INSIDE: A NEW ACID TO CONSIDER FOR BIODIESEL PROCESSING 2016 Edition
Several New, Innovative Biodiesel Facilities Near Completion Page 12
Market Review, Outlook Page 18
Producers Respond to RFS, Tax Credit Policy Page Pa ge 24
U.S. Producers Develop International Projects Page Pa ge 28
Total’s Renewable Diesel Conversion at La Mède
Page Pa ge 32
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CONTENTS 2016 EDITION VOLUME 13 ISSUE 1
12 Standing On Its Own 2 Feet PROJECT DEVELOPMENT
Despite tough market conditions, biodiesel producers move ahead with new and innovative projects
BY ANNA SIMET
12 18 Poised for the Best Year Yet MARKET
Biodiesel-related markets throughout 2015 are reviewed as we look ahead to the possibilities of 2016
BY KATIE FLETCHER
24 Back On Solid Ground POLICY
Producers respond to the U.S. EPA’s final RFS rule for 2014-’17 and retroactive reinstatement of the tax credit
BY RON KOTRBA
28 Biodiesel Opportunities Abroad INDUSTRY
For various reasons, U.S. biodiesel companies have plans to develop projects and markets overseas
BY RON KOTRBA
32 Total’s La Mède Conversion EUROPE
Supermajor oil company Total shares details of its plan to convert a French oil refinery into a renewable diesel plant
BY RON KOTRBA
Advertiser Index 22 34 30 7 2 17 40 23 27 31 21 35 39 26 & 38 16
American Controls Inc. AMERIgreen Energy ARKEMA Avalara BDI - BioEnergy International AG D3Max LLC Desmet Ballestra North America Dexsil Corporation Future International Diversified Inc. GEA Westfalia Separator Iowa Central Fuel Testing Lab Lanxess Energizing Chemistry Louis Dreyfus National Biodiesel Board Oil Trades Supply Corp.
DEPARTMENTS 4 Editor’s Note ABOUT-FACE
BY RON KOTRBA
36 CONTRIBUTION 36 ENVIRONMENT Our Commitment to a Sustainable Future
Catalyst supplier Evonik Corp. provides an overview of global biodiesel programs to combat climate change
BY CARLOS ARAUJO
5 Legal Perspectives
California Launches New Fuel Policies in 2016
BY GRAHAM NOYES 6 Talking Point
A New Acid for Your Biodiesel Process
BY JOSEPH BORST 7 Events Calendar 8 Inside NBB
www.BiodieselMagazine.com E D I T O R I A L Tom Bryan President & Editor in Chief email@example.com Tim Portz Vice President of Content & Executive Editor firstname.lastname@example.org Ron Kotrba Editor email@example.com
ABOUT-FACE Ron Kotrba
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Anna Simet Associate Editor email@example.com Katie Fletcher Associate Editor firstname.lastname@example.org Jan Tellmann Copy Editor email@example.com P U B L I S H I N G Mike Bryan Joe Bryan
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What a year it’s been. If I’d been asked at the end of first quarter 2015, what the end of the year would bring for the U.S. biodiesel industry, my optimistic attitude would have compelled me to say, “Better things,” but my countenance might have telegraphed a different story. Overall, the downed U.S. biodiesel market impeded investment and stymied growth. This environment was precipitated by a confluence of factors, such as low diesel prices, and in many cases, negative margins, a prolonged delay in the RFS targets for 2014-’15—the rule for 2014 that should have been finalized by Nov. 1, 2012, was not published until Nov. 30, 2015—no tax credit for the fourth time in six years, and seriously depressed RIN values. For more information on 2015’s market activities and what 2016 may hold, be sure to read “Poised for the Best Year Yet” on page 18, written by associate editor Katie Fletcher. While the U.S. biodiesel sector suffered as a whole in 2015, this didn’t stop many domestic companies from making progress in developing new projects, as evidenced in the page-12 story, “Standing On Its Own 2 Feet,” by associate editor Anna Simet. This is a genuinely positive story of the perseverance and ingenuity exhibited by those in this business, whose efforts shine like the sun against a backdrop of stormy regulatory and market environments. On page 28, in the article, “Biodiesel Opportunities Abroad,” I feature four U.S. companies that are focusing on expanding their businesses overseas for a variety of reasons—whether they are fed up with federal policy inconsistency, state and local regulatory constraints, or are taking advantage of hungry international biodiesel markets. With the serious issues our domestic industry has faced in recent years, it’s no wonder companies are seeking this avenue. Given the U.S. EPA’s more robust biomass-based diesel volumes in the final RFS rule for 2014-’17, however, it will be interesting to see whether some of these companies refocus their efforts on domestic projects. Other influencing factors may include the EPA’s commitments to get the program time line back on track and continue raising biodiesel volumes, and the reinstated blender tax credit retroactively in effect from Jan. 1, 2015, through Dec. 31, 2016. For more on the RFS final rule, program time line and tax credit, check out “Back On Solid Ground,” on page 24. The events that unfolded late in 2015—EPA’s release of a strong RFS rule and reinstatement of the tax credit—are setting the stage for performance of an about-face in 2016, which, by all accounts, could be the greatest year the U.S. biodiesel industry has ever experienced. I’m placing my bets on it.
California Launches New Fuel Policies in 2016 BY GRAHAM NOYES
outcome of the GGRF budget process in California could California will be the biodiesel market to watch in 2016 as the state implements a diverse set a precedent for other states that establish cap-and-trade programs pursuant to EPA’s Clean Power Plan. portfolio of policies that will directly impact With the support of the NBB, CBA and LCFC, Asthe industry. The state’s landmark greenhouse gas (GHG) reduction program, AB 32, is celebrating its 10-year anniversary and ramping up quickly. According to the 2015 State Agency GHG Report Card, California GHG policies reduced more than 37 million metric tons of GHG emissions in 2013, and the state intends to quadruple that rate of GHG reduction by 2020. California is outpacing the U.S. average on both job creation and economic growth and showing no political hesitancy in combatting climate change. The low carbon fuel standard (LCFS) is California’s flagship GHG reduction program in the fuels sector and is delivering 10 percent of the state’s GHG reductions, despite being hindered by litigation. In 2015, California’s Air Resources Board readopted the LCFS program to satisfy procedural requirements while simultaneously enhancing the program and refusing to delay the GHG reduction timetable. Based on credit generation, California’s transportation sector reduced its carbon intensity 2 percent between 2010 and 2015, and will reduce it 8 percent more between 2016-’20. The market has responded accordingly with credit prices moving from $28 per ton in June to triple digits by December. Robust credit values have incentivized biodiesel production particularly from corn oil, tallow and used cooking oil, and also attracted 115 million gallons of renewable diesel into California’s market in 2014. In addition, highly effective participation in the readoption process by the National Biodiesel Board, California Biodiesel Association and individual producers convinced ARB to reduce by more than half the indirect land use change (ILUC) attributable to soy. This change will roughly triple the rate of LCFS credit generation from virgin soy biodiesel compared to the prior LCFS regulation. California’s cap-and-trade program will generate approximately $2.5 billion in revenue for the state’s GHG Reduction Fund (GGRF) in fiscal year 2015-’16. As a GHGreducing clean fuel technology, current and future California biodiesel producers are potentially eligible to receive a portion of the GGRF budget. In its Second Triennial Plan, ARB recommended that in-state production of low carbon fuels receive funding from the GGRF. The CBA and Low Carbon Fuels Coalition are actively engaged in the political process to secure long-term funding for the industry. The
semblymember Bill Quirk successfully guided AB 692 to passage this year. AB 692 establishes mandatory procurement of low carbon fuels for the overall state fleet with a 3 percent requirement applicable for 2017, ratcheting up 1 percent annually to 10 percent in 2024. Very low carbon diesel fuels must not exceed 40 percent of the carbon intensity of CARB diesel—a standard that can be met by biodiesel produced from low carbon feedstocks. While AB 692 only imposes reporting requirements in 2016, state fleets are already issuing solicitations for very low carbon fuels. Such an approach is consistent with a central pillar of Gov. Brown’s GHG reduction strategy: 50 percent reduction of petroleum use in vehicles by 2030. While these programs appear likely to create opportunities for biodiesel, California’s Alternative Diesel Fuel regulation presents more of a challenge. The ADF regulation has been under development for many years and its implementation was made mandatory by the LCFS lawsuit. The ADF regulation establishes a fuel approval process in California. During the rulemaking, ARB analyzed the emissions performance of biodiesel blends and found a small increase in nitrogen oxide (NOx) emissions. As a result, ARB imposed limitations on biodiesel blends that vary from B5 to B10 depending on the season and cetane number. The NBB, CBA and individual biodiesel producers were highly engaged in the ADF rulemaking and convinced ARB to delay implementation of the blending limits until Jan. 1, 2018, and to include a sunset provision based on the market penetration of new technology diesel engines. In addition, ARB established provisions to authorize the use of the NOx-reducing additive DTBP, and to enable biodiesel producers to certify their fuels as NOx-neutral relative to CARB diesel. Finally, the biodiesel industry convinced the California Legislature to solve a bothersome tax problem with the passage of AB 1032. The provision authorizes a refund for tax paid on the biodiesel fuel portion of dyed blended biodiesel fuel removed at rack if the supplier can show that tax on this biodiesel has been paid by the same supplier. Author: Graham Noyes Attorney, Keyes, Fox & Wiedman LLP 916-668-4636 firstname.lastname@example.org
A New Acid for Your Biodiesel Process BY JOSEPH BORST
The biodiesel producer deals with many Hydrochloric acid is very corrosive, generally requires glass-lined vessels, and liberates toxic fumes. It too can issues in the process of making a quality, cause the precipitation of insoluble salts, which can in-spec product at a good profit. Many long hours are spent trying to maximize yield and to find and use lower-cost feedstocks. Optimizing the process is a must to stay profitable, and how that is done is as diverse as the biodiesel plants themselves, and the people who operate them. No matter what the process, fatty acid methyl esters are the goal: making them in spec and in the highest yield. While many different processes are used in biodiesel plants, most processes rely on sodium or potassium methylate and methanol to convert oils into biodiesel. The neutralization of crude biodiesel to remove any methylate catalyst and salts is often done by washing the biodiesel with a dilute water solution of an acid. Typical acids used for this process step are sulfuric, acetic, citric, phosphoric, sulfuric and hydrochloric. Each has disadvantages that are addressed by a relatively new, environmentally friendly acid, Lutropur brand methanesulfonic acid (MSA). If a producer is using sulfuric acid in this step, Lutropur MSA can give up to a 3 percent increase in biodiesel yield due to faster and cleaner phase separation and less corrosion. Scale formation that can occur with citric and phosphoric acids is eliminated with Lutropur MSA, and phase separation is faster with Lutropur MSA, which can improve the efficiency of the process in comparison to acetic and phosphoric acids. If a producer is using hydrochloric acid, Lutropur MSA is much safer (no fumes) and much less corrosive. Like the neutralization of biodiesel, producers have typically used common acids for the neutralization of glycerin and soap splitting to separate fatty acids. Often the producer accepts the undesirable consequences of their choice because the chosen acid is familiar and perhaps the only one that they have experience using. Sulfuric, hydrochloric, acetic and citric acids can each be used in this application; however, each has disadvantages. Sulfuric acid generates insoluble sulfates that require solids handling, and the corrosivity of sulfuric acid is always a concern. In addition, sulfuric acid causes darkening of the oil and reacts with fatty acids to form sulfates that make separations more difficult. 6
negatively impact the process. Acetic acid has the drawback of being volatile and having an odor. The use of citric acid can cause the formation of insoluble citrates, which can cause fouling. Lutropur MSA is an excellent alternative to these acids for the neutralization of glycerin. The salts of MSA have a high solubility in glycerin, which means solids formation is not an issue with MSA as can be the case with most other acids. Because it is not an oxidizing acid like sulfuric acid, it gives fast phase separation and yields a higher quality free fatty acid product. MSA is relatively low in corrosivity compared to sulfuric and hydrochloric acids, which is important for equipment longevity. Lutropur MSA is a friendly acid: It has no odor like acetic acid, and it has very low volatility, making it a good choice for glycerin distillation processes. The conventional strong acid catalyst for free fatty acid conversion is sulfuric acid, which has many disadvantages: corrosivity, formation of emulsifier byproducts that lengthen separation times, and color development in biodiesel, among others. Lutropur MSA is an excellent alternative to sulfuric acid for this process. This unique catalyst allows the clean transformation of fatty acids into a much better-colored biodiesel product. It clearly outperforms sulfuric acid by being less corrosive on expensive stainless steel equipment and by allowing the use of cheaper, lower-quality feedstocks with high levels of free fatty acids while giving better and faster phase separation through the elimination or reduction of undesired side reactions. For biodiesel producers, the goal is cost-effective production that leads to improved profitability. Whether you are trying to improve process separations, eliminate the formation of solids, utilize high free fatty acid feedstocks, improve biodiesel yield, or just need a high-quality methylate catalyst, Lutropur MSA is a process acid that certainly should be considered. Author: Joseph Borst Senior Technical Service Representative, BASF Corp. email@example.com
National Biodiesel Conference & Expo JANUARY 25-28, 2016 Tampa Convention Center Tampa, Florida
The National Biodiesel Conference & Expo has proven that your investment in time and money to participate will return value to you and your organization on both the balance sheet and in your role in the industry. Every company with a role related to biodiesel will be represented. Those who understand the significance of the event bring their entire teams. There is no question this is the biodiesel event of the year, only a question of how you’ll capitalize on the opportunities it presents. 800-841--5849 www.biodieselconference.org
International Biomass Conference & Expo APRIL 11-14, 2016
Charlotte Convention Center Charlotte, North Carolina 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. It’s a true one-stop shop―the world’s premier educational and networking junction for all biomass industries. 866-746-8385 www.biomassconference.com
International Fuel Ethanol Workshop & Expo JUNE 20-23, 2016
Calculating excise taxes on biodiesel is confusing, but it doesn’t have to be. Make is easy by letting our experts handle your calculations and returns.
