Senate to Propose Biodiesel Tax Incentive

From the NBB:

We’re happy to report that the Senate Finance Committee today unveiled a bipartisan “tax extenders” package that includes the biodiesel tax incentive. The committee is slated to take up the package next week.

This marks welcome progress for one of NBB’s top priorities and is an important step toward winning reinstatement of the tax incentive. The proposal, released by committee Chairman Orrin Hatch, R-Utah, and Ranking Member Ron Wyden, D-Ore., calls for a two-year reinstatement covering 2015 and 2016. The committee has scheduled a markup for the bill, which contains 52 tax incentives and is titled, “An Original Bill to Extend Certain Expired Tax Provisions”, on Tuesday, July 21.

The committee has been working on the bill in a bipartisan fashion on the bill for weeks, so we anticipate that it will have broad support in committee. However, we urge those of you with senators on the committee to contact them today and urge them to support the biodiesel incentive. Makes sure they know it is an important economic policy for their home state. To find a list of senators on the committee, click here on the committee’s website.

More information on the bill can be found here. A copy of the initial Chairman’s Mark of the bill can be found here. A revenue table for the tax extenders bill can be found here. A summary of the package can be found here.

As you know, this is the beginning of what has been a long process in past years. However, the Senate bill is a significant step forward, and it will serve as the first draft as House and Senate leaders continue negotiating how to proceed with expired tax incentives. It was critical that biodiesel was included in this proposal.

We will send another update next week after the committee markup. Meanwhile, if you have any questions, please don’t hesitate to contact our Washington office at 202-737-8801.

 

 

Enzymatic Biodiesel

We have been benchtop testing with enzymatic biodiesel, evaluating it’s performance with different feedstocks and mixture ratios to see what works best.  So far, I’m impressed with the results and it appears to be far easier to use than I originally understood.

We have begun investigating what the upfit costs would be to scale up for production, but the ROI looks promising.   Not only would we be able to use a wider range of feedstocks, but the pre-treatment time is cut dramatically, input chemicals are cut dramatically, and our production yields look like they might double.  All very promising.

I’ve been down this road before, skipping down what looks to be a yellow brick road and then have a bunch of flying monkeys swoop down and steal my favorite dog.   So, we proceed cautiously, but overall we are excited about the prospect of using a new technology that could potentially increase yields and profit.

 

EPA Releases RFS Volumes for Biodiesel (finally)

Biodiesel back on track for increased demand in upcoming years.  This is good news, and long overdue…

From the NBB:

The EPA today released its long-awaited proposal to establish volumes under the Renewable Fuel Standard (RFS). While the proposal is not perfect, we are pleased to report that it calls for steady growth in Biomass-based Diesel through 2017 and is a dramatic improvement from the EPA’s initial draft in November 2013. In fact, while the initial proposal would have held biodiesel flat at the 2013 standard of 1.28 billion gallons through 2015, today’s proposal calls for an increase of more than 600 million gallons between 2013 and 2017.

While we will continue pressing for stronger growth during the coming weeks, this represents a significant turnaround that should pave the way for healthy biodiesel markets in the coming years and also sets a precedent for further RFS growth in the future. The proposal, which is subject to public comment and change until finalized later this year, would establish the following volumes for Biomass-based Diesel:

2014 – 1.63 BG
2015 – 1.7 BG
2016 – 1.8 BG
2017 – 1.9 BG

Additionally, it includes the following growth for the overall Advanced Biofuel category, which offers further opportunity for biodiesel growth above and beyond the Biomass-based Diesel standards:

2014 – 2.68 BG
2015 – 2.9 BG
2016 – 3.4 BG

The EPA says it will finalize the proposal by Nov. 30.

We know the delays and uncertainty surrounding this RFS rule over the past two years have been incredibly damaging to our industry and have created significant hardships at your businesses. But the improvements in this proposal are a testament to the impact that we as an organized and unified industry can have in Washington. Thank you to all who participated in our advocacy efforts. This wouldn’t have happened without your help, and we will be calling on you to engage even more in the coming weeks.

