U.S. Government Investing More into Biofuels

By Tina Caparella

The U.S. Departments of Agriculture (USDA), Energy, and the Navy will invest up to $510 million during the next three years in partnership with the private sector to produce advanced drop-in aviation and marine biofuels to power military and commercial transportation. The joint plan calls for a substantial cost share from private industry of at least a one-to-one match. The partnership aims to reduce U.S. reliance on foreign oil and create jobs while positioning American companies and farmers to be global leaders in advanced biofuels production. The United States spends more than $300 billion on imported crude oil each year.

Increased use of advanced biofuels is a key component of President Barack Obama’s energy security agenda, but according to USDA, there is currently a lack of manufacturing capacity for next-generation drop-in biofuels in the country. To accelerate the production of bio-based jet and diesel fuel for military and commercial purposes, Secretary of Agriculture Tom Vilsack, Secretary of Energy Steven Chu, and Secretary of the Navy Ray Mabus have developed a plan and signed a memorandum of understanding to jointly construct or retrofit several drop-in biofuel plants and refineries. Each agency has earmarked $170 million to the partnership.

“America’s long-term national security depends upon a commercially viable domestic biofuels market that will benefit taxpayers while simultaneously giving sailors and Marines tactical and strategic advantages,” said Mabus. “This announcement not only leverages our home grown fuel sources to support our national security, but it also helps advance the biofuels market, which ultimately brings down the cost of biofuels for everyone.”

“By building a national biofuels industry, we are creating construction jobs, refinery jobs, and economic opportunity in rural communities throughout the country,” commented Vilsack. “As importantly, every gallon of biofuel consumed near where it is produced cuts transportation costs and, for the military, improves energy security.”

In a separate announcement, USDA is funding more than 500 projects to boost renewable energy production, and reduce energy costs for producers and rural small businesses. The grants and loan guarantees are being provided through the Rural Energy for America Program, a 2008 farm bill initiative that offers funds for farmers, ranchers, and rural small businesses to purchase and install renewable energy systems and make energy-efficiency improvements. In this latest round of funding, USDA is making $27 million available, with one of the largest grant awards going to United Cooperatives in Beaver Dam, WI, who was selected to receive a $448,500 grant to help with the installation cost of 33 ethanol flex-fuel dispensers and 17 biodiesel dispensers.

The Obama administration has set a goal of making 10,000 new flex-fuel pumps available to America’s drivers within the next five years – a five-fold increase from today’s levels. Of the $27 million in grants and loans, a scant $1.8 million is earmarked for flexible fuel pump projects, while the rest of the funding is disbursed primarily among energy efficiency and solar projects with a few biomass and geothermal projects being funded.

Other flexible fuel pump grant recipients include Phoenix Petroleum in Dawson, GA, $189,416; Propel Fuels California, Inc., in Cathedral City, CA, $75,000; and Pacific Biodiesel, Inc., in Kahului, HI, $47,420. Funding for each award is contingent upon the recipient meeting the conditions of the grant or loan agreement. Grants can finance up to 25 percent of a project’s cost, not to exceed $500,000 for renewables and $250,000 for energy efficiency.

Biox Upgrades Facility

Biox Corporation has secured funding for upgrades to its Hamilton, ON, Canada, biodiesel facility to improve the quality of its glycerin by-product from crude to technical grade. Farm Credit Canada has agreed to replace Biox’s existing term-debt facility with a new facility that will include approximately $4.8 million (Canadian) for the final design and construction costs of a stand-alone glycerin refinement plant within the existing footprint of the Hamilton facility.

“The planned upgrades will enable us to capture the full value of the approximately 9.4 million pounds of glycerin that is a by-product of biodiesel production,” said Kevin Norton, chief executive officer of Biox. “By achieving technical grade glycerin, we believe we can maximize the margin contribution from our facility on an ongoing basis and significantly reduce our glycerin storage costs for a low one-time capital investment.” The project is expected to be operational by summer 2012.

The current crude glycerin by-product from Biox’s biodiesel production has limited market applications and requires storage and handling costs that exceed its market value. Technical grade glycerin currently carries a wholesale market value of about 30 to 40 cents per pound.

