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INSIDE: JOBE ON THIS YEAR’S BIODIESEL INFLUENCE AWARD WINNER 2019 Spring Edition

THE PERENNIAL

QU E STI O N Experts Discuss Feedstock Supply as New Projects Take Off Page 14

Plus Spotlight on Organizations Adding Value to Feedstock

Page 22

And

Inside NBB

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CONTENTS 2019 SPRING ISSUE VOLUME 16 ISSUE 2

FEATURES

14 Where Will All the Feedstock Come From? FEEDSTOCK

With billions of gallons of potential additional feedstock demand from coprocessing and new projects, the question is examined

BY RON KOTRBA

22 Adding Value Across the Board SPOTLIGHT

Biodiesel Magazine spotlights two organizations that, in very different ways, provide value-added approaches to the field

BY RON KOTRBA

14

DEPARTMENTS 4 Editor’s Note

Balancing Act

BY RON KOTRBA 5 Events Calendar 6 Talking Point

Eye on the Editor BY JOE JOBE

22

8 Business Briefs 10 Inside NBB 26 Marketplace

Advertiser Index ON THE COVER:

A modified variety of pennycress developed by CoverCress Inc. grows in a trial plot. The company has identified up to 32 million acres of Midwestern farmland where the winter cover crop can ideally grow between rotations of corn and soybeans. The crop has the potential to deliver up to 2.4 billion gallons of additional feedstock for biodiesel and renewable diesel—one of many supply sources from which the ag and waste industries can meet growing demand. PHOTO: COVERCRESS INC.

7 20 27 18 28 17 21 24 5 25 2 19

2020 National Biodiesel Conference Biodiesel Magazine's Top News D3MAX Deep South Commodities, LLC Evonik Oil Additives USA, Inc. HTH Companies IMERYS Minnesota Soybean Growers Association National Biodiesel Board Renewable Process Solutions United Color Tech WWS, Inc. www.BiodieselMagazine.com

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EDITOR'S NOTE

BALANCING ACT Ron Kotrba

www.BiodieselMagazine.com E D I T O R I A L Tom Bryan President & Editor in Chief tbryan@bbiinternational.com

Editor Biodiesel Magazine rkotrba@bbiinternational.com

Ron Kotrba Editor rkotrba@bbiinternational.com

The writing process, if done responsibly, will almost always lead to an excess of information in the hands of the writer. The

writer is his own first editor, leaving scraps of facts, figures, data and quotes on the cutting-room floor in an attempt—however successful—to cohesively and clearly tell a story. The assignment pitch, deadline, page count, audience, his knowledge of the subject matter, and his own personal world view all contribute to the decisionmaking process of what to include and what to leave out. Some writers may complain when faced with too much information. I seldom face this problem. For me, the worst and hardest article to write is the one for which too little material is gained during the information-gathering phase. It just doesn’t work, and the writer’s lack of subject matter knowledge glares back at the reader like—well, like a poorly written, ill-informed article. Anyone can identify the signs: vagueness; skirting, or writing around, the issue; brevity when a deeper analysis is called for; a lack of primary sources—or even worse, citing secondary sources such as another news outlet. In my humble opinion, information-gathering—research, interviews, attending technical sessions at events, and deliberation—is the most important and intense part of the writing process. During this phase of my page-14 feature, “Where Will All the Feedstock Come From?” I spent weeks interviewing some of the most revered feedstock experts in this space—Stephen Kaffka, John Cusick and Alan Weber. My interview with Weber led me to CoverCress and its CEO Jerry Steiner. When all of my interviews were completed, the word count of my notes from these four sources alone was in the tens of thousands. For me, this is where I want to be when I begin writing an article. Sure, my nearly 15 years as a writer in this sector, notebooks full of handwritten notes from recent industry events, and access to a world of information through the internet help. But the perspectives of primary sources such as these are invaluable. Like most feature articles that I write, despite this article being 4,500 words long I am left with a plethora of information that did not make it into the piece. Is this wasted time and effort on my part? Never. It adds to my growing background knowledge and will help inform future articles. Even if this were not the case, I can genuinely say it was simply nice to talk with these folks and glean just a fraction of their insight. The information I gathered can, if necessary, be distilled down to a few points. One, no one I spoke with can identify an upper limit to biomass-based diesel production before feedstock markets go haywire. It’s not infinite, but it may not be as finite as some think. Two, market forces drive innovation and efficiency. Given the right market signals, sustainable supplies will follow. Three, markets—including drivers, participants and technologies—change. The difference between creative adaptation and apathetic obliviousness is the difference between success and failure.

Jan Tellmann Copy Editor jtellmann@bbiinternational.com P U B L I S H I N G Joe Bryan John Nelson Howard Brockhouse

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2019 SPRING EDITION

S A L E S

Marketing & Sales Director jnelson@bbiinternational.com Business Development Director hbrockhouse@bbiinternational.com

Chip Shereck

Senior Account Manager cshereck@bbiinternational.com

Jessica Tiller

Circulation Manager jtiller@bbiinternational.com

Marla DeFoe

Marketing & Advertising Manager mdefoe@bbiinternational.com

Dayna Bastian

Social Media & Marketing Coordinator dbastian@bbiinternational.com

Jaci Satterlund

A R T Art Director jsatterlund@bbiinternational.com

Raquel Boushee

Graphic Designer rboushee@bbiinternational.com

Subscriptions Subscriptions to Biodiesel Magazine are free of charge to everyone with the exception of a shipping and handling charge for any country outside the United States. 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 highquality 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 email rkotrba@bbiinternational.com.

Please recycle this magazine and remove inserts or samples before recycling

TM

COPYRIGHT © 2019 by BBI International

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&

CEO jbryan@bbiinternational.com


EVENTS CALENDAR

International Fuel Ethanol Workshop & Expo JUNE 10-12, 2019 Indiana Convention Center Indianapolis, Indiana From its inception, the mission of this event has remained constant: The FEW delivers timely presentations with a strong focus on commercial-scale ethanol productionâ&#x20AC;&#x201D;from quality control and yield maximization to regulatory compliance and fiscal management. The FEW is also the ethanol industryâ&#x20AC;&#x2122;s premier forum for unveiling new technologies and research findings. The program extensively covers cellulosic ethanol while remaining committed to optimizing existing grain ethanol operations. 866-746-8385 www.fuelethanolworkshop.com

National Biodiesel Conference & Expo JANUARY 20-23, 2020 Tampa, Florida This premier event offers an impressive schedule filled with opportunities for networking, learning, and discovery. Conference-goers and exhibitors will be able to engage with decision makers and get an insiderâ&#x20AC;&#x2122;s look at what the industry has in store for 2020. 573-635-3893 www.biodieselconference.org

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NATIONAL

International Biomass Conference & Expo FEBRUARY 3-5, 2020 Gaylord Opryland Resort & Convention Center Nashville, Tennessee Organized by BBI International and produced by Biomass Magazine, this event brings current and future producers of bioenergy and biobased products together with waste generators, energy crop growers, municipal leaders, utility executives, technology providers, equipment manufacturers, project developers, investors and policy makers. Itâ&#x20AC;&#x2122;s a true one-stop shopâ&#x20AC;&#x201D; the worldâ&#x20AC;&#x2122;s premier educational and networking junction for all biomass industries. 866-746-8385 www.biomassconference.com

BOARD

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Learn More About the Biodiesel Industry View Biodiesel Magazine's Webinar Series' upcoming and OnDemand webinars. 866-746-8385 | www.biodieselmagazine.com/pages/webinar

 Í Í    www.BiodieselMagazine.com

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TALKING POINT

Eye on the Editor BY JOE JOBE

Ron Kotrba, your editor of Biodiesel Magazine since 2009 who’s been writing for the publication since 2005, was recognized in January with the 2019 Influence Award by the National Biodiesel Board.

