung Association in Minnesota.

REG Awarded

Biofuels Digest, a daily newsletter covering the biofuels industry, has named Renewable Energy Group (REG) as the “Commercial-Scale Technology of the Year” in its 2010 Biofuels Digest Award winners. The awards, first established in 2008, recognize excellence in the research, development, and commercialization of biofuels, renewable chemicals, and bio-based products. REG was one of 28 winners from around the world, which are chosen by the Biofuels Digest editorial board based on nominations submitted by the readership.

According to Biofuels Digest, REG was honored for its “novel continuous-flow, multi-feedstock processing technology that has allowed the company to pioneer the acquisition of a wide variety of hard-to-process, low-cost feedstocks such as tallow and yellow grease.”

Other winners included Neste Oil as “Project of the Year” for the completion and start-up of its 240 million gallon renewable diesel plant in Singapore.

Schools Keen on Making Biodiesel

More than 50 university and public school systems in the United States now own and operate Springboard Biodiesel’s BioPro biodiesel processor in an effort to save money and reduce their carbon footprint. Arkansas State University topped the list when it purchased the fully-automated machine that converts 50 gallons of vegetable oil or animal fats into ASTM International-grade biodiesel for approximately 95 cents a gallon.

Dr. Kevin Humphrey, director for Agricultural Education at Arkansas State University, first saw the BioPro in use at Truman State University in Missouri and plans to use his school’s equipment to convert crop oils, some of which will be grown at the university’s farm, as well as cooking oils collected from the college cafeterias to produce biodiesel. The plan is to use the finished fuel in diesel irrigation motors, tractors, and on-campus utility trucks.

Biofuels Bulletin – February 2011 RENDER | back