Biodiesel Producer, Petroleum Distributor to Lead Iowa Board

An oil man of 32 years who became a biodiesel producer has been tapped to lead Iowa’s thriving biodiesel industry. 

Members of the Iowa Biodiesel Board (IBB) elected Mark Cobb as chairman of the nonprofit organization at its annual meeting in September. He is vice president of Iowa Renewable Energy in Washington, IA, a 30 million gallon per year biodiesel plant that employs 23 people. Cobb replaces Dan Oh, president and chief operating officer of Ames-based biodiesel producer REG, who served as chairman of the IBB for four years. 

Cobb is also president of Cobb Oil, a petroleum distributor based in Brighton, IA. Cobb Oil was an early adopter of biodiesel, first offering the product in 2002 at the request of farmer customers. 

“I am a believer in biodiesel,” Cobb said. “I’ve seen how well it worked for my own business, and look forward to helping facilitate what will hopefully be a period of prosperous growth for Iowa biodiesel in the coming years.” Earlier this year, Iowa passed some of the nation’s most comprehensive biodiesel policies, including an incentive for petroleum retailers who carry at least five percent biodiesel.

Cobb also serves on the board of the Petroleum Marketers and Convenience Stores of Iowa, chairing that group’s alternative fuels committee.

Also elected to become IBB directors were Ben Kruger, general manager of biodiesel for Cargill, and Chad Stone, REG’s chief financial officer.

Iowa is home to 15 biodiesel facilities with the capacity to produce more than 300 million gallons of biodiesel. 

Higher Blending Quotas for Biofuels in the EU

According to the Kingsman industry information service, some European Union (EU) member states have increased their national blending quotas in 2011 in comparison with 2010 on the basis of energy content: Finland, from four to six percent; Poland, from 5.75 to 6.2 percent; Italy, from 3.5 to four percent; Spain, from 5.83 to 6.2 percent; Bulgaria, from 3.5 to five percent (by volume); and Denmark adopted its first-ever obligatory quota of 3.5 percent.

As a result of these higher quotas, the Union zur Förderung von Oel- und Proteinpflanzen (UFOP) expects another increase in the consumption of biodiesel and biofuel within the EU in 2011. As reported by EurObserv’ER, as of July 2011, biofuel sales were up by 1.7 million tons over 2009, an increase of 13.6 percent, to 13.9 million tons (biodiesel – 10.7 million tons, vegetable oil – 200,000 tons, and bioethanol – three million tons). However, the association believes that even if this sales trend continues, it would not be sufficient to utilize the production capacity of 22.3 million tons of biodiesel within the EU. The UFOP recalls that the European standard for biodiesel – EN 590 – limits the blending of biodiesel to seven percent by volume. With about 206 million tons of diesel fuel consumed within the EU in 2010, biodiesel sales would not exceed about 14 million tons.

KLM and Amsterdam Airport’s Ground Fleet Run on Biodiesel

About 40 ground transport vehicles in the Amsterdam Airport Schiphol and KLM fleet are being powered by 100 percent biodiesel as a step toward introducing more sustainable transport vehicles at the airport, where a number of electrically-powered vehicles are also already in use. However, as electric power is not currently suitable for all vehicle types, the use of biodiesel presents a sustainable alternative.

The biodiesel that Schiphol and KLM will be using for ground transportation consists of 100 percent used cooking oil and contains no fossil fuels. The supplier, SkyNRG, also supplies sustainable kerosene for aircraft flown by KLM, Thomson Airways, and Finnair (see “Biofuels Bulletin” in the August 2011 issue of Render).

“By using 100 percent biodiesel in our vehicles, we are injecting a powerful impetus in the advancement of sustainable enterprise at Amsterdam Airport Schiphol,” said Ad Rutten, executive vice president and chief operating officer of Schiphol Group. “We have formulated the ambition of running a CO2-neutral operation by 2012, and investment in sustainable mobility is one way in which we will achieve this.”

From September through December 2011, some 40 airport vehicles, including tractors and catering, bird control, and lease and delivery vans, will run on 100 percent biodiesel. If the pilot program proves a success within those four months, additional vehicles will be switched over to biodiesel.