 

 

Best Regards,

Joe Jobe
CEO
National Biodiesel Board

 

 

Corn prices have dropped, but has your food costs? Ask Chuck Grassley

2015-05-20 02:24:11 EDT via OPIS
***Sen. Grassley Rails against RFS Repeal Opinion Piece

Sen. Chuck Grassley (R-Iowa) took to the Senate floor earlier today to rail
against a Wall Street Journal opinion piece written last week by the National
Chicken Council and the National Council of Chain Restaurants, calling on
Congress to repeal the Renewable Fuel Standard (RFS2).

In the opinion piece last week, the two groups described the RFS as a provision
“that stymies small businesses, hurts the environment and increases food
prices.” OPIS reported on the opinion piece on May 15.

“Once again, chain restaurants and chicken producers are teaming up to smear
homegrown biofuels producers at the expense of energy independence and cleaner
air,” Grassley said on the Senate floor, noting that “every couple of years,
food producers or grocery manufacturers team up with big oil to try to undermine
the extremely successful Renewable Fuel Standard.”

“I’m going to take this opportunity to do a simple fact check of some of the
most egregious claims. First, they claim that since 2005, when the RFS was first
adopted, costs of vital food commodities, including corn, grains and oilseeds,
poultry, meat, eggs and dairy have risen dramatically. This is pure myth,”
Grassley said. “The fact is consumer food prices have increased by an annual
average of 2.68% since 2005. In contrast, food prices increased by an average of
3.47% in the 25 years leading up to passage of the RFS,” he noted.

“Second, they claim that as a result of the RFS, corn is being ‘diverted’ from
livestock feed to ethanol. Again, this claim is false,” Grassley continued.
“Corn used for ethanol has come from the significant increases in corn
production since 2005….And one-third of the corn used for ethanol production is
returned to the market as animal feed. The amount of corn and corn co-products
available for feed use is larger today than any time in history. So, it’s hardly
being diverted,” he said.

“Finally, they claim the increases in feed costs have affected the American
production of beef, pork and chicken. They state that production had increased
consistently over the past 30 years, but has now leveled off due to the higher
cost of feed. Again, this is nowhere near reality,” Grassley said. The reality
is USDA is projecting red meat and poultry production of 95.2 billion pounds
this year, up 10% from 2005. … Just a few years ago, when corn prices had
peaked at more than $7.50 a bushel, grocers, food producers and restaurants were
claiming that food inflation would approach 10% because of the RFS. They warned
that they’d be forced to pass those higher costs on to consumers immediately,”
he said.

“Well, with corn at $3.50 a bushel today, have consumers seen a dramatic
reduction in retail food prices? … Corn prices have come down by more than
half in the past two-and-a-half years, so why are food producers holding prices
steady or increasing them?” Grassley asked.

“The fact is domestic renewable fuel producers are feeding and fueling the
world. … The [RFS] policy is working. I intend to defend all attacks against
this successful program whether they come from big oil, the EPA, big food or
others,” Grassley added.

Neither food group responded to Grassley’s remarks by presstime.

Clean Burn Ethanol Plant Closed Before it Opened

Autopsy of the NC Biofuels Center

Almost a year old now,  I recently ran across an article that talked about the GOP’s funding retraction for the NC Biofuels Center and how it was politically motivated.   The article can be read in full at http://www.eenews.net/stories/1060003013.  I don’t know much about eenews.net, but the article reads very bent towards the political left, and didn’t really have any weigh in from the Republicans or any real mention of mitigating factors that may have contributed to the Center’s demise.

From a North Carolina biodiesel producer’s perspective, I have a few thoughts on the matter.   I met with the leadership of the Biofuels Center many times.  They came and visited my plant in 2011.   There are 5 biodiesel plants in North Carolina, and that year was the year we became the largest producer in the state.  I liked them instantly as they were very respectful and friendly.   They were not, however, very well educated on biodiesel or how it is produced.  I expected more I guess, being they were from the “Biofuels Center”.   I got multiple questions about fermentation, distillation, or similar ethanol type biofuel questions which had no application in my plant.  They were eager to learn, but I felt they should have come more prepared (and apparently I wasn’t the first biodiesel plant they had visited that week).

