July 2011 Biodiesel Magazine

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July 2011

INSIDE: REGULATORY IMPACTS ON TERMINAL REQUIREMENTS

The Biodiesel Express

More U.S. Railroads Make the Switch to Biodiesel Page 30

Plus Biodiesel Sets Sail

Page 24

And Biodiesel-powered

ConcertsPage 36

Attend the world’s leading algal industry conference.

2011 Algae Biomass SummitOctober 25 – 27, 2011Minneapolis, MN

“One of the best biomass conferences I attended all year. The contacts and exposure have proven to be invaluable to our biomass program.”Richard Wilson, Marketing Manager, Applied Chemical Technology

More than 800 leaders will be in attendance:

• Algae experts and leaders who are shaping the industry• The top algae biomass producers in the world• Companies in algae-related industries and businesses with

synergistic operations • Entrepreneurs planning to start a venture in the algal industry • Venture capital, finance & investment companies exploring

investments in this domain• The biofuels and other biofuel products research community • End-users who are purchasing and utilizing the energy created

Cultivate theAlgae Industry

“This conference offered exceptional exposure, relationship building with the ability to cement meetings that were previously held by e-mail and phone only. The decision makers were there…”Victoria M. Kurtz, Fluid Imaging Technologies, Inc.

Attendees will gain the following:

• Expertise from the leading algal industry players• Insight into where the algae industry is heading• Information on new opportunities created by the industry• Plans and strategies for your algae fuel venture• Knowledge on trends in external financing for algal projects• New cultivation and harvesting methods and techniques• A better understanding of the latest government policies

Register Today!www.algaebiomasssummit.org

Questions? Call us at 866-746-8385Follow us: http://twitter.com/algaeindustry

“The premiere organization for scientists, governments, and industry working in all aspects of algal biomass.”Shay Simpson, Associate Director – Bioenergy Program at Texas AgriLife Research, a member of the Texas A&M University System

JULY 2011 BIODIESEL MAGAZINE 3

CONTENTS

JULY 2011 VOLUME 8 ISSUE 7

MARINE

Biodiesel Sets SailUse on the open water BY BRYAN SIMS

LOCOMOTIVE

Steaming Ahead to a Better FuelMaking the switch to biodieselBY ERIN VOEGELE

POWER

Don’t Forget the EventGreening the concert space BY LUKE GEIVER

DISTRIBUTION

40 Regulatory Impact on Terminal Requirements What distributors should know about renewable fuelsBY NAVED REZA

CORRECTIONIn the June 2011 Talking Point column by Clayton McNeff, titled "Biodiesel Has a Bright, Multicolored Future," it stated incorrectly that McNeff is a board member of BioCat Fuels. McNeff is actually a board member of Mcgyan Biodiesel LLC and Ever Cat Fuels LLC, not BioCat Fuels.

4 Editor’s NoteClean BurningBY RON KOTRBA

6 Legal PerspectivesUnderstanding IndemnitiesBY DREW D. LARSON

8 Talking PointCreating New Opportunities Off-roadBY ED BURKE

10 Biodiesel Events

12 FrontEndBiodiesel News & Trends

18 Inside NBB

22 Business BriefsCompanies, Organizations & People in the News

44 Marketplace/Advertiser Index

Biodiesel Magazine: (USPS No. 023-975) July 2011, Vol. 8, Issue 7. Biodiesel Magazine is published monthly. Principal Offi ce: 308 Second Ave. N., Suite 304, Grand Forks, ND 58203. Periodicals Postage Paid at Grand Forks, North Dakota and additional mailing offi ces. POSTMASTER: Send address changes to Biodiesel Magazine/Subscriptions, 308 Second Ave. N., Suite 304, Grand Forks, North Dakota 58203.

DEPARTMENTS CONTRIBUTIONS

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BIODIESEL MAGAZINE JULY 20114

CLEAN BURNING

In my estimation, there is probably no application with great-er potential for biodiesel than the off-road markets. The multibil-lion gallon U.S. heating oil market is a candidate, but then there is what some call the “real” off-road markets: tractors and combines, locomotives, marine vessels, stationary (or mobile) gensets, countless types of forestry equipment, loaders—the list goes on.

Just like the drastic reductions in emissions that have taken place over the past decade for new on-road diesels, thanks to regulations set by U.S. EPA, off-road diesels are on the path to the same greener fate. Implementation dates are staggered for the various off-road sectors, but once they are phased in completely, the not-so-distant future holds a clean-air promise from all newly manufactured on- and off-road diesels. That means the near elimina-tion of the black soot commonly associated with diesels, as well as nitrogen oxides (NOx), a smog-forming pollutant. The new off-road emission reductions will require the use of low and ultra-low sulfur fuels, not only to reduce sulfur dioxide emissions, but chiefl y so expensive catalysts used in aftertreatment systems aren’t fouled. The growing, positive body of work on how biodiesel interacts with these devices will certainly help ease people’s minds about using biodiesel-blended fuels in the presence of aftertreatment systems.

These upcoming emissions reductions are great for the environment, but once in effect, the regulations will only apply to new models. Diesels last a very long time. It is reasonable to think it could take 50 years or more to replace the pre-existing fl eet. There are retrofi t programs if environment-conscious farmers, loggers, contractors, engineers, ship captains or others in the off-road sector wish to voluntarily reduce their equipment’s carbon footprint. These programs would help install particulate fi lters and NOx abatement devices (e.g., SCR systems) to drive down emissions and drive up its greener image.

Certainly, incorporation of biodiesel is a seamless game-changer in reducing off-road fl eet emissions. Biodiesel reduces particulate matter by nearly 50 percent compared to petroleum diesel. Total hydrocarbon emissions from biodiesel are 67 percent less. Carbon monoxide drops nearly 50 percent. Sulfur emissions are virtually wiped out since biodiesel is a sulfur-free fuel. Health effects testing has shown cancer-causing polycyclic aromatic hydrocarbons (PAH), and the nitrated variety of PAH, were decreased by 75 to 85 percent, except for benzo(a)anthracene, which was reduced by half. Finally, I would be remiss not to mention the most clichéd line about biodiesel exhaust ever: it smells like French fries.

Ron KotrbaEditorBiodiesel [email protected]

EDITOR'S NOTE

Luke Geiver jumps into power generation for the concert and event market in “Don’t Forget the Event” on page 36.

Bryan Sims writes “Biodiesel Sets Sail” on page 24, a review of maritime use and acceptance of biod-iesel.

The 2 billion gallon locomotive market is the topic of Erin Voegele’s story, “Steaming Ahead to a Better Fuel” on page 30.

Associate Editors

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


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A R T

E D I T O R I A L

P U B L I S H I N G & S A L E S

Mike Bryan

Joe Bryan

Tom Bryan

Matthew Spoor

Howard Brockhouse

Jeremy Hanson

Chip Shereck

Marty Steen

Bob Brown

Andrea Anderson

Dave Austin

Nick Jensen

Jessica Beaudry

Marla DeFoe

John Nelson

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Circulation [email protected]

Advertising [email protected]

Senior Marketing [email protected]

Jaci Satterlund

Elizabeth Burslie

Art [email protected]

Graphic [email protected]

Ron Kotrba

Bryan Sims

Erin Voegele

Luke Geiver

Jan Tellmann

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Subscriptions Subscriptions to Biodiesel Magazine are free of charge to everyone with the exception of a shipping and handling charge of $49.95 for any country outside the United States, Canada and Mexico. To subscribe, visit www.biodieselmagazine.com or you can send your mailing address and payment (checks made out to BBI International) to: Biodiesel Magazine Subscriptions, 308 Second Ave. N., Suite 304, Grand Forks, ND 58203. You can also fax a subscription form to (701) 746-5367. Reprints and Back Issues Select back issues are available for $3.95 each, plus shipping. Article reprints are also available for a fee. For more information, contact us at (701) 746-8385 or [email protected]. Advertising Biodiesel Magazine provides a specifi c topic delivered to a highly targeted audience. We are committed to editorial excellence and high-quality print production. To fi nd out more about Biodiesel Magazine advertising opportunities, please contact us at 701-746-8385 or [email protected]. Letters to the Editor We welcome letters to the editor. If you write us, please include your name, address and phone number. Letters may be edited for clarity and/or space. Send to Biodiesel Magazine Letters, 308 Second Ave. N., Suite 304, Grand Forks, ND 58203 or e-mail to [email protected].

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Understanding Indemnities BY DREW D. LARSON

A well-structured indemnity pro-vision is critical to ensuring both parties are protected in relation to breaches of an asset or stock pur-chase agreement. When negotiating an acquisi-tion, the parties carefully allocate the risks between them through the use of warranties, representations and cov-enants. Indemnity provisions provide the mechanism by which those obligations are enforced and limit the parties’ exposure to delayed claims. This article will discuss the key terms of an indemnity provision and the consider-ations that go into negotiating such provisions.

Survival provisions serve as a statute of limitations for claims related to the breach of an agreement. Obliga-tions under the agreement are usually divided into two sets, one set that lasts indefi nitely and a second set that lapses within one to three years of the closing date.

The indefi nite set usually includes obligations related to corporate authority, government authorization, environmental matters, taxes, employee benefi ts, related party transactions, and similar matters that could have large liability, could completely unwind the deal, or are completely within the seller’s control.

The second set of obligations usually lapses within one to three years of the closing date. These obligations generally include all business related representations and warranties, including those related to fi nancial statements, the suffi ciency of assets, the condition of assets, any material adverse changes, and litigation. The time lapse provides certainty to the seller, and breaches are gener-ally discoverable before the time period lapses. The time period is generally set to match the term of an escrow, discussed below.

Almost every party to an acquisition agreement recognizes that there will be small breaches that do not materially impact the operation of the business. There-fore, the parties often create a minimum threshold that must be crossed before the seller will be required to pay damages for a breach. The seller also desires to limit its potential liability. The primary mechanisms used to man-age these risks are a “basket” and/or a “cap.”

A basket is a threshold amount of damages that must be reached before a party is liable to pay any claims. There are two primary types of baskets, deductible baskets and fi rst-dollar baskets. With a deductible basket,

the seller only pays for indemnity claims that exceed the deductible basket threshold. In contrast, a fi rst-dollar bas-ket provides that once the basket threshold is reached, the seller is responsible for all claims, including those used to reach the threshold. Through negotiation, a party can also craft a hybrid of these approaches with different basket thresholds and deductible levels.

A cap is a fl at dollar limit on the claims that the seller and/or the buyer may be liable for under the agreement. A seller’s liability is often limited to at least the purchase price, though it may be negotiated to a lower amount as well. While the cap may be as high as the purchase price, the ability to collect may be functionally limited to the escrow amount, discussed below. Often, a cap is inap-plicable to the certain obligations due to the magnitude of the liabilities that may be covered, like environmental liability. A buyer may also seek to limit his liability for damages, though the focus is usually on the seller.

The parties should also consider how damages should be measured. While terms like materiality and knowledge are carefully negotiated in various representa-tions and warranties, sellers often seek to ignore such limitations when calculating indemnity claims. This increases the likelihood that a basket threshold will be reached. Both parties should carefully consider whether such a provision is appropriate in their particular deal.

All the promises in the world are not worth anything if the seller distributes the purchase price and the buyer has to chase down every shareholder to recover the funds. For this reason, the parties often place a portion of the purchase price into escrow as security for indem-nity claims. A common escrow amount is 10 percent of the purchase price, though the actual escrowed amount will depend on the risks involved in the transaction and the bargaining power of the parties.

This summary merely scratches the surface of the complexity related to indemnity provisions. Any party to an acquisition should question their attorney about the risks associated with indemnity provisions and the ways in which indemnity provisions can serve that party’s interests.

Author: Drew D. Larson Attorney, BrownWinick

(515) 242-2485 [email protected]

LEGAL PERSPECTIVE

Introducing Algae Technology & Business magazine. The algal biomass industry’s premier source for in-depth reports, technical updates, and expert commentary

Biorefining Magazine’s Algae Technology & Business covers the latest developments of new technologies and commercial markets derived from algae. Discover for yourself the most recent news, products, events and players who are shaping this fast-moving, powerful industry.

As algae biomass utilization edges closer to commercialization, you now have an information source at your fingertips. Algae Technology & Business will help you discover and learn the power of green.

Contact us today and learn about this exciting industry!

