US Biodiesel Producers Cutting Back

By Tina Caparella

Policy setbacks in Washington, DC, are taking a toll on the United States (US) biodiesel industry, according to a survey conducted by the National Biodiesel Board in late April. The survey of 54 biodiesel producer members found that nearly 80 percent have scaled back production this year and more than half have idled production at a plant altogether. In addition, two-thirds of producers surveyed said they have already reduced or anticipate reducing their workforce as a result of the downturn. The cutbacks come in the face of a lower Renewable Fuel Standard (RFS) proposal from the Environmental Protection Agency (EPA) and US Congress’ failure to extend the biodiesel tax incentive, which expired December 31, 2013.

Among the survey findings:
• 78 percent have reduced production from 2013;
• 57 percent have idled production or shut down a plant this year;
• 66 percent have reduced or anticipate reducing their workforce; and
• 85 percent have delayed or canceled expansion plans.

Producers surveyed nearly universally attributed the industry decline to the lower RFS proposal and loss of the tax incentive. The RFS proposal, which has not yet been finalized, would establish a biodiesel standard of 1.28 billion gallons for 2014, a sharp cut from last year’s record production of nearly 1.8 billion gallons by facilities in almost every state in the country that supported some 62,200 jobs. According to a recent study, nearly 8,000 of those jobs would be threatened by a drop in production to the level EPA has proposed.

The biodiesel tax incentive that expired at the end of 2013 marks the third time in five years that Congress has allowed it to lapse. The incentive is included in a tax extenders bill currently under consideration in the US Senate, but it remains unclear when or if the incentive might be reinstated.

“Unless Congress and the administration act, we will be forced to make very difficult decisions in the future,” said Jeff Haas, chief executive officer, General Biodiesel, Seattle, WA.

“We made these investments because we believed in what the administration and Congress were trying to accomplish with the Renewable Fuel Standard and because a road map was laid out for growth under the RFS for the next decade, particularly in advanced biofuels,” said Wayne Presby, owner of White Mountain Biodiesel, North Haverhill, NH, discussing the growth of his business in recent years and now-delayed expansion plans. “But with this RFS proposal, and the uncertain tax policy from Congress, that expansion and the jobs that would come with it are on hold.”

“Biodiesel has proven itself to be a successful fuel,” said Bryan Christjansen, general manager at Renewable Energy Group’s refineries in Albert Lea, MN, and Mason City, IA. “If the administration chooses to go with the EPA proposal, it does not just put domestic fuel production in jeopardy, but it harms local economies and billions of dollars of investments.”

Many Senators, particularly those with biodiesel plants in their states, support biodiesel and the government incentives that help boost the alternative fuel’s use.

New Zealand to Get First Biodiesel Plant

New Zealand’s Z Energy plans to invest $21 million ($18 million US) in a biodiesel plant to be built in Auckland and the associated supply chain infrastructure in Auckland and Mount Maunganui. The facility, scheduled to be built in 2015, will have the capacity to produce 20 million liters (5.2 million gallons) of biodiesel per year from about 10 percent of the country’s inedible tallow supply.

Z Energy Chief Executive Mike Bennetts said while the company has publicly discussed the potential for this project in the past, the board has approved it, subject to completion of regulatory and resource consenting – including approvals from competitor companies to construct a blending facility – and the finalization of key contracts.

“We appreciate that others have tried and failed to bring domestically produced biodiesel at this sort of scale to the New Zealand market, however, we have refined and investigated this particular option rigorously over the last four years,” Bennetts stated. “We are not trying to grow a feedstock supply and with the core of our business in distribution and marketing liquid transport fuels, we have confidence in our ability to successfully bring biodiesel to the New Zealand market.” He added that the company has had discussions with a number of core commercial customers who have expressed commitments to taking Z Energy’s initial production.

“We expect strong customer support for a high-quality, genuinely sustainable biodiesel and indeed our decision to proceed is at least partially based on these indications of support,” Bennetts noted. “I want to be clear that the economics around biofuels remain very challenging and we have worked this project non-stop for four years to get to this point. We believe we have the knowledge and capability to manage the various operating and financial risks while offering our customers a quality product at a similar price to mineral diesel.”

Initial production will likely be allocated to commercial customers who would use the biodiesel in five to 20 percent blends with petroleum diesel in heavy-duty vehicles, but the company expects to also supply upper North Island retail sites with a five percent biodiesel blend. The option exists to double the plant’s production to 40 million liters (10.5 million gallons) of biodiesel quite quickly if consumer demand and economics support it.

Firms Deliver Biodiesel to Africa

Incbio, a Portuguese engineering company specializing in fully automated industrial ultrasonic biodiesel plants, has delivered an 8,000 metric ton (2.4 million gallons) per year biodiesel plant to Biokast Energy S.A., in Tunis, Tunisia, a small country in South Africa.

Due to its skidded construction, the plant is fully built prior to shipping and requires minimal assembly once onsite, usually taking less than one week from arrival to startup. The plant uses Incbio’s ultrasonic reactors to produce biodiesel from used cooking oil collected from restaurants in Tunis.

Meanwhile, Florida Biodiesel, Inc. has completed a biodiesel plant sale to the Lorymat Corporation, Ivory Coast, Africa, which will process palm oil and locally collected used cooking oil into biodiesel. The production equipment is capable of producing 9,000 gallons of biodiesel daily and will be used as a hands-on educational tool to show students and government agencies how to make renewable energy on the Ivory Coast.

French Hub Switches to Biodiesel

Reports are that the Dépôt pétrolier de Port-La-Nouvelle (DPPLN) storage terminal located between Montpellier, France, and Barcelona, Spain, is converting from oil to biodiesel, becoming France’s first dedicated biodiesel hub on the Mediterranean coast. The news came just days after an announcement that European countries will increase solid biofuel imports to 50 million to 80 million metric tons (13 billion to 21 billion gallons) by 2020.

The DPPLN terminal is a 45,000 cubic metric facility consisting of 10 tanks and two jetties capable of reception, storage, and distribution of biofuels and vegetable oils that will continue to offer blending and mixing capabilities.

Ontario Issues Biodiesel Mandate

The Canadian province of Ontario has introduced new “greener diesel” rules to improve air quality by reducing greenhouse gas emissions. The rules went into effect April 1, 2014, and will be phased in over three years, so by 2017, the amount of biofuel blended into regular diesel will average at least four percent. Greenhouse gases must be reduced by at least 30 percent this year and 70 percent by 2017, for the biofuel portion of the new blend. Ontario’s greener diesel is a blend of petroleum diesel and renewable biofuel made from feedstocks such as canola and soy oils, animal fats, and recycled cooking oils.

By 2017, Ontario’s greener diesel approach is expected to reduce greenhouse gas emissions by about 600,000 metric tons a year – equivalent to taking 140,000 cars off the road. Home heating oils and aviation fuel are exempt from the new rules and northern Ontario will be exempt until 2017.

June 2014 RENDER | back