And that summed up in a nutshell the focus of the Biofuels Center (BC):  They were focused almost entirely on ethanol and ethanol based crop research.  The goal set by North Carolina was lofty:  “By 2017, 10 percent of liquid fuels sold in North Carolina will come from biofuels grown and produced within the State.”   Almost none of that, apparently, was envisioned as coming from the five biodiesel plants that already existed in North Carolina.   Logistically that made some sense, in that they needed at least a few very large biofuels plants in NC to be able to meet such a lofty goal as was set.  I know at least 3 of the 5 biodiesel plants (including TBI) would have happily accepted ANY incentives to expand our plants to meet the goal.  But the BC wanted ethanol.

Triangle Biofuels never got any financial support from the Biofuels Center, even though we contacted them and applied several times.  Where they did provide financial support, grants, or research assistance is well documented, but as far as I know there were no major allocation of funds ($250,000 to Blue Ridge Biofuels is the largest and only real grant I’m aware of) provided to any of the existing biodiesel plants for expansion to help meet the 10% goal set by the State.   To be fair, the $250,000 award to Blue Ridge is a sizable award by most biodiesel plant measures, but comparatively it was too small.  Much of the awards went to municipalities or research programs for university programs.   Their failures are also well documented, such as “Clean Burn” (see featured image above) in Raeford, NC, which received millions in funding and incentives but went bankrupt before it ever produced any ethanol.  Needless to say, it’s 2015 and we will come nowhere close to meeting that goal in 2017.  Most likely, it never really had a chance to begin with.

Lyle Estill of Piedmont Biofuels said this in the article:  “Looking back on the center, Estill said that its leaders would sometimes ‘impose petroleum thinking on the biofuels endeavor.’ In other words, the center aimed for big projects that require massive quantities of feedstock.”  Lyle and I often don’t see eye to eye, but I respect his expertise and passion for biodiesel as a fuel, and his perspective on this issue is dead on in my opinion.  He too wanted to see the smaller plants receive funding to help them grow, and possibly spark additional plants into production.  That, of course, never happened.

The idea of the Biofuels Center was a fantastic one; it was noble, and it was timely.  The people that worked there were ambitious, talented, and passionate.  Their execution however, was flawed and misguided.

Factor in the budget constraints that most states were operating under, the lack of any significant substantive accomplishments by the Biofuels Center towards the goal set for 2017, the low ROI on funds allocated to the center, and it isn’t difficult to understand the Legislature’s decision to stop funding the center.

 

NC Motor Fuel Tax for Biodiesel Reduced to .36/gallon!

Effective April 1st, 2015 through December 31, 2015, the North Carolina motor fuel tax rate will decrease from 37.5 cents per gallon to 36 cents per gallon.  This also applies to biodiesel when used as a motor fuel for highway use.

The inspection tax remains at .0025 cents per gallon.

ASTM Fuel Oil Standard Revised to Accommodate B6-B20 Blends

From OPIS:

ASTM International announced today new performance specifications for fuel oils(D396) that will accommodate blends of 6% to 20% biodiesel in conventional fuels.

The revised standard, to be known as D396-15a, will go into effect as soon as it is published, which ASTM said would be “soon.”

The blend is branded Bioheat (R) fuel. The fuel oils covered by D396 are used in home heating and hot water applications, as well as industrial boilers and burners.

The existing No. 1 and No. 2 grades in ASTM D396 already cover 5% biodiesel or less.

“The oilheat industry is reinventing itself as a 21st-Century fuel by moving to higher blends of low-carbon biodiesel and ultra-low sulfur levels across the board,” said John Huber, president of the National Oilheat Research Alliance (NORA), in a statement provided by the National Biodiesel Board (NBB). NBB and NORA have worked together on Bioheat (R) fuel certification, testing and user education.

The new B6-B20 grade is a blend of all the parameters contained in the existing No. 1 and No. 2 oilheat grades, but adds parameters for stability and allows a slightly higher distillation temperature for the blends. The changes are the same as those for B6-B20 in on-and-off-road diesel fuel passed by ASTM in 2008.