Contact infoPhone: 866-746-8385Fax: 701-746-5367Email: [email protected]

ContaPhone:Fax: 70Email:


For local fuel dealers, there is a lot of talk about state biodiesel initiatives and providing new opportunities in Bioheat and other off-road biodiesel applications. To this we say: “Get in now and don’t wait for the mandate.”

Dennis K. Burke Inc. is a family-owned fuel dealer that has been delivering premium fuels for more than 50 years. The Burke family shares a unique marketing experience on the road to bringing biofuels into the mainstream oil market. Servicing state and local biodiesel contracts for Massachusetts and New Hampshire, Burke gained years of biofuels experience in off-road applica-tions and delivering Bioheat to many schools, govern-ment buildings and commercial properties.

Burke began its journey with biodiesel began back in 1996, primarily offering B20 blends to fl eets complying with EPAct. Biodiesel looked promising, but quality is-sues were concerning. As quality improved and tax incen-tives for biodiesel became available, demand increased. By 2002, Burke was well-positioned as a biodiesel blender for major fl eet operators and had the only retail fuel pumps dispensing biodiesel within 100 miles of Boston.

Looking back, who could have imagined all of the off-road applications for biodiesel that we have today? A few worth noting include the trailblazers at Massachu-setts’ Taunton State Hospital, which initially began using a B3 Bioheat blend on the hospital’s 500-horsepower Cleaver-Brooks boilers in November 2006. After three or four weeks, the blend was increased to B5, and by January 2007, it increased to B10. The engineers photo-graphed and documented the boiler’s improved condi-tion and better performance. In 2008, the blend went to B20—and has been running smoothly since.

Dennis K. Burke does not service residential heating accounts. As fuel wholesalers, the opportunity to blend Bioheat for our fuel dealer customers has worked well and provides a more natural fi t to our business. Snow’s Fuel Oil & Propane is one of Massachusetts’ largest fuel dealers on Cape Cod. The company introduced B5 Bio-heat as a home heating oil alternative in 2007. More than 350 current accounts switched to Bioheat, and it quickly added 60 new accounts. A few years ago, Massachusetts-based Alvin Hollis Oilheat introduced Bioheat as a home heating oil alternative and now services more than 1,000 Bioheat accounts. Construction fi rms are using biodiesel to green their fl eets and equipment to meet environmen-tal guidelines necessary to bid on many government and

private contracts.From buses and trolleys to tour boats and water

taxis, tourism dollars are creating a biodiesel boom in the Northeast. More and more off-road applications are see-ing economic rewards in reducing emissions with biod-iesel. You can spend a day on Boston’s historic Freedom Trail and learn that many of the historic sites and public buildings are kept warm with Bioheat.

Newburyport Whale Watch in Newburyport, Mass., is a great tale. In 2006, it started adding home-brewed biodiesel made from restaurant grease when fueling at the marina. A few years back it realized that biodiesel was fun, but the blending wasn’t. It now fuels by truck with a B10 blend.

You can take a B10-powered water-taxi to the shops across the harbor at Mid-Harbor Launch in Marblehead, Mass. The company converted all of its launch service and mooring equipment to B10 in 2008 and is very happy with biodiesel’s performance.

Recreational boaters in Rhode Island can pull up to the fuel dock at Port Edgewood Marina and fi ll up with a B20 biodiesel blend. Marinas are going green to keep their waters clean with B5 to B20 blends, and boaters are getting hooked on the benefi ts.

In northern New England, it’s all about the snow. Many ski slopes and resorts are concerned with the effects of climate change on their industry. Choosing biodiesel is one way for operators to emphasize their ef-forts in reducing greenhouse gases.

At Toreka Tractor Sales in Ayer, Mass., every new tractor leaves the showroom with a fi ll of B5 in the winter and B20 during warmer months. Using biofuels on the farm is becoming more common in our area—the more Earth-friendly, the better. Buying local plays a big role in green culture, so there are marketing rewards for local farms using biodiesel and Bioheat.

Working with biodiesel for 15 years, we’ve learned this: Start with a better quality biodiesel feedstock, blend it with a premium quality diesel or heating oil, and you will sleep better at night. In the end, biodiesel and Bio-heat have a role in energy policy and the mandates will eventually come. As for these biodiesel pioneers men-tioned, like me, they enjoyed the journey.

Author: Ed BurkeChairman, Dennis K. Burke Inc.

(617) [email protected]

Creating New Opportunities Off-road BY ED BURKE

TALKING POINT


International Biorefi ning Conference & Trade ShowSEPTEMBER 14-16, 2011Hilton Americas – HoustonHouston, TexasThe International Biorefi ning Conference & Trade Show brings together agricultural, forestry, waste, and petrochemical professionals to explore the value-added opportunities awaiting them and their orga-nizations within the quickly maturing biorefi ning in-dustry. Register by August 3rd and receive $200 off conference registration rate.(866) 746-8385www.biorefi ningconference.com

Northeast Biomass Conference & Trade ShowOCTOBER 11-13, 2011Westin Place HotelPittsburgh, PennsylvaniaWith an exclusive focus on biomass utilization in the Northeast―from Maryland to Maine―the Northeast Biomass Conference & Trade Show will connect cur-rent and future producers of biomass-derived electric-ity, industrial heat and power, and advanced biofuels, with waste generators, aggregators, growers, munici-pal leaders, utilities, technology providers, equipment manufacturers, investors and policymakers.(866) 746-8385www.biomassconference.com/northeast

EVENTS CALENDAR

Algae Biomass SummitOCTOBER 25-27, 2011Hyatt Regency MinneapolisMinneapolis, MinnesotaOrganized by the Algae Biomass Organization and co-produced by BBI International, this event brings cur-rent and future producers of biobased products and energy together with algae crop growers, municipal leaders, technology providers, equipment manufac-turers, project developers, investors and policy mak-ers. It’s a true one-stop shop—the world’s premier educational and networking junction for all algae in-dustries. (701)746-8385www.algaebiomasssummit.org

Southeast Biomass Conference & Trade ShowNOVEMBER 1-3, 2011Hyatt Regency AtlantaAtlanta, GeorgiaWith an exclusive focus on biomass utilization in the Southeast―from the Virginias to the Gulf Coast―the Southeast Biomass Conference & Trade Show will in-clude more than 60 speakers within four tracks: Elec-tricity Generation; Industrial Heat and Power; Biorefi n-ing; and Biomass Project Development and Finance. Speaker abstracts are being accepted online through July 15th.(866) 746-8385www.biomassconference.com/southeast

Houston: Epicenter of the Refi ning WorldMark your calendars and get ready, the No. 1 biorefi ning event in the world is coming. For three days, Sept. 14-16, the 2011 International Biorefi ning Conference &

Trade Show to be held in Houston will bring together hundreds of indus-try professionals to discuss all things advanced. Produced by Biorefi ning Magazine, the unprecedented event will offer a comprehensive look into advanced biomass refi ning including technology scale-up, project fi nance, policy, feedstock use and more. Geared towards industrial, petroleum and agribusiness ventures, the program will highlight advanced biofuels devel-opment and distribution, biobased platform chemicals, polymers and other renewable molecules.

The conference will be held at Hilton Americas. The educational ses-sions will appeal to those in fi nance (venture, private and institutional equity), petroleum and petrochemical refi ning, pulp and paper milling, biofuels and biobased products manufacturing and project development, agricultural processing and waste management, and will also be of interest to professionals from auto manufacturing, aviation, government/military, and research and academia.

Starting with industry tours of the region’s most innovative bioprojects and facilities, the conference will cover the biggest issues in the biorefi ning sector today. Included in the discussion will be petroleum industry perspec-tives on biorefi ning, converting existing industrial assets into next-gener-ation biorefi neries; forging symbiotic relationships; aviation and military perspectives on biobased jet fuel; and among others, the global market out-look for biobased fuels and chemicals. For those startups seeking a foothold in the global industry, the conference will also cover venture capital and private equity viewpoints and overcoming the barriers to market entry.

In 2011, there’s one place and one event that will usher in the next phase of the surging biorefi ning industry, and for three days in September, you could be there, at the 2011 International Biorefi ning Conference & Trade Show, along with the team from Biorefi ning Magazine, to listen and learn how the next generation of advanced biofuels and biobased chemicals is succeeding now.

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SKILLED FARMERS: Bernie Crowley with Delta American Fuels says soybeans will get planted despite a fl ooded Mississippi River.

FrontEnd Biodiesel News & Trends

The Early Indications of a Flooded MississippiLuckily, soybean farmers know what they’re doing

The fl ooded Mississippi River may be slowly receding, fi lter-ing back into its banks, but the damage has already been done. Pictures of soaked out homes and buildings, street signs poking through a wave of water or even distressed farmers looking across their fi elds covered by three feet of water clearly show the im-mediate effect of the culmination of heavy moisture that came at a bad time. As Bernie Crowley, vice president for Delta American Fuels, a biodiesel plant with a terminal on the Mississippi river, notes some of the photos out there sensationalize the damage, however, but some minimize it.

The USDA’s Under Secretary Dallas Tonsager has already toured everywhere from Missouri to Louisiana to assess the dam-age. Joining Tonsager on the tours was Michael Scuse, under sec-retary for Farm and Foreign Agricultural services at USDA. “Our hearts go out to all of those affected by the disasters,” Scuse said. “Our fi rst-hand assessments will allow us to identify the unique farm safety net and rural community development needs of the impacted region.

Although it might be too soon to assess the fl ood’s impact on biodiesel production, Crowley’s attitude towards the fl ood may be

an indication. As a soybean farmer himself, he says the good news is “farmers, especially around here,” have a good understand-ing of soybean planting requirements. If, he says, “you get seven sunny days, you can get the planting done.” And regardless of when the water fully recedes, the soybean fi elds will get planted—that, he says, will happen.

“It’s going to be an expensive fl ood for us but it could’ve been a lot lot worse,” he says, pointing out that a high number of cotton acres will be lost as most cotton growers in the area plant in the low lying areas near the river.

Through the Farm Service Agency at USDA, an emergency loan program is available to help “producers recover from produc-tion and physical losses due to natural disasters.” The loans are available as soon as any fl ooded counties are declared a Presiden-tial or Secretarial Disaster county, according to the USDA.

The water at Crowley’s pier is going down, but reports from the state of Arkansas indicate that more water needs to be re-leased into the river, essentially refl ooding the river. Eventually, he says, they will be back in business. —Luke Geiver

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Why Every State Needs an Alganomical ApproachKim Jones knows algae, and how to make a statewide impact

For all of the well-funded algae development fi rms rushing to commercialization, there are also companies led by the likes of Kim Jones. As the founder of Alganomics, Jones and her husband aren’t focused on global scale-up; they just want to make an im-pact in North Carolina through their work with algae. “There is a greater interest in algae right now than there ever has been,” Jones says. And she should know, after spending much of her academic career researching algae strains for uses that range from tumor treatments to environmental remediation.

Jones is an example of why one could argue that the algae growth curve is going nowhere but up. Although she teaches at a community college in the chemistry and biology departments, Jones felt that some of her ideas on algae were worth pursuing, so she started her algae venture. For the past two years, Alganom-ics has been located at the Oak Island Waste Water facility where Jones has plans to turn the area into a renewable energy park. The facility already reuses the recycled water from the plant to water several baseball and football fi elds nearby, but Jones is looking to add her originally designed algae photobioreactors to the site in some way. She is still in the research and development stage but her ongoing work with strain selection and culture growth can prove important to the overall growth of the industry.

Jones, with the help of her husband’s engineering skills, has designed a trailer-mounted technology that she plans to employ at a local lake. Using her equipment, the state plans to remove

unwanted algae from the water. “They could care less what we do with the algae,” she says. “They just need to get the algae out of the lake as well as the nutrients. They can kill the algae, but the nutrients will just go back into the lake and then the lake will just have another algae bloom.”

The technology is based on current processes already being used at wastewater facilities, she says, and all the algal strains Alganomics works with are wild and found in the area. “We are looking at how different strains work together,” she says, and so far she has found that when combining different strains into the same culture she can avoid major culture crashes.

In addition to algal biomass-to-power research, environmen-tal remediation work at a local lake and mass culture research, Jones is also looking to work at several of the hog farm lagoons in the state. “We would be using the hog lagoon waste and all those nutrients we are trying to keep out of our natural water to cultivate the algae.”