This is a well-deserved acknowledgement of Kotrba’s significant contributions to the biodiesel industry, and I commend NBB for its selection of Kotrba out of hundreds of nominations. Kotrba is an accomplished professional and also a gentleman who goes about his work with persistence, conscientiousness and great skill. That work has made Biodiesel Magazine an indispensable trade journal for the industry and certainly worthy of an Influence Award. But Kotrba himself has chosen to carry out his role mostly behind the scenes. I have known Kotrba for all of his years in the biodiesel industry and have come to greatly admire and respect the man and his work. So, it seemed that this was a good opportunity for his many readers to get to know more about him as well. For those who have been in the biodiesel industry for less than 10 years, you may not know or remember the origins of the Eye on Biodiesel Awards. They were inspired by the CBS evening news segment “Eye on America,” and we decided we could name all of the awards with the letter “I”—Influence, Impact, Inspiration, etc. Past recipients include Willie Nelson, Darryl Hannah, Neil Young, Melissa Etheridge, John Deere, and Ford. So, Kotrba is in distinguished company, including his fellow 2019 recipients. Not long after graduating with a bachelor’s degree from Michigan State University, Kotrba began his career as an advanced engineering laboratory technician for an OEM exhaust supplier. He helped lead developmental work on diesel aftertreatment systems such as diesel particulate filters, urea SCR and lean NOx traps. Kotrba started working for BBI International Jan. 5, 2005, as a staff writer for Bio6

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diesel Magazine and Ethanol Producer Magazine. In 2007, BBI launched Biomass Magazine and the debut issue featured his cover story. Later in 2007, Kotrba became senior writer for all of BBI’s publications. In 2009, during the Great Recession, he took over editorship of Biodiesel Magazine. “Those were very scary times for everyone, but the biodiesel industry took a disproportionate hit,” Kotrba said. “Vegetable oil prices had followed crude oil prices to record highs—72 cents per pound for soy oil and $147 a barrel (bbl) for West Texas Intermediate. Those high oil prices were a contributor to the economic collapse that sent oil prices below $30/bbl in a matter of months. The banking, real estate and automotive industries were teetering on complete failure. But in addition to suffering in this economic freefall with everyone else, biodiesel got hit with the European trade case, the delayed implementation of the Renewable Fuel Standard, and the first lapsed tax credit. It was somewhat surreal.” Kotrba’s career in the biodiesel industry was just getting warmed up at the same time that the industry was plunging headlong into a major wave of hardship. But he fought through all the challenges and his hard work and persistence paid off. The year 2011 emerged as a banner one for Kotrba, as he led the editorial direction of 26 print magazines (12 Biodiesel Magazine, 12 Biorefining magazine and two Algae Technology & Business) as well as helping to organize and attending a number of industry conferences. Throughout its 15-year history from 2004 to today, Biodiesel Magazine with Kotrba at the helm experienced the same wave after wave of dramatic challenges and successes that the biodiesel industry went through. The industry was characterized during that time by astonishing growth and breathtaking victories followed by seemingly overwhelming challenges in “rinse and repeat” cycles that were enough to make your head spin. So too has been the turbulent path for Biodiesel Magazine during its lifespan. As the magazine enters the

2019 SPRING EDITION

second half of its second decade in publication, I, for one, predict a more stable future for this print and online publication that has become a staple for our industry. Kotrba has published thousands of articles over the past 14-plus years that touch on every aspect of biodiesel, ethanol, biomass and much more. He also manages Biodiesel Magazine’s U.S. & Canada Biodiesel Plant Map that has become a widely used resource. He has attended every National Biodiesel Conference & Expo for the past 14 years in a row. Kotrba shared with me that one of the many highlights of his career was at the 2007 NBB Conference in San Antonio, Texas, when Merle Haggard performed a concert to launch the NBB political action committee. Kotrba is a lifelong fan of the country legend and was thrilled when Haggard took a question from him at a press briefing. “I was on cloud nine,” Kotrba said. “I sat and enjoyed the concert and couldn’t wipe the grin off my face the whole time.” One of the things that distinguishes Kotrba as a journalist is his commitment to accuracy and the truth. His reporting is always relentlessly backed up by facts, and that gives him and his magazine an earned reputation for credibility. “Through all the trials and tribulations, this industry has persevered as the perpetual underdog,” Kotrba told me. “People should not underestimate the doggedness of the men and women of this industry. They are fighters. And they are fighting the good fight—the right fight.” As the former CEO of the NBB for nearly 20 years, I’m proud to share some of those scars with Kotrba, and I’m glad that he is being recognized for the positive influence he has had—and will continue to have— on this industry. Author: Joe Jobe President and Founder, Rock House Advisors 573-680-1948 joe@rockhouse.us


Join us next year in Tampa for the business of biodiesel!

the

Date !

2020

S a ve

NATIONAL BIODIESEL CONFERENCE & EXPO

T h e B i o d i e s e l E v e n t o f t h e Ye a r | J a n u a r y 2 0 â&#x20AC;&#x201C; 2 3 , 2 02 0 | TA M PA


BusinessBriefs

People, Products & Partnerships

vate equity firm Advent International. By retaining the specialty methacrylate monomers business within Evonik and integrating it into oil additives, their similar business models with a customer solution-centric approach will allow them to focus on developing and producing specialty and highperforming products and technologies. PHOTO: THE GOODSHIPPING PROGRAM

IKEA Transport & Logistics Services, CMA CGM, the GoodShipping Program and the Port of Rotterdam are cooperating in a first-of-its-kind partnership to test and scale the use of sustainable marine biofuel beginning March 19 with a landmark bunkering of the biofuel on a CMA CGM container vessel. The fuel has been developed by GoodFuels after undergoing three years of testing with marine engine manufacturers. The biofuel oil is derived from forest residues and waste oil products and delivers 80 to 90 percent wellto-propeller carbon dioxide reduction while eliminating sulfur oxide emissions. The shipping sector must switch to low sulfur fuels by 2020 while facing impending International Maritime Organization greenhouse reduction requirements.

PHOTO: EVONIK CORP.

Evonik is merging its specialty methacrylate monomers—the applications monomers product line—with its current oil additives business to become the new oil additives business line within the resource efficiency segment. Application monomers were formerly part of the methacrylate business of Evonik, which is currently in the process of being sold to U.S.-based pri8

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Anne Yu, Shell Hong Kong Ltd. PHOTO: SHELL HONG KONG LTD.

Shell has launched a pilot program in Hong Kong with Maxim’s Group wherein waste oil from Maxim’s Group restaurants and bakeries will be collected, converted into biodiesel, and blended with diesel by Shell. Maxim’s Group will then use biodiesel to fuel its 100-plus delivery trucks. Maxim’s Group is the first restaurant group in Hong Kong to join this program. Shell has recently made biodiesel available at Shell’s Tai Po Market station, the third station providing biodiesel, which expanded coverage of the sustainable fuel to encourage adoption among commercial fleet customers. The other two stations providing biodiesel are located at Tsing Yi and Hong Kong International Airport. Mike Devine joined World Energy in September as vice president of sales and business development. Devine previously spent six years with wholesale biodiesel distributor Devine Amerigreen Energy, which closed unceremoniously last year after it and parent company Worley & Obetz filed bankruptcy as a result of the alleged

2019 SPRING EDITION

fraudulent activity of CEO Jeffrey Lyons. Devine has known World Energy founder and CEO Gene Gebolys for 15 years. “We all share the same vision to be able to offer low-carbon gallons downstream through the last mile of the distribution chain,” Devine says. “We’re building a production platform that’s more integrated in the supply chain than just transactionally providing biodiesel to obligated parties.” One of Devine’s focuses at World Energy is growing downstream discretionary blending of biofuels. “Our company’s initials are ‘WE,’ and that’s really what our organization feels like,” Devine says. “Gene has assembled a great collection of talented people whose common goal is not to boost our brand or us, but to act as a trusted partner to help enable downstream markets and end-users enjoy all the opportunities these low-carbon gallons can provide.” Prior to Amerigreen, Devine spent three years as petroleum liaison with the National Biodiesel Board working with Paul Nazzaro. Early this year Devine was also elected to the board of directors for the National Biodiesel Foundation.

