September 2011 Biodiesel Magazine

INSIDE: FOOD, FUEL OR FOOLS? YOU DECIDE September 2011

Exposing India Biofuels Development Hindered by Government Dysfunction, Corruption Page 24

Plus

Europe’s Unique Challenges Page 36

Latin American Biodiesel Developments Hold Strong Page 30

AND

The First U.S. Biodiesel School Bus Makes Its Last Run Page 40

WWW.BIODIESELMAGAZINE.COM

CONTENTS

SEPTEMBER 2011 VOLUME 8 ISSUE 9

DEPARTMENTS 4 Editor’s Note Going Public

BY RON KOTRBA 6 Legal Perspectives

The Next Big Cut: Does It Make Cents?

BY ANGELA J. CYR 8 Talking Point

Food, Fuel or Fools

BY PETER BROWN

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24

12 FrontEnd

ASIA

LATIN AMERICA

Developing India

Solid Growth in Central, South America

Corruption, dysfunction and increasing energy needs

BY LUKE GEIVER

10 Biodiesel Events

The region is a still a hotbed of biodiesel activity

BY BRYAN SIMS

Biodiesel News & Trends

18 Inside NBB 22 Business Briefs

Companies, Organizations & People in the News

44 Marketplace/Advertiser Index

36

40

EUROPE

USE

A Whole New World

Retiring Ol’ No. 74: ‘The Bean Bus’

The most established global sector faces tough times

BY ERIN VOEGELE

The nation’s first biodiesel-powered school bus retires

BY RON KOTRBA

Biodiesel Magazine: (USPS No. 023-975) September 2011, Vol. 8, Issue 9. Biodiesel Magazine is published monthly. Principal Office: 308 Second Ave. N., Suite 304, Grand Forks, ND 58203. Periodicals Postage Paid at Grand Forks, North Dakota and additional mailing offices. POSTMASTER: Send address changes to Biodiesel Magazine/Subscriptions, 308 Second Ave. N., Suite 304, Grand Forks, North Dakota 58203.

ON THE COVER

Researcher Kasiviswanath Muthukumarappan, with biomass in hand, says feedstock availability and logistics in India have put biofuel production there years behind the U.S.

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EDITOR'S NOTE The largest U.S. biodiesel company, Renewable Energy Group, filed for its IPO to go public in July. REG holds five wholly owned biodiesel production facilities and one leased plant, with a total production capacity of 212 million gallons.

What does it mean for the industry when the nation’s largest biodiesel producer goes public? And what does it say about REG’s financial status right now? I asked these questions on my F.A.M.E. Forum blog, shortly after the announcement, along with this perspective.

In a broad sense, one school of thought is that stock exchanges, and the public’s ability to buy and sell company shares, is the democratization of capital. Those who oppose this viewpoint insist this is only an illusion, since often only a minority of any public company’s stock is offered for common purchase, with the majority retained by the few corporate elite. In its SEC filing, REG states, “We have led the consolidation of the U.S. biodiesel industry.” Consolidation is generally considered to be incongruent with democratization. The biodiesel industry is rife with localized, small, private production facilities, and larger private companies, which is a fairly good representation of what a diverse, decentralized fuel industry should be. Some would say that is democratic.

Peter Brown, the September issue’s Talking Point columnist, had this to say in response to my blog: “They still have shares to put out there to be bought by the great unwashed in a market that the unwashed does not yet understand. Risky? Probably far more than anyone realizes. A gamble? Probably not because the company now has solid assets to back its worth. Whoever buys its shares will be buying contracts, the start of an acceptable business and contacts around the world. So yes, it is a democratization process and in a very real sense an educational process for the above mentioned unwashed.

As far as the regional biodiesel facility sucking off waste oil from the local McDonalds is concerned, that image is over. What we have are feedstock contracts negotiated in India and Ghana for jatropha oils that will be converted to biodiesel to allow KLM to fly to Dusseldorf. That is the real world of REG at this point in time, and that will become the reality of the biodiesel business.”

GOING PUBLIC Ron Kotrba

Editor Biodiesel Magazine rkotrba@bbiinternational.com

FOR MORE INFORMATION AND PERSPECTIVE, VISIT KOTRBA’S BLOG AT BIODIESELMAGAZINE.COM/BLOG/READ/

Associate Editors Luke Geiver writes “Developing India” on page 24, a story that asks where is all the biofuels progress in such a promising land?

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Erin Voegele covers the European biodiesel industry—the world’s most mature—in “A Whole New World” on page 36.

Bryan Sims gives us a panorama of Latin American biodiesel developments in “Solid Growth in Central, South America” on page 30.

www.BiodieselMagazine.com E D I T O R I A L Ron Kotrba Editor rkotrba@bbiinternational.com Bryan Sims Associate Editor bsims@bbiinternational.com Erin Voegele Associate Editor evoegele@bbiinternational.com Luke Geiver Associate Editor lgeiver@bbiinternational.com Jan Tellmann Copy Editor jtellmann@bbiinternational.com P U B L I S H I N G Mike Bryan

&

S A L E S

Chairman mbryan@bbiinternational.com

Joe Bryan

CEO jbryan@bbiinternational.com

Tom Bryan

Vice President tbryan@bbiinternational.com

Matthew Spoor Howard Brockhouse

Vice President, Sales & Marketing mspoor@bbiinternational.com Executive Account Manager hbrockhouse@bbiinternational.com

Jeremy Hanson

Senior Account Manager jhanson@bbiinternational.com

Chip Shereck

Account Manager cshereck@bbiinternaional.com

Marty Steen

Account Manager msteen@bbiinternational.com

Bob Brown

Account Manager bbrown@bbiinternational.com

Andrea Anderson

Account Manager aanderson@bbiinternational.com

Dave Austin

Account Manager daustin@bbiinternational.com

Nick Jensen

Account Manager njensen@bbiinternational.com

Jessica Beaudry

Circulation Manager jbeaudry@bbiinternational.com

Marla DeFoe

Advertising Coordinator mdefoe@bbiinternational.com

John Nelson

Senior Marketing Manager jnelson@bbiinternational.com

Jaci Satterlund Elizabeth Burslie Lindsey Noble

A R T Art Director jsatterlund@bbiinternational.com Graphic Designer bburslie@bbiinternational.com Graphic Designer lnoble@bbiinternational.com

Subscriptions Subscriptions to Biodiesel Magazine are free of charge to everyone with the exception of a shipping and handling charge of $49.95 for any country outside the United States, Canada and Mexico.

To subscribe, visit www.biodieselmagazine.com or you can send your mailing address and payment (checks made out to BBI International) to: Biodiesel Magazine Subscriptions, 308 Second Ave. N., Suite 304, Grand Forks, ND 58203. You can also fax a subscription form to (701) 746-5367. Reprints and Back Issues Select back issues are available for $3.95 each, plus shipping. Article reprints are also available for a fee. For more information, contact us at (701) 746-8385 or service@bbiinternational.com. Advertising Biodiesel Magazine provides a specific topic delivered to a highly targeted audience. We are committed to editorial excellence and high-quality print production. To find out more about Biodiesel Magazine advertising opportunities, please contact us at 701-746-8385 or service@bbiinternational.com. Letters to the Editor We welcome letters to the editor. If you write us, please include your name, address and phone number. Letters may be edited for clarity and/or space. Send to Biodiesel Magazine Letters, 308 Second Ave. N., Suite 304, Grand Forks, ND 58203 or e-mail to rkotrba@bbiinternational.com.

Please recycle this magazine and remove inserts or samples before recycling COPYRIGHT Š 2011 by BBI International

TM

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LEGAL PERSPECTIVE

The Next Big Cut: Does It Make Cents?

BY ANGELA J. CYR

In June, the U.S. faced new pressure from the Group of 20 nations to end government aid for the biofuels industry at a meeting of farm/agriculture ministers in Paris. The issue

for the U.S. trading partners is that the U.S. is alone in actively using trade policy to promote its own industry.

At the G20 summit, the discussion included the elimination of government subsidies to promote the use of biofuels. Many of the member nations present at the G20 believe that such reduction in subsidies would reduce the volatility in global food prices. The current biodiesel tax incentive expires on Dec. 31.

At the same time as the G20 summit was taking place, biodiesel tax credit extension bills were introduced in both the U.S. House of Representatives and the U.S. Senate. The House bill, H.R. 2238, was introduced by Reps. Aaron Schock, R-Ill., and Collin Peterson, D-Minn. The proposed House legislation extends the $1 per gallon biodiesel tax credit to 2014 and changes the tax incentive to a production excise tax credit. The Senate version, S. 1277, was introduced

by Sen. Chuck Grassley, R-Iowa, and would extend and modify the existing tax incentives for domestic biodiesel production. The Senate bill would convert the tax incentive from a blender credit to a production tax credit. If signed into law, the Senate bill would extend the new incentive for five years. The biodiesel tax credit would be increased to $1.10 per gallon for the first 15 million gallons of biodiesel produced by small producers. Additionally, the legislation would require that production of B100 or B99 become a taxable fuel, which would require the producer to collect the 24.4 cents per gallon tax from a marketer when sold outside of a registered terminal. The legislation would still allow blenders to own the renewable identification numbers (RINs), but the blenders would not be eligible to collect the $1 tax credit. The shift from a blenders tax credit to a production tax credit is designed to improve efficiency in the administration of the tax credit and reduce opportunities for fraud and abuse.

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The extension of the tax incentives for biodiesel production is extremely important to the industry’s access to capital and other methods of progress.

Many groups in the biofuels industry have argued that a multiyear extension is needed to provide stability and certainty to the still maturing biodiesel industry.

However, as previously mentioned, the current $1 blenders tax credit expires at the end of 2011. Given the federal deficit discussions currently taking place, Congress may not have the desire to renew the biodiesel tax credit.

Since the introduction of the biodiesel tax credit in 2004, it has helped support the production and use of biodiesel. Biodiesel production in the U.S. increased from 25 million gallons in 2004 to 690 million gallons in 2009, before Congress allowed the tax credit to lapse at the end of 2009, which resulted in the loss of jobs in the biofuels industry throughout 2010 as facilities were shuttered. However, there are many people in the biodiesel industry who believe that elimination of the tax credit would not result in the destruction of the biodiesel industry but instead would strengthen the RIN market. The thought process regarding the RIN market is that gallons earning a tax credit are able to remain in production at a lower RIN value than would be possible without the tax credit. If the tax credit is eliminated, then the thought is that the RIN value will rise approximately the same amount. There is evidence to support the concept that while the biodiesel industry struggled during the lapse of the tax credit, the RIN value traded at high enough prices to fill the void left by the elimination of the tax credit. The strength of the RIN market relies upon the continued RFS mandates.

Author: Angela J. Cyr Attorney, BrownWinick (515) 242-2418 cyr@brownwinick.com

TALKING POINT

Food, Fuel or Fools

BY PETER BROWN

The argument that the world is facing a food shortage, and that biofuels are contributing to that shortage, is bogus. There is enough food in the world to give every man, woman and child 4.3 pounds of food a day.

A study undertaken by the Stockholm International Water Institute highlights the absolutely staggering amounts of food that are wasted every day. In the U.S. alone, it is estimated that 30 to 40 percent of our food crops never reach the table.

The price of food is going up, and in some cases quite dramatically. It is also very clear that other staples have risen just as dramatically, none more so than petroleum products. Another study done by the World Bank in July 2010 places the blame for the increase of food prices on commodity traders who use food as just another commodity to be manipulated for profit and excludes any thought of food being just food.

Wars are being fought for petroleum, not for food, because starving nations do not have the clout to get fed, they only have the right to die off while often sitting on simple solutions to their energy problems. It is fascinating to read which countries are the hungriest and least able to feed their own people. The worst off are clustered in a combination of climactic disaster, low irrigation, political insanity and religious sectarianism.

What is never brought up is that those same areas are energy poor. They lack local supplies of the most basic energy sources. They have no roads, no power and no water to face their overwhelming poverty. Interestingly enough, most of them have access to some form of bioenergy; more often than not palm oil and possibly jatropha. In some of those countries, diesel sells for $4 a gallon and a small place like Liberia could be energy independent if it harvested its palm plantations.

The basic premise that the world is gasping for food is only true insofar that there are pockets or areas, in the developing nations, that are unable to produce enough food locally to survive. A really simplistic example would include the farmer in Sierra Leone who raises tomatoes and cannot afford to move his 20 pounds a week to the local market because of the high cost of transportation (diesel fuel). The multinational food companies that fill the shelves in remote areas of the world can afford those prices because they transport

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in bulk over vast distances in sophisticated refrigeration units. Their fuel per pound is minimal compared to the local farmer, although you will not see them rushing into Somalia any time soon.