While Jones and her small team may not be ready to go com-mercial with any of their technologies yet, there is no doubt the role companies such as Alganomics play in the sector. How can the industry not grow if every state has its own version of the Jones’ catering to local needs through their innovative approaches with algae? “There isn’t a specifi c business model that we are looking at,” she says. “We are trying to be a bit opportunistic and looking at what the needs are.” —Luke Geiver

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The Council of the European Union adopted regulations to extend the anti-dumping and countervailing duties that cur-rently apply to imports of biodiesel originat-ing in the U.S. on May 5. Those duties now also apply to U.S.-produced biodiesel that is cosigned from Canada. The anti-dumping and countervailing duties have also been ex-tended to apply to imports of fuel contain-ing 20 percent or less biodiesel by weight that originates from the U.S.

Documentation sourced from the Eu-ropa website states that the European Com-mission received a request from the Euro-pean Biodiesel Board last June to investigate the possible circumvention of anti-dumping measures that had been established. The request alleged that U.S. biodiesel blended fuel containing 20 percent or less biodiesel was being exported to Europe via Canada

and Singapore. The request also alleged that a signifi cant change in pattern in trade involving biodiesel exports from the U.S., Canada and Singapore had taken place since the duties had been established and the re-medial effects of the existing anti-dumping measures were being undermined in terms of quality and price.

The investigation concluded that U.S. biodiesel did fl ow through Canada to Eu-rope, effectively circumventing the required duties. This was not found to be true in Singapore, and that portion of the investi-gation was terminated.

The EBB has spoken out in support of the new measures. “The anti-circumvention measures adopted by the council represent a decisive move to ensure that the remedial effect of the EU duties on U.S. biodiesel is fully maintained over time,” said EBB Sec-

retary General Raffaello Garofalo. “Opera-tors should be aware that any future attempt to circumvent the existing duties can be investigated and remedied in the same way, with retroactive fi nancial implications for the companies involved.”—Erin Voegele

Biofuels’ Impact on Gas, Diesel ExportsConsultant notes gasoline exports will rise while biodiesel meets higher diesel demand

Changing domestic demand for fuel means the U.S. refi ning industry is exporting more gasoline in order to keep capacity in operation that would otherwise be idle. At the same time, domes-tic demand for diesel is increasing. Increased blending of biofuels under the RFS2 is also having an impact on U.S. fuel markets. Lynn Westfall, executive vice president of petroleum-consulting company Turner, Mason & Company, unravels the current state of domestic refi ning industry for Biodiesel Magazine.

The U.S. refi ning industry ran at well below capacity last year, Westfall says. While some might think that increasing gasoline exports are taking fuel out of the U.S. marketplace and therefore increasing prices, Westfall stresses this is not the case. “We’re not taking way from the U.S. market to export,” he says. “We have plenty of capacity to make up for it. As a matter of fact, we haven’t even made up for the demand decline in the U.S. with exports. Demand since 2007 is down 3 percent, about 250,000 barrels a day, and we’ve only increased exports by about 200,000 barrels per day. We’ve got plenty of spare capacity and we haven’t even used that spare capacity yet to make up for the demand shortfall since 2007 due to the recession.”

According to Westfall, the U.S. refi ning industry is expected to export an increasing quantity of gasoline as ethanol further reduces demand for the fuel. In fact, if ethanol fulfi lls a signifi cant share of RFS2 requirements, Westfall says it could add nearly 2 million bar-rels of fuel per day to the U.S. gasoline market. That amount of fuel

is roughly equivalent to the output of 24 petroleum refi neries. However, the diesel markets will be an entirely different story.

“We’re exporting about 15 percent of demand for diesel already,” Westfall says. Although diesel-replacement fuels currently are expected to play a more minor role in the future of the RFS2 when compared to gasoline replacements, like ethanol, that could change. For example, biodiesel and renewable diesel fuels could continue to take on a greater share of the advanced fuel pool under the pro-gram. Even if this happens, Westfall said that the impact of biod-iesel on the U.S. refi ning industry will continue to be less signifi cant than the impact of the ethanol industry.

“Unlike gasoline, diesel fuel demand is growing,” Westfall says. “Over the course of the next 10 years, we would expect growth in diesel demand to take up the biodiesel, even if it gets up to 10 percent [of the diesel market]. That’s only a 1 percent growth per year, while [the market for diesel] typically has been going up about 2 percent per year. Domestic demand will take up biodiesel plus production from refi neries.”

There is another way biofuels could impact the U.S refi ning in-dustry in a signifi cant way. Several biorefi ning companies are work-ing to develop renewable crude oils that could serve as feedstock for traditional petroleum refi ning facilities, resulting in a wide variety of biobased drop-in fuels and chemicals. “Certainly that would be the best economic solution,” Westfall says, noting that a refi nery doesn’t care where crude comes from. —Erin Voegele

FRONTEND

EXPORT ISSUES: The European Commission has taken action against U.S. biodiesel that was imported to the EU via Canada.

EU anti-dumping, countervailing duties extendedU.S. biodiesel exported to Europe via Canada now covered by duties


Iowa is positioned to become the nation’s leader in biodiesel production and consumption. That’s because in May, the state’s Senate and House both voted to extend its biodiesel tax credit program, which was set to expire at the end of the year, to Jan. 1, 2018. The biodiesel tax incentives are one portion of a compre-hensive renewable energy bill (Senate File 531) worth an estimated $89.6 million aimed at creating a system that incentivizes local biofuel production and consumption in The Hawkeye State. Gov. Terry Branstad signed the bill just before press time.

Specifi cally pertinent to biodiesel, the new bill: extends the Iowa biodiesel retailer credit at 2 cents per gallon for blends of B2 and 4.5 cents per gallon for B5 in 2012, followed by 4.5 cents per gallon of B5 through 2017; makes it easier for petroleum market-ers to achieve the credit; adds a biodiesel producer incentive of 3 cents per gallon in 2012, 2.5 cents per gallon in 2013 and 2 cents

per gallon in 2014 (for fi rst 25 million gallons per producer) and provides $3 million a year to the Renewable Fuels Infrastructure Board to help companies offset the cost of installing infrastruc-ture components, such as fuel pumps.

For biodiesel producers, like Ag Processing Inc., which oper-ates a 30 MMgy facility in Sergeant Bluff, the proposed biodiesel tax credit system is a strong indication of how Iowa supports not only bolstering biodiesel production, but also promoting increased use of the biofuel by end-users within the state.

“It’s especially helpful that the provisions that benefi t con-sumers have been extended,” AGP Vice President John Campbell tells Biodiesel Magazine. “The main thing is to help consumers buy it. If consumers buy it, we’ll make it and this bill has both sides of it.”—Bryan Sims

Executive Decision States take initiative to incentivize their biodiesel industry where federal incentives fail to

Driving ChoiceOpen Fuel Standard Act aims to diversify fuel availability at the pump

Diesel prices show no signs of going down, but a new bipartisan bill introduced by Congressmen John Shimkus, R-Ill., Eliot Engel, D-N.Y., Roscoe Bartlett, R-Md., and Steve Israel, D-N.Y., aims to change that in three years by offering more fuels at the pump come 2014. Coined the Open Fuel Standard Act (HR 1687), the proposed legislation is focused on driving innovation, bringing a variety of fuels to the pump and encouraging investments in research to fi nd cheaper fuels to diesel.

Specifi cally, the OFS would require that 50 percent of new automobiles in 2014, 80 percent in 2016 and 95 percent in 2017, would be warranted to operate on nonpetro-leum-based fuels, in addition to or instead of petroleum-based fuels. Compliance possibili-ties include an array of existing alternative fuel vehicles—such as fl ex fuel, natural gas, hydrogen, biodiesel, plug-in electric drive and fuel cell—and a catch-all for new technolo-gies. The CEOs of the Big Three automo-bile manufacturers have repeatedly gone on record stating their willingness to commit to making 50 percent of new cars fl ex fuel vehicles or warranted to operate on biodiesel blends above B5 by 2012.

For retail owners like California-based Propel Fuels, the proposed legislation falls in line with the company’s mission of providing more alternative fuel choices at its pumps in the state, according to CEO Matt Horton.

“We’d love to see more vehicle manu-facturers come out with stronger support for blends of at least B20,” Horton tells Biodiesel Magazine. “We’re hopeful legislation like this, especially for diesels, will raise awareness of the issues around education of the public and OEM support for biodiesel.”

While the proposed legislation supports the diversifi cation of fuels that retailers can supply, it fails to mention at what cost, if any, would be going to the retailer to build out the infrastructure necessary to install the equipment required to make those fuels available at the pump.

“We’re advocating for an extension and an expansion of the existing infrastructure tax credit to make it easier for retailers to install this very expensive equipment,” Hor-ton says. “Addressing the vehicles is certainly an issue, but it doesn’t matter if we got a lot more vehicles on the road if we still don’t have the infrastructure to deliver the fuel.” —Bryan Sims

FRONTEND

PROPELLING BIOFUELS: Matt Horton, Propel CEO, says he’d love to see more OEMs support B20 in their auto warranty.

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FRONTEND

Push for Tax Credit RenewalJobe addresses importance of tax credit at International Biomass Conference

Taking a Closer LookHow advanced imaging technology will play an instrumental role in algae-to-biodiesel development

National Biodiesel Board CEO Joe Jobe was a featured speaker at the International Biomass Conference & Expo in St. Louis May 3. Jobe joined the leaders of six other trade associations active in the bioeconomy to discuss cooperation and federal policy during a plenary session, titled Association Executive Roundtable: Our Industry in a Changed Political Landscape.

During the session, Jobe stressed the importance of extending the biodiesel tax credit. “There are certainly folks that like to sort of chatter and speculate on policy, but it is our industry’s position that our No. 1 prior-ity is to get the extension of the biodiesel tax credit,” he says.

While the RFS2 is now a central part of the policy framework going forward, Jobe noted that the program and tax credit are designed to work together. “This is the fi rst full year of [RFS2] implementation,” he says. “Last year was a half year, the fi rst year tran-sition year from RFS1 to RFS2, and it wasn’t generating any demand. So, this is the fi rst year of the RFS2. That is critical…and this

is the fi rst year that we’ve ever had the tax credit and the RFS2 working in tandem—and guess what? It works.”

Jobe also notes that the biodiesel tax credit has been a very effective piece of energy policy. “It has led to investments in plants and plant science research,” he says. “It is driving a signifi cant amount of plant science research…We are investing in algae, the greening companies are investing in yield technology because of what’s going on in the sector. It works and we need to get it extended and it is going to help to [make] the RFS2 be more successful, buffer against waivers by the petroleum industry and other things. I would urge those who are publically speculating about the tax credit within our sector to not do that. We don’t really want to negotiate with ourselves, and it is very impor-tant that we put ourselves in the best position possible to get the credit extended. We’re not helping that position by suggesting that it’s not needed.”

Given the focus on debt reduction in Congress right now, Jobe admits it’s going to

be a challenge to get the tax credit renewed before the end of the year. He also stresses that he thinks the biodiesel industry has a good chance at success. “We’ve got a differ-ent set of circumstances in our industry,” he says. “Our tax credit is a quarter-century younger than the ethanol tax credit. We just need a little bit more time to get a little bit more mature.” —Erin Voegele

Fluid Imaging Technologies Inc. was founded in 1999 as a spinoff from Bigelow Laboratory for Ocean Sciences in West Booth-bay Harbor, Maine. So, when FIT forged a strategic partnership with algae-to-biofuel developer Bard Holding Inc. to use its FlowCAM imaging particle analyzers for algal cell detection and classifi cation at Bard’s commercial algae production plant in Morrisville, Pa., the venture was a natural progression.

Originally developed at Bigelow for studying plankton in ocean water, Fluid Imaging Technologies’ FlowCAM technology is de-signed to combine the benefi ts of a fl ow cytometer and a high-speed microscope in a single instrument, which will allow algae-to-biofuel developers like Bard to monitor nourishment levels and detect contaminants in algal cells more effi ciently than traditional meth-ods, according to Lew Brown, marketing director for Fluid Imaging Technologies.

“In algae-to-biofuels, the biggest advantage is that we can rapidly acquire lots of images of algal cells,” Brown explains. “When we acquire the image, we take up to 26 different measurements of those images looking at things like diameter, length, species and so forth.

What that gives you the ability to do is, in post processing, algorithmi-cally design fi lters where you tell the software to look for all the cells that look like a particular kind.” —Bryan Sims

TRADING UP: Bard Holding will use the FlowCAM from Fluid Imaging Technologies to speed up its algae developments.

POLICY GOALS: National Biodiesel Board CEO Joe Jobe speaks about the benefi ts of the biodiesel tax credit at International Biomass Conference & Expo held by BBI International.