Wisconsin Center Milwaukee, Wisconsin
The FEW provides the global ethanol industry with cutting-edge content and unparalleled networking opportunities in a dynamic business-tobusiness environment. The FEW is the largest, longest-running ethanol conference in the world―and the only event powered by Ethanol Producer Magazine. 866-746-8385 www.fuelethanolworkshop.com
Learn more today at alternativemotorfuels.avalara.com 844-425-9110 | firstname.lastname@example.org www.BiodieselMagazine.com
Industry Perseverance Pays in 2015 Hardship. Uncertainty. Perseverance. It may sound a bit like a broken record if you’ve been around this industry very long, but the challenges we’ve faced over the course of our history aren’t for the faint of heart. And much like the other challenges of our past, this industry again stepped up with a strong, united front and succeeded. Joe Jobe, CEO, October 2015 marked the two-year National Biodiesel Board anniversary of the infamous leaked draft renewable volume obligation (RVO) proposal that signaled the U.S. EPA’s intention to cap biomass-based diesel at 1.28 billion gallons for two years and presumably forevermore. It launched us on a two-year odyssey that cast the future of the industry into a state of limbo. The National Biodiesel Board’s top priorities for 2015 all fit together like the pieces of a puzzle. 1) Finalize RVOs for 2014-’16 with a path for growth, 2) extend the biodiesel tax credit, 3) educate biofuel detractors on the benefits of biodiesel to their goals, and 4) continue to maintain a unified biodiesel industry and coordinate membership to be able to continue the powerful leveraging of resources. I’m proud to say that as of this writing, we were in a good position to achieve all four of these goals by the end of the year. The renewable fuel standard (RFS) volumes were finalized with growth in the biomass-based diesel category to 2 billion gallons in 2017. NBB’s various expert testimony at the June public hearing, as well as our comprehensive comments submitted in July, and our continued advocacy gave extensive evidence that our industry can do even more in 2016 and 2017 to help the RFS achieve its advanced biofuels goals and strengthen the overall program. The volumes were not as high as they could have been, but were much better than the 1.28-billiongallon proposal where they started. We’ve seen strong bipartisan support for the biodiesel tax incentive with legislation included in both House and Senate versions of tax packages in 2015. There has also been momentum to transition to
a producer’s credit as of this writing. A production credit has been an industry priority for more than six years and would help concentrate taxpayer support on U.S. companies stimulating growth in domestic production. The Advanced Biofuel Acceleration Project is the single largest program in NBB’s history and is the only national educational campaign for biodiesel. Along with educating the general public and key decision makers on the benefits of biodiesel, it has allowed us to reach specific detractor groups like environmental organizations and the livestock industry on their own turf. We have been able to build the case for biodiesel through independent data and show them how it helps them reach their own industry goals. And finally, our successes over the past two years couldn’t have happened without priority No. 4, maintaining a unified industry. With members in 44 states and three Canadian provinces, our voice in Washington, D.C., is much louder than other industries our size because we have a unified message coming from a diverse coalition of companies from across the country. The success of the biodiesel industry is a direct result of the diverse, united coalition we have built. We are large, publicly traded corporations and small businesses, Midwesterners and West Coasters, entrepreneurs and farmers, including our soybean partners who have so generously invested in us with both their policy support and checkoff dollars. This partnership has increased and leveraged the value of everyone’s dollars and afforded the industry as a united group to do more than any of us could have done individually. Our industry goals couldn’t have been achieved without the relentless, diverse, unified, collective voice of an industry standing together. We must not let up as we push for a more robust policy and continued market expansion in 2016. We must protect the industry we built and continue to move forward. It won’t be easy, but together we will continue our record of success. Joe Jobe CEO National Biodiesel Board
NBB Industry advocacy helps get RFS volume growth back on track
More than a dozen industry representatives testified in support of raising RFS volumes at the summer EPA hearing in Kansas City, including NBB Vice President of Federal Affairs Anne Steckel.
October 2015 was the two-year anniversary of the leaked draft renewable volume obligation (RVO) proposal from the U.S. EPA that signaled the agency’s intention to stall biomass-based diesel at 1.28 billion gallons for at least two years. “That devastating leaked draft launched us on a two-year odyssey that cast the future of the industry into a state of limbo,” said Anne Steckel, National Biodiesel Board vice president of federal affairs. “EPA proposed the rule in the fall of 2013 and stated multiple times that they would improve the rule by spring of 2014. In December 2014, still without a final rule, they withdrew the proposed rule and said they would issue a revised proposed 2014 rule, sometime in 2015, and try to issue a final 2014 rule by the end of 2015.” That much-improved revised proposed rule came in June of 2015, and EPA officially righted the renewable fuel standard (RFS) ship with a final rule Nov. 30, 2015. The improved rule that grew both biomass-
based diesel and overall advanced biofuel volumes came after NBB mobilized an aggressive advocacy campaign opposing the original proposal. “We generated more congressional support than we’ve ever had, with nearly 100 lawmakers signing letters to the White House calling for growth and powerful lawmakers holding press conferences or calling the White House directly,” said Steckel. “We engineered an aggressive media campaign that saw several hundred op-eds, letters, and news stories published. And we organized an aggressive grassroots campaign that raised the profile of biodiesel in Washington and increased pressure on policy makers to act.” While the volumes weren’t as high as NBB advocated for, they were significantly higher than the original 2013 proposal at 1.28 billion gallons per year. The November decision was also significant as it returned the RFS rulemaking process to the timeline in the statute.
NBB members set direction of their industry
NBB members elected Ron Marr, Minnesota Soybean Processors, as their new chairman.
The National Biodiesel Board is a member organization that operates under the direction of the membership on a daily basis. Fifteen individuals from member companies volunteer to sit on the board for two-year terms and members guide the daily activities of staff through involvement in the board, standing committees, strategic planning, the program-development process, membership surveys, regional and national member meetings, and more. Each November members vote to fill half of the positions on the governing board. In 2015 members elected to begin their two-year term include Kent Engelbrecht, ADM; Ron Heck, Iowa Soybean Association; Ed Hegland, Minnesota Soybean Research and Promotion Council; Ron Marr, Minnesota Soybean Processors; Steve Nogel, AGP; Amy Sigg Davis, Ohio Soybean Council; Robert Stobaugh, Arkansas Soybean Promotion Board; and Chad Stone, Renewable Energy Group Inc. Others that continue to serve their second year include Mike Cunningham, American Soybean Association; Greg Anderson, Nebraska Soybean Board; Jennifer Case, New
Leaf Biofuel; Timothy Keaveney, Hero BX; Steven Levy, Sprague Operation Resources; Robert Morton, Newport Biodiesel; and Ben Wootton, World Energy. “All of this is done so NBB as an organization is truly representing the best interests of our members,” said Donnell Rehagen, NBB chief operating officer. “Being able to come together, identify our strengths and weaknesses, and then go out and execute in the areas that our members determine will help us the most is one of the biggest advantages we have as an industry.” Additionally, the new board elected four new officers for 2016 including chairman, Ron Marr; vice chair, Jennifer Case; treasurer, Greg Anderson; and secretary, Kent Engelbrecht. “Biodiesel faces many challenges and I’m excited to be able to serve the industry that I care so much about,” said Marr. “This industry has reached nearly 2 billion gallons for a third-consecutive year and will continue to grow into the future under the direction of a unified industry voice.” www.BiodieselMagazine.com
West Coast market focus proves successful for biodiesel Nearly a decade ago, California embarked upon a landmark climate initiative commonly referred to as AB 32. The law requires greenhouse gas (GHG) emissions reductions to 1990 levels by 2020—a reduction of approximately 15 percent below expected emissions in a “business as usual” scenario. AB 32 includes a number of ambitious climate programs that call for reductions in every sector of the economy. The state’s low carbon fuel standard (LCFS) focuses on transportation. “Over the past four years of the LCFS, the California biomassbased diesel market has grown from 10 million to 200 million gallons,” said Don Scott, director of sustainability at the National Biodiesel Board. “This shows how successful carbon policies can be at spurring growth in clean fuels like biodiesel.” In part because of the success demonstrated in California, both Oregon and British Columbia have also adopted low carbon transportation policies, and they are setting precedent for the rest of the world. This means that approximately 5 billion gallons of diesel are now under low carbon fuel policies on the West Coast. NBB has concentrated significant resources over the past eight years to ensure that biodiesel participates in these programs. The technical data developed by NBB played a significant role in the determinations by the California Air Resources Board confirming that biodiesel reduces GHG emissions by 50 to 80 percent compared to petroleum diesel. This makes biodiesel the lowest carbon liquid fuel available in today’s marketplace.
“Biodiesel is the most sustainable fuel on the planet,” Scott said. “But quantifying the precise carbon intensity of fuel from varying feedstocks, geographies, and process technologies does not happen without significant investment in data and scientific analysis. Lifecycle assessment is a complex undertaking that required participation from diverse stakeholders such as the California Biodiesel Alliance, our friends in the environmental community, and NBB members.” On a national scale, biomass-based diesel has the potential to reduce carbon emissions by 40 million tons annually, or the equivalent of removing more than 30 million passenger cars from the road.
NBB: Your membership organization The National Biodiesel Board is the national trade association representing America’s first advanced biofuel. NBB works to create sustainable biodiesel industry growth through governmental affairs, education, communication, technical and quality assurance programs. Serving as the coordinating body for research and development in the U.S., the organization is comprised of state, national and international feedstock and feedstock processor organizations, biodiesel producers, fuel marketers and distributors, and technology providers. “The biodiesel industry has achieved much in its relatively short existence through strong leadership and a determined, unified commitment to purpose,” said Doug Whitehead, NBB director of operations and membership. “Engaged participation
is crucial to ensure that momentum continues and NBB staff members are dedicated to serving the membership every single day and in everything that we do.” NBB membership has grown significantly over the years from its start with seven members in 1992 to nearly 200 member companies today. These companies vary from Fortune 100 companies to small, family-owned businesses. This diverse membership base has provided a strong foundation for growth with member companies in 44 states. No matter your involvement in the industry, NBB has a lot to offer. To find out how to become a member, visit nbb.org/ join-us or contact Doug Whitehead in the NBB office at 800-841-5849.