“The data set behind these changes is one of the most extensive I’ve seen in more than 20 years at ASTM,” said Steve Howell of M4 Consulting, an ASTM Fellow who chairs the ASTM Biodiesel Task Force. “Having an official standard for higher biodiesel blends in heating oil will help foster consumer confidence, and give blenders and distributors a needed tool to incorporate more low carbon, ultra-low sulfur biodiesel into heating oil.”

Research will continue to support official specifications for higher- concentration blends of biodiesel in heating oil, all the way to B100, according to NBB.

“Brookhaven National Laboratory surveys of customers already using biodiesel blends not only showed similar or better experience than with traditional fuel oil, they also showed many already use B20 or higher blends with great success,”
Howell said.

The official vote to change the standard took place at the December 2014 ASTM meeting.

–Kevin Adler, OPIS  (http://www.opisnet.com/)

 

 

US_Capitol_Building

Biodiesel Tax Credit for 2015?

I just received a letter in the mail today from Senator Richard Burr regarding a letter I sent him about the biodiesel tax credit some months ago.  In it, I stated that the biodiesel tax credit is actually HARMFUL the way it is being currently implemented.  That is, letting it lapse for a whole year and then reinstating it retroactively, as Congress has now done three times.

He agreed that Congress should provide businesses more certainty than the current year-to-year extensions we are currently experiencing, but claimed that attempts at longer extensions (like the 3 to 5 year tax credit I proposed) were thwarted by a veto threat from the President.

This is confusing for us in the biodiesel industry, as the President has promised that the renewable energy sector has his full support.   That, however, does not appear to be the case.  Especially in light of the political games being played with the EPA and the RFS program, which are under the control of the President.

So, at best we can appear to hope for yet again another kicking of the can down the road, and another 1 year biodiesel tax credit for 2015.  Hopefully before we see January of 2016…

You can view the Senator Burr Letter here

To add insult to injury, I received a letter from my insurance carrier showing that the “Terrorism Risk Insurance Act” was set to expire on December 31, 2014 but was somehow able to be renewed until December 31, 2020!!   It just goes to show you what a powerful lobby can do for your industry.    Here’s the letter from the insurance carrier

 

 

Biodiesel

RFS for Biodiesel Isn’t the Same RFS for Ethanol

This past week the presidential hopefuls for 2016 attended the Iowa Ag Summit, which for all practical purposes served as a test run for the Iowa caucus hopefuls.  Of particular concern for all the candidates was how they were going to position themselves with respect to the RFS program.  Iowa is big on corn.  Corn means ethanol, and that means jobs for Iowans.

The EPA’s Renewable Fuel Standard (RFS) is a controversial program where the government has mandated that all petroleum motor fuels must have a certain amount of renewable fuel added to them in order to reduce harmful combustion emissions (so as to reduce greenhouse gases).   This is why you see the “This product contains up to 10% Ethanol” at the gas pump.

The government is essentially forcing the private industry (Oil and Gas) to purchase a product that under certain circumstances it would not purchase.  Ethanol by far makes up the bulk of the sales under the RFS program.  The program has increased the volume of renewable fuel required to be blended into transportation fuel from 9 billion gallons in 2008 to 36 billion gallons by 2022.   Most of this will be ethanol.

From the US EPA’s RFS site, here is the 2014 data, showing the number of RINs (Rewewable Identification Number) generated by each fuel class industry.  Biodiesel, the stuff we make at TBI, is listed under D4.  Ethanol would be under D3 and D6.

Fuel (D Code) Domestic Importer Foreign Generation
Cellulosic Biofuel (D3) 33,360,560 0 0
Biomass-Based Diesel (D4) 2,212,736,209 203,958,762 291,970,178
Advanced Biofuel (D5) 78,838,620 64,474,655 0
Renewable Fuel (D6) 14,009,755,793 79,009,021 257,366,277
Cellulosic Diesel (D7) 8,859 50,446 0

Biodiesel has long been the red-headed stepchild that just “tags along” under Ethanol in the RFS program.  Indeed, when the RFS program was first implemented, it was confusing for biodiesel producers to even comply with it because the program was so blatantly skewed towards ethanol.   But as you can see, Ethanol produced roughly 14 Billion RINs for 2014, with biodiesel trailing with a paltry 2.2 Billion domestically produced RINs.  Thus, naturally, the biodiesel faction really doesn’t have much influence into the RFS program, and we just go along with whatever big Ethanol can lobby and push to put in place.