Center left, Paraguay President Benitez, center right, ECB Group president Battistella PHOTO: THE GOVERNMENT OF PARAGUAY

Paraguay President Mario Abdo Benítez and Erasmo Carlos Battistella, president of Brazilian investment holding company ECB Group, met Feb. 25 and favorably discussed ECB Group’s Omega Green renewable diesel complex, worth more than $800 million. The Paraguayan plant will be capable of producing 250 MMgy of renewable diesel and biojet fuel. Virtually all production will be destined for


BUSINESS BRIEFS

export markets such as the U.S. and Europe. The facility will make its fuel from soybean oil extracted with renewable hexane, animal fats and used cooking oil. The hydrogen required will be obtained through electrolysis of water with ThyssenKrupp technology. Crown Iron Works will supply soybean processing design and equipment, including oil extraction and treatment, and Honeywell’s UOP will supply a modular hydrotreatment plant. The entire complex will be fueled by renewable energy. ECB Group plans to start full production in 2022.

mand for low-carbon fuels in the EU, the Geneva trading desk will leverage Targray’s global franchise and in-house expertise to create differentiated value for biodiesel consumers throughout Europe. Targray’s EU biofuels business is led by biodiesel trader Vincent Cariou. Prior to joining the company in 2019, Cariou worked for nearly 10 years at agricultural commodities company Cargill, helping optimize procurement and logistics for biodiesel, vegetable oil and soybean meal customers in the European Union.

to further strengthen its leadership team. Marsch is a skilled senior management consultant with 25 years of experience in the corporate world. His background includes the electric utility industry, association management, government relations, marketing, conference planning and more. Marsch will help lead an expanded national and international network of strategic partners who serve as Rock House Associates. The company expansion brings with it an expansion of its client base, which includes renewable fuel clients, petroleum refiners, electric utilities, agricultural commodity groups, private equity funds and autonomous technology companies.

PHOTO: RENEWABLE ENERGY GROUP INC.

Renewable Energy Group Inc. held an open house March 1 in Seneca, Illinois, to celebrate the start of construction on the company’s first diesel fueling station. REG owns and operates a 60 MMgy biodiesel plant in Seneca, just one of more than a dozen REG production facilities. REG’s Seneca plant brings in more than 17,000 trucks per year, which have to drive through town to get to the plant. The 35,000-gallon diesel fueling station, which will offer blended REG biodiesel to the public, is expected to open this spring.

PHOTO: TARGRAY

Targray has opened an EU biodiesel trading desk in Geneva, Switzerland. Part of a broader investment plan to meet de-

PHOTO: MUENZER BIOINDUSTRIE GMBH

European biodiesel producer and waste oil collector Muenzer Bioindustrie GmbH has opened its first biodiesel plant outside of Europe in Navi Mumbai, India. In 2016, the company officially registered its subsidiary, Muenzer Bharat Pvt. Ltd., in Mumbai, India. Muenzer Bharat is certified by the International Sustainability and Carbon Certification system. Construction of the community-scale biodiesel plant in Navi Mumbai began last year, and the official opening of the production facility recently took place. The plant is scaled at 3,000 tons, or more than 900,000 gallons, per year. The company’s goal is to run a system like this in every city with more than a million inhabitants. Rock House Advisors, the consulting firm founded by Joe Jobe— former longtime CEO of the National Biodiesel Board—is expanding. Mike Marsch has joined Rock House as senior vice president

PHOTO: CROWN IRON WORKS

Crown Iron Works has developed a new process upgrade for biodiesel manufacturers named advanced catalyst reduction and economization (ACRE). ACRE adds a third transesterification reaction step while delivering an energy-efficient design for reduced cooling load and steam use. Multiple ACRE installations have demonstrated a 40-plus percent catalyst reduction and savings of 3 cents per gallon. In addition, ACRE is designed to reduce acid usages, promote energy savings through economization and increase manufacturing uptime. ACRE can be retrofitted into any unmodified Crown plant and may be available for centrifuge operations. Greenfield installations can benefit through improved performance and total cost of ownership. Crown’s decanter-based biodiesel program supports a robust operation with proven reliability and increased uptime.

Marsch

www.BiodieselMagazine.com

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NATIONAL

BOARD

Thank You, Biodiesel Industry Thank you. Thank you to the biodiesel leaders, champions, advocates and many others who helped make our industry a success in 2018. The U.S. biodiesel industry can proudly look back on a year in which we made some significant progress toward a stronger and more predictable industry. Today, biodiesel is more present than ever in the current marketplace, showing up as a leading player in the fuels industry and Donnell Rehagen, CEO, delivering on today’s consumer demand National Biodiesel Board for more environmentally friendly fuel. In January, we celebrated this success at our annual National Biodiesel Conference & Expo in San Diego, California. It was rewarding to commemorate a year of milestones with biodiesel pioneers from across the country and remark on an industry that began more than two decades ago. Now we are a nearly 3 billiongallon-a-year industry and still growing, and we owe a lot of that success to our committed members. Another big reason for recent growth has been successful policy efforts. These policies don’t just happen. It takes a long, sustained effort to work with our champions to craft policies that work. We are fortunate to have members of Congress who advocate for biodiesel and strong leaders who are willing to lie on the tracks for us. This past year we engaged with organizations like National Renderers Association, National Association of Truck Stop Operators, American Soybean Association, Petroleum Marketers of America, and many more. The National Biodiesel Board has strengthened its reach and relationships by increasing regular dialogue with our industry partners. With this cooperation, we know we can accomplish more. However, in 2019 we will need to continue to work alongside our stakeholders to improve our policy efforts and fight the good fight that is necessary in Washington, D.C. Our first task will be reinstatement of the biodiesel tax credit. For many years, NBB has advocated for a long-term, multiyear tax incentive that provides producers certainty and encourages investment and growth. Last year, however, we fell short of achieving a long-term extension of the $1 per gallon federal biomass-based diesel blenders tax credit. While this was a disappointment, the

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2019 SPRING EDITION

progress NBB made in having positive conversations with House and Senate leadership about the benefits of a long-term tax credit instead of the on-again, off-again nature we’ve seen over the past 10 years gives us confidence in the opportunity to see success in 2019. Also, in 2019, the industry will continue to face issues in the Renewable Fuel Standard, such as small refinery exemptions and U.S. EPA’s planned rule changes. EPA announced it will initiate a rule and public comment period to reset the statutory RFS volumes for 2020-’22. The agency triggered this reset by waiving the annual statutory volumes for advanced biofuels by more than 20 percent for 2018-’19. NBB previously engaged EPA on the planned reset and continues to advocate for higher volumes in the biomass-based diesel and advanced biofuel categories as the agency develops the reset proposal and the 2020 annual rule. In 2019, NBB will continue to pursue litigation that could force the agency to review its past rules and change its methodology going forward. Additionally, NBB will be focusing its efforts on the U.S. Department of Commerce. Late in 2018, against the expressed wishes of the NBB Fair Trade Coalition, the commerce department granted the government of Argentina’s request and initiated “changed circumstances” reviews of U.S. antidumping and countervailing duty orders on Argentine biodiesel companies. The department’s changed circumstances review process typically takes up to 270 days, meaning a final determination could come as late as September. In the meantime, the duties remain in place as established. At our conference I said, “Our industry is not for the faint of heart.” Significant challenges present themselves every day, but we can’t give up. We may have a lot on our plate this year, but we are prepared to lead the challenge and work alongside our strong and determined industry to advocate for American biodiesel and renewable diesel. Join us in personally participating in these critical efforts and accept the challenge to move America’s advanced biofuel forward. Donnell Rehagen CEO National Biodiesel Board