National ad campaign educates from coast to coast The National Biodiesel Board continues to spearhead the only comprehensive national education campaign designed to promote biodiesel. The effort reaches many audiences from opinion leaders to local fleet managers and everyone in between. Among NBB’s constant objectives is to safeguard against roadblocks that might impede industry growth. “Our advertising budget is less than 1 percent of petroleum’s ad budgets, but we are confident this campaign is helping,” said Jessica Robinson, NBB communications director. “An extensive news analysis comparing 2010 coverage to 2015 coverage showed a decrease in biodiesel coverage of about 35 percent overall. However, biodiesel with ‘advanced’ increased more than 300 percent. So even though biodiesel coverage has dropped, our message—that biodiesel is advanced—is getting through.” The advertising portion of the 2015 campaign included a 30-second commercial that aired on national television networks, as well as on select local broadcast outlets and cable news programs throughout the summer and fall. The digital campaign included banner advertising and a 15-second version of the television commercial presented as a preroll to programming on news platforms and as openers to videos on YouTube. Radio and print focused on target areas rounded out the comprehensive campaign, anchored by a relaunched website that provided video features on how biodiesel is making a difference from coast to coast. Overall, the campaign successfully earned a grand total of 62.4 mil-
lion impressions, more than 640,000 online views of the TV commercial, and 67,500 clicks through to AmericasAdvancedBiofuel.com. “According to NBB’s annual survey those who have seen, read or heard the ads are much more likely to have a positive image of biodiesel,” Robinson added. “The difference is more than 20 percent and highlights the significant role of this education effort.”
Third-party groups highlight NBB successes with industry awards The National Biodiesel Board was honored by a number of thirdparty organizations in 2015 for successful efforts and achievements in advancing the biodiesel industry. Honors came from regional and national organizations, and recognized staff members, marketing efforts and the organization as a whole. “It’s an honor to be recognized by other distinguished organizations for our industry’s efforts,” said NBB CEO Joe Jobe. “But maybe more importantly, it is verification that we are focused in the right areas and what we do to move the industry forward is successful and relevant.”
2015 honors included: The United Soybean Board’s 'Excellence in Oil' award
The 'Outstanding Achievement Award' from the Ohio Soybean Council
This is one of the highest awards given annually by the national soybean checkoff organization to an individual or organization that has been instrumental in developing major new opportunities for U.S. soybeans greatly impacting the profit potential for all U.S. soybean farmers.
The state organization annually recognizes one person or organization that has significantly contributed to the goals of the soybean checkoff. NBB was chosen because of the new opportunities created for Ohio soybean farmers through industry growth from approximately 200,000 gallons in 1999 to almost 2 billion gallons in 2015.
The 'Initiative of the Year' award from the Greater Washington Region Clean Cities Coalition
Honorable mention award from the min’s Integrated Marketing Awards
The coalition is part of the U.S. DOE Clean Cities program. Anne Steckel, NBB vice president of federal affairs, was presented with the award for her work to advance the renewable fuel standard. The award recognizes an alternative fuels team leader who played a key role in closing a significant and complex alternative fuels challenge during the past year.
NBB’s national advertising campaign “Coast-to-Coast” received honorable mention in the Print/TV or Radio Bundle category as top media and marketing executives gathered in New York City to honor the work of their colleagues and peers, and share best practices and lessons learned in the marketing space. www.BiodieselMagazine.com
NEW LEASE ON LIFE: Lakeview Energy LLC bought the shuttered Producer’s Choice Soy Energy biodiesel plant in Moberly, Missouri, now called Lakeview Biodiesel. From a rear view of the plant, pictured are the glycerin stripper and methanol distillation columns. The pad beneath them, referred to as the “S-pad,” contains the hot oil heater, cooling tower and chiller. PHOTO: LAKEVIEW ENERGY LLC
Standing On Its
Own 2 Feet Despite less than ideal economic and policy conditions, the biodiesel industry continues to move forward, and not just one project at a time BY ANNA SIMET
From the outside, it may seem as though the biodiesel industry had a tough year. An amalgamation of economic and political factors have impacted most biofuel sectors, perhaps the most obvious of hindrances being plummeting oil prices. Diesel costs fell throughout 2015, recently reaching a six-year low, and are forecast to fall even further in 2016. The U.S. DOE’s Short-Term Energy Outlook issued in December projected the average price of diesel to settle at $2.71 for 2015, and $2.67 in 2016. A recent OPIS report cited B100 prices at $3.37, falling from an average of $3.55 per gallon in summer 2015. To compound matters, the biodiesel tax credit expired Dec. 31, 2014, for the fourth time in six years. At press time, the U.S. House and Senate passed a two-year retroactive extension of the $1-per-gallon blender credit. Two weeks prior, a restructured version of the tax credit as a producer incentive was introduced in Congress. Producers were hopeful this would pass but at the last minute the incentive was reverted back to a blender credit, voted on, and passed. The credit is now retroactively in effect from Jan. 1, 2015, through Dec. 31, 2016. And finally, the U.S. EPA’s renewable fuel standard (RFS) renewable volume obligation (RVO) numbers were woefully late, stirring up investor uncertainty and stymieing development. The highly anticipated numbers were released Nov. 30, 2015, and the volumes for biomass-based diesel were higher than the spring proposal—1.63 billion gallons for 2014, 1.73 billion gallons for 2015, 1.9 billion gallons for 2016, and 2 billion gallons for 2017. Good news overall, years late, nonetheless. Despite these hurdles, a closer evaluation of the U.S. biodiesel industry and feedback from producers and developers tells a bit of a different story. Below is a cross section of developing projects to watch in 2016.
INNOVATION AT ITS FINEST: Biodico employs a variety of renewable energies and new process testing technologies at its two new California biodiesel facilities. PHOTO: BIODICO
2 Biodico Projects Roughly two decades ago, Russ Teall, founder and president of Biodico, launched a company that focused on modular, multifeedstock biodiesel plants called Biodiesel Industries. After prototypes, pilots and some work with the U.S. Department of Defense and U.S. DOE, the company built its first commercial plant in 2000, and subsequent plants in Australia, Colorado and Texas, all of which were sold off. “We designed, built, operated and then sold to our strategic joint partners once everything was up and operating correctly, in order to fund the next plant,” Teall says, adding that, considering the unique, proprietary technology of the plants the company builds, Biodico decided that its two latest projects, one recently completed and the other under development, will remain owned by the company. The first project, Biodico Westside in California’s San Joaquin Valley, is a partnership between Biodico and Red Rock Ranch. The 20 MMgy plant was completed in the fall, with the first runs of biodiesel made in early December. “The next facility will be at the Naval Base Ventura County, a joint venture we started with the U.S. Navy in 2002,” Teall says. “It initially focused on biodiesel, but now focuses on all biofuels and bioenergy. We’ll be building a biodiesel facility there similar to the one up in west side, supported by renewable, combinedheat-and-power onsite resources.” 14
Similar to the design of Biodico Westside, the 10 MMgy Naval Base Ventura County plant—a partnership with the U.S. Navy, and supported by the California Energy Commission—will gasify dry biomass, mostly prunings from local orchards and vineyards, and also utilize anaerobic digestion for wet biomass such as crude glycerin, rotten fruits and vegetables, to produce heat and power consumed on-site, according to Teall. The location is already home to the Biodico Technology Test Site, which was built with a CEC grant and is the result of a five-year joint research and development project between Biodico and the Navy. One facet of the partnership is training Navy engineers to learn ASTM standards, Teall says, as well as what might go wrong in the process causing the fuel to fail to meet them. And that is where the most unique part of Biodico’s process comes into play, according to Teall. “A lot of the testing that’s involved is time-consuming—running the gas chromatograph, it takes 45 minutes. The conclusion we’ve come to is that, to make on-spec biodiesel, there are two ways to do it. One is to test the batch when it’s done, and that might tell you that on Monday morning you made a mistake, but the other is to divide the process into a series of steps, and to test at the end of each portion of the process. By doing that, you’re not wasting time finding out at the end of the day that
you did something wrong in the morning,” Teall says. Biodico has implemented the latter option—real-time testing. “If you want to know, at end of the transesterification step, whether you have any residual glycerin, mono-, di- or triglycerides, you run a GC test and 45 minutes later it tells you,” Teall says. “We can tell exactly the state of the reaction at every single step—a series of sensors and protocols that give us that. We developed that with the U.S. Navy, and it’s incorporated into the new facility.” The next step is incorporating real-time sensing into automation. Real-time testing differentiates the company as a biodiesel producer, Teall says, and renewable energy is a second distinguishing factor. “In 2004, we got a U.S. EPA award for using landfill gas to run our boilers, our first prototype biodiesel plant was run by small-scale solar … it’s a continuation of that focus on renewable energy to create renewable fuels.” On challenges with launching two projects in today’s economic climate, Teall says there were not many surprises. “It was our fifth plant, and we have a focus on getting things done thoroughly and quickly. We obtained all of the necessary permits, networked with all of the agencies, and the fact that it was my area of practice helped quite a bit in understanding what the rules are and what the agencies are looking for, and being able to give it to them.” Teall says he doesn’t worry so much about today’s low diesel prices. “The single largest factor in biodiesel production is feedstocks and their cost, and that has to be addressed right up front,” he says. “We need to zero out all of the subsidies and incentives, because if your business is not stable without subsidies and incentives, then you’re exposing your investment to a lot of risk—people tend to forget that.”
Lakeview Biodiesel LLC When Lakeview Energy was considering purchasing a shuttered 10 MMgy biodiesel plant in Moberly, Missouri, it recognized it might appear outside of its interests, as the company has investments in agribusiness, wind energy and two ethanol plants located in Merrill, Iowa, and Coshocton, Ohio. But
PROJECT DEVELOPMENT the prospect of diversifying its biofuel portfolio with biodiesel, the attractive characteristics of the Moberly site and its proximity to the company’s ethanol plants equated to an opportunity that was just too appealing to pass up, according to CEO Jim Galvin. The plant retrofit is moving full steam ahead, he says, and plans are to bring it online in Q2 2016. “I just recently visited the site, and right now, there is probably more equipment outside than inside,” he says. At Moberly, the company will deploy a multifeedstock-capable transesterification process, using various fats, oils and greases, potentially including distillers corn oil from the company’s ethanol plants. “The geography of this plant was one of the big things for us,” Galvin says. “We’re almost equal distance between Kansas City and St. Louis, where there are good local markets for our product. A project we’re working on right now is access to rail—we’re working with the local Missouri railroads to see what our options are there, to enable us to serve other local markets.” Raw material availability was a key factor in the decision to purchase the plant and move forward with the retrofit, Galvin says. “There’s a good supply chain there. And one of the things we looked at was the potential for our [existing] plants—Plymouth or Three Rivers—to be able to supply corn oil, and whether it would be cost-effective for us. That’s advantageous to this particular location.” Another aspect Lakeview evaluated was what kind of local support the project would have. “It was a very important first step,” Galvin says. “With any kind of stressed asset purchase, there can always be issues, so this was something we looked at before we made the investment. We’ve gotten very good support from the local economic development and city councils, and we’re recruiting staff at the moment and are in the interviewing process, and have taken on a number of people already.” Galvin says diesel prices were considered but had little impact on the decision to purchase the Moberly plant, as the company makes long-term investments. “If we made decisions based on the short term, we’d never get anything done—the market moves so quickly,” he says. “Fundamentally,
RETOOLED FOR EXCELLENCE: Duonix, a joint venture between Flint Hills Resources and Benefuel, nears completion of its retrofitting project in Beatrice, Nebraska, the former 50 MMgy Beatrice Biodiesel facility. PHOTO: FLINT HILLS RESOURCES LLC
we looked at this and believe there’s a bit of a consolidation play to take place in the biodiesel industry. Our plan is that if this goes successfully, we’ll look at a number of other acquisitions in the biodiesel sector. We’re not looking at this as a sole, stand-alone project.”
Duonix Beatrice When Irving, Texas-based Benefuel Inc. brought to market its novel, patented Ensel technology, a catalytic process capable of refining renewable, high free fatty acid (FFA) feedstocks into a variety of products, it snagged the interest of Flint Hills Resources LLC, a leading refining, chemicals, biofuels and ingredients company. Considering the interests and experience of both companies, the partnership made perfect sense. “Flint Hills Resources is a leader in the transportation fuels industry, and has a long history of blending biofuels,” says Jeremy Bezdek, vice president of biofuels and ingredients at Flint Hills Resources. In fact, the company has been blending ethanol into gasoline since the 1990s. “We are continually looking for ways to innovate and optimize our transportation fuels business and further create value for our customers and society,” Bezdek says. “That’s why, in 2010, our company purchased its first two ethanol plants in Iowa. Since then, we have added an additional five ethanol plants to our biofuels fleet making Flint Hills Resources the fifth largest producer of ethanol in the U.S.”