The main issue I have as a biodiesel producer is I don’t think biodiesel needs the RFS.  As far as I can tell, it has not helped my industry.  In fact, in the past some unsavory types have fraudulently fabricated RFS data that put a black eye on my industry.   Instead we have layer upon layer of regulation, which encumbers business operations for small companies, and puts us at the mercy of political jockeying like we have seen in 2014 and 2015.

The EPA STILL hasn’t released the mandate requirements for RFS for 2014 and 2015.  This is supposed to be done in June of the year prior to the mandate year, meaning in 3 months, we should be receiving the mandate requirements for the 2016 production year.   This hasn’t happened, and it has created uncertainty and trepidity in our market.   That means depressed prices, depressed orders, and depressed revenues for producers.

The ethanol producers are big names you know well.  They have deep pockets, and can afford very powerful lobbyists and PACs in Washington DC to further their interests.   There are roughly 160 biodiesel plants in the US, most of which are 10 Million Gallons per Year (MGY) production, or less.

The shame of all of this is that biodiesel is a great renewable fuel.  It’s a drop in replacement for diesel, could be a stand alone fuel all by itself if the market were allowed to grow naturally.  (Ethanol is never sold “neat”, because of BATF regulations around ethanol and it’s low temperature ignition problems.  It is always blended with gasoline in some ratio.)

Further, there is no “Blend Wall” with biodiesel, you can blend it as high as you like as long as your engine is rated for it.  We regularly burn straight biodiesel in our cars and trucks without incident.

Biodiesel is here now.  No engine modifications needed, no refueling infrastructure changes needed, and by far, comparably less concerns or restrictions on usability or compatibility with modern vehicles on or off the road today.   The customers that use our fuel love it, and like the fact that we are recycling used cooking oil into a renewable fuel that is domestically produced here in the USA.  That, by itself, should be enough for biodiesel to stand on its own.

It may be wishful thinking, and maybe even a little naive, but I’d like to see biodiesel de-coupled from ethanol.  Ethanol is giving us a bad name (I still have people ask me if we make biodiesel out of corn…), and we really need to  be out in front of this problem and explaining the benefits of biodiesel instead of relying on Ethanol and the EPA to sort out our problems for us.

 

M35A2 4X4 Biodiesel Truck

M35A2 2½-Ton Truck for Sale – Includes Biodiesel of course! $8500.00

It’s time for us to part with our 1971 Kaiser M35A2 bobbed 2½-ton truck.   Rebuilt in 2007, this is a “Deuce and a Half” Hard Top that has been bobbed to a 4X4 with the larger A3 style tires.  It is painted in Desert Tan and includes Power Steering!!

The engine is a NEW multi-fuel inline 6-cylinder Hercules motor with turbocharger (non-whistler) that will run on biodiesel, diesel, gasoline, motor oil, kerosene, or transmission fluid.   Of course we have run it on biodiesel for a while, currently it is running B20 biodiesel.

This truck has been professionally chopped and bobbed removing the rear axle and making it a 4X4, air shifted front axle. It has been completely repainted and re-upholstered. The tires have been upgraded to 46″ Michelins and the wheels to 20″ dual beadlock combat wheels. New batteries installed. The 9½ft bed has a new bed liner. Odometer shows original miles, not miles on engine!

Air windshield wipers work. Black out lights installed. An air chuck has been installed to the rear bumper for filling tires, running air tools, or just filling air in rafts or sports toys. Two speed transfer case. No rust. This vehicle has a clean North Carolina title and is street legal. You do not need a CDL to drive it. Hard top installed to keep wind and rain out, and helps reduce noise.  Drive this thing anywhere.

Original cost was over $13,000.00.  Price is $8,500.00 (negotiable), and includes a full tank of B20 biodiesel fuel.   Buyer must arrange any shipping and pay all shipping costs. Vehicle is in excellent working condition but is sold AS-IS.  Why are we selling it?  Because it just sits in the parking lot, and that is a crying shame.  Get this truck and have fun with it!

You can view a video of this great running truck here.