Biodiesel Industry Strives to Build Momentum

By Tina Caparella

The last 10 years have been an “apocalyptical decade” for the biodiesel industry, said Joe Jobe, National Biodiesel Board (NBB) chief executive officer, as he opened the 2013 National Biodiesel Conference and Expo in Las Vegas, NV, in early February. Videos highlighted the struggles and accomplishments the United States (US) industry has faced since 2002, but Jobe warned that attacks against renewable fuel would continue. However, with the Environmental Protection Agency’s Renewable Fuel Standard (RFS) in place and tax credits reinstated, he believes 2013 will likely be the most prosperous year for the industry.

“Our goal is to make our transportation energy supply look like our power energy supply,” Jobe stated, referring to a combination of solar, wind, and coal. He then announced a new 10-year vision for NBB: 10 percent of the on-road diesel market by 2022 (10×22).

“It’s not about replacing every drop of petroleum; it is about continuing to diversify transportation energy so we can meet our needs affordably and sustainably,” Jobe noted. Eight years ago, NBB set a goal of five percent of the diesel fuel supply by 2015, which was viewed as aggressive. With a billion gallons of biodiesel produced in 2011 and 2012, the industry is well on track of achieving that goal, possibly meeting it even sooner. Nonetheless, Jobe admitted there will need to be technological breakthroughs in feedstocks to obtain the new 10×22 goal.

Scott Thurlow, Canadian Renewable Fuels Association, addressed the market up north where there are two main biodiesel producers, Rothsay and Biox, with Archer Daniels Midland (ADM) on the cusp of opening a plant. There is a federal two percent mandate in place for renewable diesel that includes biodiesel in the country’s diesel pool, except in the province of Newfoundland, which is exempt due to logistics. Using 2011 figures, the mandate requires 160 million gallons of biodiesel, of which 20 percent is produced domestically. Thurlow estimated biodiesel production in Canada last year was about 40 million gallons; expected capacity in 2013 will be nearly double that once the ADM facility is online. He noted there is a desire to increase the national mandate for renewable diesel to five percent by 2020.

A Las Vegas Biodiesel User Group panel took the general session stage to describe how biodiesel got its start in the city back in 1999 when Russ Teall, now with Biodico Sustainable Biorefineries, contacted Gary Weinberg, Western Sierra Services, who worked for a petroleum company at the time.

“We were really running by the seat of our pants,” Weinberg commented since there was no technical specification or legislation at that time of biodiesel’s infancy. It took a lot of effort to convince the Clark County School District, Las Vegas government officials, and the community that biodiesel was good for the school buses and children despite early reports criticizing the alternative fuel. Dan Hyde, now retired from the City of Las Vegas, did not have fun being a fleet manager his first two years as biodiesel was being introduced, but working through the technical issues and myths took teamwork of multiple advocates and the hard work has been successful. Since the school district’s program of using biodiesel in its buses began in 2001, 250 million miles have been driven, displacing five million gallons of petroleum diesel fuel.

“We never lost one engine,” declared Frank Giordano of the Clark County School District.

The conference’s general session on the second day included NBB’s Chairman Gary Haer, Renewable Energy Group, comparing parallels of his family’s struggle after floods devastated his 750 acres of crops in 2010/2011 and the trials and tribulations of the biodiesel industry. In both situations, farm and biodiesel persevered with the help of family and industry. Haer explained how effective NBB’s Advanced Biofuel Initiative, a national communications campaign, has been.

“It was critical that we defined ourselves before our opponents defined us,” he commented.

Former US Senator Byron Dorgan (D-ND) was the session’s keynote speaker as his involvement with biodiesel dates back to some of the first legislation introduced and he has a long history in the fuels industry. He noted that the United States is producing 25 percent more oil and gas than it did just five years ago, and recovering more oil with better technology. Yet the country still imports 45 percent of its oil and the globally-set cost per barrel is dependent on many factors.

While Dorgan is a big supporter of producing more oil and gas at home, he believes this country also needs to support alternative energies, biofuels, and renewable fuels.

“Renewable energy can and will play an important role in this country,” he stated, adding that timing is everything and the industry must tell its good news story, relentlessly. Dorgan revealed that Congress has two huge challenges ahead: cut spending and adjust the tax code to bring in revenue, which puts renewable fuels at risk because of tax credits and mandates. He went on to say he is disappointed the petroleum industry is fighting the RFS because, “We have to move together to be successful.”

Giving the conference’s closing address the following day was US Department of Agriculture Secretary Tom Vilsak, who told a packed audience that the biodiesel industry is helping to create “a new dynamic in America.” He reiterated that dependence on foreign oil is less than 50 percent and dropping, and gave some of the credit to advancements made in the industry.

“The biodiesel industry is making us a more secure country and the most exciting piece is that it’s not just limited to fuel and energy,” Vilsack said. “Because of how innovative you are, with new technology and techniques…you’ve given birth to a biobased economy and with that the possibility of a new American economy.” He noted that challenges to the RFS are baseless because it’s working as intended, but there is still more work to be done.