In 2011, FHR purchased the Beatrice, Nebraska, biodiesel plant out of bankruptcy. The same year, it made an equity investment in Benefuel, a company that Bezdek says has developed a technology that could dramatically improve the cost-effectiveness of biodiesel production. “We believe the Benefuel technology has the potential to expand the range of low-cost feedstocks used in biodiesel production,” he says. “The Ensel technology process combines esterification of FFAs and transesterification of triglycerides into a single process step, which is a long-standing technology goal of the biodiesel and oleochemical industries.” Resulting from FHR’s investment in Benefuel is the Beatrice plant, a joint venture titled Duonix Beatrice, which will represent the first commercial use of the Ensel technology. “Flint Hills Resources has been hired by Duonix to be the operator and employer,” Bezdek explains. Duonix Beatrice will be feedstock-flexible, able to run on distillers corn oil, used cooking oil and animal tallow, and, of course, soybean oil. “Feedstock flexibility will allow the plant to purchase lower-cost feedstocks,” he says, adding that the types purchased will depend on the market. Progress continues at the Duonix Beatrice plant, with a start-up planned in early Q1 2016, Bezdek says. “In preparation for the planned start-up, we have begun plant commissioning including conducting safety checks www.BiodieselMagazine.com
PROJECT DEVELOPMENT on plant equipment. These checks include tests on piping integrity, and safety systems designed to maintain balance in industrial systems.” On project challenges, Bezdek says Beatrice marks the first time FHR has built a plant from nearly the ground up. “That means we couldn’t draw on past experience as a guide,” he says. “It began with a clean slate.” And part of working from a clean slate meant putting together a new—and right—team, which will include about 50 people when the facility is operational. “We are happy with the results,” Bezdek says. “We have a talented team of individuals, some drawn from within Flint Hills Resources, some from Benefuel, and some drawn from elsewhere, with extensive experience. They have worked hard to get the plant up and running.” Another hurdle faced in the beginning was thoroughly testing and validating the Ensel technology. To do so, a pilot plant was constructed near FHR’s Euless, Texas, fuel terminal. “After multiple rounds of testing, we felt confident the technology would be sustainable at a commercial-scale operation,” Bezdek says. “Our next challenge will be scaling up production and, with luck, proving our assumptions were correct.” And finally, earlier in the year, Beatrice and surrounding areas were hit with 25-year flooding, which washed away some of the railroad tracks leading to the plant, leaving equipment stranded at another location. “Waiting for delivery put pressure on our timeline and resulted in some construction delays,” Bezdek says. On the recent release of the RFS RVO numbers, Bezdek says they have no bearing on the company’s decision to operate its plants. “We don’t consider it a significant factor in the viability of this project, or our biofuels and ingredients business,” he says.
SUPER PLANT: At the end of 2015, CHS started up a unique 5 MMgy supercritical biodiesel plant designed and built by Jatrodiesel. The biodiesel production site is colocated with its 125 MMgy ethanol plant in Annawan, Illinois. PHOTO: JATRODIESEL INC.
process technology firm Jatrodiesel Inc. In an early November interview, Jatrodiesel President Raj Mosali told Biodiesel Magazine that the final stages of tying the automation into the process were underway. The innovative facility is able to capitalize on the existing ethanol plant’s infrastructure, steam, and distillers corn oil byproduct for biodiesel CHS/Jatrodiesel Inc. feedstock. Colocated with CHS’s 125 MMgy ethanol plant in Annawan, IlJatrodiesel describes its Super technology as a single-stage process linois, is a 5 MMgy supercritical biodiesel plant designed and built by that eliminates esterification and transesterification, puts no limit on
PROJECT DEVELOPMENT FFA levels in feedstock, and cuts the cost of traditional biodiesel refining by 25 to 28 percent, in part by eliminating the need for conventional catalysts. During the process, feedstock is mixed with methanol and is introduced into the Super column, which operates in a supercritical environment. High temperatures and pressures are maintained, and complete conversion takes place in minutes with minimal or no loss in yield, according to Jatrodiesel. The feedstock’s water content also has no effect on the process. The mixture coming from the Super column is then sent through a separation process to isolate biodiesel from glycerin, and the excess methanol is recovered. The biodiesel is then either water- or dry-washed to remove excess glycerin. “This changes the whole landscape,” Mosali says. “The simplicity is remarkable—we’re talking three or four steps in the Super process vs. 10 steps in traditional biodiesel processing. We have built 18 traditional biodiesel plants, and we know the complexity in the process due to variable feedstocks and FFA and, also, the complexity in operations due to various processes involved. The Super process addresses those issues and solves them.” There were three main challenges in commercializing the Super process, according to Mosali. The first was scale-up of a technology that has never before been commercialized. “There’s no supercritical process used in a chemical plant at this volume, so all the pumps, valves, reactors, automation—it was all new ground for us,” he says. The next hurdle was making the process truly continuous vs. batch. Most supercritical operations in other industries are batch, Mosali explains. “How to pressurize and relieve in continuous fashion was important,” he says. The final and perhaps most significant challenge was overcoming the high equipment costs for a supercritical process. “If our capex was two to three times the cost of a traditional biodiesel plant, then simplicity and lower operational costs of the process wouldn’t matter,” Mosali says.
Forging Ahead In addition to the above projects, numerous others are under development, including Renewable Energy Group Inc.’s four plants in Emporia, Kansas; Clovis, New Mexico; Atlanta, Georgia; and New Orleans, Louisiana. Biodiesel Magazine was unable to obtain project updates from REG, and information on the projects wasn’t provided during its Q3 2015 financial earnings call. However, CEO Daniel Oh said the company is making a “meaningful upgrade” at its Danville, Illinois, biorefinery. “We’re investing over $30 million for a variety of enhancements that will enable us to produce high-quality biodiesel more efficiently,” he said during the call. “We’re adding distillation equipment that will result in a more pure final product, as well as expanding feedstock pretreatment capacity, storage and other logistical enhancements. Those upgrades are on track and we expect upgrade work at Danville to be completed around the middle of 2016.” Additional proposed projects include Viridis Fuels’ 10 MMgy Oakland, California, facility, which received a CEC grant and is in early stages of development, as well as a new glycerin refinery at Louis Dreyfus Commodities 90 MMgy plant in Claypool, Indiana, scheduled to come online by the end of 2015. In addition, New Heaven Chemicals is nearing completion of an 18,000-ton sodium methylate plant in Manly, Iowa, to serve the growing, regional market, says Prasad Devineni, NHC managing director, with a second, larger catalyst plant under development in Houston. While the past year hasn’t been the best of times, it certainly hasn’t been the worst, and many projects have been moving forward, tax credit or not, low diesel prices or high, confident in biodiesel’s role in the domestic fuel market. The biodiesel industry continues to develop and evolve, demonstrating the ability to stand on its own two feet. Author: Anna Simet Associate Editor, Biodiesel Magazine 701-738-4961 email@example.com
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Poised for the Best
Looking back over the past The U.S. biodiesel industry year, industry stakeholders will say had to prove its durability it’s been a tough year for biodiesel. in 2015, but the release “I think 2015 as an entire energy complex has been challenging,” says Daniel Oh, president of finalized RVOs and CEO of Renewable Energy Group Inc. reinstatement of the blender and Low diesel prices coupled with falling prices for tax credit offer many a D4 renewable identification numbers (RINs), crude oil and commodities, not to mention unhopeful outlook for 2016
certainty surrounding regulation and exchange rates, all contributed to the roller-coaster environment the biodiesel industry rode in 2015. Despite the challenges faced, the National Biodiesel Board’s CEO Joe Jobe says 2015 will likely see at or above record volumes. Harm
BY KATIE FLETCHER
to the industry doesn’t come in the year’s volumes, but rather in the margins. “At different points throughout the year, we saw some of the worst margins in our industry’s history and they can be directly attributed to policy instability,” Jobe says. “If you’ve been in this industry very long, you’ve seen a lapse of the biodiesel tax incentive before—four times in the past six years—but coupled with not having a final volume for biomass-based diesel or the advanced biofuel category and extremely low ULSD (ultra-low sulfur diesel) prices made 2015 one of the toughest years to-date.” On the flip side, Jobe says he believes 2016 has the potential to be one of the industry’s best years.
on whether the tax credit would be restructured as a producer incentive or reinstated as a blender credit—with both sides of the argument making their compelling cases—a two-year retroactive extension of the blender credit was signed into law. “With [the RFS and tax credit] in place, both can operate as intended, driving the expansion of cleanerburning, renewable fuels into the marketplace,” Jobe says. Devine adds with both, 2016 will be a “very solid year” for biodiesel blending. “I would not be surprised if it’s the largest production year in the history of the RFS and biodiesel,” he says. Ramon Benavides, president and founder of development and consulting company Global Renewable Strategies and Consulting LLC, says while many cast efforts on issues around incentives afforded to the industry, GRSAC recognizes that the reductions devastating the petroleum sector are a critical element to the slowdown in U.S. biodiesel. “It is certainly helpful that the RVO has been published and it will eventually bolster the industry, but the conditions afflicting the petroleum sector will weigh heavy on the renewable fuel sector,” Benavides says.
Ultra-Low Sulfur Diesel Others, such as biodiesel wholesale marketer and distributor Amerigreen Energy Inc.’s Michael Devine, agree. “The industry has still been able to maintain its production to hit the renewable volume obligation (RVO) numbers, so that’s a positive, but it’s been challenging with the negative BO-HO (bean oil to heating oil) spread, the dramatic slide in the price per gallon of distillates, the uncertainty surrounding the RIN markets,” he says. The RVOs in U.S. EPA’s Nov. 30 release of its final renewable fuel standard (RFS) rule provide industry the opportunity to get back on track with 2016 and 2017 volumes set for biomass-based diesel (1.9 and 2 billion gallons, respectively), and with the agency already working to propose 2018 volumes this spring. Another regulatory factor impinging on the future health of the industry is the availability of the $1-per-gallon tax credit. In December, after months of back and forth
According to the Energy Information Administration’s short-term energy outlook, diesel fuel averaged $2.71 per gallon (retail price including taxes) in 2015 and is projected to decrease even further to $2.67 in 2016. Lower projected crude oil prices this winter have reduced the forecast residential heating oil price and average household heating oil expenditures. According to Benavides, 2016 will face the challenges associated with blend margin in the diesel market. “We expect heating oil prices to breach the $1-per-gallon level,” he says. “This means that diesel will be priced for a period through Q2 at about 16 cents per pound finished with about 25 cents delivered to market. This implies that the credit and RIN pricing must cover the spread to sustain the industry.” As of Dec. 7, the U.S. average price of on-highway diesel fuel was $2.38 per gallon, $1.16 per gallon lower than the same time last year. During the week of Dec. 7 in the spot
market, ULSD pricing for New York harbor was $1.24, U.S. Gulf Coast was $1.17 and Los Angeles pricing was $1.33. As far as diesel consumption goes, after increasing by 210,000 barrels per day (bbl/d), or 5.5 percent, in 2014, consumption of distillate fuel, which includes diesel fuel and heating oil, is forecast to fall by 30,000 bbl/d (0.9 percent) in 2015 and to increase by 40,000 bbl/d (1 percent) in 2016. The 2016 growth is driven by increases in manufacturing output, foreign trade and marine fuel use.