inside

NBB Federal Affairs Efforts Remain Key Focus in 2019 The National Biodiesel Board continues to work closely with its members and allies to advocate federal policies that support growth of the industry. Securing an extension of the biodiesel and renewable diesel tax incentive, which expired at the end of 2017, is an urgent priority. In early February, NBB members traveled to Washington, D.C., to meet with their representatives and senators. In nearly 50 meetings over a two-day period, biodiesel producers and soybean growers urged legislators to renew the biodiesel and renewable diesel tax incentive as soon as possible. They discussed the financial challenges that the industry is already facing due to the lapse of the tax credit. The meetings produced a positive outcome. On Feb. 11, Reps. Dave Loebsack, D-Iowa, and Darin LaHood, R-Illinois, and 42 other representatives sent a bipartisan letter to their leaders urging a multiyear extension of the biodiesel tax incentive as soon as possible. In support of the biodiesel industry, members of Congress from across the country—from California to New York—signed the letter to House Speaker Nancy Pelosi, D-California; Republican Leader Kevin McCarthy, R-California; Majority Leader Steny Hoyer, D-Maryland; and Republican Whip Steve Scalise, R-Louisiana. “We strongly support a multiyear extension of the incentive to provide the policy certainty necessary to help the biodiesel industry and rural economies continue to grow,” the letter states. Many groups have written to ask that Congress make it a priority to extend the tax incentive at the earliest opportunity. In a March letter to Pelosi and McCarthy, members of the California Advanced Biofuels Alliance wrote, “The uncertainty created by the lapse of the biodiesel tax credit is slowing investments in new plants and raising the costs of projects to maintain, improve or expand existing plants.” The effort to convey a sense of urgency to Congress also paid off. Sens. Chuck Grassley, R-Iowa, and Ron Wyden, D-Oregon, chairman and ranking member of the Senate finance committee, respectively, introduced legislation that would provide a two-year extension of the biodiesel and renewable diesel tax incentive. “We hope that both House and Senate will address the expired tax provisions as soon as possible,” said Kurt Kovarik, NBB’s vice president of federal affairs, while thanking the senators. “Biodiesel producers have counted on the credit to secure blending contracts and financing for plant expansions and upgrades. But they are now facing the longest period of uncertainty ever, as the tax incentive remains expired two full months after the start of the year.” The House ways and means committee is now beginning a process to consider all expired tax incentives, with the first hearing held March 12.

NBB Fair Trade Coalition Additionally, NBB’s Fair Trade Coalition continues efforts to ensure that the U.S. maintains a level playing field for domestic producers to compete with imported biodiesel. In early 2018, the U.S. Department of Commerce issued countervailing duty and antidumping orders on imports of certain biodiesel products from Argentina and Indonesia. The move followed an extensive trade investigation showing that the countries were subsidizing their domestic industries and selling their biodiesel significantly below fair market value. Then in December, the commerce department initiated “changed circumstances” reviews to assess Argentina’s most recent modification to its export tax regime and whether a review of the U.S. antidumping and countervailing duty orders is warranted. NBB worked to raise awareness of the situation. In late February, a bipartisan group of 14 senators, led by Grassley and Sen. Maria Cantwell, D-Washington, wrote to Secretary of Commerce Wilbur Ross. “It is unclear why Commerce would afford a special review to Argentina and its biodiesel industry when the ink on these antidumping and countervailing duty orders is barely dry,” the group of senators states in the letter. The letter was co-signed by four other senators from the finance committee, which oversees issues with international trade. The senators asked Ross to develop a complete record of Argentina’s biodiesel trade actions before determining whether revisiting the U.S. duties is warranted. “In the short period since the antidumping and countervailing duty orders were imposed, U.S. biodiesel producers have been able to compete on a more level playing field, and the U.S. biodiesel industry has begun to recover from the injury caused by the unfair trade practices of the Argentine government and industry,” the letter states. Domestic biodiesel production increased by 17 percent, or more than 300 million gallons, in 2018 compared to 2017. www.BiodieselMagazine.com

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insideNBB

National Biodiesel Conference & Expo Fuels 2019 with Industry ‘Engagement’ America’s largest celebration of biodiesel returned to California in January for a record sixth visit. This year more than 800 biodiesel producers, distributors, retailers and other industry advocates gathered to Engage in thought-provoking discussions about America’s first commercially available advanced biofuel, to check out some of the latest technological advancements and offerings from automobile manufacturers, and to hear from prominent industry experts. Donnell Rehagen, CEO of the National Biodiesel Board, kicked off the conference with a keynote address relating biodiesel to the moon landing, which will celebrate its 50th anniversary this year. Just like the moon landing, biodiesel was another 20th Century technological feat. “We created an entirely new fuel from sustainable, renewable resources to power our heavy-duty vehicles, cars, boats, and even our homes,” Rehagen said during his opening remarks. “Biodiesel and Bioheat may not be quite at the level of the moon landing, but they are major accomplishments worth celebrating. And we’re only getting bigger and better.” NBB worked extensively to ensure this year’s conference was interactive and educational. In order to do that, NBB put together a jampacked schedule with engaging speakers to offer important information on the latest in the industry. During the conference, speakers answered key questions about the biodiesel market, new regulations, critical policies, alternative fuels markets, biodiesel branding and environmental impacts. Also, NBB made sure to cover all policy bases and shared up-todate information on what 2019 looks like for the biodiesel industry. The Renewable Fuel Standard, trade, biodiesel tax incentive, low-carbon fuel policies, and Minnesota’s B20 state standard were among the topics covered. “It has always been NBB’s strategy to help establish state and regional policies to compliment the federal policies that shape our industry’s market,” Rehagen said. While there is still policy uncertainty, biodiesel experts from coast to coast shared essential insights to help attendees navigate expectations for the coming years. “Showing our strength, getting down in the trenches and fighting, and securing the support of congressional allies will continue to be the keys to success,” said Kurt Kovarik, NBB vice president of federal affairs. The conference also spotlighted the bright future of biodiesel through NBB’s Next Generation Scientists for Biodiesel program. Each year the NGSB program offers scholarships to college students for an opportunity to participate alongside industry experts at the conference. This year scholarship winners had the opportunity to share their extensive biodiesel research during a poster session and a breakout session, titled, “One Small Step: The Next Generation of Biodiesel Scientists.” “I have fulfilled my dream of presenting my research at the conference as an Indian biodiesel research representative,” said Santhosh Poojary, a biotechnology engineering student from the NMAM Institute of Technology in Nitte, India. “Industry conferences provide a great opportunity for networking and future collaboration. Words are limited to express my gratitude.” Additionally, it wouldn’t have been a biodiesel conference without discussing the industry’s environmental stewardship. Biodiesel’s goal is to promote and advance biodiesel use through sustainable initiatives and practices. Integral sessions discussed how companies can commit to the 12

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2019 SPRING EDITION

reduction of greenhouse gas emissions and advance affordable, domestic renewable fuels to contribute to a cleaner environment. To close out the conference, NBB went out with a bang in the final session, “To 2022 and Beyond: Renewable Fuels in the Next Decade.” Influential renewable fuel industry leaders discussed RFS and what is on the horizon for 2020. “Opponents of the RFS early on thought that sustainability might be a weakness to exploit,” Rehagen said. “We knew that was wrong, that science was on our side—but we hadn’t galvanized biodiesel’s sustainability story with the data, research and scientific thought-leaders we needed to counter our opponents’ emotion-based attacks.” If you missed anything during the conference, you can visit blog.biodieselconference.org for detailed content including informative interviews, stories, photos and more. NBB hopes to see you next year at the National Biodiesel Conference & Expo in Tampa, Florida, Jan. 20-23, 2020.


insideNBB

Industry Honors Biodiesel Champions with Annual Awards The National Biodiesel Board’s annual Eye on Biodiesel awards recognize a diverse group of individuals and organizations who have made significant contributions to biodiesel. From longtime champions to present-day breakthroughs, the commercial biodiesel industry wouldn’t be where it is today without these individuals and organizations. “These leaders are integral to the growth and development of the biodiesel industry,” said NBB CEO Donnell Rehagen, “and we would not have seen the strength in our sector this year without their extensive dedication.” Cory-Ann Wind, Oregon Clean Fuels Program Manager, and the Oregon Department of Environmental Quality— Climate Leader Award The Oregon Department of Environmental Quality administers the state’s Clean Fuels Program, which is led by CFP Manager CoryAnn Wind. The CFP requires gradually increasing carbon intensity reductions for transportation fuels, culminating in a 10 percent reduction by 2025. Following only the second year of program implementation, biodiesel use in Oregon grew to 51 million gallons. NTEA – The Association for the Work Truck Industry— Industry Partnership Award NTEA represents more than 2,050 companies that manufacture, distribute, install, sell and repair commercial trucks. It also provides indepth technical information, education, and member programs and services. NBB’s partnership with NTEA has been instrumental in getting biodiesel information to the critical audience in the work truck industry.

Wind

Kotrba

Ron Kotrba, Editor of Biodiesel Magazine—Influence Award Ron Kotrba has been writing for Biodiesel Magazine for more than 14 years and has served as editor for a decade, going above and beyond to create awareness and provide an important platform for the voices within the industry. His depth of knowledge on the issues affecting the industry has led to strong, consistent reporting of the complex issues faced over the years. Biodiesel Magazine continues to be a critical platform for sharing biodiesel success stories that are key to building support for industry growth.