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FRONTEND

Is the Next Best Process Already Here?Jatrodiesel was wrong about their Super process―and they’re happy about it

Moving InA biodiesel project sets up shop in Utah

Marginal Lands Offer 'Fruitful' Potential Jatropha farming on an Indian reservation? Mission NewEnergy says yes

Raj Mosali and his team at Jatrodiesel thought they had the lat-est, best biodiesel process available to date, but they were wrong—and that was a good thing. After tweaking their supercritical-esque process that also employs a heterogeneous solid metal catalyst, they improved the economic superiority of the process again. “This beats the traditional process by a long shot,” Mosali says. And, ac-cording to him, this newly trademarked “Super” process is nothing like traditional biodiesel manufacturing.

In most biodiesel production methods today, processing re-quires at least four to fi ve steps using a homogeneous catalyst. This process, however, “eliminates all of these multiple stages,” Mosali says. The Jatrodiesel process mixes the methanol with the oil, which can be at any free fatty acid (FFA) content—15, 20 or even 100 percent—he says. The mixture is fed through a super column along with the solid metal catalyst and the resulting product is an ASTM spec biodiesel.

The reason this process is better than a traditional approach, Mosali says, directly relates to the reuse (or lack thereof) of the catalysts. He says in a typical process, the liquid catalysts used cost up to 15 cents a gallon. Through pilot-scale work, Mosali and his team thought they had that number down to roughly 1.5 cents per

gallon using the Super process. But, after a few tweaks to the entire process, they found that using their system wouldn’t require the reuse of the catalysts, and that dropped the price per gallon down to under a half a cent per gallon. “So, now there is a huge differ-ence in cost savings,” he says.

Although part of the savings stems from some tweaks to the super column by changing the way the product trickles through and is packed in, the main reason for the greater improvement to the process is a simple preprocess they perform on the feedstock. Because the feedstock they were testing, which ranged from corn oil to yellow grease to pork fat, all had different impurity levels and water content values, the team decided to add a preprocess step to clean up the feedstock, and that, Mosali says, “makes a huge differ-ence in the longevity of the catalyst.”

The system operates at supercritical temperatures and pres-sures, and there are already at least three interested parties who have begun soliciting renderers or ethanol facilities for feedstock supplies. The process is scalable to any size, but for now Mosali and his team are focusing on the 3 MMgy range. Although the pilot testing is already complete, Mosali says the real proof will come after the Super process is put to commercial use. —Luke Geiver

Utah doesn’t house an operating commercial biodie-sel plant, but that will change by mid-year when Wasaque Renewable Energy LLC produces 10 million gallons of fuel-grade methyl esters annually from virgin oils such as saffl ower near the town of Plymouth.

Dallas Hanks, Utah State University Extension bio-energy agronomist and director for the USU Extension Center for Agronomic and Woody Biofuels who toured the plant in April, tells Biodiesel Magazine that WRE’s plant is a welcomed sign that a portion of the feedstock re-search conducted at the university will now be channeled towards in-state biodiesel production and consumption.

“Our activities [at USU] are more focused on the feedstock side so we’re really excited to have something here to refi ne those feedstocks into biodiesel,” Hanks says.

According to Hanks, the plant features state-of-the-art process technology that was designed in-house by WRE, including a distillation tower that enables the company to produce biojet fuel in addition to biodiesel. Previously, WRE held trial production runs in its pilot fa-cility in Plymouth before scaling up to its 10 MMgy plant, Hanks says. “We’re lucky to have a plant here in Utah,” he says. —Bryan Sims

There are more than 300 Indian reservations in the continental U.S. and for a company that has just fi led an IPO based on its ability to produce biofuels from jatropha, that number is pretty signifi cant. Mission NewEnergy has been one of the leaders pushing for the use of jatropha as a biodiesel feedstock, and if its perceptions regarding the potential of marginal land use in the U.S. are true, then the company should expect a nice payout. James Garton, president of Mission NewEnergy, believes there are outstanding biodiesel opportunities in the U.S. right now based on “the rapidly increas-ing RIN value representing the dramatic short supply of U.S. feedstock and operating refi ning capacity.”

For Garton, those factors aren’t the only reasons biodiesel looks good right now. “Growing on Indian reservations,” he says of the jatropha used for its biofuels process, “has the potential of utilizing otherwise unusable re-sources and providing a great number of jobs.” Here’s a new twist: “Mission has been invited to meet with a number of signifi cant Indian tribes,” Garton says. Now, he hopes for “fruitful” discussions and the ongoing evaluation of this opportunity.

It’s hard to say which situations and geographic locations would be best suited for jatropha farming, or more importantly, which tribal political loca-tions would cater well to such a project. But if jobs, biofuels and marginal land use are all involved, then the project should be welcomed with open arms. —Luke Geiver


Impacting the future direction of the biodiesel industry is an important goal for the National Biodiesel Board. The direction of the industry is best driven by one collective voice. Cultivating that voice takes time and members, not just dues and membership, but true member engagement and interaction. This is why the NBB has made it a priority to increase engagement among members.

Why is an engaged member so important? To achieve the goals of the NBB, we need the input of all our

members. Because we’re a member organization, we ask that our members contribute their time, talent and treasure for the better-ment of the biodiesel industry. True member engagement supports the entire industry and helps members see the value of their invest-ment.

What steps have been taken to increase member engagement?

Over the past two years, NBB has taken a new approach to member interaction with more personal and face-to-face contact. We’ve also streamlined both verbal and written communication with our members. By traveling to meet with groups of our mem-bers face-to-face at our Member Briefing & Industry Updates, we’ve gotten an “on-the-ground” look at things from their per-spective. Sitting in person with a member ensures clearer commu-nication and proves very beneficial as we strive to engage all of our members.

What steps are planned in the near future to increase member engagement?

NBB will continue efforts to achieve more face time with our membership. But, we also know that it is not feasible to meet with every member in person, so those who aren’t available to attend regional and national meetings will be invited to attend program specific webinars. This will ensure that we are capturing the views of all our members so that the organization’s voice is true to the issues facing the industry.

What is the feedback from members?

Members are, now more than ever, seeing the value of their membership in NBB. For a long time, some segments of the industry thought they were “required” to be a part of this organization. I have seen that perception changing as members become more engaged and learn the value of the core programs and what NBB does for them. Now, membership stems from a desire to be part of the collective voice, rather than something they may have felt required to do. This is a positive step for our organization.

What aspects of membership development have you most enjoyed?

Overall, the goal of membership development is to inform our members how NBB is investing their dollars for the betterment of the biodiesel industry. When I see a member’s eyes light up as they hear about one of our accomplishments, it is rewarding. Whether it’s getting biodiesel defined in a state’s statute or RFS2 Regional Training, there’s no better feeling than sharing our industry’s suc-cesses with our membership.

What is the main focus of member engagement?

I think that overall, this initiative will be successful if we hold onto the idea that NBB should be one, collective voice working towards the best interests of the biodiesel industry. That one voice is the NBB, and we want to do everything we can to engage the biodiesel industry so that we can represent our members to the best of our abilities. We are only able to achieve our goals as an industry if we all work together.

Doug Whitehead, Director of Operations, National Biodiesel Board

Membership Development Works to Unify Industry

Doug Whitehead, operations director, NBB


In May, the National Biodiesel Board began production for the advertising portion of the Advanced Biofuel Initiative. The initiative will use one-on-one outreach and NBB’s first-ever national televi-sion ad among other avenues to help secure biodiesel’s role as an advanced biofuel.

The 30-second television commercial will be presented as a tes-timonial showcasing biodiesel at work in real settings. After much testing and research, this format proved to be the most effective among the target audience. The simple, direct message will help re-iterate that biodiesel is here now, working to support our economy and energy independence. There are many great cities that use biod-iesel, but Dallas was selected for its universal appeal as a “typical” American city free of regional or other stigmas.

The commercial will air during Sunday morning news shows and will begin with local cable advertising targeted at the Mid-Atlan-tic region. The National cable ad buy is scheduled for the fall with additional regional ad buys and a print and online media outreach portion of the campaign to reinforce both the images and the mes-sages in the television commercial.

The advertising effort is just part of the overall Advanced Bio-fuel Initiative. The program also includes opportunities for direct

insideNBB

NBB initiative showcases biodiesel in fi rst-ever national campaign

The Advanced Biofuel Initiative includes a 30-second commercial to secure biodiesel's role as an advanced biofuel.

The Mid-Atlantic region, including Washington, D.C., is the targeted region for the television commercial.

The new commercial showcases biodiesel use in real-world settings.

outreach to likely detractors such as environmental organizations, all designed to establish biodiesel as an advanced biofuel.

Campaign information including the TV commercial and print advertising pieces can be found at www.biodiesel.org.


The million dollar question in biodiesel right now is how much fuel the industry will produce this year. In May, at a congressional hearing on biofuels, a top U.S. EPA official left little doubt what the answer is.

Responding to questions about delays in commercial produc-tion of other advanced biofuels, Margo Oge, director of EPA’s Of-fice of Transportation and Air Quality, said the agency is standing firm behind its overall advanced biofuel carve-out in the RFS2 pro-gram because it believes biodiesel will not only meet its 800 million gallon mandate, but there is enough production capacity to fill in shortcomings elsewhere. “We believe the capacity is there to make up the difference,” she told lawmakers.

Director Oge’s comment is the latest in a series of statements from EPA officials that should put to rest any question about where biodiesel stands and whether its RFS2 mandate is real.

Why is this important? Oge and her office are the referees—her team manages the RFS2 program. In fact, they have been man-aging congressionally imposed fuel programs for nearly 20 years, and they know how to run them. They understand the petroleum sector, and they understand advanced biofuels like biodiesel. They analyze the reports and know which companies produce every gal-lon of biofuel.

Team EPA has done the math and concluded that biodiesel can reach the EPA’s goals.

For biodiesel, that means producing not only 800 million gal-lons of biomass-based diesel under the RFS2 program, but also potentially an additional 100 million gallons to help meet general, undifferentiated advanced biofuels targets. In fact, biodiesel is the only fuel being used on a commercial scale in the U.S. today that meets EPA’s advanced biofuels criteria. Others such as renewable diesel and sugarcane ethanol are not likely to be used in significant volumes in 2011 and 2012.

Despite this, some have continued to question whether this production will really happen, whether EPA’s targets will really be met. The answer is yes. Here is why.

The RFS2 program can’t be avoided. EPA established a set of rules that provide flexibility under which petroleum companies can comply, but they must comply. If petroleum companies don’t comply, EPA is allowed to use an elaborate set of compliance rules that could result in multimillion dollar fines and jail time for non-compliance.

While options for avoidance in any given year exist for indi-vidual companies, together with possible continued exemptions and waivers, they are tightly controlled and can be used only under clearly defined circumstances.

Regarding waivers, EPA is required to periodically evaluate the impact of the RFS2 requirements on the price of diesel fuel. But the statute specifically states that EPA can reduce volume require-ments only in cases of significant renewable feedstock disruptions

or other market factors that create significant price increases. In such cases, EPA can reduce the mandate by a maximum of 15 per-cent. If after 60 days the cause of the price increase continues, the requirement may be reduced again by an appropriate amount not to exceed an additional 15 percent (800 MMgy x 15 percent = 120 MMgy).

Separately, interested parties can apply for general waivers, but EPA has made it clear that waivers will be granted only in strict circumstances. Only one partial waiver has been requested in the history of the program, by the state of Texas, and it was denied.

Regarding options for individual companies, there are two tools that give individual companies flexibility. First, if a company generated excess RINs that were not used in 2010, it can roll over no more than 20 percent of its 2011 volume requirement to 2011. In other words, if an obligated party acquired 500 excess RINs in 2010 and its 2011 RVO is 1,000 RINs, then only 200 RINs from 2010 could be used in 2011 (20 percent of 1,000 = 200). In track-ing biodiesel production volumes from 2010, we are confident that very few, if any, excess RINs were generated in 2010.

Second, the regulations allow companies that are unable to generate or purchase sufficient RINs to meet the annual volume requirements to carry forward a renewable fuel deficit into the next year; we call this a deficit carryover. If any deficit is carried over, however, the obligated party must acquire enough RINs to meet the next year’s requirement and satisfy the deficit. An obligated party may not carry a deficit in two consecutive years. For example, if Company A is required to acquire 1,000 biodiesel RINs in 2011 but does not do so and 1,200 biodiesel RINs in 2012, then in 2012 the company is required to purchase 2,200 RINs in order to meet the 2012 compliance requirements. Further, Company A cannot roll any of the 2,200 RINs into 2013.