“You have the power to make us more energy secure, and still create enough food and fiber for the world,” Vilsack went on to say. “That’s an amazing opportunity worth fighting for. You also have the ability to respond as a generation to climate change. You’ve got to keep up the fight because the stakes are extraordinarily high.” NBB then recognized Vilsack as one of the strongest advocates for renewable fuels in the country by presenting him with the National Energy Leadership Award.

Perplexities of Public Policy
Individual conference sessions tackled technical issues, markets, petroleum, and federal/state policy and regulations, which was popular with attendees. Giving a broad federal policy outlook were Ginny Terzano, Dewey Square Group, and Wes Coulam, Washington Council Ernst and Young. Terzano explained how President Barack Obama recognized America’s changing demographics and fought hard to win them over in the 2012 election. The president won 93 percent of the black vote, 71 percent of Latinos, 67 percent of unmarried women, and 60 percent of voters ages 18 to 29.

“Various signs show Republicans running for office are on the outside of the way citizens are thinking,” Terzano commented, adding that Republicans are starting to pivot because of the consquences of the 2012 election. She remarked that the events in Newton, CT, and Hurricane Sandy have changed the dialogue in Washington, DC, forcing political leaders to take a hard look at issues they haven’t previously addressed. Due to these and other events, Obama’s agenda includes gun safety, climate/energy, immigration, jobs and the economy, equality issues, and Afghanistan, but it’s still unclear what is going to get done going forward.

Terzano then provided an array of possible presidential contenders already being discussed for the 2016 election, but stated, “It’s way too early to tell who’s going to jump in.”

Coulam noted that Congress is still divided with the Republicans controlling the House of Representatives and Democrats in the majority in the Senate. Many committees that control taxes and the country’s financial and environmental matters are also divided. Coulam indicated that given the precedence on biodiesel tax extenders in the past (allowed to expire for one year before renewed retroactively, twice),it is unlikely renewing any tax extenders, biodiesel or otherwise, will be a priority in Congress.

A second session on federal policy again packed the room, possibly because Michel Monconduit, Internal Revenue Service, provided information on filing for the extended biodiesel tax credits. Tim Urban, Washington Council Ernst and Young, echoed there won’t be a lot of discussion in Congress about extending the biodiesel tax credits the first half of this year due to national budget issues, debt ceiling, and sequestration taking precedence. He explained that the current tax extension was part of a “mega package” and the industry may have to look for that next package to be a part of, although several members of Congress are looking to repeal energy tax incentives and other tax loopholes.

Jim Massie, Alpine Group, agreed that the first quarter would see Washington dealing with fiscal matters, adding that after four years of battling with Congress, Obama has decided he doesn’t need them anymore and will use his executive power to build his legacy. Massie noted the RFS is under “complete attack,” with the focus being on the lack of cellulosic ethanol and biodiesel renewable identification number fraud. He warned that opponents have built a strong case and may have the votes in Congress; however, to amend the RFS would mean amending the Clean Air Act, a very difficult task.

Tom Hance, Gordley Associates, focused on various lucrative bioenergy programs within the farm bill, which received a one-year extension until September 30, 2013, but only for baseline funding programs, so energy was not included.

Shifting to state policy, NBB’s Shelby Neal highlighted state biodiesel mandates, which include Oregon and Minnesota at five percent, Pennsylvania at two percent, and Washington at five percent, although enforcement is spotty. There are several other states with mandates in place, such as New Mexico and Louisiana, which have not yet been implemented. As for home heating oil, New York City now requires two percent biodiesel in heating oil (called bioheat) that went into effect in October 2012. Connecticut is requiring two percent bioheat in heating oil for 2012, increasing to five percent in 2015, and 20 percent in 2020, which will be implemented when all contiguous states pass similar policies, although regulation has been introduced to eliminate this requirement. Legislation has also been introduced in New York to expand the city bioheat mandate to the entire state.

Eric Bowen, Renewable Energy Group and California Biodiesel Alliance, discussed the low carbon fuel standard (LCFS) in California that requires a 10 percent reduction in carbon intensity by 2020. Although he believes biodiesel is poised to make a major contribution in the state’s carbon reduction goals, there are challenges. A lawsuit was brought against the standard for violation of interstate commerce laws and was won, but the ruling was appealed and is now in the hands of the appeals court. Bowen emphasized that even if the appeal is denied and the ruling stands, the law is easily fixable to allow it to continue moving forward.

Another challenge comes from the Western States Petroleum Association that argues the LCFS goals are unattainable by 2015 and unfair due to multiple requirements. Other challenges include infrastructure issues in California at the terminal level and not enough biodiesel availability in the state.

Rebecca Richardson, MARC-IV Consulting, provided state fuel quality activities, reporting that 48 states have adopted the definition of biodiesel to include ASTM D6751 and 23 states proactively test biodiesel/diesel blends at various levels.

“Fuel quality is only an issue if there’s an issue,” she stated.

The next National Biodiesel Conference and Expo is scheduled for January 20-23, 2014, in San Diego, CA.

April 2013 RENDER | back