Biodiesel Feedstocks The Jacobsen data reporting company published a blog recently acknowledging that many are calling 2015 the end of the commodity supercycle as prices have returned to levels not seen since before the housing bubble runup in 2006 and 2007. Successive years of good soybean crops, heavy supplies of crude oil and a weak economy have all contributed to the downward grind of the market, according to the Jacobsen. While the RVO along with a tax credit will provide a solid market foundation for the industry that it hasn’t seen in years, a strong dollar will likely continue to keep more commodities in the U.S., which could limit the price of competing products. According to EIA’s monthly biodiesel production survey for September, there was a total of 795 million pounds of feedstocks used to produce biodiesel during the month. Soybean oil remained the largest feedstock in September with 390 million pounds consumed. During the nine-month period from January to September 2015, the U.S. biodiesel sector consumed 3,599 million pounds of soybean oil compared to 3,433 million pounds for the same period in 2014. Other vegetable oil usage for biodiesel over the ninemonth period includes 597 million pounds of canola oil, 753 million pounds of corn oil and 1 million pounds of palm oil. Animal fat feedstock inputs include 141 million pounds of poultry and 330 million pounds of tallow. White grease totaled 434 million pounds for the nine-month period and yellow grease 916 million pounds. According to USDA’s recent oil crops outlook, soybean oil is priced at around 32 www.BiodieselMagazine.com
MARKET c/lb where it is estimated to remain, if not decrease slightly, in 2016. Abundant U.S. soybean stocks have been seen throughout 2015 and are predicted to continue next year. U.S. season-ending soybean oil stocks for 2015’16 are forecast to be 2.3 billion pounds—265 million pounds higher in November mostly due to a higher level of beginning stocks. The latest National Agricultural Statistics Service crushings report indicates that Oct. 1 soybean oil stocks (crude and refined) totaled 1.82 billion pounds. The higher soybean oil inventory also confirms that domestic use in 2014’15—at 19 billion pounds—was lower than expected. The expected growth for 2015-’16 from this lower consumption level prompted a lowering of this year’s forecast of domestic use by 300 million pounds to 19.25 billion. Devine says that the anticipated large bean oil crop will provide more feedstock flexibility for the industry. In the oil crops outlook, canola oil came in at 38 c/lb and has the potential to decrease to around 35 cents in 2016. In the report, corn oil was priced at 37 c/lb and is estimated to be between 36 and 39 c/lb in 2016. Soybean, canola and corn oil have all decreased in comparison to 2014 pricing. As of Dec. 11, in all reporting regions, white grease was between $16.50 and $19 per hundred weight (cwt), down from $24 to $29 per cwt in 2014. Yellow grease was between $16.50 and $24 per cwt across all regions, compared to $23 to $28.50 per cwt the prior year. Overall, commodity prices have fallen throughout 2015 for a variety of biodiesel feedstocks. Kurt Lange, CEO of ClearEcos, focuses his business on collecting restaurant oil and grease for the industry amongst other activities. Yellow grease prices have dropped from above 45 c/lb in 2011 to under 20 c/ lb in late 2015. “Biodiesel goes down and the value of the yellow grease goes down,” Lange says. “It’s operating at about a third of its high right now.” The Jacobsen has published several blogs on its website covering the changing supply and demand dynamics in the tallow market and providing a review of 2015. According to the blog, seasonal decreases have become a new normal as biodiesel plants steer away from tallow during the cold winter months and oleochemical plants draw down their inventories. Over the past five years, the mar20
ket has seen big September drops as cheaper bean oil and decreased Q4 demand drive values lower. The Jacobsen states that tightness should continue into 2016 as livestock farmers continue rebuilding cattle herds. As a result, spot trading will likely continue to be limited, but tallow sellers may see additional competition from vegetable oils and other animal fats that aren’t hampered by low slaughter numbers.
D4 RINS Prior to EPA’s finalized RVO figures, obligated parties stepped in and provided a boost to biodiesel RINs. The 2015 D4 RINs jumped nearly 2.5 cents, trading as high as 57.5 cents on strong volume reported on Nov. 4. This allowed the 2015 D4/D6 spread to expand to 16 cents, according to the Jacobsen. Devine thought the industry was a little surprised to see a decline of the RINs market from the mid-80s down into the 30s after the proposed RVOs were released in spring 2015. “That made it very problematic to create blend margins in many parts of the U.S.,” he says. According to a farmdoc daily report by economist Scott Irwin with the Department of Agricultural and Consumer Economics at the University of Illinois at UrbanaChampaign, the price of D4 biodiesel RINs has fallen by more than 50 cents per gallon since mid-June. The first factor contributing to the decline in D4 biodiesel RINs prices is the price of soybean oil, which has fallen about 7 c/lb since mid-June due to improving soybean production prospects in the U.S. and concerns about economic growth in China. Soybean oil prices have led to a decline of more than 60 cents in the price of biodiesel. In turn, the decline in biodiesel prices has been the main factor in narrowing the biodiesel blending margin by about 25 cents. Irwin says, since the biodiesel blending margin, at least in theory, is equal to the RINs value (ignoring time value), it’s puzzling that the decline in D4 RINs prices is slightly more than twice the size of the decline in biodiesel blending margins. He indicates that the most likely explanation for this result is that traders were increasingly believing the biodiesel tax credit would be reinstated for 2015. Just before the release of the final rulemaking in late November 2015, Devine shared that strength came back in the RIN market,
which was supportive for biodiesel blending, however, by and large, it’s been a choppy year. “It’s been difficult to define blend margins,” he says. “We were dealing in the first quarter with RVO uncertainty, now that the biodiesel industry has received positive clarification on that with the finalized EPA ruling, hopefully we see some continued strength in the RINs.” Amerigreen is conservatively projecting D4 RINs to be somewhere in the mid-80s moving into 2016. “The greatest challenge for the biodiesel industry in 2016 may be the price of crude oil,” Devine adds. “It’s always a challenge to create blend margins when oil falls below $40 per barrel.” In the three trading days following the EPA announcement, the price of D4 biodiesel RINs jumped 20 cents per gallon, or 31 percent, according to a farmdoc daily article entitled “RINs Gone Wild? (round 2)” written by Irwin and Darrel Good. The D6/D4 price ratio rose from 0.66 to 0.97 over three trading days. There was a modest increase of 100 million gallons, or about 5 percent, in the 2016 and 2017 biomass-based diesel mandates in the final rulemaking. Irwin and Good say, while this should result in higher biodiesel and renewable diesel prices, and consequently, higher D4 prices all else constant, the price increase relative to the mandate increase implies an extremely inelastic supply relationship. For this reason, other factors are likely to be at work. One factor the economists believe is the biodiesel and renewable diesel production that will be needed to backfill the conventional gap once the stock of RINs is depleted down to pipeline levels. According to Progressive Fuels Ltd.’s weekly RIN Recap for Dec. 3-9, the RIN market began to fall for the first time since the EPA announcement of RVO figures. The 2015 D4 RINs came off sharply trading in the mid- to high-70s. According to PFL’s daily report for Dec. 11, the market will continue to trade actively as Q1 approaches with many obligated parties buying to meet RVOs and some last-minute cleanup of some books. The report said RINs had fallen back down to the high-80s plateau the market seemed to have reached in biomass-based diesel. As of Nov. 10, EPA’s moderated transaction system (EMTS) data shows 2.3 billion biomass-based diesel D4 RINs have been generated. D4 RINs generated by domes-
MARKET tic biomass-based diesel producers have reached 1.8 billion, importers have generated 289.3 million D4 RINs and 195.2 million D4 RINS have been generated by foreign producers.
Biodiesel The first half of 2015 was not kind to U.S. biodiesel producers, with net losses averaging 8 cents per gallon, according to Irwin’s July 2015 farmdoc daily article “MidYear Update on Biodiesel Production Profits.” This is just a continuation of the pattern that, with a few exceptions, has been in place since January 2014. The release of the EPA proposal in spring 2015 did have a positive impact on both soybean oil and biodiesel prices, but the increases largely offset one another, leaving profits roughly unchanged. Irwin indicated that this suggested the market believed there was sufficient slack production capacity inside and outside the U.S. to fulfill the mandates without having to drive biodiesel profits above break-even levels. Irwin also suggested the delay in market adjustments could be due to
uncertainty about the level of mandates that would ultimately be implemented. Over 2015, production has come from 97 biodiesel plants with capacity of 2.2 billion gallons per year, according to the EIA. In EIA’s September biodiesel production report, for the nine-month period from January to September, biodiesel production was 948 million gallons—up from 917 million gallons in the comparable period in 2014. Sales of B100 over the nine-month period in 2015 was 600 million gallons, and an additional 337 million gallons was sold in blends. According to PFL’s near-market summary in its daily report issued on Dec. 11, B100 soy methyl esters ranged from $2.58 to $2.63 per gallon in Chicago and $2.70 to $2.75 per gallon in the Gulf Coast region. According to the National Weekly Ag Energy Roundup, in October, biodiesel prices reported in Iowa were $2.58 per gallon, down from $3.15 in October 2014.
Production and Its Placement According to NBB, the RVOs in the fi-
nal RFS rule reflect modest but meaningful growth over recent years when the U.S. market has hovered around 1.8 billion gallons annually. “We certainly think the biodiesel and overall advanced biofuel standards could and should have been higher,” Jobe says. “The production capacity is there, and we have surplus fats and oils that can be put to good use.” REG is the largest producer of biomass-based diesel in North America at 432 million gallons of active capacity at 10 facilities. Oh says growth is in the company’s DNA. Even though Oh acknowledges that overall the RVO numbers could have been stronger, he says the direction and the desire EPA and federal government have signaled for is more of what REG does. Biomass-based diesel volumes through EPA’s EMTS system indicate it will be approximately a 1.8 to 1.9 billion gallon market for 2015, with nearly 400 million gallons of imports. “Imported volumes are a significant concern for NBB as we work to develop our own domestic industry,” Jobe says. “With nearly 3 billion gallons of installed U.S. ca-
MARKET pacity, we are more than capable of handling future growth, while the EPA streamlined the pathway for biodiesel from Argentina to comply with the RFS.” According to the Jacobsen blog entitled “Biodiesel and Renewable Diesel Imports 26 percent of EMTS through August,” biodiesel and renewable diesel imports continue to enter the U.S. market at a rapid pace. Biomassbased diesel imports from January through August 2015 were already 96 percent of full year 2014. Most biodiesel import activity originates from Argentina and Indonesia. According to the blog, looking at total U.S. biodiesel and renewable diesel production accounted for in 2015, it is evident that the U.S. is importing a significant amount of the potential 2015 RVO. According to the EPA, total D4 gallons were 1.2 billion through August. Overall, biodiesel and renewable diesel imports account for 26.3 percent of total D4 production through August. Shifting gears to the markets biodiesel
served in 2015, undoubtedly, the largest volume of diesel fuel is used for transportation, and nearly 75 percent of the newest diesel vehicles sold and registered in the U.S. today are approved for levels of B20 or higher, Jobe says. On the heavy-duty vehicle side, where much of the diesel fuel gets used, more than 90 percent of new vehicles are approved for B20 or higher. “We’ve already seen expansion and interest from partner organizations within the marine, railroad and other off-road markets that haven’t been interested in biodiesel work before because significant volumes weren’t seen in those markets,” he adds.