Pacific Biodiesel to Supply Fuel

Pacific Biodiesel, Inc., has agreed to supply at least 250,000 gallons of locally produced biodiesel to the new eight megawatt (MW) Honolulu International Airport Emergency Power Facility to be operated by Hawaiian Electric Company.

The three-year contract with renewal options calls for Pacific Biodiesel to supply biodiesel from locally recycled cooking oil collected and processed at either the Pacific Biodiesel plant on Oahu or the Big Island Biodiesel refinery in Kea’au, HI, which is currently under construction. The contract is a result of a request for proposals issued by Hawaiian Electric in March 2010. The agreement must next be reviewed for approval by the Hawaii Public Utilities Commission with input from the Consumer Advocate. The biodiesel supply will begin when the airport facility is ready for operations, targeted for October 2012.

The planned Honolulu International Airport Emergency Facility is a partnership to serve the State Department of Transportation and Hawaiian Electric customers with four biodiesel-fueled generators able to provide eight MW to the grid. The units will be able to contribute power to the grid during normal operations but be isolated to supply power exclusively to the airport during an emergency.

In addition to recycling used cooking oil into vehicle fuel on Oahu, Maui, and the Big Island, Pacific Biodiesel is managing the Military Biofuels Crop Demonstration Project in Waialua on Oahu, funded by a $2.4 million grant, to develop a production model for fast growing, oil producing plants like safflower, sunflower, and camelina to produce biodiesel for the military and local community.

Tyson’s Webster Joins Biofuels Company

Solazyme, Inc., a renewable oil and bioproducts company, announced that Jeffrey Webster has joined the company as its chief operating officer. In this role, he will be responsible for leading and expanding operational infrastructure across Solazyme as the company continues to grow.

Webster joins Solazyme from Tyson Foods where as group vice president and general manager of the Renewable Products business he had full profit and loss responsibility for $500 million in revenue and was responsible for initiating, funding, and building the Dynamic Fuels plant in Geismar, LA, which is America’s first commercial scale (75 million gallons per year) advanced biofuels facility. At Tyson, Webster established new growth platforms, partnerships and brands, and pioneered Tyson’s efforts into the renewable energy space.

Webster has successfully established partnerships with a multitude of top energy and nutrition companies, including Conoco Phillips and global fuel customers like the U.S. Air Force, while also successfully enacting legislation for second-generation renewable fuels. While at Tyson, he was also responsible for the full operations of the company’s food ingredient, pet food ingredient, and animal feed businesses.

Prior to Tyson, Webster held roles including vice president, Global Strategy and Development at Kellogg’s. He began his career as a geophysicist with ARCO Oil and Gas.

United States and Australia to Develop Alternative Jet Fuels

The U.S. Department of Transportation’s Federal Aviation Administration and Australia’s Department of Resources, Energy, and Tourism have reached a memorandum of understanding (MOU) to continue research and development of clean, sustainable alternative aviation fuels.

“Air travel is global and we need international partners to develop these innovative new fuels,” said U.S. Secretary of Transportation Ray LaHood. “Our ultimate goal is to work with all of the Asia Pacific nations to achieve a sustainable, independent energy future for aviation, and this is an exciting first step.”

The MOU calls for Australia and the United States to exchange information about policies, programs, projects, research results, and publications, and to conduct joint studies in areas such as fuel sources and environmental impacts. The memorandum also facilitates analysis of fuel source supply chains. The nations agree to cover the associated costs.

Western Biodiesel Fined for Methanol Release

The Provincial Court of Alberta, Canada, has fined Western Biodiesel, Inc., $160,000 under Alberta’s Environmental Protection and Enhancement Act for releasing wastewater containing methanol into the environment and providing false or misleading information to investigators.

Jason Freeman, a former manager with the company, also pled guilty to directing the release of contaminated wastewater and knowingly providing false or misleading information to investigators. He was sentenced to four months of house arrest.

The court heard that on October 27, 2008, Freeman directed workers to release flammable wastewater onto the ground at the back of the company’s property near High River. The following day a welder, not knowing of the release, ignited the wastewater with a welding torch causing a fire. No one was injured. When investigators arrived at the site in response to an anonymous complaint, Freeman denied that a release had occurred.

October 2011 RENDER | back