Finally, the last piece of the puzzle addresses small refiner-ies. Small refineries were exempted from the program until Jan. 1. In 2009, a Senate Appropriations Committee directed U.S. DOE to study and determine whether small refineries faced a dispro-portionate economic hardship in meeting renewable fuel standard (RFS) requirements beginning this year. The study has been com-pleted and is under review by EPA. If small refineries continue to be exempted from the program, then there may be some very minor adjustments to the overall volume requirements.

In conclusion, there is no doubt this program is complicated, but compliance is a must, and the thresholds for waiving the pro-gram are extremely high. Already, we are mid-year, volumes have increased dramatically, the program has not been waived, and we are in the middle of high biodiesel blend season. As an industry, our goal is to work with our customers, the obligated parties, to en-sure both producers and obligated parties meet the volume require-ments of the program. Whether we produce 800 or 900 million gallons this year, let’s start planning for 1 billion gallons in 2012.

insideNBB

Why the 800-million-gallon RFS2 mandate really means 800 million gallons


insideNBB

The price of food continues to be closely linked to petro-leum prices, commodity markets and other world economics. This volatility in food prices has led to the resurfacing of the food vs. fuel debate in recent months. The National Biodiesel Board Sustainability Awareness program allows NBB to refute misinformation about biodiesel’s role in the food and fuel de-bate with scientific facts.

Recent efforts by NBB to counter food and fuel misinfor-mation include webinars with experts, information releases, fact sheets, media outreach and much more.

The 2011 NBB Conference hosted a presentation on food, fuel and land use with Stephen Kaffka of the University of Cali-fornia at Davis and Keith Kline of Oak Ridge National Labora-tory. This discussion on their research supporting sustainable biofuels was so well presented and received that a webinar was conducted in May to discuss the issues in more detail.

“While the challenge remains for the biodiesel industry to convey the complicated truth in simple sound bites, the webinar provided an opportunity to dive into the true scientific interac-tions between renewable fuels, food prices and land use,” said Don Scott, NBB director of sustainability.

Another important branch of the Sustainability Awareness program at NBB is reaching out to members of the media who cover biofuels. Often stories written on biofuels, land use and food issues tend to perpetuate common myths. To combat those myths the team developed a background page to distribute to reporters when articles surface on the subject. This resource is designed to provide information, open a dialogue with the re-porter, and offer NBB as a source for future articles.

“It takes more than simply sound science to counter myths,” Scott added. “You have to be proactive in getting that science out into the public.”

Sustainability Awareness program counters misinformation with science


A new study by the Michigan State University branch of the Great Lakes Bioenergy Research Center, led by the University of Wisconsin-Madison, shows that, in recent years, U.S. biofuel production has resulted in no indirect land use changes. Critics of biofuels have long claimed that increased demand for biofuel feedstocks such as corn and soybeans has led to land use changes around that world, which ultimately result in greater green-house gas emissions. But the Michigan State study found that, based on the most recent data available, from 2002 to 2007, biofuel production “is not significantly correlated with changes in croplands for corn (coarse grain) plus soybean in regions of the world which are trading partners of the United States.” Joshua Morby, executive director of the Wisconsin Bio Industry Alliance, says, “This study is yet another nail in the coffin for the tired argument that biofuel production is causing harmful indirect land use changes around the world. The fact is that biofuels are significantly more environmentally friendly than traditional fossil fuels, and have a large role to play in reducing fuel costs, growing our economy, and increasing our energy independence.”

The United Parcel Service began us-ing biodiesel blends at its most vital hub in Louisville, Ky., in May. UPS recently in-stalled a biodiesel fuel tank and fueling sta-tion at its Worldport facility. It will allow fueling operators to blend specified per-centages of biodiesel "on the fly," starting

with 5 percent biodiesel, B5, and working up to B20. As the single most important point in all of UPS's global operation, Worldport processes 416,000 packages an hour, is the size of 80 football fields, and turns 100 aircraft a day. The 30,000-gallon biodiesel tank and station at Worldport fuel nearly 200 vehicles and diesel-fueled equipment, most of which help load pack-ages on and off the planes. The National Biodiesel Board called the switch “monu-mental.”

For biodiesel producers using corn oil feedstock, take note: Ashland Inc. says ethanol producers can now capture up to three times more corn oil during process-ing and extract a higher quality oil with a new product introduced by subsidiary Ash-land Hercules Water Technologies. The new corn oil extraction aid, PTV M-5309, is easily introduced into the process and requires no additional capital expenditure. The corn oil extraction aid significantly in-creases corn oil yield by improving the re-lease of oil during mechanical extraction. Added to the process after distillation, the extraction aid also reduces solids in the oil, resulting in a cleaner, higher-quality oil. Results also include a reduction in sys-tem deposits, allowing for less downtime related to cleaning and maintenance. The product has received the generally recog-nized as safe (GRAS) and Kosher certifica-tions. Additionally, Ashland has a pending patent application for use of Ashland PTV M-5309 in corn oil extraction.

Neuron BPh and Repsol have for-malized an agreement for the develop-ment of bioprocesses focused on the pro-duction of biofuels. The Neuron biotech company from Granada is going to carry out research in collaboration with Repsol on second-generation biofuels via its Bio-

Industrial division. The research will be on fuels produced from agricultural waste and wood pulp. Repsol, developing projects in the biofuels sector for more than 10 years, is collaborating with Neuron BioIndustrial because of its experience and knowledge in the field, which will allow Neuron to make significant progress in a short period of time, particularly in the industrial appli-cation of bioenergy and biopolymers.

The founders of BDI-BioEnergy In-ternational AG, Wilhelm Hammer, CEO, and Helmut Gössler, chief technology of-ficer, will be leaving the management board for personal reasons when their contracts end June 30. Hammer and Gössler are taking this step after making appropriate preparations for their successors and in full agreement with the supervisory board. They will both continue to be associated with the company as sharehold-ers and consultants. Effective July 1, the super-visory board of BDI has appointed Markus Dielacher and Edgar Ahn to be new mem-bers of the management board. Both have been with the company for years and have in-depth sales and technical experience. Ham-mer says, “Since BDI was established 15 years ago, my partner Helmut Gössler and I have worked with our colleagues to develop the company from small beginnings to the world market leader for multifeedstock biodiesel plants. In spite of the severe financial and economic crisis in recent years, BDI is well equipped for the future today.”

BusinessBriefs Companies, Organizations & People in the News

NEW MANAGEMENT: Dagmar Heiden-Gasteiner (center) will remain CFO while Dielacher and Ahn join BDI's management board.


The law firm of Mi-chael Best & Friedrich LLP announced Mary Ann Christopher has joined the firm as a partner in its Mil-waukee office. Christopher will join the firm’s energy and sustainability industry team as well as the trans-actional practice group where she will focus on project finance, complex business transactions and mergers and acquisitions. Christopher has success-fully represented clients in complex com-mercial business transactions, mergers and acquisitions, and project finance, primarily in the development, acquisition, sale, fi-nance, operation and leasing of major in-frastructure and industrial projects, equip-ment assets, and related facilities; with a particular emphasis on the renewable and clean energy sectors such as wind, bio-mass, biofuels, hydrothermal and nuclear. Christopher received her law degree from Northwestern University School of Law and her undergraduate from Carleton Col-lege in Minnesota.

Wika Instrument Corp. is offering its 213.40 bourdon tube pressure gauge in-tended for adverse ser-vice conditions where pulsation or vibration exists. It is suitable, the company says, for gaseous or liquid media that will not ob-struct the pressure system. With pressure ranges up to 15,000 psi and glyc-erin and silicone filled options, the 213.40 is ideal hydraulics and compressions, particu-larly in mining operations. Also, the Wika XSEL 2XX.34 process gauge series is de-

signed for severe service applications found in refining, chemical and petro-chemical plants. The XSEL is used to measure line and pumping pressures in biodiesel reaction, wash, settling and mixing methanol catalyst. Utilizing a stress reducing Bourdon tube design, movement with hardened components and bearing technology, the XSEL pro-cess gauge pressure system is capable of producing 10 million or more pres-sure cycles. Wika says due to its greater resistance to vibration and pulsation, the XSEL reduces downtime from re-placing regularly worn-out instruments

and improves safety risks from the release of process media. With positive pressure ranges up to 30,000 psi, a five-year war-ranty on the gauge and a 10-year warranty on the pressure system, the company says it exceeds industry standards.

After raising $2.5 million in working capital, EQM Technology & Energy was able to restart the 12 MMgy plant in Cle-burne, Texas, recently. The startup went smoothly, according to Jack Greber, CEO of EQM, who adds, “Production and sales have met our forecasts, and customer in-terest and demand have been strong.” The

restart of the plant would not have been possible without the company’s issuing

of $2.5 million worth of convertible notes. The convertible notes allow the purchasers two different op-tions. They can wait the three-year

time period the notes have been is-sued for and receive the payment back

with an interest rate of 10 percent per an-num. Or the purchaser can instead convert the notes into common stock in EQM at 40 cents per share before the three-year time period. After one year, however, if EQM’s common stock has traded at an average price per share above two times the conver-sion price for 60 consecutive days, accord-

ing to EQM, the company can “call,” or forcibly convert, the notes.

Renewable fuel retailer Propel Inc. announced the opening of a new fueling location in Redwood City, Calif. The sta-tion, co-located with a Valero station on Whipple Avenue, supplies both biodiesel and E85. The new location is the 24th Clean Fuel Point station that Propel has opened to date. More than 75 sites are planned for development across California over the next year. According to the company, those sites will all feature biodiesel in addition to E85. “Even when diesel prices get extremely high and biodiesel is significantly less than regu-lar diesel, we still see a lot of customers with diesel vehicles that will still drive right past the biodiesel pump and go to a diesel pump,” says Matt Horton, Propel CEO. “Usually it’s because they don’t know that they can use biodiesel in their diesel vehicle.”

A three-way partnership between Angel Labs LLC, Industrial Green Power Inc. and Titan Biodiesel was forged whereby Angel Labs will deliver to market its ultra-efficient, six-inch “Massive Yet Tiny” engine to power a 40 kilowatt genset distributed by Industrial Green Power Inc., powered by biodiesel fuel supplied by Titan Biodiesel. Invented by Raphial Morgado, co-founder and managing member of Angel Labs, the MYT-6 possesses an incredible power-to-weight ratio, low parts count, low mainte-nance, high mechanical efficiency and low pollution. The MYT-6 engine can be applied to benefit virtually any engine application, from ships to small generators.

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

BUSINESSBRIEFS

Sponsored by

NEW PARTNER: Mary Ann Christopher joins Michael Best & Friedrich as a member of the fi rm's energy and sustainability team.


MARINE

BIODIESEL ON BOARD: Family-owned Red and White Fleet has been using B20 in its passenger vessels without incident since 2006.

PHOTO: RED AND WHITE FLEET


Biodiesel

A high percentage of biodiesel is used by consumers on land, and marine operators are trying to match that same level of usage by seaBY BRYAN SIMS

MARINE

Encountering red tape isn’t new for alterna-tive fuels such as biodiesel on their journey to acceptance as viable, on-road fuel. The same could be said for its off-road applications, specifically in maritime use. Per-haps no one understands the trials and tribulations of biodiesel bet-ter than Randall von Wedel who, in the early 1990s, was instrumental in helping biodiesel become accepted by boaters in the San Francisco Bay area.

Recognizing biodiesel’s inherently higher-quality air and wa-ter characteristics, von Wedel, a principal scientist at CytoCulture International and avid boating enthusiast, recalls a pivotal point in California where he saw an opening for marine operators to—by increasing their use of biodiesel—enhance performance in marine engines and reduce their carbon footprint. In 1993, the California Air Resource Board mandated that all high-sulfur No. 2 off-road diesel fuel be switched to what was called low-sulfur, low-aromatic, which inevitably forced oil companies to lower levels of aromatic compounds, such as benzene, in the fuel, von Wedel says. The switch also inevitably caused the gaskets and seals (or elastomers) in boat engines to shrink, he says, because they were designed to swell in the presence of those aromatic compounds found in high-sulfur diesel fuel. Shortly after CARB imposed the switchover, von Wedel and his colleagues published empirical data supporting the fact that biodie-sel not only restored lubricity in marine engines, but, because of its solvent properties, allowed the membranes to swell up again. Von Wedel was vindicated.