Stephen Kaffka, Extension Agronomist, Department of Plant Sciences, University of California, Davis—Inspiration Award Stephen Kaffka has been a key advisor during implementation of the California Low Carbon Fuel Standard. His expertise on agricultural production bridged the gap between the good things that farmers can do, and the environmental metrics desired by the Air Resources Board and its stakeholders, who place environmental protection as a top priCasey’s General Stores—Impact Award In the past year, Casey’s General Stores has become a leading player ority. As a result, biodiesel producers are participating in an expanding in the biodiesel industry, keeping biodiesel in high consumer demand. California market while the carbon reduction goals are being exceeded. Casey’s has now converted more than 590 stores to biodiesel and plans to expand the use of biodiesel products to another 300 locations. With this prominence across the country, the biodiesel industry has an opportunity to make strides in public awareness and usage of America’s advanced biofuel.

NBB Grows Washington, DC, Staff Team The National Biodiesel Board is rounding out its staff in Washington, D.C., this year. Headquartered in Jefferson City, Missouri, NBB maintains a Washington office for federal affairs and work on regulatory issues surrounding international trade, tax issues and the federal Renewable Fuel Standard. This year two new staff members joined the NBB team, Kate Shenk as director of regulatory affairs and David W. Cobb as director of federal affairs, neither of whom is a stranger to biodiesel. Shenk comes to NBB from the Biotechnology Innovation Organization where she led a regulatory affairs committee and developed analyses and comments on regulatory policies.

Cobb recently served as federal affairs director for CHS Inc., a Fortune 100 company and the nation’s largest farmerowned cooperative, where he advocated for the company’s legislative and regulatory policy priorities.

Shenk

Cobb

www.BiodieselMagazine.com

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FEEDSTOCK

Where Will ALL THE FEEDSTOCK

Come From?

As a new wave of large-scale biomass-based diesel projects develops, experts suggest market forces are ready to deliver the necessary fats, oils and greases BY RON KOTRBA

The vast number of large-scale biomass-based diesel projects announced in 2018 harkens back to the golden age of biodiesel in the mid- to late 2000s when a sort of irrational exuberance defined the market. Notable differences exist between then and now, however, such as the type and scale of these projects along with who is backing them, what is driving their development, and the maturity level of the market in which these projects are taking place. Many of these new biomass-based diesel projects intend to produce renewable diesel at a much larger scale than even the largest biodiesel plant. Two of them alone—the 400 million-gallon expansion of Diamond Green Diesel in Norco, Louisiana, and the 600 MMgy greenfield project in Port Westward, Oregon, by Next Renewable Fuels Inc.—would add a billion gallons of capacity to the U.S. market that absorbed less than 3 billion gallons last year. World Energy is behind another massive project with its quarter-billion-gallon expansion that will quintuple production in Paramount, California. Ryze Renewable Fuels has two renewable diesel projects fully under construc-

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tion in Nevada totaling 150 MMgy. Renewable Energy Group Inc. announced an amorphous renewable diesel project with Phillips 66 in Ferndale, Washington. ReadiFuels, a subsidiary of Applied Research Associates and partner to Chevron-Lummus Global, also has plans for a renewable diesel facility in Iowa. And then there is coprocessing. The Marathon petroleum refinery in Dickinson, North Dakota, has been coprocessing renewable diesel with petroleum crude oil since last summer. Sinclair, BP and several other oil refiners are also either currently coprocessing large volumes, or plan to soon. “It’s the quiet ones we have to keep track of, not the ones that have made the announcements,” says John Cusick, a senior analyst with The Jacobsen. “I see coprocessing as being significant. It could open up a huge realm of demand. They’re all gunning for it, but I don’t see the actual feedstock demand coming as quickly as the market seems to think it will. We’ll see renewable diesel conversions as refiners turn the lemons of their unprofitable oil refineries into the lemonade of renewable diesel. Once the line’s crossed though, then we can decide what to think. We’re starting to see a tipping point where low-carbon steps are viewed as good business, especially when

2019 SPRING EDITION

they’re tying executive compensations to lowcarbon strategies. It is coming.” Greenfield biodiesel projects, which slowed to a crawl after the Great Recession, and the retooling of idled facilities, have also picked back up. Cargill’s 60 MMgy soy biodiesel plant in Wichita, Kansas, is nearly complete. Benefuel plans to build two biodiesel refineries, a 20 MMgy facility in Ontario, Canada, and another in British Columbia. Epitome Energy LLC is developing a soy crush and 30 MMgy biodiesel facility slated for Crookston, Minnesota. World Energy recently acquired an idled 40 MMgy biodiesel plant in Estill, South Carolina. Hero BX bought two shuttered facilities last year in Illinois and Iowa. The list goes on. Cusick says there are at least 60 programs in place around the world driving demand for biofuels. “It’s definitely heating up,” he says of the looming pressure on feedstock supply. “It’s an interesting moment that we ask this question, considering feedstock prices suffer despite what’s just around the corner. The simple programs in place today and the slated growth creates massive, ramping demand. I came into The Jacobsen out of the biodiesel trading bubble as an analytical person looking at the markets. Previously, I was pretty focused on the biodiesel


NEW KID ON THE BLOCK: CoverCress CEO Jerry Steiner says he can foresee farmers growing 5 million acres of his company’s modified pennycress winter cover crop in 10 years, which could yield 400 MMgy of new high-quality oil. This is only 16 percent of the targeted 32 million Midwestern farming acres that rotate corn and soybeans. PHOTO: COVERCRESS INC.

world. It’s been a fascinating thing to shift gears here. I’ve done a lot of work with refiners. With the feedstock situation, I think the tipping point is going to happen soon. With the programs and overall suck of fuel on virgin vegetable oils and low carbon-intensity feedstocks, we’ll see dramatic shifts.” Unlike 15 years ago, Big Oil is now all in, whether it is through investment partnerships, coprocessing and refinery conversions, or signed offtake agreements for every gallon of renewable diesel to be produced. “We never had that in biodiesel,” Cusick says. At important business gatherings like the recent National Biodiesel Conference & Expo in San Diego, obligated parties are holding fewer discussions with ag behemoths such as Archer Daniels Midland and Cargill about buying biodiesel volumes and more talks with them about buying refined feedstock, Cusick says. “It’s an interesting time,” he muses. “We’ve had a lot of inquiries in the past year or two here at The Jacobsen from regulated parties about demand from the California market. That is driving the decision-making process.” In the biodiesel heyday of the 2000s, the main growth drivers were the $1 per gallon federal biodiesel tax credit and the Renewable

Fuel Standard. “Now we’re way beyond RFS2 and the federal programs,” Cusick says. “It’s hard to grasp, to be honest with you. It’s kind of fascinating to understand the world in which decisions are now being made. RFS2 may swing back around in a year or two, but at the moment I don’t see anyone spending money around RFS2. What I see today is people making chief decisions based on California’s Low Carbon Fuel Standard.” California’s LCFS is a big draw, but Oregon has a similar policy in effect, Washington is expected to pass and implement one soon, and British Columbia has one in place too. This is clearly a growing, expanding trend, but the Golden State’s sheer market size, program maturity and greenhouse gas reduction hockey stick through 2030 makes it the golden child of low-carbon policies. And everyone wants a piece of the action. “One thing I see that is unique,” Cusick says, “is if you look at the net back economics of renewable diesel production in California, it makes sense even without RIN credits.” California Gov. Gavin Newsom, elected in November, has a stated goal of eliminating petroleum diesel emissions in his state by 2030. California’s annual diesel demand approaches

4 billion gallons. While electrification is seen as the savior to many climate change issues by injudicious environmentalists, most grounded, reasonable thinkers know electrification of heavy-duty markets will not come easily, soon or without a prohibitive cost. With 80 percent renewable diesel and 20 percent biodiesel, the California Advanced Biofuels Association believes the state can achieve Newsom’s goal without eliminating the diesel engine. Since 2010, California’s use of biomassbased diesel has grown from 1 to 15 percent. During Q2 of last year, renewable diesel made up more than 10 percent of California’s total diesel supply, according to the U.S. Energy Information Administration. Stephen Kaffka, an agronomist at the University of California-Davis, says low-carbon fuel policies such as those on North America’s West Coast have intrinsic value for oil companies, renewable fuel producers and engine makers, among others, as they keep diesel engines and fuels in the picture. “I can see a synergy in those projects under development with the oil industry and those who need diesel engines in various applications,” he says. “It’s a way to extend the useful life of diesel engines in terms of climate policy.” www.BiodieselMagazine.com