We are dealing with a complex and very delicate equation that can only be solved by making assumptions on the X, Y and Z axis. X is the high cost of transportation due to the increased fuel prices; this unknown variable shifts on a daily basis for many reasons and is entirely unpredictable except that it trends up. Y is the untold damage we are doing to our planet because of X, which actively modifies Y, and is in turn modified by a horde of other factors some call the SUV (sport utility vehicle) syndrome. Then there is the Z factor, the zany factor that dictates against both reason and logic under the guise of political, ecological and ethical stances that some food staples may not be fuel, and certain forms of energy are “unacceptable� or unethical.

The role of the multinational food corporations is almost as troubling as the role being played out by the large petroleum companies. They abhor biofuels because the transition from food to fuel is immediate.

There are fewer intermediaries between the corn farmer and the gas tank than between the farmer and the Doritos chip. So no wonder the food companies have an altruistic attitude.

On the other hand, changing one element of the equation changes the whole aspect of the solution. The most obvious element has to be the ability to generate energy in one way or another. Often overlooked is the fact that petroleum products have become increasingly expensive, distribution is erratic and supplies are controlled by outside sources that may not have anyone’s best interest at heart. Making biodiesel from available feedstock to operate generators, trucks and other trappings of civilization can only be a good thing in areas where civilization comes at the point of a gun.

Being part of a movement that will allow the world to maintain its standard of energy and replace those energy sources with renewables is certainly a step in the right direction.

Author: Peter Brown Co-founder, International Procurement Tools Inc. (408) 426-5585 peter@euromarketingtools.com

EVENTS CALENDAR International Biorefining Conference & Trade Show SEPTEMBER 14-16, 2011

Hilton Americas – Houston Houston, Texas The International Biorefining Conference & Trade Show brings together agricultural, forestry, waste, and petrochemical professionals to explore the value-added opportunities awaiting them and their organizations within the quickly maturing biorefining industry.

(866)746-8385 www.biorefiningconference.com

Northeast Biomass Conference & Trade Show

Biomass Event Hotspot: San Francisco in January

01/16

If you go to one event in the western U.S. this year, make it BBI International’s Pacific West Biomass Conference & Trade Show, produced jointly by Biomass Power & Thermal and Biorefining magazines.

The Pacific West Biomass Conference & Trade Show heads to the Bay area this year, and will be held Jan. 16-18 at the San Francisco Marriot Marquis.

The conference, one of three distinct regional offshoots of BBI’s International Biomass Conference & Expo, will feature more than 60 speakers in four tracks: - Biomass power and thermal - Feedstock - Biomass project development and finance - Biorefining The Pacific West Biomass Conference & Trade Show will connect the area’s current and future producers of biomass-derived electricity, industrial heat and power, and advanced biofuels, with: - Waste generators - Aggregators - Growers - Municipal leaders - Utility executives - Technology providers - Equipment manufacturers - Investors - Policy makers The Pacific West Biomass Conference & Trade Show is designed to help you, the biomass industry stakeholder, identify and evaluate solutions that fit your operation.

It's time to improve your operational efficiencies and tap into the revenue-generating potential of sustainable biomass resources in the region.

Register today at www.biomassconference.com/pacificwest.

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OCTOBER 11-13, 2011 Westin Place Hotel Pittsburgh, Pennsylvania With an exclusive focus on biomass utilization in the Northeast—from Maryland to Maine—the Northeast Biomass Conference & Trade Show will connect current and future producers of biomass-derived electricity, industrial heat and power, and advanced biofuels, with waste generators, aggregators, growers, municipal leaders, utilities, technology providers, equipment manufacturers, investors and policymakers.

(866)746-8385 www.biomassconference.com/northeast

Algae Biomass Summit OCTOBER 24-27, 2011

Hyatt Regency Minneapolis Minneapolis, Minnesota Organized by the Algae Biomass Organization and coproduced by BBI International, this event brings current and future producers of biobased products and energy together with algae crop growers, municipal leaders, technology providers, equipment manufacturers, project developers, investors and policy makers. Register by Sept. 12 and save $200.

(866)746-8385 www.algaebiomasssummit.org

Southeast Biomass Conference & Trade Show NOVEMBER 1-3, 2011

Hyatt Regency Atlanta Atlanta, Georgia With an exclusive focus on biomass utilization in the Southeast—from the Virginias to the Gulf Coast—the Southeast Biomass Conference & Trade Show will connect the area’s current and future producers of biomass-derived electricity, industrial heat and power, and advanced biofuels, with waste generators, aggregators, growers, municipal leaders, utility executives, technology providers, equipment manufacturers, investors and policy makers. Register by Sept. 20 and save $200 off.

(866)746-8385 www.biomassconference.com/southeast

get more.

NATIONAL

BOARD

NBB Is Your Member Organization.

FrontEnd

Biodiesel News & Trends

PHOTO: CAL POLY

from the state and private partners, he will instead work to generate additional revenue through a coservice.

His project on recycling nutrients, energy and water, trademarked RNEW, will attempt to “completely wring all the value out of wastewater,” Lundquist says, using an open-pond algae-based system. The mention of wastewater treatment and algae in the same sentence is certainly not new, Lundquist says, as wastewater and algae research and use has been happening since the 1950s. But, he says the possibilities for new methods of treatment involving algae—and more importantly, the state of the wastewater infrastructure across the U.S., from his perspective—and the RNEW project seems deserving and worthy of any new attention.

“Wastewater treatment is not inexpensive and there is a lot of demand for it,” he says. It is something people will pay for, and is “something they are required by law to do.”

The main infrastructure currently operating in the U.S. was established in the 1970s and '80s he says, most of which was based on federal, grants that today are not as readily available as they once were. And low-interest loans offered by most communities to build new facilities are also being cut. “There is going to be less money available for these communities to build their wastewater plants.”

Not only has the money for new construction become scarce, but many of the facilities built 30 years ago are rapidly reaching the end. As Lundquist explains, there are three basic types of wastewater facilities: electromechanical plants, pond-based oxidation systems and the most popular, activated sludge. The electromechanical system typically requires a high volume of concrete, steel and electric motors. In some setups the wastewater is trickled over a substrate that requires energy to move up ENOUGH GRIST: The Cal Poly feed mill has been used to develop and test algaeenriched feeds for broilers and livestock. over the substrates (rocks). These systems are vulnerable to concrete and rebar erosion and will typically only last 20 to 30 years.

The oxidation systems typically used in small communities are based on a deep earthen basin system and can last up to 50 years, but, Lundquist says, “They were only good for what we call secondary treatment,” or the removal of organic solids. Over time, sludge accumuCalifornia researchers aim to recycle nutrients, lates and they need to be upgraded. And then there is the energy and water with algae activated sludge system that uses blower motors to send bubbles into the water, essentially creating bacteria to purify the wastewater, which also is vulnerable to concrete In the algae industry, biofuels and coproducts such as animal breaks and steel erosion. feed are equally responsible for profitability. Tryg Lundquist, asThe RNEW system will be an open-pond, multi-culture algae sistant professor, wastewater expert and algae researcher at Cal system. Lundquist says his team will have access to 5-acre testing Poly State University, San Luis Obispo, agrees. He is leading a ponds, and it will try a new zooplankton control method. If they team of researchers on a project funded by the California Energy achieve their true goals, they will meet the lipid productivity levels Commission that will focus on algae, wastewater treatment and, achieved in conditions suited for biofuels productions. biofuels, but not coproducts per se. With $692,000 in funding —Luke Geiver

Forget Algae Coproducts, Think Algae Coservice

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FRONTEND

The Army is (Still) Going Green Facetiously, Matt Roberts envisions the day when the U.S. Army might change its current slogan from “An Army of One” to “Be All That You Can Be, And Be Green Doing It.” Roberts, vice president of marketing for Springboard Biodiesel LLC, has reason to boast since his California-based firm sold a 50-gallon BioPro 190 biodiesel processing unit to the Florida Army National Guard’s Camp Blanding Joint Training Center near Starke, Fla., in January 2010.

“The military is just a huge target market for us and we would love to have a BioPro on every military base on the globe,” Roberts tells Biodiesel Magazine. Springboard Biodiesel is responsible for more than 6 million gallons of annual installed capacity spread across 14 countries, Roberts says.

The feeling is mutual, according to Jessika Blersch, sustainability coordinator for Camp Blanding Joint Training Center.

Using Springboard’s processor, she says, has allowed Camp Blanding to achieve what its biofuel program was originally set out to accomplish when it first launched in January 2010: offset fuel costs with a cleaner-burning fuel by decreasing dependence on fossilbased diesel and increase energy security.

Both objectives fall in line with federal and state orders. The program is just now coming out of its pilot project stage.

The camp collects used cooking oil

for free from the camp’s large drums at the Consolidated Dining Facility. It's transported to a maintenance facility where it’s converted into B100 so that the base’s maintenance vehicles, such as mowers and tractors, can pull up to a maintenance facility to fill their tanks on B20. But the amount of fuel that can be produced ultimately depends on the number of vehicles on the installation that can use the biofuel.

“I’ve noticed from the consumption that a lot of them are beginning to incorporate more biodiesel as they fill up their tanks,” Blersch says, adding that Camp Blanding has produced an estimated 1,100 gallons since the program bought Springboard’s processor last year for the program, at a cost of only 67 cents per gallon, roughly. “It’s becoming more of a trusted product,” she says.

In addition to the camp’s maintenance fleet, a school on the camp designated two school buses to run on B20. Also, forestry personnel use biodiesel during burn mixes when conducting prescribed burns on camp. While biodiesel may be produced and offered exclusively at Camp Blanding, plans are to offer biodiesel to additional users outside the gate who may want to reduce fuel costs and use a cleaner burning fuel, Blersch adds.

As for Roberts, he’s proud to see

PHOTO: SGT. FIRST CLASS BLAIR HEUSDENS

How one military installation closes the loop on energy security by producing, using biodiesel

MIX IT UP: Jessika Blersch, sustainability coordinator for the Florida National Guard's Camp Blanding Joint Training Center, measures sodium hydroxide while processing vegetable oil from the installation's Consolidated Dining Facility into biodiesel.

America’s finest take the lead by implementing biodiesel initiatives like Camp Blanding. And he’s optimistic more will follow its example. “We’ve been trying to get the attention of the military to use our equipment for some time now and we’ve found it to be a challenge,” Roberts says, “but we are very pleased that Camp Blanding has taken the initiative to start doing this.”

—Bryan Sims

Optimizing Research A unique acetal could open up new options for biodiesel Acetals can play a critical role in the performance and quality of biodiesel. They function as additives and can enhance the cetane for higher ignitability. They also improve oxidation stability and decrease nitrogen oxide emissions. Ion Agirre, a doctor of chemical engineering at the University of the Basque Country, has discovered a novel route for producing a different type of acetal, 1,1 diethoxy butane, from renewable sources such as plant-derived sugars.

According to a thesis Agirre defended,

titled, “Innovative reaction systems for acetal (1.1 diethoxy butane) production from renewable sources,” he successfully produced 1,1 diethoxy butane using reactive distillations and dehydration membranes between ethanol and butanol. The main advantage of this type of acetal, according to Agirre, is that it is derived from biobased sources where the ethanol can be obtained from fermentation of sugar-rich plants and the butanol from the dehydrogenation or the partial oxidation of its corresponding alcohol. In his research, he

notes that 1,1 diethoxy butane complies with the majority of specifications required for adhering to diesel, unlike other commonly used acetals, such as 1,1 diethoxy ethane.

Agirre concluded that the most efficient and economical option for obtaining 1,1 diethoxy butane could be the combination of dehydration membranes and conventional distillation. Agirre’s work on acetal process optimization can also be found in the Journal of Membrane Science. —Bryan Sims

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FRONTEND

Catalyzing a New Alternative

Heterogeneous catalyst could offer new recipe for biodiesel production Typically, biodiesel is produced via a transesterification reaction in a homogenous phase, meaning the raw materials, such as soybean oil and methanol and a catalyst are in the same liquid phase. But this route can be cost-prohibitive for producers as conventional catalysts used today, such as sodium or potassium methoxide, cannot be reused or regenerated since the catalyst is consumed in reaction. Researchers at the Autonomous Meritorious University of Puebla in Mexico believe they’ve discovered an alternative to this conventional route, however, by employing hydrated lime, or calcium hydroxide, in a heterogeneous process that enables easier separation, higher activity, selectivity and longer catalyst life.

