Tell Renewable Fuel Standard Opponents It’s Food...then Fuel

By Dave Elsenbast, Vice President, Supply Chain
Renewable Energy Group, Inc.


Opponents of the Renewable Fuel Standard (RFS2) are putting a negative light on biodiesel in the press to convince American consumers that advanced biofuels increase their daily costs of living. This article is to help set the record straight with the biodiesel industry’s valued partners so all are armed with accurate information to correct these antagonists with a more appropriate food, then fuel message.

The RFS2 calls for 1.28 billion gallons of biodiesel to be used under the biomass-based diesel renewable volume obligations. Today’s biodiesel industry is more than capable of producing the additional 280 million gallons of biodiesel needed to meet the 2013 requirement.

As the biodiesel and feedstock industries advocate for 1.6 billion gallons for the 2014 renewable volume obligations, the rendering industry can help tell the story that many biorefineries use waste from food production. Leftover cooking grease from French fries and fat removed from steaks and pork chops account for a significant portion of biodiesel produced in the United States (US). The rendering industry has garnered significant value from this lower-value products model and consumers ultimately benefit. As biodiesel producers and renderers generate revenue for these lower cost products, farmers are likely to produce more crops and livestock, bringing more protein and carbohydrates into the market for food.

Livestock producers are beneficiaries of at least three significant benefits for every gallon of biodiesel produced: (1) lower relative meal prices due to higher vegetable oilseed crush rates; (2) higher values per head due to increased animal fat prices; and (3) access to crude glycerin as an energy source for feed rations.

With growing demand for livestock feed, soybean meal supplies increase, which creates additional soybean oil for biodiesel utilization. Nationwide, 50 to 60 percent of all US biodiesel is still produced from soybean oil. A December 2010 study by Centrec Consulting Group, LLC stated soybean meal prices could increase by as much as $36 per ton if they weren’t gaining access to the value of soybean oil via biodiesel production. This lost market could cost domestic livestock producers an additional $4.6 billion for soybean meal purchases over the future five-year period (assumed period for the economic study was model year 2011 to 2015). Biodiesel adds value.

Renewable Energy Group (REG) is focused on being a lower-cost feedstock biodiesel producer. While the company is always looking for vendor relationships that benefit its bottom line, REG believes in using raw materials that create a greenhouse gas emissions advantage versus petroleum and support lower consumer food prices. According to a study commissioned by the National Biodiesel Board, since 2007 the price relationship between animal fats and soybean oil has become stronger and increased demand for fats and oils, which has led to increased fat prices. In fact, increased biodiesel production has led to greater demand for animal fats and, in part, led to higher value per head harvested for livestock producers. As an example, review of historic animal fat prices demonstrates that feeder cattle prices have been supported by strong demand for animal fats by uses such as biodiesel. Up to an additional $16.79 of value per head was generated when comparing “pre-biodiesel” tallow and inedible tallow prices with current fats and oils prices.

When the REG Newton biorefinery uses beef tallow, choice white grease, and poultry fat, it essentially reduces rising price pressures on meats in the grocery store. Simply put, biodiesel is supporting food security while making the United States more energy secure. The biodiesel industry needs the rendering industry’s help showcasing this process to policymakers and market influencers. Renderers can contact their legislator via REG’s advocacy website at http://advocacy.regi.com/.

Multiple Feedstock Production Technology Requires Efficiencies
REG’s array of biorefineries includes seven commercial-scale biodiesel facilities with a total capacity of more than 225 million gallons using technology capabilities to match feedstock availability in the area of each plant. Feedstock choice is based on economics.

As an example, the Ralston, IA, plant is co-located with a soy crush facility so it runs on soy oil. REG’s Albert Lea, MN, plant acquired in September 2011 is being upgraded at a cost of $20 million to be capable of using every Environmental Protection Agency (EPA) approved feedstock in the Midwest. The Danville, IL, Newton, IA, and Albert Lea, MN, plants form a functional capability basis, each one different but generally built with the same flexibility. The Seneca, IL, plant can convert free fatty acids as well as triglycerides into biodiesel.

Biodiesel producers with multi-feedstock capabilities using EPA-pathway approved raw materials are key to a diverse, sustainable feedstock market. In addition, a biodiesel company with a multiple feedstock, multiple vendor approach must be focused on highly efficient logistics and conversion capability.

Biodiesel Industry Supports Overall Economy, Offering Benefits to Consumers
The biodiesel industry creates localized job growth, increases the United States’ gross domestic product, and adds value to the agriculture, manufacturing, and transportation industries. Last year, the US biodiesel industry supported more than 63,000 jobs both directly and indirectly. (Analysts note that number would be 19,000 higher with the certainty of the federal blender’s tax credit being in place.) The National Biodiesel Board projects the addition of 30,000 jobs with the increase of the RFS2 obligations in 2013.

As the US manufacturing sector begins to rebound after the recession, the biodiesel industry is doing its part by supporting $6 billion of gross domestic product in the American economy in 2012. That number is projected to grow to nearly $7.93 billion in 2013. The biodiesel industry is a meaningful part of energy independence; every gallon of biodiesel produced at home is one that does not have to be imported.

Biorefiners and feedstock suppliers under the RFS2 are delivering desired results to achieve US energy and food security goals. Farmers, food producers, and restaurants win as the biodiesel industry creates a higher source of revenue across the supply chain. These food producers are rewarded with better margin opportunities, which can lower food prices and save consumers money. That’s not the “food versus fuel” fallacy that RFS opponents want you to believe, but rather food, then fuel.


February 2013 RENDER | back