Sets Sail


“That launched biodiesel in California because there was so much publicity associ-ated with using biodiesel in marine engines then,” von Wedel tells Biodiesel Magazine. “We were in the right place, at the right time and with the right fuel. I didn’t design it—it just happened.”

Since that time, von Wedel’s pioneering efforts with biodiesel in the Bay area reso-nated to other fleet operators and boat own-ers, such as the Red and White Fleet, which was interested in using biodiesel. As it turned out, Red and White became the first com-mercial adopter of biodiesel in ferry vessels in the Bay area. Since 2006, family-owned Red and White company has been using a B20 blend in its passenger vessels with no issues directly related to engine operability, according to Joe Burgard, director of opera-tions for Red and White.

“We did have some bacteria growth early on, but we didn’t attribute it directly to the biodiesel,” Burgard says. “I think early on there was a lot of inconsistency on the quality standards of biodiesel, but since we adopted it there have been no issues.”

Not only did ferry fleet operators in the Bay area express immense interest using biodiesel, but it also proliferated northward into Washington. In 2004, the Washington State Department of Transportation’s Ferry Division conducted a pilot biodiesel fuel test over a four-month period using a B20

blend of soy biodiesel in three of its vessels. Although the operational issues were chal-lenging, according to Paul Brodeur, direc-tor of vessel maintenance, preservation and engineering for the ferries division, the test was successful in that it helped him gather important information that would inspire a 12-month biodiesel pilot study in 2008 using blends of B5, B10 and B20 with ULSD in

three of its vessels—the Issaquah, the Klahoya and the Tillikum. Currently, Brodeur says 15 of the 20 vessels run on a B5 blend, amount-ing to about 17 million gallons of biodiesel consumed annually.

“When that pilot test concluded in 2009, we went to the state legislature for some funding for ongoing biodiesel use,” Brodeur says. “We were later funded at a 5 percent

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PIONEERING USE: Users in the San Francisco Bay area have been instrumental in getting biodiesel into maritime applications.

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level for the incremental cost of the biodie-sel, and that was based on availability.”

Today, many marine operators across the country are either exploring the use of or are using biodiesel in their marine en-gines. For example, the Virginia Port Au-thority expanded its voluntary program in January of using B5 with ULSD in its die-sel-powered machines owned by the VPA’s

operating company, Virginia International Terminals Inc. Also, the U.S. Navy, the larg-est consumer of diesel fuel in the country, is studying the long-term feasibility of inte-grating biodiesel and other renewable forms of biofuel in its fleet of ships to reduce its carbon footprint, NOx and SOx emissions and achieve a sustainable goal of buying do-mestic product.

Things to Keep in MindSeveral studies have been conducted

to find which biodiesel blends interact best with marine engines. Marine engines are equipped to perform efficiently without incident on B5, but issues can occur when blends exceed that amount if the proper precautionary measures aren’t met. Two of the prominent issues that arise when ship owners consider using blends above 5 per-cent include incompatibility with fuel filters, gelling and potential microbial growth in older fuel tanks. Of course, operational de-ficiencies related to biodiesel greatly depend on the size and duty-cycle of any given ship, Brodeur says.

“We’re only burning B5 so the blend ratio is pretty low, so we wouldn’t expect to have any issues,” Brodeur says. “When we did our pilot testing, we started having fil-ter issues and some gelling issues occurred when we ran on B20, especially in colder weather.”

Brodeur recalls suspending the use of biodiesel when his B100 product stored in stainless steel totes began to gel when it was subject to temperatures of 20 degrees Fahr-enheit. That was when his team manually blended their product, compared to now where they employ in-line blending systems at their fueling sites. Brodeur advises keep-ing a close watch on fuel clogging that can occur when B20 is used.

MARINE

SIGHTSEEING: Marine applications are especially tough for biodiesel because of the moisture, turbidity and other factors that can cause fuel issues and microbial growth.

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MARINE

“Operationally, the biggest thing we ex-perienced [with B20] was some premature filter clogging, so you have to stay on top of cleaning out your fuel transfer filters and your fuel purifier,” Brodeur says. “Issues like these happen at a much slower rate with B5 or B10.”

Another aspect to be mindful of, ac-cording to Brodeur, is to actively partici-pate in proper fuel management practices by using additives or biocides to ensure fuel tanks are clean to reduce the fuel-water in-terface that can often create an environment suitable for microbial growth, commonly known as “diesel bugs.”

“If we get an active population of mi-crobial growth, then we’ll do a higher dos-age to kill them, whether it is diesel fuel or a blended product, then we find ourselves in good shape,” Brodeur says. “It’s not more or less indicative of whether you have a blended product or not. It’s a marine envi-ronment where you have variables that can

cause microbial growth other than biodiesel, like the tanks that are integral with the hull, varying temperatures, tanks sweat, conden-sation and so forth.”

Stricter Emission Standards Ahead

With more oceangoing vessels in use, and stricter fuel and air emission regula-tions in both domestic and international waters expected to go into effect in the next few years, biodiesel will play a progressively greater role. This was evidenced when, in October 2008, the member states of the International Maritime Organization agreed to amend the International Convention for the Prevention of Pollution From Ships (MARPOL) Annex VI, adopting new tiers of NOx and fuel sulfur controls. The most stringent of these new emission standards apply to ships operating in designated Emis-sion Control Areas, including the newly-des-ignated North American ECA.

The revised MARPOL states that as of 2015, ship operators that trade in emis-sion control areas will be required to burn fuel with less than 0.1 percent sulfur (1,000 ppm), which will help reduce SOx and par-ticulate matter by more than 85 percent from today’s levels, according to the U.S. EPA. The fuel sulfur limit allowable under MARPOL today is 10,000 ppm.

Kevin Reynolds, senior marine engi-neer for The Glosten Associates Inc., an engineering and consulting firm based in Seattle, authored a report on exhaust gas cleaning systems used in ships for The Ship Operators Cooperative Program, which was released in February in light of the new MARPOL regulations that are set to go into effect. Reynolds says the study was designed to guide ship operators when faced with the dilemma of switching to expensive distillate fuel in ECA or install EGS and continue to burn high-sulfur, heavy fuels. He adds that the use of biod-iesel in conjunction with ULSD is a solid option for ship operators looking for ways to comply with impending sulfur emissions as prescribed by the amended MARPOL requirement.

“Biodiesel in our view is certainly a low-sulfur option,” Reynolds says. “The challenge for these large oceangoing ships is that it’s going to be very expensive rela-tive to residual fuel.”

Reynolds continues, “One of the big-gest challenges in switching over to biod-iesel is that it essentially scrubs the fossil fuel residue off your storage tanks and it tends to plug your filters, hence making the switchover process fairly painful. There’s still some interest in using biodiesel by ship owners, but there needs to be continued pilot projects to get past compatibility is-sues, along with increased supply, as con-tinually switching between biodiesel and fossil-based fuels could create unwanted incompatibility issues.”

As for NOX, the amended MARPOL requirements will mandate that all marine Tier III engines will have to install some form of aftertreatment technology by 2016. Von Wedel admits there while there may be a slight increase in NOx when us-


blends up to B20 in double-walled tanks and piping that currently meet requirements for petroleum-based fuels.

“You have to provide a letter from all of the tank component manufacturers showing biodiesel compatibility for getting above B5 underground,” Bullard says. “Then you can apply for, and hopefully your local authority will grant you, a variance, which could take about a year and a half until you receive ap-proval.”

In Washington, Brodeur faces the chal-lenge of trying to get consistent access of biodiesel. Currently, the Washington ferries that traverse the Puget Sound region under Brodeur’s watch are all fueled from three different locations. One, he says, is a fuel terminal that delivers blended fuel by boat (also called wet fueling) and the other is equipped with in-line blending capabilities. The third is in the process of having in-line blending equipment installed at the fuel pier in Seattle.

While Brodeur admits that biodiesel is considered a boutique fuel in many port hubs across the country with limited to no state or provincial backing to support the build-out of an infrastructure for more widespread availability, he doesn’t have any regrets for taking a chance on using biodie-sel during its pilot studies.

“As long as we continue to receive the necessary funding to support the program, I’m committed to moving the fleet forward with higher biodiesel blends, up to B20, be-cause that’s what we tested and that’s what we know will work,” Brodeur says. “Beyond that, I think we would need to go into more of a pilot project if we were considering blends higher than B20. Certainly, B20 is doable and if we’re funded to that level, I’m committed to make that happen.”

Author: Bryan SimsAssociate Editor, Biodiesel Magazine


MARINE

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ing biodiesel, it would be eliminated with the utilization of both biodiesel and af-tertreatment technology to comply with MARPOL NOx requirements.

“Biodiesel has good potential to assist in the role, but it’s going to have to be in conjunction with proper additives or with aftertreatment, which will be very chal-lenging for boats,” von Wedel says. “Boats aren’t set up for that and there’s no market right now to build equipment to retrofit a boat or ferry to accommodate those strin-gent standards. But, in principle, it could be done.”

If You Build It, They Will DeliverAs biodiesel usage increases by ships

near ports and harbors, one might ask: is there an infrastructure at ports to support installation of fuel terminals to meet that demand? The answer is no, especially in the Bay area, according to Kent Bullard, a BQ-9000 consultant and biodiesel quality assurance consultant for Little Rock, Ark.-based biodiesel consulting firm Lee Enter-prises Inc.

“There really isn’t any access, at least here in Southern California, to biodiesel unless if you’re having a fuel company come and service your boat by wet fueling then you can get access to fuel if you order it,” Bullard says. “If we could have biodie-sel back at Ventura Harbor at the fuel dock, it would start moving again, especially now that biodiesel is becoming price competi-tive with diesel now.”

Bullard cites California’s ongoing un-derground storage issue as one of the main culprits holding down the build-out of an infrastructure at ports for greater access to biodiesel in the state. In 2009, Califor-nia’s Water Resources Board expanded its approval for storing biodiesel blends in underground tanks from the existing B5 limitation to up to B20. A 25-year-old California law requires the storage of any chemical in underground tanks to be tested and independently certified as being compatible with the tank materials, Bullard explains. With only B5 blends having been tested, the water board approved a three-year emergency variance to allow higher


LOCOMOTIVE

GREENING THE RAIL: Amtrak recently wrapped up a one-year trial of B20 in its Heartland Flyer. PHOTO: AMTRAK


Steaming Ahead to a Better FuelRailroad companies investigate benefi ts of using biodiesel-blended fuelsBY ERIN VOEGELE

LOCOMOTIVE

The railroad is already considered one of the most environmentally sustainable and efficient ways to transport freight. Although most railways address fuel efficiency in terms of gallons-per-mile rather than miles-per-gallon, the sheer volume of cargo that can be moved by a single train results in a highly efficient operation.

The U.S. Surface Transportation Board defines three primary categories of railroads in the U.S.: Class I, Class II, and Class III. Short-line railroads, those with annual operating revenue of less than $20 million, are primarily classified Class III. Regional rail-roads, those with annual operating revenue between $20.5 million and $277.7 million, are generally classified as Class II. The largest railroads in the U.S., defined by the STB as having annual carrier operating revenues of $250 million or more—are classified Class I. Currently, seven rail lines in the U.S. are recognized as Class I, including Burlington Northern Santa Fe, CXS Transportation, Canadian National/Grand Trunk, Kansas City Southern, Nor-folk Southern, Soo Line and Union Pacific.

According to the Association of American Railroads, Class I railroads alone operated more than 94,000 miles of track in 2009, with 24,047 locomotive engines in service. During the same year Class I railroad operationed 1.53 trillion ton-miles. A ton-mile equates to 1 ton of freight moved one mile. Furthermore, the AAR estimates that the average Class I train transported 3,546 tons of cargo 919 miles per trip.

Most locomotive engines in the U.S. are powered by diesel, and the fuel they use to transport freight is not insignificant. Data published by the STB illustrates that the seven Class I railroads consumed nearly 964 million gallons of fuel during the first quar-


LOCOMOTIVE

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FUELING THE FUTURE: Amtrak fuels the Heartland Flyer with biodiesel-blended fuel while photographers capture the fi ll-up.

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ter of 2011, which is a slight increase over the more than 900 million gallons of fuel the same railroads consumed during the first quarter of 2010. The U.S. Energy Information Adminis-tration estimates that more than 2 billion gal-lons of distillate fuel oil were used by the rail-road in 2009, representing a fraction of the 34 billion gallon on-highway market. However it is important to note that even a 2 billion gal-lon market represents the opportunity to blend 100 million gallons of biodiesel into a B5 blend, or 400 million gallons of biodiesel into a B20 blend of fuel.