According to Manuel Sanchez-Cantu, lead researcher on the project at the school’s chemical engineering department, he and his team purchased 24-kilogram sacks of hydrated lime from a seller in Perote, Mexico,

and soybean oil that they bought from a local grocery store. They then added methanol and lime to the used soybean oil. After two hours at reaction temperatures of around 60 degrees Celsius, the process yielded conversion rates that approached 100 percent.

Sanchez-Cantu notes that the hydrated lime was reused twice with full conversion of the used soybean oil and methanol to produce biodiesel and the catalyst was not consumed or dissolved in the reaction, which allowed for separation from the products via centrifugation.

“The advantage that hydrated lime has over other catalysts is that hydrated lime represents an inexpensive option compared to other catalysts for obtaining biodiesel since it’s produced in large amounts and it’s readily available,” Sanchez-Cantu says, adding that hydrated lime is also commonly used for industrial applications such as food preparation (to make tortillas in Mexico), water treatment

and petroleum refining. Previous studies have indicated that a different type of lime, calcium oxide, has also shown to efficiently catalyze the transesterification process.

That hydrated lime could also potentially be used for a long period allowing the generation of technology adjusted for continuous processing, which would improve the economics of biodiesel production, SanchezCantu says, adding, "though a lot of work and research should be done."

Sanchez-Cantu says castor oil will also be examined using hydrated lime as a catalyst, but more work is being carried out to optimize the process with soybean oil. “We’re performing tests on the catalyst’s stability and investigating ways to increase it,” he says.

“Also, research is underway on the shaping process of the catalyst employing distinct binders in order to carry out continuous production of biodiesel.” —Bryan Sims

Virginia Needs More Biodiesel Virginia Gov. Bob McDonnell’s recent comments on his state’s attempt to reduce reliance on foreign-based fossil fuel may sound like a broken record, but after signing legislation that he also said could make the state the “Energy Capital of the East Coast,” his words should sound pretty good for Virginia residents, and elsewhere.

Speaking to alternative vehicle advocates and company executives, McDonnell said his state needs to implement an alternative fuel mandate for all of the 10,000-plus state-owned fleet vehicles.

Then, he signed two executive orders, one of which essentially forces the Department of General Services in conjunction with the governor’s senior advisor on energy to form a plan of replacement for current fleet vehicles with those that can run on alternative fuels.

“I think every American understands now that our dependence on foreign sources of oil is not good,” he says, adding 14

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that the move will help out environmentally and financially through job creation. The governor's executive orders will push for nearly every form of alternative energy, and while biodiesel may be in short supply in some areas, the same can be said to a greater extent for fuels such as compressed natural gas or docking stations for electric vehicles. And BIG NEED: Virginia Gov. McDonnell signed executive orders recently to comments from Danny spur replacement of the state fleet to run on alternative fuels.

Marshall, R-Danville, show that Virginians might recognize that too. “In Southern Virginia, we can connect ternative fuel production and usage across the Commonwealth.” —Luke Geiver this (alterative energy) with the research being done with producers like Piedmont Biofuels and others. It can be a boost to al-

SEPTEMBER 2011

PHOTO: OFFICE OF THE GOVERNOR OF VIRGINIA

After two executive orders, use could increase

FRONTEND

An Underground Solution

U.S. EPA issues guidance on underground storage tanks New resources are now available to those who want to store biofuel-blended fuel in underground storage tanks (USTs).

On July 5, the U.S. EPA published guidance on the compatibility of USTs with fuel blends containing more than 20 percent biodiesel or more than 10 percent ethanol.

In a statement provided to Biodiesel Magazine, the EPA outlines the reasoning behind its issuance of the guidance. “Given the increase in use of biofuels, a greater number of [UST] systems will likely store biofuels in the future,” says the agency.

“This may also mean a greater number of UST systems could store fuel blends that contain higher percentages of biodiesel.”

According to the EPA, the guidance applies to Indian country and in states that do not have state program approval (SPA).

Information provided by the agency states that 36 states, the District of Columbia and Puerto Rico, have SPA. The agency notes that the guidance may also be useful to those living in SPA states because they must have a compatibility requirement that is similar to federal requirements. However, the agency also says it “encourages approved states to develop their own guidance regarding the compatibility of UST systems with biofuel blends.”

Specifically, the guidance discusses how owners and operators of USTs that are regulated under 40 CFR part 280 of the Clean Air Act can demonstrate compliance with the agency’s compatibility requirements

for fuels containing more than 20 percent biodiesel or 10 percent ethanol. According to the EPA, federal UST regulation 40 CFR 280.32 has been in existence since 1988.

Regarding the storage of biodiesel fuel in USTs, the EPA says it understands that the vast majority of biodiesel stored in these systems is either B5 or B20. “Available data indicate these blends do not present a significant material compatibility concern,” the agency says. “Therefore, the June 2011 guidance applies to the small number of USTs that are storing greater than 20 percent biodiesel.”

The underground compatibility requirement regulation states that owners and operators of underground storage systems that supply these fuels must use UST systems made of or lined with materials that are compatible with the biofuel blends. In the guidance, the EPA states that “because the chemical and physical properties of ethanol and biodiesel blends may make them more aggressive to certain UST system material than petroleum, it is important that all UST system components in contact with ethanol or biodiesel blends are materially compatible with that fuel.”

The agency explains that until the mid-1980s most USTs were made of bare steel, which is likely to corrode over time, allowing contents to leak. Faulty installation, inadequate operating and maintenance procedures are also named as possible causes of leaking. According to the EPA, the leak-

ing of USTs can cause soil and groundwater contamination, in addition to other health and environmental risks, including the potential for fire and explosion.

To achieve compliance for newly installed equipment comprised of multiple individual components such as submersible turbine pump assemblies, the agency states that UST owners and operators can obtain certification from the equipment manager that documents the compatibility of the entire assembly. If, however, the equipment requires maintenance and components of the equipment are later added or replaced, manufacturer approval of the overall component is not sufficient.

The EPA outlines three acceptable methods to demonstrate compatibility. First, owners and operators can use components that are certified or listed by a national recognized, independent testing laboratory. Second, they many use components approved by the manufacture as compatible with the fuel being stored. Manufacturer approvals must be in writing, indicate an affirmative statement of compatibility, specify the range of biofuel the component is compatible with and be issued by the manufacturer—not the installer or distributor. Third, owners and operators can use another method determined by the implementing agency. EPA says it will work with states as they evaluate alternative methods that fall into this category. —Erin Voegele

A Long-Shot Biodiesel Quest

The Mexican government, jatropha and one man’s pursuit of biodiesel in Missouri There is a lot to doubt about Boyd Ware’s quest to build a biodiesel facility in Fulton, Mo. To start, he plans on using a feedstock that, to this point, has been unavailable for significant use in the U.S.: jatropha. Next, he plans to source the feedstock from the Mexican government. But, his quest doesn’t appear to be a pipedream.

Ware recently made his case before the city council of Fulton to stop the council from

taking away land it had previously set aside for construction of the facility. In a six-toone vote, the council decided to allow Ware to retain the potential use of land based on this recently formed partnership with Mexican officials to produce jatropha. Bill Johnson, Fulton’s city administrator, says the feedstock will be grown and crushed in Mexico and shipped to Fulton via rail.

The city isn’t under contract with

Ware, nor the Mexican government, and Ware is responsible for all of the funding for the biodiesel plant that would use jatropha. “In this struggling economy,” Johnson says on the actions of the city council, “the community is looking for every economic opportunity that comes along.”

—Luke Geiver

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PHOTO: MARATHON BIODIESEL

FRONTEND

KEY BIO: Marathon Biodiesel is working to build a production and distribution network in the Florida Keys.

The Good Ol’ Boy of Biodiesel A 'homebrew' startup thrives in the Florida Keys Doug Lillie is a commercial fisherman of 37 years in the Florida Keys, a former machinist, and a self-proclaimed good old boy of biodiesel. With a little help from the right person, Lillie's efforts might just be the reason biodiesel in the Keys takes off. Seven years ago, Lillie ditched his day job and put his life savings into biodiesel production. “I’m in this for a solution,” he says, “not to solve our big problems but to solve our little ones.” For a long time now, Lillie, in his late 50s, says he thought biodiesel was always the most promising fuel, and,

that by now the entire country would have switched to diesel engines running “bio,” as he calls it. Lillie is more than an idealist though, he’s developed a proven biodiesel production process and hopes biodiesel use in the Florida Keys increases.

His vision started with “bio,” and morphed into a trailer mounted with a processor, just to avoid the hurricane season—and now he has bigger plans for the Keys, and maybe elsewhere. Each week, Lillie serves more than 20 customers who come for his product. He’s currently awaiting ASTM cer-

tification on samples he’s provided, but to this point, he hasn’t received a single complaint from his customers who range from commercial fishermen who’ve modified their engines to run his Marathon-produced biodiesel, to fleet users, to folks looking for a few gallons they can trust. “I’ve got a full mason jar on the counter right now that has been out in the sun for 8 months,” he tells Biodiesel Magazine. “I did a test on it just the other day and it came out great.”

Lillie and his wife, who helps out, and an employee, who sleeps at the production site in a trailer provided by Lillie,take the operation seriously. The attorneys who have signed on with Lillie to patent his process and franchise his recipe and production methods for use on a modular trailer are also serious. “We want to get all the restaurants in the Keys on board with us,” Lillie says, adding that he doesn’t care about huge profits at the moment. “I just want to make bio.”

He currently sells his waste vegetable oil-based biodiesel for $3.75 a gallon, regardless of the price of petrodiesel. “I’ve been called an idiot and a lot of other names,” he says of his pricing model. But, since he finalized his process and started marketing Marathon, his customer list has grown significantly. He’s even looking to bring on more lawyers to continue developing the modular trailer system.

—Luke Geiver

Continued Opposition

Canadian Trucking Alliance persists with biodiesel resistance A petroleum pricing expert working with the Canadian Trucking Alliance is disputing the cost-saving benefits of biofuels. Michael Ervin, vice president and director of consulting services with Kent Marking Services Ltd., recently completed an analysis for the CTA that asserts renewable fuels could actually increase the price consumers pay at the pump.

“It is entirely likely that a more robust ethanol renewable fuel standard (10 percent, for example) might lead to higher gasoline prices, particularly if existing incentive and tax exemptions were removed, since ethanol is a relatively expensive gasoline additive,” Ervin says.

“The same may very well hold true for biodiesel, once better price/ cost transparency is established for this product.”

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A 2 percent biodiesel mandate established by the Canadian federal government went into effect July 1, prompting criticism from some groups, including the CTA. While the CTA’s analysis questions the cost benefits of biofuels, a Regulatory Impact Analysis Statement published by the Canadian government claims the estimated average price increase of the biodiesel mandate over the next 25 years would equate to approximately one-third of a cent per liter, which would be unnoticeable when compared to daily fuel price fluctuations. A review of the RIAS commissioned by the Canadian Renewable Fuels Association further determined that consumers are likely to pay less at the pump for biodiesel blended fuel as production costs drop.

—Erin Voegele

FRONTEND

Going Public

Renewable Energy Group moves toward initial public offering Ames, Iowa-based Renewable Energy Group Inc. has become the latest renewable fuels company to pursue a proposed public offering. On July 18, the company filed a registration statement on Form S-1 with the U.S. Securities and Exchange commission.

Although REG is now in a quiet period and unable to comment on the action, information released by the company notes that USB Securities LLC and Piper Jaffray & Co. will be acting as joint book-running managers for the offering, and Nicolaus & Co. Inc. and Canaccord Genuity Inc. will be acting as co-managers.

The number of shares to be offered and the price range for the offering have not been determined.

GROWING CAPACITY: Renewable Energy Group acquired the former SoyMor Biodiesel LLC facility in Albert Lea, Minn., in July, just prior to filing its IPO. According to REG’s SEC filings, the company currently operates six biodiesel plants with a combined annual production capacity of 212 MMgy. Five of Work is currently underway to bring the idle plant back online. “That those facilities are wholly-owned and one is leased. In 2010, REG form of work takes some time and there can be some variables, but sold nearly 68 million gallons of biodiesel, representing approximately we’re already communicating to our customers that quite soon we will 22 percent of the biodiesel produced in the U.S. during that time. have product available there," said REG President Daniel Oh, followWhile many U.S. biodiesel producers scaled down operations in ing the acquisition announcement. recent years, REG has continued to grow. In fact, the company’s SEC During the announcement of the Albert Lea plant acquisition, filings state that four of the six facilities currently operated by REG Oh was unable to comment on whether REG would pursue the have been acquired since February 2010. purchase of additional biodiesel assets. He did note, however, that Approximately one week before announcing plans to go public, REG believes the biodiesel industry is doing well and is looking for REG completed the purchase of a 30 MMgy biodiesel plant in Albert opportunities to grow. The proposed public offering seems to an Lea, Minn. The former SoyMor Biodiesel LLC facility, which origiobvious step in that direction. —Erin Voegele nally began operations in April 2005, was built and operated by REG.