Looking Back and Ahead Although the environment REG and other industry participants find themselves in today certainly has challenges, Oh believes, at least for REG, there is a lot of opportunity. “The biggest challenge, which is not unique to biodiesel producers but the entire fuel
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value chain, is simply the uncertainty,” he says. Notwithstanding the downsides of 2015, Oh foresees the opportunity to overcome some ambiguity with the more robust RVOs and reinstatement of the tax credit. The biodiesel tax incentive has played a key role in stimulating growth in the U.S. biodiesel industry since its first implementation in 2005. “Biodiesel producers have tremendous capacity for growth and are poised to expand and hire, but the on-again, off-again nature of the tax incentive makes it very difficult to obtain financing and investment, and biodiesel producers are reluctant to make new hires or expand facilities without a reliable tax policy,” Jobe says. Lange with ClearEcos has been involved in developing a biodiesel plant the past few years, and the environment has made this endeavor a challenge. “As far as 2015 goes, it was tough,” Lange says. “We lost a lot of biodiesel plants. It’s hard to get capital to build a biodiesel plant when the market is the way it is right now. The return on biodiesel has been very low.” As long as crude oil remains low, it’s probably, ultimately, going to impact all of the other subsidies associated with biodiesel, Lange adds. “If you can’t make a viable, marketable product based upon an economic means, it’s really a risky time to be investing in building a biodiesel plant,” he says. Looking back at 2015, “one of the things the industry should be proud of is the growing volume and capability of delivering very high-quality, affordable biofuel even with all that volatility,” Oh says. “I think we are going to look back at 2015 and say it was a year that the industry proved its durability and ability to deliver high-quality fuel and high-quality renewable identification numbers.” Looking ahead to 2016, with finalized RVO figures and a reinstated tax incentive, Devine says, “I think it could be the U.S. biodiesel industry’s best year ever, and then we’ll see what 2017 brings.” Author: Katie Fletcher Associate Editor, Biodiesel Magazine 701-738-4920 email@example.com
Back On Solid Ground The final RFS rule and a two-year retroactive reinstatement of the blenders tax credit are expected to bring stability back to the U.S. biodiesel sector BY RON KOTRBA
After two years in limbo without renewable volume obligations (RVOs) under the federal renewable fuel standard (RFS) for 2014-’15—not to mention uncertainty regarding future years—the U.S. biodiesel industry had once again found itself in a state of precariousness following the strong growth year of 2013. The pattern of good years followed by bad years is, unfortunately, something the sector has come to expect with seriously delayed RFS targets and the on-again, off-again nature of the $1-per-gallon blender tax credit over the years. But events in late 2015 show signs that this pattern may finally be broken, or, at minimum, the
U.S. sector is heading into a period of stability. On Nov. 30, the U.S. EPA released its final 2014-’17 RVOs for biomassbased diesel and its final 2014-’16 RVOs for the overall advanced biofuel category, and both were higher than the proposal released in May. Moreover, the agency vows to get the program back on track while indicating it plans to continue increasing biomass-based diesel RVOs in years to come. The final RVOs for biomass-based diesel are 1.63 billion gallons for 2014, 1.73 billion gallons for 2015, 1.9 billion gallons for 2016, and 2 billion gallons for 2017. The proposal issued last spring called for 1.63 billion gallons of biomass-based diesel for 2014, 1.7 bil-
lion gallons for 2015, 1.8 billion gallons for 2016 and 1.9 billion gallons for 2017. The advanced biofuel bucket, another important category for biodiesel producers, also increased slightly for 2015 and 2016 years compared to the proposal. The final rule for advanced biofuels issued Nov. 30 requires 2.67 billion ethanol-equivalent gallons for 2014, 2.88 billion gallons for 2015 and 3.61 billion gallons for 2016. The proposal for advanced biofuels issued last spring called for 2.68 billion ethanol-equivalent gallons for 2014, 2.9 billion gallons for 2015 and 3.4 billion for 2016. The National Biodiesel Board’s CEO Joe Jobe and his organization applaud the Obama administration for boosting the volumes from the proposal and recommitting to biodiesel. “It is a good rule,” Jobe says. “It may not be all we had hoped for but it will go a long way toward getting the U.S. biodiesel industry growing again. We have seen three years of damaging delays, but the administration took a strong step forward that should put biodiesel and the RFS on a more stable course in the years to come.” Jobe says NBB will continue working with the administration toward stronger standards, and notes that the advanced biofuel standards “could and should have been higher,” he says. “The production capacity is there, and we have surplus fats and oils that can be put to good use.” The Iowa Biodiesel Board indicates that while the final RFS rule is better than the proposal, it is not perfect. “While we are thankful for the improved numbers from EPA and the White House, they still fall a little short of what the industry had asked for and what the industry is capable of,” says Grant Kimberley, executive director of the IBB. “This is especially true in light of the imports of subsidized foreign-produced biodiesel we’ve seen from places like Argentina and Southeast Asia. Yet, overall, we are still pleased with the modest increase and grateful to have more market certainty. In future years, we hope implementation of this policy will have clearer direction for our producers well in advance, and reflect actual production capabilities.”
The final rule represents a commitment from EPA to get the RFS program back on track, Jobe said during a press call in early December, to meet the statutory deadlines going forward. This is extremely important to the stability of this industry and its ability to attract investment. “This has been one of the biggest flaws in the program in the past few years,” he says. “It comes out strongly as a commitment to get on track and move forward.” Getting the RFS program back on track means that the 2018 RVO for biomass-based diesel must be out 14 months in advance of the program year—or by Nov. 1, 2016. Ben Evans, director of federal communications for the NBB, says the organization fully expects EPA to meet its deadlines moving forward. So with the final rule for 2018 to be published by Nov. 1, 2016, this means that the proposal for 2018 should be out by summer. Steady, sustainable and meaningful growth is what this industry needs and, as Jobe says, this rule provides just that. “We’re going to see a doubling of our industry that is on track to happen in a five-year period,” Jobe says, referring to 2012-’17. “That is demonstrable success.” Jobe says the NBB’s goal is to push for doubling the RVOs again in the next five years, from 2017-’22. “This is a very achievable and sustainable goal our industry will work to achieve,” he says. And according to what EPA writes in its final rulemaking, the agency agrees that continued growth is what’s needed for biomass-based diesel. “Although the biomassbased diesel industry has performed well in 2013 and in subsequent years, we believe that continued appropriate increases in the biomass-based diesel volume requirement will help provide stability to the biomass-based industry and encourage continued growth,” EPA states. “This industry is currently the single largest contributor to the advanced biofuel pool, one that to date has been largely responsible for providing the growth in advanced biofuels envisioned by Congress. Nevertheless, there has been variability in the number of biodiesel facilities in production
over the last few years, as well as the percent utilization of individual facilities, both of which contribute uncertainty in the rate of production in the near future, and which can be mitigated to some degree with an increase in the biomass-based diesel applicable volume. Increasing the biomass-based diesel volume requirement should help to provide market conditions that allow these biomassbased diesel production facilities to operate with greater certainty. This result is consistent with the goals of the Act to increase the production and use of advanced biofuels.” Jobe says another positive aspect of this final rule is that it shows commitment on the part of the EPA and the administration to utilize this existing law and this program as a primary tool to achieve GHG reductions in the heavy-duty transportation sector.
Producer Reactions Most producers Biodiesel Magazine spoke with are excited and encouraged by the higher biomass-based diesel volumes in the final RFS rule after the industry has suffered considerably for the past two years operating without a federal mandate. Ron Marr, director of regulatory affairs for Minnesota Soybean Processors, which owns and operates a 30 MMgy biodiesel plant in Brewster, Minnesota, tells Biodiesel Magazine that the EPA’s final RFS rule is good and solid. “When you look at where we were in 2013 when the EPA issued its proposal that flatlined biodiesel at 1.28 billion gallons, and now we’re up to 2 billion gallons in the RFS for 2017, that is fireworks,” he says. “The increased volumes really show all the hard work and dedication of the D.C. [National Biodiesel Board] lobbying efforts, supported by Jefferson City, along with all the member involvement from the comments they submitted on the proposed rule. Overall, this is very good news.” Marr also says that U.S. biodiesel producers manufactured 1 billion gallons in 2012, and with the new final rule, the industry will be producing twice that in 2017. “To double production volumes in just five years is truly amazing,” he says. The nation’s largest biodiesel producer, Renewable Energy Group Inc., is also www.BiodieselMagazine.com
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pleased with the final rule. “This increased final RVO provides a solid foundation for REG to continue growth,” says Daniel J. Oh, president and CEO of REG. “We asked EPA for two things in this process—longer-term certainty and growth for biomass-based diesel—and this final rule provides both. This supports a solid, positive growth trajectory for biomass-based diesel over the next two years, particularly when you consider that this was a 1 billion gallon industry less than four years ago.” Michael Doyle, president of Agron Bioenergy, a 15 MMgy biodiesel plant in Redwood City, California, says that the news is “really encouraging. It’s really positive that these volumes are going up.” R. Delbert LeTang, president and CEO of SG Preston, a company with plans to construct five renewable diesel production facilities in North America, says that the EPA’s final RFS rule is an “exciting piece of news. These figures show a lot of progress. It tells us there is a growing acceptance for the ability of our industries to attain these kinds of volumes.” Gabe Neeriemer, president of Patriot Biodiesel LLC, a 5.2 MMgy biodiesel plant in Greensboro, North Carolina, says the EPA’s feet-dragging on issuing a final RFS rule for 2014-’15 and the policy inconsistency and uncertainty has destroyed the industry. “The damage is done,” he says. “It’s too little, too late,” he says about the Nov. 30 final rule. “There’s no way it’s going to incentivize us to invest more or expand. We’re just trying to get our heads above water.” He adds, however, that he does like the direction RIN prices are going since the final rule was issued. “If they’re at $1 or more, I like it,” Neeriemer says. “But with diesel prices so low, it’s not going to make up for the losses we’ve incurred over the past 24 months.”
Blenders Tax Credit Reinstated
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At press time, a tax extenders package that included the twoyear retroactive extension of the $1 per gallon biodiesel and renewable diesel blender tax credit was passed by both chambers of U.S. Congress as one of the legislative branch’s last items for the session. The biodiesel blender tax credit will be retroactive to Jan. 1, 2015, and in effect through Dec. 31, 2016. While U.S. biodiesel producers and the NBB had high hopes the incentive would pass as a reformed production vs. a blender credit, the sector will continue the fight next year to educate lawmakers on the benefits of the restructuring. “While this is a missed opportunity to reform this tax incentive, biodiesel plants across the country will have a greater degree of predictability and stability under this extension,” says Anne Steckel, vice president of federal affairs for NBB. “We will continue pushing to reform this as a producer’s credit next year to ensure that U.S. tax dollars are supporting U.S. workers and productivity.” Oh, the CEO of REG, says he is pleased with and thankful for the extension. “With the president’s signature, this worthwhile incentive, combined with higher RFS biomass-based diesel volumes, will reinforce our company’s continuing growth by encour-
POLICY aging higher blends and usage of advanced biofuels throughout North America,” Oh says. “We will continue to work with [legislators] and our industry partners to advocate for a conversion to a producer’s tax credit in the future because we believe that is how this credit should be structured.” Kimberley with IBB says he is grateful but also disappointed Congress did not follow Sen. Chuck Grassley’s lead in restructuring the credit to go to actual biodiesel producers. “Our state’s biodiesel producers will have some degree of business clarity in the 2016 landscape, rather than gambling on whether it will be reinstated retroactively,” Kimberley says. “That’s a major step forward in creating stability for this truly American energy industry. We’re glad Congress recognized its importance. Making it a producer’s credit would ensure that foreign-made biodiesel would not be eligible for the credit, better-fulfilling Congress’s original intent with establishing this policy. We hope closing this loophole will still happen in future years.” The new CEO of Canadian biodiesel producer Biox Corp., Alan Rickard, says the reinstatement of the tax credit will provide much-needed industry stability and support. “On the retroactive passage of this legislation, Biox expects a positive impact of approximately $7 million to be recorded in our fiscal Q1 results, related to the entire 2015 calendar year,” he says. “Even greater is the market stability that the proactive passage of this legislation provides. This, combined with the EPA setting the RFS RVOs from 2014-’17, and Ontario’s Greener Diesel requirement increasing to 3 percent in 2016, gives us a positive outlook for the biomassbased diesel market in North America.”
More Work Ahead So while the industry celebrates victories in a renewed tax credit and final RFS rule that establishes a growth trajectory through 2017, along with a commitment from EPA to get the program back on track, plus signs the agency will continue growing biomass-based diesel RVOs, work is far from over. NBB continues to urge EPA to reconsider its approval of a fast-tracked method for Argentine biodiesel to qualify under the RFS program, and the organization will pick up where its work left off at the end of 2015 in trying to educate legislators on the importance of restructuring the tax credit to a producer incentive. Furthermore, with the 2018 RVO proposal expected by midyear, NBB must determine what volume it should suggest to EPA for 2018. “I think it’s too early for us to say that,” Evans says. “We have an RVO task force that carefully analyzes the markets each year and makes recommendations, so we will conduct that process again and develop proposals accordingly.” In the meantime, producers are making moves to ramp-up production and get this industry back on solid ground. Author: Ron Kotrba Editor, Biodiesel Magazine 218-745-8347 firstname.lastname@example.org
Biodiesel Opportuni es Abroad Several U.S. producers sketch out overviews of international developments BY RON KOTRBA
OVERSEAS GROWTH: With expansion at its Indiantown, Florida, facility (shown) unlikely due to regulatory constraints, and with its plant construction halted in New Jersey, Genuine Bio-Fuel is banking on international developments to fuel its growth. PHOTO: GENUINE BIO-FUEL INC.