Some railroads are beginning to recognize the benefits associated with employing a renew-able fuel in their operations. In fact, Amtrak and BNSF Railway Co. are each participating in long-term B20 trials. While there are obvious benefits of using renewable fuel in terms of energy security and reduced carbon emissions, those who wish to fuel locomotive engines with biodiesel face a different set of challenges than those using the fuel in on-road operations.

“The railroad industry is a bit different than trucking in that we use our locomotives for a very, very long time,” says Marc Magliari,

LOCOMOTIVE

Amtrak’s media relations manager, noting that there are still some locomotives in the U.S. that have been operating for more than 50 years. Perhaps most importantly, the reliability has to be incredibly high in order for biodiesel to be used commercially by railroads. While a com-pany running a trucking fleet likely has ‘spare’ trucks that can be utilized if biodiesel-associ-ated issues pop up unexpectedly with one en-gine, the railroads do not have that luxury. Any fuel that a locomotive uses has to have little or no impact on locomotive reliability and avail-ability, says Magliari. There really aren’t spare locomotives a railway company can rent or otherwise utilize if one in their fleet becomes inoperable for a period of time.

Amtrak Trial Amtrak kicked off a one-year B20

trial in the spring of 2010. The trial, which wrapped up May 15, focused on the Heart-land Flyer, a P32 model train purchased in the late ’90s that travels between Ft. Worth, Texas and Oklahoma City, Okla. While it will take several months to compile and analyze the data gathered during the trial, Roy Deitch-

USING LOCAL FEEDSTOCKS: A biodiesel trial in Montana is testing B20, manufactured using camelina, canola and saffl ower oils, in a BNSF locomotive.

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LOCOMOTIVE

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LDCommodities.com man, Amtrak’s vice president of environmental, health and safety, says preliminary results seem to indicate the fuel’s performance has been acceptable. “For the Amtrak part of the trial, we’re very happy with the performance,” he says. Magliari adds that the trial resulted in no problems related to operational reliability.

The biodiesel fuel used in the trial has been manufactured using beef tallow as a feedstock. Magliari stresses that this was not an inten-tional decision made by Amtrak, rather beef tallow biodiesel simply happened to be locally available. The B20 was splash blended in a truck using ULSD, and directly introduced into the locomotive. In other words, the B20 blend was not stored in a tank prior to fueling the train.

The trial, which was funded with a $274,000 Federal Railroad Ad-ministration grant along with support from the Texas and Oklahoma departments of transportation, includes several discrete components. Two of the 16-cylinder engine’s assemblies were replaced with brand-new components at the start of the trial. According to Deitchman, de-tailed measurements of the gaskets and assemblies were taken at the start of the trial. Following the competition of the trial, a comparative set of measurements was taken.

Emissions testing is also being completed as part of the project. “A locomotive is difficult to emissions test,” Deitchman continues. “It has to go on a specially built dynamometer, and there are only two or three places in the U.S. that do that testing.” For Amtrak’s trial, the Heartland Flyer will undergo emissions testing at General Electric Co.’s facility in Erie, Pa. “The locomotive was built by GE, which is one of the reasons it make sense to take it back to its manufacturer [for emissions testing],” Deitchman says.

A third component of the project involves fuel efficiency. Ac-cording to Deitchman, Amtrak’s diesel-powered locomotives gener-ally consume approximately 1.7 gallon of fuel per mile traveled. In ad-dition to looking back on trial data, he says Amtrak will likely continue to operate the Heartland Flyer on biodiesel for a little bit longer, and then switch it over to ultra-low sulfur diesel fuel in an effort to deter-mine if the fuel has any impact on mileage.

According to Deitchman, Amtrak is interested in adding biod-iesel to its fuel mix as long as the fuel is proven to be a viable op-tion. Better mileage and reduced emissions would help motivate the company to utilize the fuel. One possible impediment is cost. Magliari notes, however, that the relative cost of biodiesel-blended fuel has dropped dramatically since Amtrak first started considering this trial five years ago.

Montana TrialA similar one-year B20 trial is also being completed in Montana

on the BNSF railway. The project, which wrapped up July 1, actually grew out of on-road biodiesel trial that was spearheaded by Montana State University-Northern and Opportunity Link Inc., a local non-profit. “The [on-road] trials went so well and got so much press that [we wanted] to do a trial with some significance on the railroad,” said Jessica Alcorn-Windy Boy, director of MSU-N’s Bio-Energy Center. She emphasizes that the goal was not to simply run a train for period of time using a low blend of fuel, such as B5. Rather the goal of the


LOCOMOTIVE

trial was to gather long-term, scientific data that could address the severe winter condi-tions present in northern Montana.

BNSF signed on for the trial. Two of the railway’s locomotives have been employed in the trial. One is a control that operates using No. 2 diesel. The other has been fueled with B20 for one year. The identical locomotives were manufactured in the 1970s. While the locomotive technology is slightly older, those involved in the trial note the decision to use older locomotives was intentional as they are no longer covered by manufacturer warran-tees.

The B20 is blended onsite in a controlled environment using locally sourced biodie-sel. Fuel samples have been taken from the locomotives on a regular basis and analyzed by MSU-N staff for fuel quality and biodie-sel content. According to Nestor Soriano, Jr., lead research scientist at MSU-N’s Bio-Ener-gy Center, the monthly analysis also addresses oxidation, fuel stability, acid content and deg-radation. While most biodiesel produced in the U.S. is sourced from soy beans, the crop cannot be grown in northern Montana. Rath-er, the locally produced biodiesel used in the trial has been manufactured from alternative feedstocks sources, including camelina, cano-la and safflower.

The fuel injectors in the engines also un-dergo regular testing. The locomotives are ser-viced after every 92 days of operation. Each time the trains involved the trial have been serviced, fuel injectors are removed from both locomotives. At the end of the trial, they will be supplied to the manufacturer, which will disassemble the injectors and analyze them for wear and other abnormalities.

“There is an emissions testing com-ponent of the study as well,” said Soriano. During the summer, the team will borrow a portable emissions testing system from the National Renewable Energy Lab. Soriano says the equipment will allow his team to compare the emissions that result from the two loco-motives.

Economic development is another com-ponent of the project. According to Barbara Stiffarm, executive director of Opportunity Link, a primary goal of her organization is to increase local opportunities for economic growth. Biodiesel represents a significant op-

portunity for economic growth in the region, she continues. The goal is to keep the entire biofuel operation local, from cultivating the oil seeds, to processing, conversion and use. Stiffarm notes that Opportunity Link believes railroads could offer an important local market for biodiesel blended fuel.

The data gathered by the trial could ulti-mately be used to support the establishment of a biodiesel mandate for locomotive fuel. “We are hopeful that in the future there will be

some sort of [renewable fuel] mandate in the railway industry,” Soriano said. “We want to identify the challenges that the railroad indus-try may face should that mandate come in…Hopefully, [if and when that mandate] is estab-lished, BNSF and others in the railway indus-try will have this data so they can be ready.”

Author: Erin VoegeleAssociate Editor, Biodiesel Magazine



POWER

GREEN CONCERTS: GreeNow uses B100 in its mobile power gensets, which power concerts and other events in New York City and the Northeast.

PHOTO: GREENOW


Why biodiesel is important to events and concerts BY LUKE GEIVER

POWER

Aaron Levinthal is the first to admit that he didn’t want to be in the generator business. He’s a concert producer at heart; and if companies like Caterpillar or Kohler had listened to him five years ago, he would still be a concert producer. “As a concert producer,” he says, “you hate hearing no, especially when I’d given them a million dollars of business in one year.” Levinthal’s requests were pretty simple: run the generators powering events like the Tribeca Film Festival in New York City or a major concert in Central Park using biodiesel-blended fuel. The obvious reason Levinthal might have pointed to may seem to be the cleaner burning nature of the fuel, or the added lubricity the biodiesel could offer the generators that typi-cally burn 35 gallons of fuel per hour, but for Levinthal, it wasn’t.

“No one had requested it when I started using it,” he explains. “For lack of a better term, I had an epiphany one day that I’m in the most wasteful business I’ve ever seen. Something that is for entertain-ment purposes only shouldn’t be doing the damage it’s doing environ-mentally.” So Levinthal entered into the diesel generator business, and today his business of powering concerts and events in the Northeast is booming, all because of B100.

Don’t Forget the Event


POWER

His company, GreeNow, isn’t alone, however. Genset companies across the country are and have been using biodie-sel blends for several years, but the suc-cess of GreeNow should be a reminder that vehicle fuel and home heating aren’t the only markets biodiesel can reach. If the example of GreeNow doesn’t ring loud enough, listen to what Levinthal ex-plains as a typical occurrence at one of his events. “When a client (like former Ameri-can Idol winner Kelly Clarkson) makes an announcement about [B100 powering the concert], they get a pretty good cheer out of the crowd.”

GreeNow isn’t Alone SidRam Power Inc. has provided die-

sel generators to events everywhere from Florida to Georgia, and even to Singapore. Over the past four years, the Florida-based company has averaged roughly 535 events per year, and during that time, if a client asked for biodiesel, Jamie Mardis, presi-

dent of SidRam Power, says that client got it. “I think when our customers feel it at the pump and people start talking about it,” Mardis says, “that is when they start asking for biodiesel in their generators.” And it’s that very reason Mardis and his team started offering B20 to customers in the first place. “When gas prices were go-ing up,” he says, “we were looking for al-ternatives, and then our customers started asking for it.”

While Mardis explains that it was the customer requests that spurred his com-pany to start providing a cleaner burning alternative, Joe Gere, marketing consultant for On-Site Energy, a genset provider that also uses B20, had an epiphany moment similar to Levinthal’s. And if you know Gere’s past, it’s easy to see why.

“Me being a 9/11 survivor,” Gere says, “or whatever they call it with continu-ing health issues,” is the main reason Gere first started pushing On-Site Energy to use biodiesel in the first place. “I was the first

AT&T person on site and I suffered a lot of health problems from my exposure,” and after that, he says, “I was a champion of a cleaner-burning fuel and On-Site was totally behind it.”

On-Site Energy, SidRam and Gree-Now are just a handful of companies that are linked to the biodiesel industry, and regardless of their reasons for running biodiesel blends to power their customers’ needs, all of the genset companies show reasons why producers shouldn’t forget about events, emergencies and other situa-tions requiring diesel-oriented power.

The first thing to know about genset companies is that, in most cases, the clients will ask for the cheapest (which sometimes means the dirtiest) fuel available. As Gere explains, if a 500 kW generator is running at 100 percent load, it will consume 35 gal-lons of fuel per hour, totaling roughly 840 gallons per day. At $1 a gallon that is $840 dollars per day. From there, anyone can do the math and see that the price today

PIONEERING CHANGE: Sprague Energy began delivering ULSD nearly a decade before U.S. EPA mandated it, and Levy says getting customers used to biodiesel is very similar.

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would be quadruple that, which means in most cases “the fuel costs more than the rental of the piece of iron,” Gere says.

For Mardis, the price of the fuel has made his requests for the use of biodiesel trend both up and down. “The requests for biodiesel go in spurts,” he says. “It seems like the demand for biodiesel had gone down, mainly because the price of diesel had gone down.”

But those circumstances have changed, at least for Levinthal. “Right now we have the advantage,” he says. “Biodiesel is cheap-er than petroleum fuel at the moment.”

The price of fuel and the competitive locale of biodiesel compared to petroleum diesel, however, isn’t the only factor that will push a genset company to use biodie-sel. “I can tell you that most of our biodie-sel clients are doing events, something that is a high-profile event where green is of concern to them,” Gere says. But the cli-ents aren’t the only ones creating a need for biodiesel in genset operation. Gere says the people who attend the events and live in the surrounding area of the event appreciate it when biodiesel is used. “If there was a way to chart that, to show the positive impacts that were made by running the biodiesel as opposed to not running biodiesel,” Gere says, “ I think more customers would opt to run the biodiesel.”

As for the physical advantages of run-ning biodiesel, Levinthal can certainly at-test. “If you put bad fuel in a $100,000 gen-erator and the light goes bad if there is a voltage fluctuation,” the result can be a big problem, he says—especially if it’s during a concert. All of the GreeNow generators are converted by eliminating the existing rub-ber hoses and yellow metals. “Because we never put anything but B100 in them, I’ve never had any problems. I get longer run time on my filters, and,” Levinthal explains, “my generators burn so much cleaner.”