Solid Production Numbers May biodiesel output strong

U.S. Biomass-based Diesel Production, January-May

Million Gallons

The U.S. EPA’s moderated tracking system (EMTS) data came out in early July, and the numbers show that in May, 82.29 million gallons of biomass-based diesel (including biodiesel and nonester renewable diesels) were produced. The nonester biomass-based diesel portion of that number, however, is very small. The Census Bureau’s methyl ester numbers for May, however, are significantly lower at 58.45 million gallons, down slightly from April’s 60.2 million gallons.

To highlight the difference in these numbers, January through May Census Bureau numbers tally up to 225.64 million gallons of methyl ester biodiesel production whereas EPA’s EMTS data from the same period show the volume of biodiesel produced was 297.4 million gallons. Total biomass-based diesel production, according to EMTS data in the same period, was 307 million gallons, so only about 9.6 million gallons of nonester renewable diesel has been produced under the RFS2 system this year.

By the time June numbers come out, the U.S. industry will have already surpassed its biodiesel production volume for all of last year.

—Ron Kotrba

SOURCE: U.S. EPA

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Biodiesel Industry Calling All Hands on Deck We’re all hearing the good news about biodiesel this year. Production is rebounding. Plants are hiring. The market is responding, and the industry is on track for a record year of production.

The turnaround is well-deserved. The U.S. biodiesel industry has worked incredibly hard to overcome some very difficult times over the past two years and laid the groundwork for our current and future success.

With every successful moment, however, comes the knowledge that the future will continue to be challenging, and I would like to caution everyone against complacency. While many things are going well now, we can't let up.

As most of you know, the biodiesel tax incentive is set to expire again at the end of the year. December may seem like a long way off, with kids back to school, Halloween around the corner, and Thanksgiving and Christmas distant holidays. But before we know it, we will be celebrating New Year’s Eve, and if we aren't aggressive now in persuading members of Congress that continued federal support for biodiesel is a wise investment, then we will surely face another frigid January.

To that end, the National Biodiesel Board is once again working overtime to rally and coordinate the industry behind our No. 1 federal priority this year, to earn an extension of our tax credit. In June, the Biodiesel Tax Incentive Reform and Extension Act of 2011 (Senate bill S. 1277 and House bill H.R. 2238) was reintroduced, and in July, just as we did in 2010, we relaunched our Fueling Action grassroots advocacy campaign and website aimed at getting everyone involved in spreading the message of biodiesel’s benefits.

Of course, NBB’s staff is also working in overdrive to help get us over the finish line. But the fact is, without you—the employees and investors who make up the biodiesel industry—we will not be able to accomplish our goals.

That is particularly true this year, when there are so many new lawmakers on Capitol Hill who know little about biodiesel and when lawmakers of all stripes are scouring government programs for anything to cut from the budget. It is critical that political leaders be made aware of our industry’s positive impact on the economy, the environment and U.S. energy security.

We must get them to understand that our industry is worth the investment—that the tax incentive helps create jobs in nearly every state in the country, helps clean our air while reducing greenhouse

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gas emissions, and helps reduce America's dangerous reliance on foreign oil. Without the tax credit our industry will be devastated, much like it was in Larry Schafer, 2010. We have a Senior Advisor, NBB great message to offer; we just need to make sure our political leaders are hearing it.

These contacts can come in the form of phone calls and letters to Congress, letters to the editor to the local newspaper, invitations for lawmakers or key staffers to visit your plant, or enlisting local community leaders to help with the cause.

Because we know you’re busy producing and selling biodiesel, we’ve posted a trove of information on NBB’s Fueling Action website, which can be found front-and-center on our homepage at www.biodiesel.org. Among other things, you’ll find a list of team captains who are leading efforts in individual states, guidance on talking through our industry’s issues with lawmakers, a list of frequently asked questions, a sample letter to Congress, and information about finding and contacting your representatives.

Last year, the Fueling Action campaign mobilized more than 3,300 calls and letters to Congress, more than 150 letters to the editor and a series of media events and biodiesel plant visits.

While we aren’t in the same dire straits we were in 2010, let me reiterate: we cannot wait until winter to make our case. There are simply too many new lawmakers who are unfamiliar with biodiesel, and too strong a current for eliminating federal incentives to expect to keep our tax credit without aggressively educating Congress about why we’re worth it.

I would encourage everyone with a stake in the biodiesel industry to get involved today, starting with a visit to our Fueling Action website and a phone call to your elected representatives.

By definition, grassroots action relies on individual voices joining together to make an impact. Make your voice heard!

Larry Shafer, Senior Advisor, National Biodiesel Board

inside

NBB BQ-9000 continues to grow with industry commitment to fuel quality High quality fuel continues to build consumer confidence in biodiesel and consumers can rest assured that biodiesel procured through BQ-9000 accredited organizations has undergone strict adherence to quality management practices.

The backbone of the BQ-9000 program is the unique combination of the ASTM standard for biodiesel, ASTM D6751, and a quality management system that includes storage, sampling, testing, blending, shipping, distribution and fuel management practices that ensure quality for consumers.

The BQ-9000 program continues to grow as new companies apply and receive their accreditation and existing companies recertify to the program. Recently two new companies became BQ-9000 accredited. The Renewable Energy Group Inc. plant in Seneca, Ill., received its producer certification and Hess Corp. in Woodbridge, N.J., received its marketer certification. Three BQ-9000 accredited marketing companies were recently recertified into the program for three years: Sprague Energy of South Portland, Maine, RKA Petroleum of Romulus, Mich., and Caljet of America LLC out of Phoenix.

The number of new applications to the program has also increased significantly in 2011.

Currently, six companies are going through the initial audits to become accredited.

According to BQ-9000 program manager Kyle Anderson, 79 percent of U.S. biodiesel production in 2010 came from BQ-9000 accredited producers. This number has steadily increased since 2005 and, so far in 2011, it has risen to 81 percent. Along with the continued commitment by biodiesel producers, there has been a noticeable increase in interest from marketers and fuel testing laboratories in recent months.

For more information or to inquire about becoming a BQ-9000 Accredited Organization, contact Kyle Anderson at the National Biodiesel Board office.

Hino Trucks added to growing list of OEMs supporting B20 biodiesel blends The biodiesel industry earned another strong statement of OEM support in July as Hino Trucks, a Toyota Group Company, announced its full approval for use of 20 percent biodiesel blends in its complete product line of class 4 and 5 cab-over, and class 6 and 7 conventional trucks. Hino Trucks is the world’s third largest manufacturer of light- and medium-duty trucks, and now the fastest growing truck manufacturer in the U.S. Hino’s B20 statement comes on the heels of competitor Isuzu Commercial Trucks’ B20 support announcement in June. Together these companies command more than 85 percent of the medium-duty truck market share in the U.S. Looking at the big picture, all of the major diesel vehicle and equipment manufacturers in the U.S. approve the use of at least B5 in their equipment, and now more than 60 percent of them also approve the use of B20 or higher blends. The move toward B20 is a trend that is expected to continue, due in large part to the biodiesel training efforts of the National Biodiesel Board’s OEM Outreach

& Education Program, as well as continuous improvement in biodiesel fuel quality and growing availability of the fuel under EPA’s RFS2 requirements.

All Hino 2011 and 2012 model year cab-over and conventional trucks powered exclusively with Hino’s proprietary J-Series engines are approved to use biodiesel B20 blends that contain biofuel blend stock (B100) compliant to ASTM D6751, and blended fuel compliant to ASTM D975. B20 biodiesel meeting these standards is also approved for use in Hino’s newly announced diesel-electric hybrid cab over due to enter the market in late fall.

Hino trucks built prior to the 2011 model year are approved to use B5 biodiesel. All biodiesel fuels used in Hino trucks must be purchased from a fuel handler licensed under BQ9000.

Look for more B20 support announcements expected from other key players in the U.S. diesel vehicle market in the months to come. For more information, visit www.biodiesel.org.

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insideNBB

NBB ad hits national publications with advanced biofuel message The advertising portion of the National Biodiesel Board’s Advanced Biofuel Initiative continued rolling along this summer. The initiative designed to secure biodiesel’s role as an advanced biofuel includes both paid ad campaigns and organizational outreach. The first-ever national ad campaign for biodiesel began this spring.

The comprehensive ad campaign includes a 30-second television commercial with a national cable ad buy scheduled for the fall with additional regional ad buys. Print and online media outreach portions of the campaign are designed to reinforce the images and the messages in the television commercial.

The ads in this page are examples of the ads that appeared in print and online versions of regional publications. Campaign information including the TV commercial can be found at www.advancedbiofuelnow.com.

NBB welcomes new members Extreme Biodiesel—Corona, Calif.

ERS Acquisition Corp.—Natchez, Miss.

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insideNBB

NBB communications team spreads the word on industry rebound With the resurgence in the biodiesel industry, many National Biodiesel Board members have been actively expanding their businesses. With that expansion come many positive stories of economic growth, green jobs and biodiesel acceptance. The NBB communications team is here as a resource for members to help spread the news.

There are many ways to generate positive press for biodiesel in the current economic climate. Whether it is through organizing a grand opening event for a new terminal, a press release on a production plant acquisition or a simple press event at your facility, NBB can help.

“NBB members have a great team of communications experts at their fingertips,” said NBB Communications Director Jessica Robinson. “We have an extensive set of resources from press con-

tacts, talking points, event planning experience and much more that we strongly encourage members to utilize.”

Robinson added that it is very important to get positive news about industry growth out to the public after the drop in production and availability in the past two years.

“People need to know that the biodiesel industry is going strong producing America’s advanced biofuel all across the country,” said Robinson. “The resilience within the industry is an incredible story that policy makers, customers, and stakeholders need to hear.”

So as plants come back into production, regional terminals begin blending biodiesel, retail stations open biodiesel pumps and other positive stories arise, let NBB know. We can help get the word out. NBB members can simply contact Kaleb Little at klittle@biodiesel.org for more information.

The privilege of partnership: NBB recognized by OEMs As a result of ongoing OEM outreach programs, National Biodiesel Board members can participate in partner vehicle pricing plans with Chrysler and Ford.

The Chrysler Affiliate Rewards program and the Ford X-Plan offer deep discounts to members of partner organizations. Because of NBB’s relationship with these two OEMs, NBB members, as well as company employees and their spouses can receive discounts on the purchase or lease of eligible vehicles. Plans include most models of Chrysler, Jeep, Dodge, Ford and Lincoln vehicles including diesel and gasoline models.

“The reward programs with Chrysler and Ford really show the strength of the relationships built by the National Biodiesel Board with the OEM community,” said Jennifer Weaver, NBB OEM outreach and education specialist. “It is exciting to see that these relationships translated into direct savings for NBB members, above and beyond the benefits of having major engine manufacturers backing biodiesel.”

The process for using the rewards system is as simple as logging into the OEM’s website to provide some personal information and a partner code provided on the NBB members only website, and then taking a print-out to your local dealer along with identification and proof of NBB membership. The no-haggle, preferred price is typically below factory invoice and is available in addition to most consumer incentives available at the dealership.

Weaver added that currently more than 60 percent of manufacturers in the U.S. market have approved the use of B20 or higher blends in their equipment. The B20 support spans the light-, medium- and heavy-duty sectors and includes agriculture, fleet and over-the-road applications.

Save the date for the 2012 The U.S. auto industry and Biodiesel Conference & Expo OEMs continue to show their Feb. 5-8 in Orlando, Fla. Registration opening soon at support for biodiesel in a numwww.biodieselconference.org. ber of ways. In the past several

years, we have seen companies increase their support by warrantying B20, designing drivetrains with biodiesel in mind, and integrating biodiesel into marketing campaigns, to name a few.

Additional information on OEM support for biodiesel can be found at www.biodiesel.org/resources/oems/ including an OEM statement summary, listings of available diesel vehicles in the U.S., biodiesel standards and more.