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FEEDSTOCK It is important to keep in mind that protein Feedstock Supply With billions of gallons of biomass-based demand—not biofuels—drives soybean plantdiesel productive capacity expected to come on- ing. As more of the world’s economies grow line in the next few years, the perennial question and prosper, the more meat people will demand of where all the additional feedstock will come and, thus, the more protein meal will be required from to supply these facilities seems more im- to feed livestock. In response to EPA, the RVO Working Group has looked at global demand portant—and legitimate—than ever. “The question is interesting,” says Alan for protein. “What we’ve found is that protein Weber, a partner with Marc-IV and advisor to meal demand will increase from 300 million the National Biodiesel Board. Weber has been tons per year today to 400 million tons by 2030,” part of the NBB’s RVO Working Group, which Weber says. “Three quarters of that will come supplies important industry and feedstock data from soybeans vs. other oilseeds. That means an to U.S. EPA to inform the agency how much additional 5.5 billion pounds of soybean oil per growth the sector can sustainably achieve for its year, or 750 MMgy, above and beyond today’s annual RFS volume proposals, since its incep- demand for biofuels. That’s just the forecast for tion. “I started in biodiesel in the 1990s, and additional oil created by protein meal demand almost every year the question is raised on feed- and doesn’t consider changes in technologies, stock supplies, and almost every year I’ve been innovations or yield increases.” The U.S. is growing more food and fuel on told there’s not enough,” Weber says. “I remember being told the industry can sustainably pro- fewer acres. According to Farzad Taheripour, a professor of agricultural economics at Purdue duce 250 MMgy and that’s it.” In 2005, U.S. biodiesel production and use University, U.S. farmland has shrunk by 23 milwas less than 200 MMgy and soybean oil prices lion acres since the passage of RFS2 in 2007. were about 26 cents a pound, Weber says. “Fast It’s also important to note that RFS2 policy reforward to now, the U.S. market is 2.6 billion gal- quires that no new net U.S. farmland be brought lons and soy oil prices are the same or less, in real into production beyond what was in use in terms.” At press time soybean oil prices hovered 2007. While some land has been converted to around 29 cents a pound. With an average yearly farmland since then, this is former cattle grazinflation rate of 1.95 percent between 2005 and ing or pasture land—not pristine prairies—that 2018, a dollar in 2005 has the spending power of has been converted to cropland to grow more about $1.29 today. Therefore, when adjusted for protein meal for chickens, according to Scott. inflation, today’s soybean oil price of 29 cents a “We’re growing more chickens and less cattle,” pound is actually less than what prices were in he says. Since 1980, U.S. farmers increased soy 2005—despite massive U.S. and global growth production by 96 percent while decreasing soil in biodiesel production. Slightly less than half erosion by 66 percent and using 8 percent less of all U.S. biodiesel production relies on soybean energy, according to the U.S. Soybean Sustainoil, about 46 percent, according to numbers ability Assurance Protocol, 2016. Another critical aspect to remember about shared by Don Scott, NBB’s sustainability director, at the 2019 National Biodiesel Conference RFS2 is that the policy excludes palm oil from qualifying for biomass-based diesel produc& Expo in San Diego. “Think about the crops and stocks we’ve tion because it does not meet the 50 percent had over the past few years,” Weber says. “When greenhouse gas emissions reductions threshold you compare the ending inventories this year required when indirect land use change effects to last year, we’ve got almost half a billion ad- are calculated in. “It’s quite clear the effects on ditional bushels sitting in storage. That equates habitat and especially tropical peat soils,” Kaffka to 700 million gallons of vegetable oil in those says. “From a carbon perspective it’s quite nasty. beans—it’s huge. People lose sight of that.” Of It’s the most productive oilseed by far per acre, course, that oil is locked in the beans and those and it’s important for economies around the may still get exported, Weber acknowledges, and world. It mixes with other vegetable oils in ways the excess inventories are partly due to the cur- that are hard to keep separate. But it’s not clear rent trade war with China. “But the other part to me though that using soybean oil produced in of it is advancements in technology,” he says. the U.S. more economically and efficiently in any “Look at yields. They’ve been above the trend way contributes to the palm oil problem.” Indirect land use change, introduced more line for the past four or five years. We’ve been aggressive in our comments to EPA that the use than a decade ago by Princeton researcher Timoof trend lines is not sufficient due to advances in thy Searchinger, is not “a bad idea,” Kaffka says. technology, which we expect to keep us above “Markets have consequences, and land use is one of them. But Searchinger over-exaggerated the trend line.” BIODIESEL MAGAZINE 2019 SPRING EDITION 16 l

and overestimated those consequences, and he underestimated the capacity of the agriculture industry to respond [to market demands].” Over the years, Kaffka has reiterated the importance of the virtuous cycle wherein innovation, invention and adoption lead to improved resource efficiencies and yields. “There’s innovation occurring more or less constantly,” he says. “In the U.S., we haven’t seen an upper limit to use increases with the main commodities. And there are still opportunities for increased production from crops. Markets are a really great identifier of slack resources, and carbon policies provide value.” Sustainable intensification is a growing, global phenomenon. It leads to more production on fewer acres and healthier land management through practices like nutrient, water and soil retention. CoverCress Whether through California orchards and nut farms intercropping canola in the winter months, or Midwest farmers planting carinata or pennycress, winter cover crops are one of many valuable ways to improve soil while making existing farmland more productive. “These winter annuals fit into existing rotations,” Weber says. “They can utilize existing oilseed processing equipment and, on the production side, require no new equipment.” Weber says one company to watch is CoverCress Inc., which has its own unique strains of pennycress targeting winter cover opportunities between corn and soybean rotations on up to 32 million acres in the Midwest. Even if just a small percentage of that land is used for CoverCress in 10 years, the crop has the potential to supply up to an additional 400 million gallons a year of high-quality virgin oil. “The first thing we did was build a set of native genetics, which formed the basis for our breeding program,” says Jerry Steiner, the CEO of CoverCress. “Then we created crosses and a test program. We got to the point of building a productive pennycress line, and since then we’ve added a molecular line through our partnerships with the University of Minnesota, Illinois State University, and Western Illinois University.” Formerly named Arvegenix, CoverCress was incorporated in 2015 by retired Monsanto employees. With investment capital from Bayer, economic development money from the state of Missouri and St. Louis County, and traditional venture capital, Steiner says CoverCress, as an R&D company, is three years from commercial planting. “In our research phase, we are routinely getting 30 to 32 percent oil on a dry weight basis,” Steiner says. “Our yields are around 1,500


FEEDSTOCK pounds of production per acre. If we use solvent extraction, we capture a high percentage of the oil.” CoverCress crops are being grown at six research locations, with 1,000 to 2,000 5-acre plots per farmer. “Every line starts with a single seed, so we replicate and test—that’s how we know what we’ve got,” Steiner says. Agronomic work is being performed at another 20 locations. Much of CoverCress’ inside research is conducted at the Donald Danforth Plant Science Center in St. Louis, Missouri. With conventional breeding, natural mutation and gene editing, CoverCress has been able to favorably modify both the oil and meal of pennycress. The seeds are naturally small, about the size of camelina seeds, but less round and more disc-shaped. “The most important change was in the meal,” Steiner says. “Native pennycress meal was not useful—it had way too much fiber in it.” Native pennycress has a dark, blackish-colored seed whereas CoverCress seed is golden-colored. This is because the modifications have removed the fibrous coating, thereby reducing the fiber. In addition to reducing fiber, CoverCress also has been able to lower the content of a key antinutrient called glucosinolate. “Glucosinolate is similar to what gives horse radish its peppery pop, which reduces animals’ desire for intake because it’s less palatable,” Steiner says. “As a natural biocide, it has a pungent smell that tells animals, ‘don’t eat me.’” Native pennycress oil possesses extremely low saturated fat content, about 4 percent, according to Steiner. “Native pennycress is also