A handful of U.S. biodiesel producers are developing projects overseas, whether it’s to capitalize on emerging or growing international markets or to take refuge from the business-stifling inconsistency of U.S. policy. “In the near future, our goal is to locate a production facility in Mexico, in one of the border states,” says Todd Hill, founder of the now-defunct Promethean Biofuels biodiesel plant, formerly located in Temecula, California. Promethean’s decline is a complicated story. It was in the midst of expanding when it was hit by a perfect storm, Hill says. “The year prior, we had been negatively impacted by the bankruptcy of one of our customers, which left us with some operating and payroll issues,” he says. “We were profitable, so that issue would have worked itself out over time. The No. 1 issue was that being colocated next to another recycler we had twice the regulatory burden. Some of the facility changes required would have impacted our landlord adversely and as such, instead of making the changes, we lost our lease. It originally took two years to permit Promethean’s facility, and we did not have
INDUSTRY cash reserves sufficient to relocate and permit a new facility. We briefly attempted to partner with a local tribal organization, but that ultimately did not pan out.” Hill recently founded a new firm, Spaq Omni Acquisition Co., that he says is first and foremost a technology-licensing company. “Our most exciting product development at this stage is our work in the field of dendrimers, most specifically methyl-ester activated macromolecules,” he says. The molecules can aid various aspects of biodiesel production, such as purification or speeding up the ambient temperature of methyl ester production. “Taxation, regulation, cost of production, market access, distribution, and feedstock procurement are all more advantageous outside of the U.S. at this time,” Hill says. “Coupled with a strong dollar, and what looks to be a protracted reduction in the price of crude, you have a set of externalities that all make foreign investment in biodiesel and specialty chemicals very promising for organizations that are not fully integrated feedstock-to-end-product operations. The current climate also promotes foreign operation for those entities looking to integrate or fortify access to feedstock and chemical components.” Hill says U.S. federal policy has never truly been in alignment with biodiesel producer interests unless that producer also was able to directly supply their own feedstock. “Whether from the historically unstable tax credit or the infamously fraud-prone renewable fuel standard (RFS), government policy and the constant state of flux of these relatively new initiatives have always been difficult and costly burdens for the small producer to bear,” he says. Promethean’s only directly negative impact from federal policy related to biofuels production, according to Hill, was the “sometimes extraordinarily delayed payment of tax credits, in some cases delays in excess of 24 months without real recourse or meaningful interest rates.” Hill adds that Promethean sought to build a business that was viable without subsidies. “Mexico seems very attractive right now with the exception of the current regulatory climate with taxation and the maquiladora system,” Hill says. “Wage structure, a plethora of talent, overall facility cost structure, and a transportation infrastructure that is already well-adapted to moving products back and forth, year-round markets for residual byproducts, as well as our prior experience in operating in that region all make it a viable alternative to U.S. manufacturing.” Across the country, Indiantown, Florida-based Genuine Bio-Fuel Inc. has been trying to develop a project at an airport in Lincoln Park, New Jersey, for years, but the company has become frustrated with the permitting and regulatory process. “We are approaching our fourth anniversary trying to get our permits,” says Jeff Longo, executive vice president of Genuine Bio-Fuel. “I do not even have enough time, energy or paper to describe that delay hold-up. Let’s just say it is everything from the sign being too large proposed on the hangers we were to renovate, to the noise possibly coming from the plant. We are all aware of the loud sounds air pumps make and how they drown out the noise of aircraft landing and taking off,” Longo quips. The company cannot expand its flagship plant in Indiantown, Florida, according to Longo, due to the local authorities’ regulatory crackdown after the nearby fire at Viesel Fuel’s biodiesel facility. “So much for expansion there,” he says, despite a stellar safety record since 2008.
In 2012, Genuine Bio-Fuel announced it was developing a 12 MMgy biodiesel project in Puerto Rico to serve Caribbean and South American markets. “After a year and a half of getting all our permits— and the government there was very pro-job and green—our largest potential customer, the power company, had multiple indictments for fraud and is totally broke,” Longo says. “Oh well, that’s just another 18 months and hundreds of thousands of dollars spent. But hey, what’s a few dollars and time these days, especially when you have a government agency three years behind on the RFS and then makes the mandate a joke?” Genuine Bio-Fuel has several proposed build-outs, according to Longo, in Latin America, Alaska, Africa and Europe, and several already completed or in the process. “For example, mobile bio facilities that can use various feedstocks supplying generators to power parts of Africa and Alaska at a third of the price per kilowatt normally charged,” he says. “Our patent-pending technology not only allows us to use 60 percent less energy, but it affords us to be a true continuous flow plant utilizing about 50 percent of the normal catalyst, a wide variety of feedstock with little concern of free fatty acid (FFA) values and having companies purchase our glycerol coproduct due to the higher-quality glycerin in it.” Longo says the company owns several operations outside the U.S. and grows its own feedstock in these locations. “We have had nothing but enthusiastic participation from these governments, local and national, with set programs that have longevity to them,” he says. “Our partners overseas are enthusiastic about even further expansion there.” Today much of Genuine Bio-Fuel’s Florida production is shipped overseas. “We make really high-quality biodiesel and ship the majority of it now off shore, negating the RIN market volatility and all,” Longo says. “Yes, we get higher pricing to offset this, however, we also save these countries money and they are going green.” Longo asks, “Why would anyone in the right business mind want to expand, much less have a facility in the states? Tax credits that come and go, RFS mandates are years behind schedule, competing for taxpayer support for foreign subsidized imports, and a country that professes it wants to go green—as long as it is cheaper than what we are paying for now.” Longo says with the blender tax credit that was reinstated through 2016, this will help the industry out, but he adds that imports will now stream in way beyond what may be anticipated. “Without the credit, they already have 40 percent of the market,” he says. “With the U.S. taxpayer increasing monies in their pocket, the imports will flood the market. A tax credit not going beyond 2016 will be absolutely no incentive for U.S. investment monies here. By the time build-outs are completed and EPA approval for RINs issued, there is no time for an ROI on the capitalization.” With its November 2015 purchase of the 15 MMgy Veros Energy plant in Alabama and its 50 MMgy facility in Pennsylvania, Hero BX is on the move domestically—but the company is not putting all its biodiesel eggs in the U.S. market. Hero BX is in the early stages of developing a project in Jamaica. Consultants representing the firm have visited the island since a 2015 Jamaica Investment Forum and have been meeting with various government and private sector stakeholders with serious interest in confirming the project. Chris Peterson, vice president of finance and commodity risk at Hero BX, says his firm is undertaking a very in-depth due diligence www.BiodieselMagazine.com
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INDUSTRY process in Jamaica. “A little over a year ago, our owner asked about interest in a potential Caribbean investment in biodiesel production,” he says. “Our due diligence started with a feasibility study that came back not very positive, so his instruction to the team was to figure this out. We looked at all the negatives and drawbacks to see if there were workarounds. It’s an island community with limited resources, electricity and chemicals. There’s no existing supply chains for feedstock, and they don’t have population centers we have in U.S. So there are struggles and challenges with the business model in Jamaica, and we spent the past year trying to iron it out.” Peterson says, however, with assistance from JamPro, an agency of Jamaica’s Ministry of Industry, Investment and Commerce that promotes business opportunities in export and investment to the local and international private sector, and certain laws, regulations and policies in the Caribbean favorable to trade, interesting opportunities for distribution exist, “if we can get the cost side of equation in check.” Hero BX intends to leverage used cooking oil in Jamaica, but not exclusively. “There is land available for cultivation, so we’re looking at feedstock development and the feedstock production side of the business as well,” Peterson says. If the company builds a plant in Jamaica, Peterson says exporting fuel would play a role depending on plant size. Domestically, the company’s biodiesel would largely go toward electricity generation. Ultimately, Peterson says Hero BX is being cautious since the company is conservative in its investments. “We’ve been in the due diligence process for a year now, and it’s coming to a milestone where we have to make a decision to go forward or not—we expect that to happen by end of 2015 or early into Q1 2016,” he says. “The consulting team is looking at the data, so they will make a presentation to the owner and see if we should continue or move on.” In Miami, Lagosur Corp. made a name for itself mid-2015 when the company announced it would develop a business on exporting biodiesel and processing capabilities to Latin America. Months later, in December, the firm announced a collaboration with Alianza Pacifco to sell biodiesel to the mining and transportation industries in Chili, Peru and Mexico.
Author: Ron Kotrba Editor, Biodiesel Magazine 218-745-8347 email@example.com
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Jorge Abukhalil, Lagosurâ€™s executive vice president of business development for Latin America, says the company was formed in 2014 with the specific objective and focus of bringing biofuels to Latin America. â€œLagosur has two core offerings to targeted countries in Latin America,â€? he says. â€œThatâ€™s introduction and importation of biodiesel and deployment of biodiesel plants for local production.â€? Lagosur is sourcing biodiesel from a variety of producers in the U.S. and overseas. â€œWe are continuously evaluating the best sources of high-quality biodiesel,â€? Abukhalil says, adding Lagosur will not publicize its specific sources. While Chile, Peru and Mexico are the companyâ€™s initial markets, Abukhalil says the company is by no means limited to those countries. â€œWe selected those markets based on market need, potential positive impact and strong relationships,â€? he says. â€œWe are making preparations for other markets in Latin America, inclusive of Bolivia.â€? Lagosur has plans to deploy biodiesel production facilities in Latin America. â€œWe will be announcing details associated with those facilities in the coming months,â€? Abukhalil says, adding that the company has a number of technology partners, the details of which are currently confidential. â€œLagosur will play several key roles to deploy local biodiesel plants, including general contractor and plant builder, co-tech developer, licensee and operator,â€? he says. Lagosur hopes to capitalize and leverage the U.S. marketâ€™s history and experience to help accelerate Latin Americaâ€™s technology adoption. â€œThe Latin American markets have all the opportunities and motivations that the U.S. has and, in many cases, even more reasons to incorporate biofuels into their respective energy supply,â€? Abukhalil says. â€œThe reality is, most Latin American countries do not have the experience and history with biofuels as an alternative source of energy, and that is where Lagosur comes into the picture.â€?
Total’s La Mède Conversion Paris-based supermajor oil company Total S.A. will convert its 150,000-barrel-per-day La Mède oil refinery to produce renewable diesel, a nervous-making project for the French biodiesel sector BY RON KOTRBA
REPURPOSED: Total’s La Mède oil refinery was built in 1935. Over time, the complex has become outpaced by more efficient refineries in Europe, one reason Total is revamping the facility to produce renewable diesel in 2017. PHOTO: TOTAL S.A.
Last spring one of the world’s largest oil companies, Total S.A., based in Paris with operations in 130 countries, announced plans to transform its oil refinery in La Mède, France, to manufacture 500,000 tons (approximately 170 MMgy) of hydrotreated vegetable oil (HVO), also known as renewable diesel. The La Mède oil refinery is in the south of France near Marseilles. The first unit was built in 1935, according to Philippe Billant, project director for Total and head of the La Mède transformation. The cracking unit—the main conversion component at the refinery—was installed in 1953. Capacity at La Mède has increased over time and, today, crude oil processing stands at roughly 150,000 barrels per day (nearly 2.3 billion gallons per year). For years, the asset has been losing money for Total. “The refining environment in Europe is tough and competitive,” Billant says. “We have to see the La Mède project in that context.”