For each event, SidRam goes through 200 to 1,500 gallons, and each week, the company orders 2,500 gallons of fuel. Gree-Now is busy from April through November and Levinthal says the company keeps stor-age tanks and extra B100 at its offices. Even with as many gallons and events both com-

panies are going through a year, the overall significance of their biodiesel use might not seem important. Fortunately, Steven Levy of Sprague Energy has a reason why every biodiesel producer should care about how the latest concert in its hometowns is being powered. It’s called The BioGenset Project, aimed at educating and creating more gen-set biodiesel operation.

The BioGenset ProjectJudy Jarnefeld, senior project manager

for the New York State Energy Research and Development Authority, is helping Levy make the BioGenset project a success. The project was chosen, she says, as a busi-ness assistance program, “so rather than helping somebody develop new intellectual property for a new product, we are helping them with marketing assistance and finding new customers, and new kinds of custom-ers in new sectors.” Those customers are the same ones that people like Levinthal or Mardis are targeting, customers who have power needs that can be met by using biod-iesel.

“The point of the project was to help identify who those users were,” she says, “and then once they figured out who they were, to help educate them that they could use biodiesel and it would have benefits.” For NYSERDA, the reason to help a proj-ect like this is also pretty simple. According to Jarnefeld, 85 percent of the petroleum used in the state of New York comes from foreign oil, “so if there is something we can do to increase the percentage of domesti-cally produced liquid fuel,” she says, “that is to our benefit.”

Levy says the program is geared to-ward three types of users. The first is a user looking to power an event, something like fashion week in New York City or the U.S. Tennis Open. The next group he says is for stationary emergency generators at build-ings, in the event of a disaster or power out-age. And the third user, he says, is the larger buildings where a diesel generator might be a primary, or in most cases a secondary, power source for that building. “Everyone has been looking at reducing emissions for on-road vehicles,” Levy says. “This particu-

lar application is to reduce emissions and reduce our dependence on foreign oil for off-road applications.”

To do that, Levy has set up a website and will hold a workshop for interested par-ties on the advantages and requirements of participating in the BioGenset program, or simply using biodiesel in their generators. “I think the objective of the program is to jumpstart the use of biodiesel in this partic-ular arena and once users see that it’s trans-parent to their use, they will incorporate it,” he says, “and even expand on their blends.”

To participate in the program, a gen-set user simply has to schedule a time with Levy that he can go over the generator’s warranties, schedule a fuel delivery time and answer any other questions the user might have. Like Levinthal and Gere, Levy also says there should be no question about performance of biodiesel in genset use, and for the future success of the program or the chance that more biodiesel will be used in genset operations, he points to Sprague Energy’s past with ULSD. Back in 1998 he says, the company started marketing ULSD 12 years before a national mandate, and historically the companies that Sprague worked with would demonstrate the prod-uct “and after a month or two, they would expand the use of it in their fleets.” This project is no different, he says, because it’s “bringing industry together and showing them the benefits.” Some will change and use the products right away (as the example of ULSD use shows) and others will dem-onstrate it and see if they are comfortable with it.

Fortunately for Levy, he won’t be wor-rying too much about the BioGenset pro-gram, at least if he remembers the achieve-ments of that former concert producer turned generator provider. He seems to be doing pretty well on B100-powered gen-sets, and if you don’t believe it, listen to the crowd after Kelly Clarkson tells her fans the lights overhead are powered by biodiesel.

Author: Luke GeiverAssociate Editor, Biodiesel Magazine



Regulatory Impact on Terminal RequirementsNavigating renewable fuels blending requirements in the distribution chain BY NAVED REZA

Today’s petroleum industry is at a crossroads. The U.S. gov-ernment has set regulations to drive sustain-ability and reduce external dependency on hydrocarbon-based products, such as the re-newable fuel standard program as required by the Energy Independence and Security Act of 2007. As a result, the petroleum in-dustry is under increased pressure to meet these requirements, and must implement improved technology for the measurement and control of renewable fuels blending.

Achieving the optimal blending of crude, gasoline and diesel fuel in refiner-

ies is challenging, but the impor-tance of blending is migrating downstream to bulk storage and distribution terminals in the U.S., and will likely only increase as the adoption of renewable fuels ac-celerates.

This situation has taken on an even greater urgency with the establishment of the revised re-newable fuel standard, or RFS2. RFS2 establishes specific annual volume standards for cellulosic biofuel, biomass-based diesel, advanced

biofuel and total renewable fuel that must be part of the U.S. fuel supply. It also includes new defini-tions and criteria for both renew-able fuels and the feedstocks used to produce them. These statutory requirements will have a signifi-cant impact on operations within the petroleum and petrochemical refining, storage and distribution sectors.

This host of regulations and standards are impacting the way

manufacturers design their overall blending

DISTRIBUTION

CONTRIBUTION

The claims and statements made in this article belong exclusively to the author(s) and do not necessarily refl ect the

views of Biodiesel Magazine or its advertisers. All questions pertaining to this article should be directed to the author(s).

Naved Reza, Global Marketing Leader, Honeywell Enraf


systems. Advances in smart blending tech-nologies, however, are making it easier to achieve compliance while streamlining op-erations. Before examining technologies, it’s important to have a thorough understanding of the actual industry standards and their impact on day-to-day operations.

Global Standards for Measurement Accuracy

Governments around the world are im-plementing new standards addressing various aspects of the alternative and renewable fu-els industry, including custody transfer mea-suring equipment and systems. In Europe, for example, the Measuring Instruments Di-rective applies to custody transfer metering for liquids and gases, and is applicable in all 27 European Union countries, plus Norway and Switzerland. As a consequence of this legislation, enhanced accuracy and security are required for biofuel blending operations serving automotive fuel marketers.

The MID contains specific articles known as annexes for 10 different instru-ment categories. The annex relevant to the measurement of petroleum products is based on the International Organization of Legal Metrology Recommendation R117-1. One of the key requirements in the MID is that the total fuel metering system must per-form within the accuracy specification—not just specific components. Not only are flow-meters subject to MID certification, other essential parts of the metering system are, as well, including temperature transmitters, biofuel blend controllers, electronic volume converters and air eliminators.

U.S. Regulations for Renewable Fuel

For bulk petroleum storage and distri-bution terminals in the United States, the in-troduction of biofuels into the mainstream fuels market, coupled with stringent renew-able fuels standards imposed by the federal government, has generated the need for a

significant investment in improved blending measurement and control technology.

On Feb. 3, 2010, the U.S. EPA, respond-ing to the requirements of EISA, issued the RFS2 regulations mandating the use of 36 billion gallons of renewable fuel in the U.S. by 2022. RFS2 puts into motion the first-ever regulatory program for establishing the greenhouse gas (GHG) performance of the nation's transportation fuels.

The RFS2 regulations contain four sep-arate categories of fuels, each with their own feedstock and performance criteria. Obli-gated parties, such as petroleum refineries, ethyl alcohol manufacturers, petroleum bulk stations and terminals, and petroleum and petroleum products merchant wholesalers, are required to include specific amounts of renewable fuels in the fuels they provide to consumers. RFS2 mandates that U.S. gaso-line and diesel include 12.950 billion gallons of total renewable fuel, 950 million gallons of advanced biofuels, 650 million biomass-based diesel, and 100 million gallons of cel-lulosic biofuel.

Increased Demands on Terminal Operators

As with any new industry regulation, a host of issues exist, and such is the case for RFS2. Those issues must be understood by those who manufacture control and meter-ing equipment for biofuel blending, and by those who seek to use it. Increasingly, the U.S. fuels marketing industry is focusing on the precision of the systems it uses to cre-ate product combinations as mandated by federal law.

The petroleum distribution sector is faced with a host of challenges when it comes to renewable fuels blending, includ-ing the design and performance of mechan-ical hardware (wetted), electronic control, reconciliation and reporting, weights and measures, and hazardous area control. The specific demands on refineries and terminal owners and operators include:

• Enhanced accuracy and control of blend components (i.e., “I need to be sure my blend is on-spec from the start to the finish of the batch.”).

DISTRIBUTION

NEW RULES: The petroleum distribution sector is faced with a host of challenges regarding renewable fuels blending, including the design and performance of mechanical hardware (wetted), electronic control, reconciliation and reporting, weights and measures, and hazardous area control.


DISTRIBUTION

• Increased security and monitoring of the blend process (i.e., “How can I be sure of an accurate blend even under fault con-ditions?”).

• Optimized tracking and traceability of calibration functions (i.e., “How can I verify my systems have been correctly cali-brated?”).

• High visibility of the blend process for maximum operational uptime (i.e., “I lack the ability to rapidly pinpoint failure modes for fast reinstatement.”).

• Ease of transaction data withdrawal for efficient reporting within a secure en-vironment (i.e., “I need to be able to re-port comprehensive data to the authorities with respect to my renewable fuels opera-tions.”).

Advanced Technology for Blending Operations

A new generation of “smart blending” technology can provide significant benefits for the global petroleum refining, storage and distribution sector. Today’s advanced blending control systems not only help end users comply with strict accuracy standards, but are also faster and easier to configure and maintain than previous equipment.

For many biofuel producers, the use of an integrated system solution is the most efficient way of ensuring compliance with complex regulatory standards. An in-tegrated system can alleviate the need to understand the technical intricacies of each component of a blending control system. Instead, terminal operators only need to understand their end requirements.

By taking a system solution approach, petroleum storage and distribution facili-ties can partner with a single automation provider and entrust full responsibility for their blending activities and transactions. So what key elements comprise such systems, and what should producers look for?

First, self-diagnostics built into inte-grated solutions enable skilled and knowl-edgeable support personnel to remotely

maintain the performance of blending units from anywhere in the world. Today’s integrated systems also include the first in-tegrated additive and blend controllers to fully comply with the EU’s MID standards. Such systems employ a robust blending al-gorithm that helps companies achieve the highest blending accuracy to reduce off-spec blends and the costs associated with waste. These systems also feature control-lers that enable either additive injection control or blending control. And, the con-trollers are optimized for seamless integra-tion into the downstream fuels distribution sector.

These single-stream controller designs can incorporate 12 separate devices, each providing individual functionality configu-rable from within a single device and se-lectable via license key in order to optimize regulatory compliance. This enables key features such as real-time deviation graphs, which allow live monitoring of the actual biofuel blend ratio during the transfer pro-cess and refining of the blend control pa-rameters.

In addition, today’s systems can pro-vide improved flowmeter proving capabili-ties, enabling plant personnel to periodically check the accuracy of blending activities to ensure profitable operation. A calibration wizard can automatically capture every de-vice calibration transaction, including time stamps, calibration volumes and meter se-rial numbers. A dashboard can then display complete device hardware diagnostics on a single screen to reduce the time spent on fault-finding by as much as 25 percent, compared to manual calibration.

The use of a menu-based screen can also help users cut field configuration time from hours to a few seconds. Systems also enable hand-held devices to connect to the system to make two-way data communi-cation easier, and to quickly and securely transfer transaction data, configuration files and calibration records.

Improved Documentation of Critical Transactions

Producers today must also seek systems that document the accuracy and compliance of their biofuel metering processes. Some single-stream controllers, for instance, can implement a large transaction storage mem-ory of more than 10,000 transactions, which allows the devices to operate for more than three months in standard operating condi-tions without losing any transactions. Al-ternatively, the controllers can have their transaction data securely downloaded via lo-cal access devices (LAD) and their memory cleared in preparation for storage of another 10,000 transactions. The transactions subse-quently transferred to the LAD can then be manually transferred to any peripheral for storage or printing via secure digital card. They can also be distributed via object link-ing and embedding for process control to third-party systems for separate reconcilia-tion.

Technology Investments for Future Payback

With the prospect of increasingly strin-gent government standards, the need to eas-ily and accurately measure biofuel blends be-comes more important and requires a more complex set of capabilities. As a result, the petroleum distribution industry must imple-ment new smart metering and control tech-nologies, which help terminal owners and operators verify regulatory compliance, min-imize capital expenses using a single custody transfer solution, ensure on-spec product at any time, prevent giveaways of high-value products, and achieve the “perfect blend.” With additional insight and control, refinery and terminal operators can fine-tune fuel blending systems for increased reliability and performance. This can result in a significant payback in terms of easier fault-finding, fewer repairs and less downtime.

Author: Naved RezaGlobal Marketing Leader, Honeywell Enraf

[email protected]

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July 2011 Biodiesel Magazine