Biofuel Demand Heats Up

Photo courtesy of the United Soybean Board

Biofuel Demand Heats Up

BY BETHANY BARATTA

In the early 2000s, soybean farmers needed demand for their soy oil to support soybean prices. The home heating oil industry in the Northeast needed to claw its way back into a market that natural gas was overpowering. Farmers and business owners, as it turns out, needed each other.

The idea of blending biodiesel with home heating oil began in Paul Nazzaro’s home office with a few other biodiesel proponents. Nazzaro’s background in the oil industry and role as a petroleum liaison for the National Biodiesel Board helps him connect the industries. If you can put biodiesel in diesel engines, why can’t it be used to heat homes, they wondered?

“When we started talking about this in 2003, it wasn’t a dream — it was building on an understanding of what the weaknesses were in the home heating market and how what you all had in the middle of the country could help them enjoy a renaissance,” Nazzaro says.

He connected farmers and home heating oil business owners. and the two sectors began conversing.

“As we explored this and looked at the particulars, we thought it could be really big, especially if New York would embrace a 2% blend,” says Greg Anderson, who was then the chairman of the Nebraska Soybean Board. “We weren’t really thinking of other blends like 5, 10, 50 to 100, but we knew if it was successful it would be a huge market for soybean oil.”

Some farmers, including Anderson, flew to the Northeast to learn about the home heating oil industry. Some heating oil industry leaders flew to Nebraska, stepping their wingtip shoes on farms to learn about soybean production.

Meanwhile, in Massachusetts

About the same time, Charlie Uglietto faced competition from the natural gas industry, which branded the heating oil industry as antiquated and dirty. This threated his family’s business, Cubby Oil and Energy, which his father started in 1945.

“We were losing market share,” says Uglietto, who recently took part in a National Biodiesel Board-arranged Big Apple Biodiesel Tour.

Nazzaro introduced him to Bioheat® Fuel, a blend of biodiesel and ultra-low-sulfur heating oil. It is a cleaner burning fuel, one that extends the life of heating equipment while reducing fossil fuel consumption. He was suspicious, just as soybean farmers were when Nazzaro brought the idea to the Nebraska Soybean Board, but he tried it.

“I have a responsibility to my customers to make sure it works,” he says. “I can’t create problems for people who depend on us.”

If it worked, the fuel could help differentiate the family-owned business in a shrinking market. He started with a 4% blend (B4), and it performed beautifully. Today, the company delivers Bioheat SuperPlus™, which contains 40% biodiesel (B40) to its 6100 accounts in the greater Boston area.

Bioheat® Fuel usage is growing as states adopt mandates supporting net-zero carbon emission goals. Residents and business owners appreciate the fuel because it can be used in existing heating oil systems. It’s available in a variety of blends: 2% to 5% (Bioheat), 6% to 20% (Bioheat Plus™), and 21% and higher (Bioheat SuperPlus™). All the blends increase the demand for soybean oil.

“It’s a win-win,” says Iowa Soybean Association President Tim Bardole, who took part in the trip to New York City.

“These family businesses that supply heating oil to the communities and homes in the Northeast have to change what they do so they can be competitive in the green market." he says. “Biodiesel gives them the edge to meet the carbon requirements that are coming in the future. They definitely need biodiesel, and the soybean industry needs the business.”

Growing demand Lofty carbon reduction goals mean greater demand for biodiesel to create Bioheat blends, Nazzaro says.

In New York, which uses approximately 1 billion gallons of heating oil every winter, switching all heating oil to B50 Bioheat SuperPlus™ would demand about 500 million gallons of biodiesel.

Soy-based biodiesel is the preferred choice because of its cold weather performance, Nazzaro says.

Soybean farmers are ready to meet the demand from Bioheat, says Rob Shaffer, a farmer from El Paso, Illinois, and member of the American Soybean Association’s board of directors. “As long as we have the livestock industry to eat the soybean meal, then we’ll have plenty of oil,” Shaffer told home heating oil company representatives in New York City. The pairing of soybean farmers to the home heating oil industry is a perfect fit, says Donnell Rehagen, CEO of the National Biodiesel Board.

“Farmers provide a wonderful product that we turn into what we call the best fuel on the planet (biodiesel). The heating oil industry has recognized the value,” Rehagen says. “Now is the perfect time for them to transition from a fossil fuel-based industry to a cleanburning industry.”

Uglietto is testing blends of B50 in a few homes, including his own. He hopes to increase the blend levels his company offers in the future.

“I hope we can take this to the next level,” he says. “As we’re going to higher levels, I feel better about what we sell and what we do every day.”

Contact Bethany Baratta at bbaratta@iasoybeans.com.