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BusinessBriefs A federal judge has granted the U.S. Securities and Exchange Commission a summary judgment against John H. Rivera, chairman and CEO of Texas-based U.S. Sustainable Energy Corp. The SEC claimed in its complaint that Rivera used false press release and public statements to drive interest in his company’s stock in order to dump insider shares into a public market that was fraudulently influenced by his false statements. The complaint also alleged that Rivera falsely claimed that his company could employ the Rivera Process, a pyrolysis process, to produce products. According to court documents, the SEC asserts that the case is not about whether a pyrolysis process could be successful, but whether Rivera’s claims that he had perfected such a process were false. The filing further elaborates that the Rivera fraudulently claimed that his company had a fully operational plant, that the process could create 5 gallons of fuel from a single bushel of soybeans, and that his company could produce 6,000 gallons of fuels per day at a cost of 50 cents per gallon. In addition, the complaint alleged that Rivera made misrepresentations regarding a prominent investment banker and prominent industry figure’s involvement in his company. He also misrepresented a property purchase, fertilizer sale and the development of ASTM-certified biodiesel.

After sitting idle for a year, Inland Empire Oilseeds LLC managed to restart production at its 8 MMgy canola-based biodiesel facility, including an adjacent canola crushing plant, in Odessa, Wash. Under new management, the plant resumed production in June and held an open house for industry and community members in July to commemorate the opening. The facility will operate with staff that had worked there prior to its

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Companies, Organizations & People in the News

closure last year. The canola crush facility can crush about 90 to 100 tons of canola per day. The Inland Empire Oilseeds plant first came online in November 2008. The company is vertically integrated and sources its feedstock within Washington and neighboring states of Oregon and Idaho, and crushes seed to produce its biodiesel.

Bing’s Creek Biofuels Facility at CVRD Solid Waste Management Facility in Duncan, Vancouver Island, Canada, owned by the Cowichan Bio-Diesel Co-operative, which has been supplying biodiesel from waste vegetable oil to its members for six years, recently held a grand opening ceremony to celebrate local, sustainable biodiesel production. The locally produced fuel will be available for sale to co-op members at the 2999 Allenby Road card lock. Also, in Catawba County, N.C., a partnership between the county and Appalachian State University plans to commemorate completion of the Catawba County-Appalachian State University Biodiesel Research, Development and Production Facility mid-August. The complex includes crush abilities and a biodiesel production capacity of 100,000 gallons per year. Research will include growing crops around the Blackburn Landfill at the EcoComplex to test which feedstocks grow best in the local climate and produce the best oil for biodiesel; dynamometer emissions and energy value testing, and algae development.

Chevrolet has plans to offer a new diesel engine option in the Cruze for improved fuel efficiency and use. Already the most fuel-efficient, gas-powered, nonhybrid vehicle in America at 42 miles per gallon during highway driving, the Cruze was the bestselling car in America for the month of June, according to the Diesel Technology Forum.

Since February, more than 20,000 vehicles in the Cruze lineup, which features a standard six-speed transmission, have been sold.

SEPTEMBER 2011

Volkswagen will begin producing a Passat featuring the TDI diesel at a new Chattanooga, Tenn., plant soon, and Mazda has also signaled that it will be the first of the Asian car makers to offer a diesel passenger vehicle in the U.S., called the Skyactiv-D. While diesel autos account for roughly 50 percent of all new auto sales in Europe, the number is drastically less in the U.S. at just 3 percent.

Through a public/private partnership with Darling International, the Chicago Park District officially launched a biodiesel production program that will provide its fleet of light-duty diesel vehicles and several of its lawnmowers with ASTM-certified biodiesel. Last year, CPD repurposed an underutilized fleet fueling site that’s capable of dispensing B5, B20 and B100. Nearly 300 of the district’s vehicles will be able to fuel up at the site, which will produce 20,000 gallons this year and eventually 50,000 gallons in subsequent years. K-plus Mechanical Services Inc. was responsible for design and build-out of the biodiesel production facility while Oak Park, Ill.-based Indigenous Energy is operator and manager. Total cost for the biodiesel processing equipment ran up to about $650,000, but most of that was offset thanks to a $250,000 grant from the U.S. DOE. The projected fuel cost savings is about 50 cents per gallon at a B20 level and $2.50 per gallon at a B100 level, according to Powers. Indigenous Energy accessed technical and lab expertise from BioVantage Fuels LLC, which owns and operates a 5 MMgy biodiesel plant in Belvidere, Ill., on the implementation of the CDP biodiesel program.

BUSINESSBRIEFS Sponsored by The ASTM D6751 biodiesel specification will soon feature three additional test methods for B100, including a BASF patented infrared spectroscopy process for the rapid analysis of total glycerin, free glycerin and cloud point. “Total and free glycerin analyses are some of the more challenging analyses when monitoring biodiesel quality,” says Kyle Anderson, technical project manager for the National Biodiesel Board, “yet arguably two of the most important properties to ensure high-quality fuel.” The new method of testing, Ck 2-09, will allow BQ-9000 testing facilities to test biodiesel samples using only a drop of fuel in roughly two minutes without sample preparation or the use of chemical reagents, according to Quality Trait Analysis, a BASF company based in Ohio. The Ck 2-09 method combines attenuated total reflectance (ATR) with the infrared spectrometer. An infrared beam of light is reflected off an ATR crystal that shows or reflects off the internal surface that is touching the sample. That reflected beam is then collected by a detection device and can be analyzed for traits such as total glycerin, free glycerin or cloud point.

A new biocatalyst developed in a chromatography tube at the Centre de Recherches Paul Pascal (CRPP), could greatly improve continuous biodiesel production processes. There are two main features of the enzymatic catalyst that will help improve the process. For one, the enzymes are used without being purified, which enhanced stability while minimizing the whole catalyst price.

The second feature of the catalyst relates to the size, using macroporous (pore diameters of micrometers) hosts and not mesoporous (pore diameters of nanometers). This opti-

mizes the enzyme’s accessibility and minimizes pressure loss between the column’s entry and end. The enzymes are from silica macrocellular foam with lipases appearing at the macropore internal surface. To optimize the enzymes, the team generates the foams within the chromatography column using a direct emulsion. The silica foams are then hybridized with a linker, which traps the enzymes and embeds the enzymes into the porous surface. The enzymes are essentially embedded into a reactor with a unidirectional continuous flow, and rely on the larger size of the pores on the surface of the reactor and the properties of the silica framework within the reactor for a greater reaction area.

The Arbeitsgemeinschaft Qualitätsmanagement Biodiesel e.V. (AGQM) recently presented results of a jointly initiated project at the 5th annual expert discussion dealing with the issue of biodiesel filterability. Petroleum and biodiesel experts were on hand.It was shown that the contents of alkaline and alkaline earth metals, phosphor and sulphur were significantly below the levels set out in the biodiesel norm EN 14214. Furthermore, the contents of sterol glycosides (SG) and acylated sterol glycosides (ASG) in biodiesel, which are suspected of causing filter blockages, were very low. A correlation between the ASG and SG contents and filterability could not be shown as a result of these studies. A topic increasingly discussed on an international level, the phenomenon of microbial growth, can be controlled using preventive measures ("good housekeeping").

Nonetheless, according to the comments by

the mineral oil industry on the present results, the biodiesel industry must reduce the water content in biodiesel if this is possible in terms of processes. Against this background, the participants discussed the current level of norms for biodiesel as well as the implementation of the AGQM recommendation “FAME for blends,” which contains voluntary specifications exceeding the biodiesel norm EN 14214.

Independent fuel distributor Pacific Pride Services LLC, a subsidiary of Wright Express Corp., and Quality Petroleum of Alabama, jointly opened the first Commercial Fuel Center in Tarrant, Ala., where various blends of biodiesel (from B5 to B20), in addition to ethanol, will be offered for commercial fleet fueling. The new location marks the eighth Pacific Pride Commercial Fuel Center in Alabama. Networked with 1,000 other Pacific Pride commercial fuel centers across the U.S. and Canada, the site will accept most major fuel cards, including Pacific Pride and Wright Express commercial fuel cards, Comdata, Voyager, TCH, Fleet One, T-Check, ComCheck and EFS. The new fueling center will operate 24 hours a day, seven days a week, and will also feature transaction monitoring equipment to provide transaction security for its private and public fleet customers. In addition to its eight fueling stations in Alabama, Quality Petroleum also boasts five fueling centers at various locations in Florida.

SHARE YOUR BUSINESS BRIEFS To be included in Business Briefs, send information (including photos, illustrations or logos, if available) to: Business Briefs, Biodiesel Magazine, 308 Second Ave. N., Suite 304, Grand Forks, ND 58203. You may also fax information to (701) 746-5367, or e-mail it to rkotrba@ bbiinternational.com. Please include your name and telephone number in each correspondence.

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ASIA

FEEDSTOCK CONSTRAINTS: Kasiviswanath Muthukumarappan, right, a professor at South Dakota State University, says the biodiesel work going on in India and China isn’t much in comparison to the U.S., Europe or Latin America, mainly because of feedstock shortages.

PHOTO: SDSU

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Developing

India A researcher and a producer explain what it will take

BY LUKE GEIVER

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The maximum potential for the development, production or use of renewable energy in India, in this case biodiesel, is virtually unlimited. Most of us don’t need a report to tell us that India is a massively populated, rapidly developing nation that is fast catching up to the rest of the world in its quest and usage of energy. More specific information can be found in a report Novozymes commissioned this year that shows fuel demand in India will grow by 8.5 percent a year by 2020. Roughly estimated, a $100 barrel of crude would equate to $19.4 billion the country would spend on imported fuel. A report done by the Pew Charitable Trusts earlier this year examining global investment in renewable energy shows that, for the first time, India has entered into the top 10 countries of the G-20 nations that have invested clean energy dollars over the past year.

Combine all of those report findings with the high volume of diesel vehicles or the promising allure of a nonedible feedstock that can be grown on marginal lands from coast to coast, and it’s easy to see why India creates so much excitement and grandiose visions of future biodiesel production capacity. Unfortunately, however, no statistics on available acres suitable for jatropha, number of diesel engines required, or size of population in need of a safe, renewable energy source indicate the amount of time it will take to convert those big dreams into a significant biodiesel powerhouse.

To provide a more accurate picture of the biodiesel landscape in India, Biodiesel Magazine left the reports behind and spoke with individuals who’ve experienced first-hand what the country does, and does not, have to offer renewable energy producers. Their perspectives show us that big potential has meant very little to the country’s progression towards greater biodiesel or other renewable fuel usage. Their personal reports, however, indicate that there is still hope.

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PHOTO: SDSU

Reports on global potential for clean technology, renewable energy or any other category that biodiesel might fit into, reveal an obvious fact:

PROFESSOR BLUNT: Kasiviswanath Muthukumarappan, an SDSU professor of agriculture and biosystems, says, quite frankly, India has “not much going on” in biofuels, due to government corruption and ineffective policy.

The Traveling Professor When Biodiesel Magazine first spoke with Kasiviswanath Muthukumarappan (Muthu for short), professor of agriculture and biosystems at South Dakota State University, he was calling from a hotel room in China, well past midnight. Muthu is part of the innovative SDSU research team that has tackled everything from biomass handling to algae cultivation, and as his call demonstrated, Muthu is not afraid of spending time away from South Dakota, traveling to China, Italy, Indonesia and certainly, India.

For our second conversation, Muthu called from Washington, D.C., where he was reviewing proposals to the USDA regarding food processing techniques.

Last year, he attended a first-ever biofuels conference in India and, since then, he says his inbox has been filled with requests to return. In addition to last year’s conference, he’s been to India several times looking for new collaborators. “We are trying to work through proposals and collaborations with China and India,” he says. But a seminar on biodiesel or other biofuels is vastly different in Atlanta than it is in India or

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China, he says. “It is very difficult to compare the trips. You aren’t comparing apples to apples,” he says. “It is different going to India.” While there is a lot of work going on in India and China in terms of biodiesel, according to Muthu, there isn’t as much in comparison to the U.S., Europe or Latin America.

“There is not much going on with biofuels [in India],” he says, “because there just is not much feedstock. They cannot collect feedstock at the higher amounts.” Although biofuels research is lacking, Muthu says of all biofuels, biodiesel gets the most attention as several research institutions are testing different oilseeds as feedstocks.

In addition to the research efforts in biodiesel throughout the country, Muthu also explains that during his visits to conferences or meetings, he’s not only linking up with other researchers, but also private companies. “I have some important contacts from those meetings,” he said. One of which is Praj Industries, a global EPC contractor and technology developer that has already signed on with U.S.-based Qteros to help in building a facility that would put

ASIA A View from Japan

From Gupta’s perspective, the general landscape for biodiesel production in India doesn’t reflect the promise of potential seen in those reports, but rather the reality of a dysfunctional government unwilling or unable to make good on promises that would significantly help the industry.