European demand for petroleum products has declined 15 percent since 2008, a trend that the company says stems from Europe’s pursuit of energy efficiency and improved vehicle fuel economy resulting from the EU’s commitment to reduce its carbon footprint. “The European market is steadily contracting,” the company states, “a situation aggravated by the shale oil and gas revolution in the United States, which gives the U.S. refining industry an advantage, and competition from refineries in Asia and the Middle East. These two trends shut European refineries out of some of their domestic and export markets and have exacerbated excess refining capacity in Europe.” In April 2015, when Total announced plans to invest in the two of its five French refineries losing money—Donges and La Mède—Patrick Pouyanné, CEO of Total, said, “There are three possible responses to the crisis in the European refining industry. The first is to throw in the towel. The second is to do nothing and perish. The third is to innovate and adapt to meet shifting demand trends. The central focus of Total’s plan for our French refining business is to realign our operations and products to changing markets. The plan that we are presenting today offers sustainable solutions for the Donges and La Mède refineries. It gives both facilities a future and strengthens Total’s refining base in France.” For La Mède specifically, Billant says the location on France’s Mediterranean Coast is a highly competitive area. “Forty to 50 percent of France’s oil refining capacity is positioned in that very small area,” he says. “There’s excess capacity in the region compared to the demand for gasoline and heavy oils.” Billant says La Mède has lower competitive factors than the average refinery in Europe. “For instance,” he explains, “it has a low complexity factor due to the relatively low cracker capacity vs. the crude distiller. And despite investments over the years, the refinery has relative low-energy efficiency and high costs.” For these reasons, Total has decided to end crude oil processing at La Mède by
the end of 2016 and begin a new chapter in the site’s long history. “The status quo at La Mède is just not possible for us,” Billant says, “so we had to do something to make the operation profitable. Closing the complex was just not possible. In our new endeavor we had to find maximum use for the assets at La Mède, including our highly skilled personnel. This is what led to the project.” The transformation of the La Mède oil refinery to manufacture HVO is a first for France, but not for Europe or the rest of the world. While La Mède is the second such project of its impressive kind globally, the Italian oil company Eni S.p.A. blazed this trail in 2012 when it announced plans to convert its Porto Marghera refinery in Venice to produce 300,000 tons of renewable diesel using the trademarked Ecofining process, developed jointly between Eni and Honeywell’s UOP. With an investment of 100 million euros ($109.2 million), Eni identified the opportunity to reuse the catalytic hydrodesulfurization section in the Venice refinery to incorporate its Ecofining technology to produce HVO. The company says while palm oil is its initial feedstock, the biorefinery will eventually incorporate animal fats, used cooking oil, algae oil and lipids. Eni’s “Green Refinery” began operations in 2014 and the company says commissioning will continue through 2015. While Eni invested 100 million euros and implemented its own Ecofining process developed jointly with UOP, Total is investing 200 million euros and will be employing French company Axens’ Vegan process. Axens is a subsidiary of IFP Group Technologies. Axens made a name for itself in the biodiesel space in the mid-2000s when it pioneered the solid catalyst Esterfip-H process for fatty acid methyl ester (FAME) manufacturing. Its first commercial installation of the Esterfip-H process was, coincidentally, also in the south of France, in Sète, for Diester Industrie. Last year, Diester Industrie and Saipol, a subsidiary of the Avril Group, merged. Just recently, in October, Saipol announced its investment of 28.5 million euros in additional biodiesel manu-
facturing capacity in Sète, adding 100,000 tons (approximately 30 MMgy) to its already existing 180,000-ton facility, and a new biomass boiler to burn sunflower hulls from its hulling complex nearly 300 miles west of Sète. The additional biodiesel capacity in Sète is based on the Lurgi process, says Tom Doron, public relations manager for the Avril Group. Interestingly, as Total points to saturation of crude oil refining in the south of France, Saipol is concerned with Total’s plans to convert the La Mède refinery to produce HVO about 100 miles away. Yves Delaine, deputy CEO of the Avril Group and chairman of Saipol, says, “Refocusing and up-scaling the activities of this site will allow us to prepare for a future in which we believe, despite a growing number of competitors in the Mediterranean region who are making use of external agricultural resources. This constitutes a real threat, which is becoming a concern to both our site and farmers in the region.” Kristell Guizouarn, chair of the French biodiesel board Esterifrance, says, “A production unit such as Total’s, increasing by 25 percent the national production, should mechanically cut the national production of rapeseed by a quarter of its present surface. Not mentioning the social and economic impact, as Total’s project will undoubtedly threaten the existing plants and the 20,000 jobs the farming and industrial biofuel sector amounts to in France.” She adds that the national federation of oilseeds has expressed “deep concerns” as the policy switch to boost mandatory off-road biodiesel blending to 7.7 percent in 2016 is at risk of being postponed. “In addition to the future competition from the Total oil refinery that should mainly use imported palm oil as feedstock rather than using domestic oilseeds,” Guizouarn says, “the French biodiesel industry feels that France’s and Europe’s support to local agricultural and industrial sectors is at risk.”
Project, Market Particulars Announced in April 2015, the first phase of Total’s La Mède biorefinery conwww.BiodieselMagazine.com
EUROPE version project is, as Billant puts it, â€œthe informing and social process, during which we explain the project,â€? he says. â€œWeâ€™re now done with that phase and weâ€™ve moved into the development and implementation phase. We will continue to operate La MĂ¨de as-is until the end of 2016. In the meantime, we will conduct detailed engineering studies so weâ€™ll be ready to start construction in early 2017.â€? Billant says Total anticipates construction will take six months and plans to commission the plant mid-2017. Some of the 200 million euros will be spent on the retrofit of the hydrotreater. â€œWe have to adapt the unit to process the renewable feedstock,â€? Billant says. The process of hydrogenating the oil to remove the oxygen generates a lot of heat. â€œMuch more than when you process fossil oil,â€? Billant says. â€œSo we have to adapt the reactor to manage thatâ€”adapt the internals of the engaging unit.â€? The conversion project also involves building a new pretreatment unit, which treats the oil and removes any harmful metals and other contaminants be-
fore the material is fed into the catalyzed hydrotreater. â€œWe also have to adapt the storage and logistics facilities,â€? Billant says. In addition to the costs associated with adapting the existing oil refinery to produce HVO, Total is investing in building a unit to produce AdBlue, a urea-based compound used by diesel vehicles to treat NOx emissions in selective catalytic reduction (SCR) systems, and an 8-MW solar farm to be installed by Total affiliate SunPower, which will provide 50 percent of the siteâ€™s power needs. Billant further explains other project details of the conversion. â€œIn this project, we will stop the crude distiller and conversion unit,â€? he says. â€œWe will keep the gasoil hydrotreater and reformer as well. That will produce the hydrogen needed for HVO production. We will also keep the naptha hydrotreater. And we will keep using most of, but not all, the existing storage. We obviously need some capacity to maintain operations.â€? Axens did not respond to requests to
talk about this project and the Vegan process. Billant says Axensâ€™ technology was chosen vs. other offerings in the market because Totalâ€™s assessment revealed that it was â€œbest able to meet our expectations for the project.â€? In an Oct. 21 press release from Axens touting Totalâ€™s selection of its Vegan processâ€”six months after Total announced the newsâ€”Axens stated, â€œThis technology was originally developed by IFP Energies nouvelles in the mid-2000s based upon an extensive research and development program. Vegan technology fundamentally consists [of] hydroprocessing any kind/mixture of renewable lipids into ultra-clean iso-paraffins. The resulting high-quality mixture of bio-paraffins exhibits a high cetane number, tunable cold-flow properties, contains virtually no sulfur or aromatic compounds and is easily blended into regular diesel or jet fuel. Vegan is based upon Axensâ€™ large experience in conventional hydroprocessing technologies and catalysts with more than 200 units licensed in the world total-
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EUROPE ing around 10 million bbl/day capacity as well as a strong knowledge of lipidic feedstock processing. Axens has pioneered the first-generation biodiesel market in the ’90s, through Esterfip technologies, based on [the] transesterification process.” Billant says the feedstock objective for La Mède is to maximize processing of used cooking oil. “We will look for that within France and the EU,” he says. “But we will definitely look for it within France.” Billant adds that if it makes economic sense, La Mède will also consider importing feedstock from outside the EU. While the main product manufactured at La Mède will be HVO for on-road use, secondary products will include propane and bionaptha. France will be the target market for its HVO production, in the context of the nation’s growing demand for biodiesel and HVO, Billant says. Other EU nations are prospective markets as well. “In 2020, European demand [of HVO and similar advanced renewables] will increase to 10 percent of transportation fuels,” he says.
Billant says HVO makes more sense than biodiesel in the context of a rising French and EU demand for biofuels since fatty acid methyl ester (FAME) blending has limitations in the EU at 7 percent, although in early 2015 France’s energy ministry upped the allowable concentration of FAME in diesel fuel to 8 percent. “We are in the context where we can set a 10 percent renewable goal in transportation fuel in 2020,” Billant says. “With the limitations of esters, biodiesel is not necessarily the only solution, as such, to meet that demand. That’s where HVO comes into the game. It’s a product that offers a solution to meet the growing demand,” he says, adding that HVO can be blended at any concentration in the EU. In addition, it puts good use to the assets already installed at La Mède. “It requires hydrogen to strip out the oxygen,” he says. “It sits very well with the existing unit in the La Mède refinery. We will use the available hydrogen and hydrotreater.” Furthermore, Total notes that France’s Energy Transition Act sets a target of 15
percent biofuels in 2030, adding that Europe and France will need additional biofuel production to meet this goal. “France currently imports biodiesel (462,000 tons in 2013 and 576,000 tons in 2014), and more than 20 percent of the biodiesel produced domestically is made from non-French crops (2013 figures),” the company states. When asked what the most challenging aspect of this monumental project is, Billant asked, “The most challenging, or exciting? We’re moving from a situation where this site was losing money, so we’re doing this conversion to make it profitable. The challenge starts there. Let’s make it profitable.” What has been key is communication. “It’s a transformation project,” Billant says. “The good news is that we have been able to communicate and explain what will happen, and we did so two years in advance.” Author: Ron Kotrba Editor, Biodiesel Magazine 218-745-8347 firstname.lastname@example.org
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Our Commitment to a Sustainable Future
Biodiesel is a real solution to reducing carbon emissions and mitigating the threat of climate change the world over BY CARLOS ARAUJO
Climate change. We read about it more frequently and definitely it is not a new topic for any of us. The difference between now and the moment when we first heard about climate change is how we experience this phenomenon. We felt as though climate change would never threaten us; that it was just a distant and unlikely problem. Unfortunately, it has become not simply a local challenge, but has evolved into a larger global threat. Different and yet equally serious symptoms of climate change are making their presence felt: rising temperatures, weather disasters in the form of droughts, heat waves, wildfires,
Many countries on all con nents are adop ng individual plans to mi gate climate change, where renewable fuels—especially biodiesel—have been one of the most eﬃcient and eﬀec ve measures to reduce greenhouse gas emissions. storms and hurricanes. In addition, included are heat stress and air pollution, which are serious public health threats. The key question is, what is the cause of climate change? Research institutes and environmental agencies agree without any doubt on one single answer: carbon pollution. Carbon dioxide (CO2) accounts for 82 percent of global emissions, wherein, specifically, transportation emissions are re-
sponsible for 28 percent of greenhouse gas emissions. It has become clear that reducing man-made emissions is a high-priority solution to that problem. There exist numerous possible ways to reduce man-made emissions. For example, reducing carbon pollution from power plants, expanding and modernizing the electric grid, adopting new technologies and establish-
The claims and statements made in this article belong exclusively to the author(s) and do not necessarily reflect the views of Biodiesel Magazine or its advertisers. All questions pertaining to this article should be directed to the author(s).
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PHOTO: EVONIK CORP.
biofuel to reduce greenhouse gas emissions. The European Union ruled the first-generation biofuels at 7 percent, with Germany and France as the prominent supporters of biofuels as a key solution to achieve ambitious CO2 emission goals. The high usage of diesel-powered passenger cars provides an impressive opportunity for biodiesel contribution. In South America, for example, the vast availability and diversity of feedstocks (soybean oil, palm oil, animal fat, and used cooking oil) combine perfectly with the strong dependence on imported diesel to drive renewable fuels programs. Brazil established the B7 (blend of 7 percent biodiesel to 93 percent fossil diesel) mandate in 2014, similar to the average blend in Colombia, while Argentina introduced B10. Other countries like Paraguay and Uruguay are also following, in a minor scale, the biodiesel trend. In Southeast Asia, the availability of low-cost Global Biodiesel Initiatives feedstock (palm oil) and the strong depenOther countries have successfully imple- dence on imported fuels resulted in a wise mented similar initiatives where biodiesel has implementation of mandates, ranging from shown to be the cleanest and most efficient B10 to B20 in countries such as Indonesia ing fuel economy standards. Another strong and solid measure adopted in the U.S. that complements this perfectly is the renewable fuel standard (RFS) program: renewable fuels percentage standards for cellulosic biofuel, biomass-based diesel, advanced biofuel and total renewable fuel. The program applies to all motor vehicle gasoline and diesel produced or imported in the U.S. RFS provides a clear path toward the growing development of renewable fuels and the extensive benefits brought to our society, environment and economy. The final rule for renewable volume obligations (RVOs) released by the U.S. EPA Nov. 30 for years 2014-’16, in addition to the applicable volume of biomass-based diesel for 2017, confirms the hard work and dedication to biodiesel from active supporters who are committed to a sustainable future.
and Malaysia. Thailand’s government applied a B7 mandate, while Philippines started working with a biodiesel blending of 5 percent. All local authorities and biodiesel producers have made distinct efforts to secure the sustainability of palm oil production, a mandatory element of renewable fuels. We can easily relate to the phrase “think globally, act locally.” Many countries on all continents are adopting individual plans to mitigate climate change, where renewable fuels—especially biodiesel—have been one of the most efficient and effective measures to reduce greenhouse gas emissions. We, at Evonik, have a vision of what our tomorrow will look like: a world with more environmentally friendly fuels. That is why we address this issue by timely identifying trends and being present in all major biodiesel-producing regions. Together, we strive for a sustainable future. Author: Carlos Araujo Marketing Manager-North America, Evonik Corp. 973-929-8181 email@example.com
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