about a third erucic acid,” he says. “In ours, we’ve eliminated that and turned it into oleic acid,” which helps provide a dual-use for the oil as both feedstock for biomass-based diesel as well as food-grade oil. CoverCress has worked with two different planting methods. One is distribution of seed over standing corn fairly close to harvest time. The other is spreading seed post-harvest and tillage. Once distributed on the field in the fall, rain is all that’s needed. Come May, the crop is ready for harvest followed by immediate soybean planting. Not only does CoverCress provide three crops in two years, but it also helps soil and ecosystem health. “Cover crops play an important role,” Steiner says. “I understand it’s difficult for farmers to invest in things that have slow returns. That’s a problem we aim to solve. Our cover crop will not only provide soil benefits but also the side benefit of making money along the way. In the Midwest, there’s a lot of drain tile and water just flows right through. Farmers need something to hold on to those nutrients and protect the soil.” The company is targeting 30 to 32 million acres of farmland south of Interstate 80 in corn and soybean rotation. “A significant number of our test fields are in Illinois,” Steiner says. “Illinois is our marker for the corn-soybean belt.” Steiner emphasizes that CoverCress is not developing a new commodity. “A crop only has value if you can take it somewhere to process,” he says. “We’re in talks with a number of people willing to modify facilities to take our crop in May when we har-

vest. We need more collection and crop locations. When farmers sign up, we offer them a fixed price and a known delivery location. It’s contract production. We’ve done all the work to develop this. We’ve made significant investments in our unique composition of CoverCress. We’ve filed for intellectual property protection. We envision plenty of processing locations, so from a farmer’s location it’s enticing and convenient, but we’re not aiming to make a whole new commodity crop with 10 people selling CoverCress seed. We want to entice the first company to place their bets with us, and we’ll offer exclusivity for a return on investment.” Where will CoverCress be in 10 years? “Of that 32 million acres,” Steiner says, “there is no reason we couldn’t be on 5 million of those in 10 years. Our yield goal in 10 years is 2,000 pounds an acre with 30 percent oil, or about 600 pounds of oil an acre.” At its goal yields and oil content, 5 million acres would mean an additional 400 million gallons of bio feedstock into the supply chain. And what if all of those identified 32 million acres were planted with CoverCress as a winter cover crop? This alone could lead to an astounding 2.4 billion gallons of newly available feedstock. Waste Oils While 46 percent of U.S. biodiesel comes from soybean oil, another 46 percent is derived from waste oils and fats, according to Scott: 14 percent from animal fats; 17 percent from used cooking oil (UCO); and 15 percent from distillers corn oil (DCO). “That diversity

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FEEDSTOCK is a real strength,” Weber says. “It allows producers to alter their use based on regional and global dynamics.” Exactly how markets identify slack resources, as Kaffka said, is exemplified in the cases of waste oils. Several years ago, UCO became in hot demand for biodiesel production. “Market demand put upward pressure on prices, and all of a sudden we started seeing collection in Brazil, India, Mexico,” Weber says. “The higher price incentivized more collection, innovation and efficiencies.” Kaffka says it’s quite possible there is still a fair amount of unrecovered waste oils in the economy not served by the rendering industry. “As the value of that material increases, through carbon and fuel policies, society becomes more efficient,” he says. “There is also discussion about recovery of lipids from wastewater treatment facilities, and progress is being made in that area. None of these things are bad—they’re all good. High-value uses will prevail, and other uses will fade.” Weber says what happened with DCO is a “perfect example” of the impact a growing biodiesel market has on feedstock innovation. DCO is a byproduct of ethanol production. Prior to significant biodiesel growth, DCO

went out in distillers grains—the resultant feed product after all the corn starch is converted to alcohol. “Now, because of biodiesel demand, almost all dry mills have the capability to extract DCO from thin stillage,” Weber says. “But yet we’re still not pulling all the potential oil out, as we’re extracting less than a pound per bushel.” While local livestock market needs also determine how much DCO an ethanol producer may desire to extract, Weber says we can see additional DCO volumes in at least two ways. “One, ethanol production has not plateaued,” he says. “Exports to other regions and increased E15 demand may continue to grow ethanol production, which would increase DCO supplies. Two, ethanol producers can look at increased extraction rates. If extraction were increased by four-tenths of a pound, this would lead to 350 MMgy of additional DCO volumes. And currently not all DCO generated is going to biodiesel. A significant volume of feedstock can be pulled back into the biodiesel space.” As renewable diesel production demands more refined feedstock, Weber says biodiesel producers will continue to look at interceptor, or trap, grease. While it’s not easy to work with, demand will necessitate innovation.

“I think there’s still opportunity from both the agriculture and the recycling and waste recovery industries for additional biodiesel feedstock supply,” Kaffka says. “If the climate problem is real, and most think it is— and we can argue about the severity and rate— these seem to be no-regret steps to me.” Biodiesel Opportunities Although the rise of renewable diesel may, on the surface, seem threatening to biodiesel in terms of competition for feedstock and end-use markets, most experts agree that the two fuels are—or certainly can be—complimentary to each other. For instance, biodiesel-blended renewable diesel can provide a 100 percent renewable product that provides the lubricity diesel engines need in an ultra-low sulfur world. Used together, they can reduce emissions significantly and, as Kaffka says, keep diesel in the picture. Certainly markets are changing—progress necessitates change—but these changes can open up opportunities for biodiesel to carve out new, or expand on existing, niches. “Biodiesel assets in California are in a great position,” Cusick says. “And I think we’ll begin to see them gel around New York Harbor

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FEEDSTOCK “But we haven’t actually seen it,” he says. Historically, the industry has demonstrated there is ample feedstock to meet demand in a sustainable way, Weber says. “We have a diverse supply of feedstock, but there is still room for innovation,” he says. “Having additional capacity and additional demand through the LCFS and RFS will drive that innovation, as it has in the past. We will see other feedstock sources come to fruition. Innovation does happen. If we have demand and the right market signals, that’s when see new sources come online. I think we have sufficient feedstock supply to grow this market.” Weber points out that there is a difference between capacity and demand. While much new capacity is under development to meet demand from the LCFS, he notes that LCFS volumes can be nested within RFS obligations. In other words, fuel sent to California to meet the LCFS can also be used to satisfy RFS obligations. “Last year the U.S. market consumed 2.6 or 2.7 billion gallons in domestic and imported biomass-based diesel,” he says. “So then all of a sudden if a line is drawn in the sand in 2030 at 3.4 billion gallons, that’s not Conclusions Kaffka says this argument of feedstock a huge jump in volumes needed to supply the 11:47:15 AM marketplace.” Cusick also suggests that, as adshortages WWS-TRADING-ARTWORK-OL.pdf has been around for a1 10-03-2019 long time. to supply heating oil markets in the vacuum of Argentine imports.” In addition, low-sulfur demands from marine fuels can be a huge draw for biodiesel. Come Jan. 1, 2020, the International Maritime Organization is requiring bunker fuels to lower sulfur content by volume from 3.5 to 0.5 percent. “It’s time to be creative,” Cusick says. The biggest challenge for coprocessing is feedstock, Cusick says. “They need a highly refined biomass feedstock that doesn’t aggravate the beast of the refinery. What they’ll want is a highly refined feedstock with no metals. Perhaps the smartest thing to do is position methyl esters as a refined feedstock for coprocessing. For biodiesel, that is the kind of thinking that should be had. Is it overkill? Maybe. But on paper, it makes sense. At the moment, we don’t have the vegetable oil refining infrastructure for future demand. At this juncture, we have no intermediary refining and processing structure to create fungible product for coprocessing. This is something the ag and biofuels sectors should think about.”

ditional domestic capacity comes online, it is possible U.S. renewable diesel producers could take market share away from Neste imports to the tune of hundreds of millions of gallons, potentially. The big message is that markets became too dependent on RFS2, Cusick says. “The biodiesel industry needs to focus on initiatives the way it did with Bioheat,” he explains. “Apply that same mentality to marine fuel development. Really understand where biodiesel fits in the next 10 to 15 years. This is coming. Not because biodiesel did a bad job. Biodiesel paved the way for this. The reality that refiners are doing this with their own infrastructure, it’s just smart business and logical. It’s a question now of beginning to adapt. We need to understand creatively once again where this industry can participate. The idea of the biodiesel industry providing the correct refined product for coprocessing sounds crazy, but making diesel out of UCO sounded crazy too.” Author: Ron Kotrba Editor, Biodiesel Magazine 218-745-8347 rkotrba@bbiinternational.com