The condition of ineffective governmental support and general lack of feedstock is not unique to India. Atushi Yoshiike of Revo International, Japan’s largest biodiesel producer, says that even though Korean and Chinese governments have committed to promoting the use of a mixed fuel made of biodiesel and petrodiesel, “there is a lack of feedstock oil in these countries." In both countries, he explains, there are tentative plans to increase the blend ratio from 1 percent to 3 to 5 percent within a few years.

His home country of Japan supports SHARE THE BURDEN: Japan is recovering a B5 blend, but unfortunately, “there is no from a natural disaster, but along with policy shortcomings and feedstock supply concrete plan in place," Yoshiike says. And, like Gupta, who said infrastructure supply is- issues, it continues to work at biodiesel sues make fueling the general transportation production on all levels. market with biodiesel very difficult, Yoshiike says “we are not able to use the existing infrastructure to supply biodiesel because the petroleum industry in Japan is blocking the spread of biodiesel.”

Yoshiike’s thoughts on Japan rival those of Yi-Fa Lee, the chairman of Chant Oil Corp., a biodiesel producing company based in Taiwan, who recently spoke about the Chinese government and its lack of biodiesel support in the Chinese newspaper, the China Post. Lee said the biodiesel industry was started by the government in 2006, but is now on the brink of collapse and is ultimately “in need of rescue.”

Much like Gupta, Yoshiike does see the potential of biodiesel in Japan based on the possible size of the market, even though he says similar changes are needed in his country as those Gupta says are required in his. “We face many difficult problems such as taxation and a lack of support for biodiesel,” he says, adding that with the growing popularity of hybrid engines and electric cars, “we believe that diesel engines will continue to be a popular engine all over the world.”

PHOTO: REVO INTERNATIONAL

Electric cars and government shortcomings won’t stop biodiesel here

the Qteros Q-microbe for cellulosic ethanol production to work.

As Muthu explains, though, it is apples to oranges when comparing a trip to Washington, D.C., with a trip to New Delhi.

There is no lack of research happening in either country, but the logistics and necessities of feedstocks are vastly different, and have put the biofuels industry in India years behind the U.S. But, even with the differences, Muthu says his trips and time spent in underdeveloped places such as India are worth it. “They want to collaborate with us,” he says, adding that he is already working through a number of proposals for collaborations that would possibly send some of his students back to India to help tackle the issues of feedstock logistics and operating costs confronting the developing nation.

“It could create a win-win situation,” Muthu says.

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PHOTO: SDSU

ASIA

BETTER EVERY TIME: Each visit to India or China for Muthu has helped him develop relationships that allow his students to learn more about the challenges to feedstock supply each country faces.

Indian Producer Tells All If Muthu represents a perspective showing the type of work being done to develop India, then Sanjeev Gupta, president of Universal Biofuels, a 50 MMgy biodiesel facility in India, represents a perspective of what is already happening. Listen to Gupta, and all of the numbers from those reports start to seem misleading. When asked a general question on the state of biodiesel in India, Gupta replied, “Literally, nothing is happening.”

The Kakinada, India, plant, a wholly owned subsidiary of U.S.-based AE Biofuels Inc., was built in 2008 by Desmet Ballestra, and, according to Gupta, is only one of about six facilities remaining in the entire country. “We are still open because we are doing a little bit of this and a little bit of that,” Gupta says. “I’m trying to compete and wrestle with the Indonesian and European markets.”

From Gupta’s perspective, the general landscape for biodiesel production in India doesn’t reflect the promise of potential seen in those reports, but rather the reality of a

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dysfunctional government unwilling or unable to make good on promises that would significantly help the industry. First, he says, export regulations do not allow the country to export their product. As far as the domestic market is concerned, he says, “The problem here in India is that the government controls the refining and distribution

While the government has said it will give a tax break to fuel mixed with a blend of 5 percent or more biodiesel, that benefit has never been realized by Gupta or any other producer. of all petroleum products,” and, with the sort of emphatic tone to his voice that one could only take as a true feeling of concern, “it is a very corrupt system over here.”

Essentially, Gupta says, the government’s attempts to further the industry have been muddled due to that corruption.

While the government has said it will give

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a tax break to fuel mixed with a blend of 5 percent or more biodiesel, that benefit has never been realized by Gupta or any other producer. The problem, he explains, is linked to the “tax guy,” who is unwilling to recognize a blended product. So, he says, “you pay the same tax (for a blended product) as you would pay on regular diesel. They are basically asking me,” he explains, “to call the biodiesel blended diesel, diesel.”

“This is not a developed nation so people don’t understand,” he says. There are scams coming out every day that Gupta says most people don’t even hear about. Because of that, “the government doesn’t have time to look at everything.”

Gupta hasn’t been one to sit idle in the face of a corrupt system that has virtually capped his ability to make a profit via biodiesel. He says he’s gone all the way to the top, which appears at first glance to clearly be in favor of renewable energy such as biodiesel. In 1987, the country established the Indian Renewable Energy Development Agency as a specialized financial institution to provide support for energy conservation and renewable energy projects. IREDA, a part of the Ministry of New and Renewable Energy, has since financed 1,921 projects reaching a $3 billion. The IREDA recently stated that “of late, the growing awareness and favorable government policies and regulatory mechanisms (both at the central and state level) have led to gradual increase in confidence of domestic commercial banks providing loans to renewable energy projects.”

But, for all that talk, Gupta says he cannot reach the traditional transportation market. “I’m basically catering to the fleet owners and the discretionary blenders and the industrial sector,” he says.

Because India is a net importer of oils, and palm oil is the cheapest, closest available feedstock, Gupta uses only palm oil.

Waste vegetable oil (WVO) or used cooking oil isn’t even a viable prospect, he says, noting again the nation’s need for further development, and the fact that WVO is simply reused again and again until it’s totally consumed.

PHOTO: MINISTER OF NEW AND RENEWABLE ENERGY, INDIA

ASIA biodiesel industry in India is bleak at best, and his stance on the savior feedstock jatropha is even worse, he does share some of the same sentiments of Muthu, and even those promising reports. The speed of research being done in the Americas, he says, is far ahead of India. But, if the U.S. comes up with a new technology or figures out algae, he says, “India will adopt it. India has a lot of sun and a huge coastline.”

As for a perspective rivaling those reports that indicate India is an untapped promise land for renewable energy, Gupta

explains it this way. In the U.S., he says, when the tax credit went away, most figured it would come back and the industry would be strong again. That happened, he says. But in India, we just don’t know what will happen. But if a 5 percent mandate was actually enforced, or the tax situation was cleared up, “this is a huge market and we could all be running full capacity the very next day.”

Author: Luke Geiver Associate Editor, Biodiesel Magazine (701) 738-4944 lgeiver@bbiinternational.com

WORK IN PROGRESS: Although the work of Farooq Abdullah, union minister for new and renewable energy in India, has looked at several renewable energy provisions, there is a disconnect between policy and enactment.

Of course, the obvious beacon of hope, something that could provide a viable, cheap feedstock is jatropha. Remember Gupta’s thoughts on the state of biodiesel activity in the country? He holds the same perspective for jatropha. Even with companies like Mission NewEnergy basing its business model on the toxic, nonedible plant in Gupta’s own India, he says, “Jatropha isn’t even a [pipe] dream now.”

So what, he says, if some researcher is trying to do some research, looking for a hybrid that can yield 2 to 3 tons of oil on marginal land. On marginal land jatropha won’t be able to meet those yields, he says, and the industry can’t wait the two to four years it will take to grow and develop the plant. “If somebody tells me they have a hundred acres, I’ll believe them, but that isn’t even enough for my one day's worth of production.”

Even though Gupta’s outlook on the

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PHOTO: PETROBRAS

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SEPTEMBER 2011

LATIN AMERICA

Solid Growth

in Central, South America A recap of regional biodiesel developments and a look ahead

BY BRYAN SIMS

Latin American countries continue to take ambitious steps to promote production and consumption of biodiesel. Predictably, in South America, Brazil and Argentina continue to dominate with several large-scale projects in queue, and Columbia, among others, is showing potential as a biodiesel producer and exporter. In Central America, Guatemala and Costa Rica and others are also making expansive efforts.

Brazil’s biodiesel market is experiencing healthy growth built around solid public policy, and it is beginning to have positive effects on the Brazilian trade balance. In January 2010, the mandated blend requirement for biodiesel in Brazil was increased from B2 to B5, three years ahead of initial scheduled targets under the national Program SEPTEMBER 2011

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PHOTO: PETROBRAS

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MOVING PRODUCT: The B5 mandate led to production of 2.4 billion liters (634 million gallons) of biodiesel last year in Brazil.

for the Production and Use of Biodiesel launched in 2004. This year, the Brazilian Biodiesel Union requested that the government adopt measures to increase the mandated blend requirement to B20 by 2020, and because a tight domestic supply balance for soybean oil is expected, trade sources don’t foresee any increases to the current B5 blend requirement until 2013.

Brazil’s soybean processing, refining and bottling capacity continues to grow, with soybean oil consumption estimated at 5.7 million metric tons in 2011-‘12, according to a USDA Foreign Agricultural Service report published in April, and 2.2 million metric tons of that expected to be used as feedstock for biodiesel production. Rising biodiesel production may hamper Brazil’s soybean oil exports this year, however, according to a report published in June by Hamburg, Germany-based Oil World. Brazil, the world’s second leading soybean oil

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exporter, may sell only 1.5 million metric tons of soybean oil for the remainder of the year, according to Oil World, down from 1.56 million metric tons in 2010. It is expected though that within five years, palm oil will cut into the soybean oil capacity used in the food industry and thus free up additional soybean oil for biodiesel production. Soybean oil accounts for 82 percent of biodiesel produced in Brazil, followed by animal fats (14 percent) and cottonseed oil (2 percent), with other oilseed crops such as castor bean and palm oil used in nominal quantities, according to the USDA FAS. Brazil is the fifth largest biodiesel producer in the world, coming in just behind Argentina, and houses 69 biodiesel plants with a combined annual installed capacity of more than 5 billion liters (1.32 billion gallons). In 2010, biodiesel production reached 2.4 billion liters under its B5 blend mandate.

The USDA FAS report estimates that an

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additional 150,000 metric tons of soybean oil will be required annually to maintain production levels under its current B5 requirement.

Investments in new and developing biodiesel projects continue to be made as several big-name agribusiness and pure play biodiesel companies announced plans this year to expand operations in the country.

In June, BioVerde Industria e Comercio de Biocombustiveis S.A., which is building Brazil’s largest biodiesel plant, expects to sell 40 percent of its output to Europe by 2015.

BioVerde is also committed to becoming Brazil’s leading specialty chemicals manufacturer from renewable sources. BioVerde plans to retrofit a facility in the state of Sao Paulo that will be able to convert vegetable oils into 100 million liters per year of chemicals for industrial applications.

In July, state-controlled oil and gas giant Petrobras forged a partnership with in-

LATIN AMERICA country producer BSBios Industria e Comercio de Biodiesel Sul Brasil S.A. to evaluate new biodiesel, ethanol and specialty chemical projects. Petrobras acquired a 50 percent stake in BSBios as part of the agreement.

According to Petrobras, it plans to spend $3.5 billion through 2014 to boost biofuels ouput. The stake in BSBios “consolidates Petrobras’ leadership in the biofuels sector,” according to a company statement.

Other notable projects under development in Brazil include a 414,800-liter-per-year biodiesel project located in the state of Mato Grosso developed by Bunge Alimentos SA. In 2010, Archer Daniels Midland Co. announced plans to construct a biodiesel plant adjacent to its existing oilseed operations in Jaocaba, and Brazilian energy company Companhia Paranaense de Energia, or Copel, is developing a very smallscale (about 5,000 liters per year) biodiesel plant in Sao Jorge d’Oeste.

Argentina Like Brazil, Argentina’s biodiesel industry has seen explosive growth in recent years with a healthy blend mandate to spur domestic production, feeding excess volumes to export markets—mainly to Europe.

Argentina remains the global export leader of biodiesel, surpassing the U.S. last year. Its biodiesel exports are forecast at a record 1.6 billion liters by the end of the year, according to a USDA FAS report released in July, and in 2012, are projected to reach a record 1.75 billion liters as the country could easily supply additional volumes if the demand is stronger, depending on unused capacity and availability of feedstock.

An outlook report by the Economic Cooperation and Development and the Food and Agriculture Organization of the United Nations, says Argentina is expected to reach about 2.5 billion liters by 2020.

Despite its established export regime, there will surely be no shortage of feedstock—soy oil—or volumes of biodiesel to fulfill its national B7 mandate, which went into effect late last year. By the end of 2011, Argentina is projected to produce about 2.5 million tons of biodiesel and 3 million tons

in 2012, its highest forecast ever, according to Carlos St. James, managing director of Santiago & Sinclair LLC, an advisory firm focusing primarily on Latin American biofuel markets. St. James is also president of Argentine Renewable Energies Chamber (CADER). Much of the uptick in production, St. James explains, can be attributed to fulfilling the B7 mandate and the government potentially increasing the mandate from B7 to B10, possibly by the end of this year or early next. Additionally, a possible B20 mandate could be implemented for the agribusiness sector to use in off-road equipment and vehicles.

“We are now working to increase to a [national] B10 level and are in trials while negotiating with the automotive and oil industries,” says St. James, adding that the government has strict oversight on how much volume gets produced under the current B7 mandate and how its data is recorded and published each month.

Meanwhile, there was a flurry of biodiesel activity this year in Argentina as five biodiesel plants, ranging in annual production capacity from 4,000 to 240,000 tons (1.2 million to 72 million gallons). Currently, the country has 25 formally approved biodiesel plants.

“The larger plants tend to focus on export markets and the smaller ones on the domestic market,” St. James says. “Investment continues to grow and new biodiesel plants are coming online in the next two years in all sizes, from Cargill with a new 240,000-tonper-year plant coming online at the end of this year, to a handful of smaller plants that will operate on unrefined cottonseed oil and tallow.”

As far as competition between process technology providers and design/build firms go in Argentina, Lurgi Inc. remains at the top with a commanding 45 percent market share, and a variety of local and U.S.based process technology providers, such as Westphalia, Desmet Ballestra and Crown Iron Works, all holding another 23 percent, according to St. James. Desmet Ballestra, in particular, has built two major biodiesel plants in Argentina, plus several pretreat-

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PHOTO: DEDINI

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COMPETITIVE MARKET: While Dedini designed this plant in Brazil, St. James says in Argentina, Lurgi commands 45 percent of the biodiesel design/build market share.

ment facilities for plants supplied by its competitors, according to Fernando Markous, general manager for the firm’s Argentinabased office. “We recently signed a contract for a third plant with pretreatment included,” Markous says. “We also have exported one plant to Peru and two plants to Colombia.”

St. James adds that the investment climate in Argentina for the most part remains healthy, but contends that the gap between the smaller and larger producers needs to close more in order for the smaller producers to have a more competitive advantage. A key driver behind Argentina’s surge in biodiesel investment is a differential export tax on biodiesel compared to that of soybean oil, he adds. Soybean oil exports are taxed 32 percent while biodiesel exports are only 34

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taxed 16.6 percent, enabling biodiesel producers to benefit from a 2.5 percent rebate.

The current net difference between the two is 17.8 percent, which favors large biodiesel producers focused on the export market.

“Investment continues to grow rapidly in Argentina for large plants and small ones,” he says, adding that access to working capital continues to be the largest hurdle for a majority of producers, big or small. “The government has worked out most of the kinks in the approval process and has established a pricing mechanism that is favorable to smaller producers in the domestic market to help them offset their lack of economies of scale.”

While the majority of Argentine biodiesel exports are destined for Europe, the

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U.S. and Canada are also on Argentina’s radar as possible candidates, particularly with the U.S. biodiesel blenders tax credit set to expire at the end of this year coupled with Canada’s biodiesel mandate that went into effect in July. “The Argentine biodiesel industry is looking to diversify exports into North America and is in the process of preparing to enter these potentially very lucrative markets,” St. James says. “Finding the ideal partner will be key to success.”

Other Opportunities As Brazil and Argentina dominate in South America, several other Latin American nations, such as Peru, Colombia, Costa Rica, El Savador, Guatemala and Paraguay, are making quieter biodiesel progress.

LATIN AMERICA Craig Frank, CEO of Miami-based Alternative Fuels Americas Inc., believes Costa Rica, Panama and Colombia are all attractive investment hubs to carry out jatropha cultivation for future biodiesel production.

AFA has concentrated its work in Costa Rica where it secured 200 hectares to grow jatropha. Frank says he plans to eventually move to a 5,000-hectare plot, adding that AFA is looking at feedstock development at this point because technology already exists to produce biofuels efficiently.

“Of the projects we know of that are set to come into production, I don’t believe the capacity will be greater than several hundred thousand gallons annually,” Frank says. “We will have, upon launch next year, the largest biodiesel project in Costa Rica.”

In addition to jatropha, AFA is studying the development and potential integration of other feedstocks such as coyol (spiny palm) and algae. Last year, AFA partnered with Sustianable Agro Biotech LLC, a Puerto Rican-based company engaged in algae-to-fuel research.

“We believe SABI has developed interesting ideas and has validated many of them in a lab setting,” Frank says. “We will, during the coming year, further this research and will, at that time, have a better understanding of what we can fairly and accurately project with regard to a timetable.”

While AFA may have not have produced any biodiesel in 2011, it has set ambitious goals for 2012. The company anticipates producing approximately 1.5 million gallons of biodiesel derived from coyol in Costa Rica.

“We believe production will increase annually with the coyol until we reach a maximum of 3 MMgy [in Costa Rica],” Frank explains. “Once the jatropha matures, we believe we will produce an additional 4 MMgy for a total of 7 MMgy by around 2015.”

AFA plans to expand its jatropha plantation operations into Panama and Colombia. Guatemala, Dominican Republic and Honduras are also possibilities, according to Frank.

“There are some other countries that are also on our radar, but we’ll consider

those after we complete our plans in these target countries,” Frank says. All in all, AFA has developed a program that intends to reach 80 MMgy of combined biodiesel output from all the countries it operates in.

While AFA’s business strategy may seem aggressive, yet achievable in Costa Rica, surrounding Latin American countries have created, or are in the process of creating, biodiesel blend mandates that should foster development of a biodiesel industry.

Of all the neighboring Latin American countries, Colombia appears to hold the

most potential of becoming a viable biodiesel producer and emerging exporter in years to come. While it may not currently import nor export any biofuels, the country’s Ministry of Energy has issued several resolutions to make the blend mandatory at levels that can be supplied by new biodiesel plants coming online. As a result, Colombia is expected to reach a B10 blend by the end of 2012.

Author: Bryan Sims Associate Editor, Biodiesel Magazine (701) 738-4974 bsims@bbiinternational.com

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EUROPE

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SEPTEMBER 2011

EUROPE

A Whole New

World

The European biodiesel sector faces unique challenges

BY ERIN VOEGELE

The European biodiesel industry may be the largest in the world, but it seems to be struggling to regain ground lost in recent years. As U.S. biodiesel producers continue to recover from the economic disaster of 2008 and 2009, some segments of the European industry are lagging behind. Public policy and perception issues seem to be holding the industry back and making the future of biodiesel in Europe somewhat unclear.

When asked to describe the current state of the European biodiesel industry, Dieter Bockey, spokesman of Arbeitsgemeinschaft Qualitätsmanagement Biodiesel e.V. (AGQM) paints a rather bleak picture.

“There is still huge over-capacity of biodiesel in the EU,” he says. According to Bockey, there is currently 22 tons (6.6 billion gallons) of production capacity in the EU. However, he estimates that the industry as a whole produced only 8.9 million tons of the fuel in 2010.

According to Pierre-Antoine Vernon, a project manager with the European Biodiesel Board, 2011 biodiesel production levels are currently relatively consistent with last year's. One change, he says, is that some biodiesel production capacity within Europe has begun to be dismantled or retrofitted. While Vernon stresses this is currently not a major trend, he says there has been a slight move in this direction.

Frank Strümpfel , spokesman for German biodiesel producer Verbio Vereinigte BioEnergie AG, also notes that many elements of the European biodiesel industry have remained consistent since last year.

Germany is still the largest producer and consumer of biodiesel, he says.

In addition, overcapacity and high feedstock prices are continuing to put financial pressure on the companies that are still producing. That said, he stresses further shutdowns of biodiesel plants are not foreseeable at this time.

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EUROPE Bockey attributes the low level of production to several factors that go beyond price pressure, including the fact that the national obligations and commitments are currently below 7 percent. This is true, he says, even though the European diesel standard (EN 590) already allows for B7 blends of diesel fuel. “This existing standard EN 590 corresponds to about 14 million tons of biodiesel,” he said.

Strümpfel notes that biodiesel producers in Europe face a significant challenge in that the market is has been defragmented through heterogeneous legislation in different EU member states. Matti Lehmus, Neste Oil’s executive vice president of Oil Products and Renewables, agrees. “It is evident that the short-term process in implementing the Renewable Energy Directive has [been] delayed somewhat and the process is proceeding at a different pace in various countries,” he says.

“As a result, the legislation within the EU is becoming increasingly fragmented, and the complexity in the biofuel field is growing and slowing down the development in this sector.”

Bockey adds that there has been a lack of strong and consistent support for biodiesel recently in Europe. “[Policymakers] make no pressure to increase the share of biodiesel in the fuel market, due to the public discussion concerning food versus fuel, greenhouse gas (GHG) savings, the public pressure concerning rain forests, restrictions [and] and problems concerning the use of biodiesel engines and so on,” he says. In fact, Bockey notes that biodiesel seems to be falling out of favor with some in Europe. “The pressure against biodiesel is rising,” he says.

Especially the automotive industry does not like biodiesel” due to perceived engine operation problems. According to Bockey, it seems unlikely that a B10 standard will be issued, even though there is a mandate within the European Commission to do so. “The general position of the automotive industry is to substitute biodiesel with HVO (hydrotreated vegetable oil).

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mentation of policy among the EU member countries, the EC has taken several actions in recent months that affect the entire sector.

In early May, the Council of the European Union adopted regulations to extend the anti-dumping and countervailing duties that had been established for U.S. imports to biodiesel to include product consigned from Canada. These duties also were extended to apply to biodiesel blends originating from the U.S. that contain 20 percent or less biodiesel by weight. The measures were taken following an investigation that concluded U.S. biodiesel had been flowing through Canada to Europe, effectively circumventing the required duties.

“The anti-circumvention measures adopted by the council represent a decisive move to ensure that the remedial effect of the EU duties on U.S. biodiesel is fully maintained over time,” said EBB Secretary General Raffaello Garofalo in a statement following the announcement. “Operators should be aware that any future attempt to circumvent the existing duties can be investigated and remedied in the same way, with retroactive financial implications for the companies involved.”

More recently, the EC announced the recognition of seven new voluntary schemes for sustainable biofuels under the RED. The voluntary schemes are mechanisms designed to ensure that biofuels used within the EU deliver tangible greenhouse gas savings when compared to fossil fuels.

Vernon explains there are two ways in which biodiesel producers can meet the sustainability requirements implemented by the RED. Producers could choose to either face 27 different frameworks, one of each EU member country, or comply with a voluntary scheme that is effective in meeting sustainability requirements in each EU nation.

According to Vernon, there are clear advantages in terms of simplicity that result from complying with a voluntary scheme.

“The voluntary schemes are a set of rules developed by a consortium of producers [or] a wider array of stakeholders to guarantee the biofuel’s sustainability according to the RED,” Vernon says. “Once the scheme is made, it has to be recognized by the Europe-

SEPTEMBER 2011

an Commission…The Commission has now published these voluntary schemes. They can now officially be used by biofuels producers to satisfy the biofuels against the Renewable Energy Directive.”

The voluntary schemes are applicable to both biofuel producers within Europe as well as those who intend to export product to the EU. “Provided that you follow one of these voluntary schemes and you are in compliance…no member state has the right to refuse your biofuels,” Vernon adds, noting that meeting the requirements of a voluntary scheme is essential for selling biofuel into Europe.

Not all the news about biofuels coming out of Europe has been positive, however. In mid-July, reports began coming out of Europe indicating possible scandal in which the EC had leaked previously unreleased studies regarding the indirect land use change (ILUC) impacts of biofuels. While some have speculated that the studies could mean the end for biodiesel in Europe, most in the industry indicate those claims are exaggerated.

The leaked reports have drawn a very negative portrait of biodiesel, Vernon says.

If the ILUC GHG impacts estimated by these studies were calculated into the GHG savings currently attributed to biodiesel, it would not be possible for most forms of biodiesel to achieve the 35 percent GHG savings required under the RED. “This is a worrying outcome,” Vernon says, adding that the studies’ ILUC values into the GHG calculations for biofuels would pretty much effectively ban the use of biodiesel within the EU. Vernon also states that he does not expect that possibility to become a reality.