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Value

ADDING

ACROSS THE BOARD Biodiesel Magazine spotlights Minnesota Soybean Growers Association, which championed the nation’s first biodiesel mandate 17 years ago as a critical approach to adding value to surplus soybean oil while creating jobs, stimulating the economy and improving the air, and Renewable Process Solutions, whose co-located supercritical biodiesel process can improve ethanol producers’ distillers corn oil margins by up to 12 cents a pound BY RON KOTRBA

WONDER PLANT: Corn is used to ferment and distill into ethanol, which provides distillers grains byproduct to the feed industry and distillers corn oil for conversion into biodiesel using technologies such as the supercritical process pioneered by Renewable Process Solutions Inc. RPS has already built two supercritical biodiesel facilities co-located with ethanol refineries, a value-added upgrade that boosts margins on their distillers corn oil by up to 12 cents a pound. 22

BIODIESEL MAGAZINE

2019 SPRING EDITION


SPOTLIGHT

PROTEIN POWER: The worldâ&#x20AC;&#x2122;s growing demand for protein drives soybean plantings, which leaves an excess of soybean oil on the market. The Minnesota Soybean Growers Association championed the nationâ&#x20AC;&#x2122;s first state biodiesel mandate 17 years ago as a way to boost farm incomes while cleaning the air, creating jobs, boosting the economy and lessening dependence on fossil fuels.

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SPOTLIGHT Minnesota Soybean Growers Association Minnesota became the first state in the nation in 2002 to pass a statewide biodiesel blend requirement. The Minnesota mandate, first implemented at 2 percent in 2005, served as a model for other states. “Some people said, ‘If they can do it in Minnesota’s colder climate, why can’t we do it here in our state?’” says Chris Hill, a soybean farmer in Brewster, Minnesota, and a director with the Minnesota Soybean Growers Association and American Soybean Association. “They saw what we did here and used it as a mold for their states and had lots of success with it. It’s like getting a pump going—once it’s going, it’ll run on its own.” Through MSGA and the checkoff program, Minnesota farmers can be credited for starting that pump from which so many others have benefited. Biodiesel crosses Minnesota’s geographic, demographic and political party lines. From value-added uses and improved prices for soybean oil—long considered a drag on soymeal prices—to city dwellers reaping the health benefits of improved diesel exhaust emissions, Hill says biodiesel is one of those rare issues

everyone can get onboard with. “It’s a winwin-win-win for everyone,” he says. Minnesota blazed another biodiesel trail last year by increasing the blend requirement to 20 percent in the summer months. “Last year was our first year with B20, and we had a real good year,” says Jim Willers, a soybean farmer in Beaver Creek, Minnesota, director with the United Soybean Board, and a Minnesota Soybean Research & Promotion Council board director. Willers was among the early contingent of MSGA farmer-members taking the biodiesel message to the state capital, proposing the idea to legislators to alleviate downward price pressure from a glut of soybean oil on the market. “We went there marching around the capital, asking people about it—that’s how it started,” he says. “We went home, got organized and spent two more years working on it.” Minnesota’s biodiesel requirement adds 63 cents per bushel to a farmer’s bottom line, Hill says, and lowers the cost of soymeal for livestock producers. Willers says the B20 mandate is equivalent to removing 223,000 cars from the road. But it also adds $1.7 billion in economic impact to the state, creates more than 5,000 direct and indirect jobs, and lowers greenhouse gas emissions in this age of growing climate uncertainty.

“Minnesota farmers are forward-thinking because we are at the headwaters of where things have to head downstream and overseas,” Hill says. “We’ve always been a taker of price. With biodiesel, we have the ability to add Hill value to our products. We needed something to be done, so why not do it ourselves? We can be the promoters of our own achievements. We have shown that biodiesel works well, it requires no modifications to equipment or vehicles, and it Willers helps our bottom line.” After all these years, farmer-led MSGA and MSR&PC—conceptualizers of the first state biodiesel mandate— continue to be fierce advocates for Minnesota’s biodiesel industry through fantastic truck builds like that featured on Discovery Channel’s Diesel Brothers, tours, meetings with legislators, informative publications and continued research through instruments such as a new Soy Innovation Campus.

Cleaning Minnesota’s air for over 15 years.

B20

20% biodiesel

B10 128,000

B20 available during summer months.

10% biodiesel

B5

5% biodiesel

B0

80,796

vehicles removed annually

0% biodiesel

0

vehicles removed annually

24

BIODIESEL MAGAZINE

l

223,000

est. vehicles removed annually

vehicles removed annually B10 available during summer months. B5 available during winter months (2014-2018).

2019 SPRING EDITION

B5 available during winter months (Implemented May 2018).

Minnesota’s use of clean, renewable biodiesel blends helps to reduce greenhouse gas and particulate emissions. Learn more at mnsoybean.org.


SPOTLIGHT RPS Renewable Process Solutions Inc. has commissioned two supercritical biodiesel production facilities co-located with existing ethanol plants. The supercritical biodiesel process (SBP) is a patented technology developed by RPS, now optimizing its third-generation model. “We have a few more facilities coming online in the coming years,” says Rahul Bobbili, RPS president and chief technology officer. “It’s becoming more evident that integrating SBP with an ethanol facility reduces capital investment by a third compared to a greenfield project. Also, a 5 MMgy co-located SBP recovers its capital investment within two to three years.” Ethanol facilities are the ideal location to produce biodiesel with broad advantages over greenfield projects. SBP can use methanol or ethanol to convert distillers corn oil (DCO) to biodiesel. Bobbili says ethanol can increase biodiesel yields up to 5 percent with a better carbon intensity score. “Also,” Bobbili adds, “using ethanol further reduces capital investment by eliminating processing steps for methanol recovery and purification.” SBP glycerin is 97-plus percent pure. “Ethanol plants can sell glycerin to traders at a higher price,” Bobbili says, “or blend with their wet or

dried distillers grains to gain a minimum value of 7 to 8 cents per pound.” The integrated utility load reduces capital investment and equipment. “Utility streams such as power, steam, cooling water and compressed air are usually available in excess at an ethanol facility,” Bobbili says. “A co-located SBP uses a small portion of that utility to convert DCO into biodiesel.” Co-location also reduces storage tankage. “A co-located SBP only needs biodiesel and methanol storage tanks, whereas the number of storage tanks required for a greenfield project is quite high,” Bobbili says. If ethanol instead of methanol were used, this would further reduce necessary tankage. “When DCO is fed into the process, byproducts from the co-located SBP are piped to various locations in the ethanol facility to capture their value,” he says. Labor cost savings for a co-located SBP are significant compared to greenfield projects, as no additional operators are required. “SBP is a continuous, hands-free operation with minimal oversight and periodic maintenance,” he says. “Since we use no catalyst whatsoever, the process is clean with no impurity accumulation to bring down the equipment for maintenance.” Ethanol plants with SBP can improve DCO margins by 10 to 12 cents per pound— not including LCFS credit values. Furthermore,

The RPS-built SBP at Calgren’s ethanol plant in Pixely,California, is being commissioned. PHOTO: RENEWABLE PROCESS SOLUTIONS INC.

increasing capacity to handle other feedstocks will bring more income. There is much discussion lately on renewable diesel vs. biodiesel. Bobbili says it’s not economically viable to co-locate renewable diesel production with an ethanol refinery. “The cost is four times that of a biodiesel facility,” he says. “Also, the margin on biodiesel is far higher than renewable diesel.” Bobbili is confident more ethanol plants will produce biodiesel in coming years. “We welcome the ethanol industry to reach out to RPS to learn more about the supercritical biodiesel process, and to see our operating facilities,” he says.

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Profile for BBI International

2019 Spring Biodiesel Magazine  

The Feedstock Collection, Brokering, Trading; Co-location; Feedstock Developments; Pretreatment Technologies issue.

2019 Spring Biodiesel Magazine  

The Feedstock Collection, Brokering, Trading; Co-location; Feedstock Developments; Pretreatment Technologies issue.