“ILUC modeling still has a very shaky basis,” he says. The more likely outcome is that a compromise will be made. Strumpful adds that ILUC is a theoretical pursuit at this time and that attributing those theoretical GHG values to biodiesel could cause massive damage to the European biodiesel industry.

Lehmus points out that the EC has not yet published any official statements or reports regarding ILUC or how ILUC should be taken into account by the biofuel sector or

EUROPE feedstock producers. “Therefore, it makes no sense to speculate on the possible impacts to [the] biofuel industry at this point,” he says.

“ILUC is highly politicized, thus we are not surprised that there are various opinions and reports of various quality regarding the issue with the aim to affect public opinion and decision making. We will wait for the official statements and reports from the Commission and respond accordingly based on the official information.”

According to Bockey, the EC could publish a legal proposal within months regarding possible ILUC amendments to the RED. The fear, he says, is that because the ILUC factor depends on the type of biofuel, the default values will be adjusted in a way that biodiesel production will no longer be able to reach the required GHG reductions after 2017. On the other hand, Bockey says, under the national renewable action plan of 10 percent renewable content in transportation fuel by 2020, there’s a concern that the commission will not present a legal proposal regarding biofuels in the way described, so there is still a huge amount of uncertainty regarding what the commission will actually suggest.

and local implementation of the RED needs to proceed rapidly in order to support the European biodiesel industry. “There are, for example, still various different interpretations of what is considered as ‘waste’ in different EU countries,” he says. “From the biofuel industry’s perspective, there should be a common interpretation of all these key issues among all EU countries.” In addition, Lehmus says it is important for legislation related to biofuels to be technology and feedstock neutral, emphasizing the importance of GHG savings and sustainability rather than supporting specific products over others.

Some policy makers within Europe are also pushing for greater focus on second-generation biofuels. Csaba Tabajdi, a Hungarian representative in the European Parliament who sits on the Environment Committee, recently spoke about the importance of second-gen biofuels at the ScienceBusiness conference in Brussels.

Like lawmakers in the U.S., Tabajdi tout-

ed the job creation opportunities offered by advanced biofuel production. “The bioenergy and biofuel production is a major economic and environment benefit in Hungary and throughout the European Union, while reducing external energy dependence as well,” he said in a transcript of his speech posted to his website. “We must ensure biofuel [production’s] competitiveness and environmental sustainability. We should encourage scientific research,” and encourage the development of a predictable regulatory environment that encourages research and investment of community financial resources.

Author: Erin Voegele Associate Editor, Biodiesel Magazine (701) 540-6986 evoegele@bbiinternational.com

The Future According to Strümpfel, his company does not expect to see any growth in the German biodiesel industry, due in part to continuing overcapacity, but he says this may not be the case for all of Europe. “Europe will see steady [growth] of biodiesel production in order to reach EU [carbon dioxide] reduction goals for the mobility sector, therefore car manufacturers have to increase their flexibility in higher biofuels blends,” he says.

In order to help support the continued development and recovery of Europe’s biodiesel industry, Strümpfel stresses that the RED has to be implemented consistently across all EU member states. “As long as there aren’t reliable political decisions or rules for the use and production of biodiesel set in place, we will see no further development of European biodiesel industry,” he says.

Lehmus agrees that the development

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SEPTEMBER 2011

USE

Retiring Ol’ No. 74: ‘Bean Bus’ The

The nation’s first biodiesel-powered school bus has made its last run

BY RON KOTRBA

For longer than the lives of the students it carried back and forth to rural Medford, N.J., schools, yellow bus No. 74 has run on biodiesel.

Joe Biluck, director of operations for the Medford Township board of education, recalls that he first started looking into biodiesel—soy diesel as many called it then—in 1995. This was before any state or federal mandates existed, and well before biodiesel had an ASTM fuel specification. But even, in those early days of commercialization, the benefits of biodiesel were clear, especially to Biluck.

“We were in the right place at the right time,” Biluck tells Biodiesel Magazine. “In 1995-‘96, when I was investigating this, there weren’t a lot of options out there for alternative fuels. So biodiesel seemed like the most appropriate fuel at the time.” Twenty-plus years ago, when Biluck says he was still “turning wrenches” for the school district, he started to hear about federal mandates for the public sector and state fleets. “We’re a quasigovernment agency,” he says, “so, I wondered, what options would I have?”

The Medford school buses transport about 3,500 students a day, SEPTEMBER 2011

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USE Biluck says. “This biodiesel program was started because of the students.” For anyone who’s been a passenger on a school bus run on diesel, the distinct smell, laden with carcinogenic particulate matter, or soot, is sure to be one of the most prominent memories.

“It has been proven that biodiesel improves air quality both outside of the bus and in the interior,” Biluck says, “and that’s the No. 1 reason for starting this program.”

In the early to mid-‘90s, EPAct encouraged, or mandated, really, state and utility fleets to incorporate alternative fuel vehicles, what Biluck says was referred to then as “bi-fueled” vehicles, and while Board of Education vehicles weren’t specifically required to go that route, he says he thought that those regulations could find their way into the school bus fleet and other vehicles operated by the education board. But the state of New Jersey had requirements on the books that said public vehicles used for the transportation of students were to be run on gasoline or diesel fuel. “There were no provisions for fuels like compressed natural gas or anything,” he says. “So if alternative fuels were wanted, they would have to change the laws to accommodate them.”

Biluck was told by the program manager in the Office of Clean Energy that there were federal monies available for state organizations, funding targeting the demonstration of alternative fuel vehicles. “So, I delved into it in ‘95 for that reason,” Biluck says.

When Biluck and others on the board thoroughly reviewed the regulations for the funding of alternatives, they realized that only vehicle acquisition, not fuel, was covered. “It’s ironic,” Biluck says, explaining that the funding supported the purchase of bi-fuel vehicles that could run on either petroleum fuel or, for instance, compressed natural gas (CNG), “but there was no infrastructure for CNG so they just ran on gasoline or diesel. But they were in compliance by operating a dual-fuel vehicle even though they almost always ran on petroleum fuel.”

In ’95, the DOE and the incentive program began accepting applications for not only the bi-fueled vehicles, but also for the alternative fuel itself. Biluck says 42

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they resubmitted the application for funding. The result was four years of extensive testing for the DOE. “The federal government wanted a well-defined program,” Biluck says. “They wanted side-by-side test groups,” to reduce or, if possible, eliminate variables between the test and control groups. Forty-four buses were used in the testing, half fueled with B20 from Twin River Technologies and the other half with conventional on-road diesel fuel.

Not only did the program want to see Hot 505 emissions test results conducted in an EPA-certified laboratory, but Biluck also says the government wanted to see significant road-time, maintenance and repair history to establish a good baseline before the tests, in addition to generating extensive reports annually after the biodiesel testing began.

Biluck sent a note to the power plant manager for International Harvester, the predominant engine in the fleet, because he was concerned that using biodiesel might void the warranty. In response, he was told

by IH that as long as service intervals were maintained, and they didn’t use more than 20 percent biodiesel, there shouldn’t be a problem. And there wasn’t.

As opposed to buying bi-fuel vehicles, which is a significant capital expense when replacing fleet vehicles, buying alternative fuels such as biodiesel has few or no upfront costs but, instead, requires more operating costs due to the fuel’s higher price compared to conventional diesel—something Biluck says is more effective budgeting for the state.

A New Mindset Later Years of testing, generating report after report, finally came to an end. “After four years,” Biluck says, “the biodiesel units were 2 cents per mile less than the control.” This was unheard of. A new fuel that cost much more than conventional diesel fuel, and had no quality standard, could reduce overall fleet operating costs by 2 cents a mile.

To put the cost savings into perspective, in a decade the Medford school buses travel 4 million miles, a long enough haul to circle the Earth 160 times. At 2 cents a mile sav-

SEPTEMBER 2011

ings using B20, this comes to about $80,000 every 10 years, or $8,000 a year. For a rural school district, where every penny counts as year after year rural township populations dwindle in favor of the fast-paced city life, reducing vehicle fleet operating costs is essential for survival.

While a premium is paid for the biodiesel, Biluck says on the backend it lowers overall fleet costs in several ways: the higher oxygen content of biodiesel reduces the rough idle. “It’s noticeably reduced,” he says, which means the buses idle smoother, reducing wear on everything from radiator bracket mounts to exhaust hangers, to the exhaust system itself, the life cycles of various pieces of equipment are extended by using biodiesel. “The particulate matter is reduced, so you get longer lasting mufflers,” Biluck says, “and you’ve got 32-feet of exhaust pipes on a bus. The fuel injectors last longer. So when you aggregate those across the fleet over time, the savings really add up."

Despite biodiesel being a fairly new fuel without a specification, having known cold flow issues when proper measures aren’t taken, Biluck says, “I didn’t want the bus to stall out and have our kids stuck out in a rural area in the middle of winter, but we took precautions and we didn’t have any problems.”

The school board was so happy with its incorporation of biodiesel, they wanted to promote it. “It had a significant impact on the state and region,” Biluck says, “so we wanted to take full advantage of this and participate in a solution for energy independence.”

Medford is an agricultural community, so there’s a direct link between area soybean farmers and the school buses running on soy biodiesel. While insignia on the biodieselburning buses would have done the job promoting use of the ag-based fuel, Biluck says the board of education was not allowed to run promotion campaigns on school buses.

“I would have promoted it,” he says, “with 44 buses, 44 rolling billboards.”

He tells a story about a bus driver who, shortly after the bus began fueling on biodiesel, kept experiencing stalling. Biluck would test the bus and never had an

USE issue. After six or seven times of the bus stalling on the driver, the natural suspicion was that the reason was the new fuel. “So we tore into the engine,” Biluck says, “and found nothing wrong.” It turned out that the driver had a globe on a chain as a key ring, which hung down low enough so when she shifted gears, the globe caught on the shifter and moved the key enough to shut off the ignition. “She was condemning the fuel, but it was a trinket on her key ring the whole time,” he says. “People don’t like change, and it takes effort and education to counteract those [misconceptions].”

One day Biluck says he was casually looking through the list of buses required to retire. In New Jersey, C-chassis buses must go into mandatory retirement after 12 years of use. As Biluck was perusing the list, he says, “There was No. 74. The bus didn’t really have a name, although over the years the kids called it ‘the bean bus.’ Now those kids are 21, 22 and 23 years old. I hope they remember how progressive this was for the

time.” After its pioneering use as the nation’s first biodiesel-powered school bus, old No. 74 will be either sold at auction or traded in for a new bus. But the impact yellow school bus No. 74 has had is still being felt. “Several hundred municipalities in the area have begun to incorporate biodiesel into their systems,” Biluck says, “I mean snow removal, buses, you name it, with no down time, no significant damage.”

“This is a great biodiesel success story,” says Chuck Myers, a soybean farmer and vice chair of the United Soybean Board.

“The Medford Public School District in New Jersey is a great example of how incorporating biodiesel into fuel programs can result in great benefits for everyone involved. Biodiesel is a fuel every American can get behind.”

The Medford board of education’s biodiesel experience was “sort of a springboard, if you will,” Biluck says. "It created a whole new experience and really taught us about the benefits of sustainable technol-

ogy and renewable energies—to improve the bottom line, improve the environment and reduce energy dependence. Biodiesel opened our eyes to that.”

The board of education has a $22 million solar project (3 megawatts) underway that’s been funded entirely by private investors, which will help realize a $7.2 million savings over 15 years for the tax payer. “This reduces money for utilities, money that’s realigned back into the classroom for instruction,” he says. “There’s government assistance to help get over those higher upfront costs, and the long-term benefits are really cost reductions. There’s significant opportunity for all types of renewable energy here now, and it all started with biodiesel.”

Author: Ron Kotrba Editor, Biodiesel Magazine (701) 738-4942 rkotrba@bbiinternational.com

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Advertiser Index 47 2011 Algae Biomass Summit 46 2011 Northeast Biomass Conference & Trade Show 7 2011 Southeast Biomass Conference & Trade Show 48 2012 Pacific West Biomass Conference & Trade Show 9 Algal Biomass Organization 35 Crown Iron Works Company 27 Eide Bailly, LLP 2 Evonik Degussa Corporation 33 FCStone, LLC 39 Jatrodiesel 11 & 29 NBB National Biodiesel Board 43 Oil-Dri Corporation of America

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SEPTEMBER 2011

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