Biodiesel Tax Credit Delays and Impact on Industry

Well, just as the NBB predicted, the Senate and House delays on reinstating the federal tax credit for biodiesel has caused the biodiesel industry to grind to a halt. I got a call yesterday from another company in NC that is going out of business. That makes three total within 6 months.

We’re still here. We’re still producing biodiesel every day, although in much less capacity than before. As far as I can tell, we’re the only biodiesel plant in North Carolina that is still actively producing truckload quantities of biodiesel. Our price is still roughly the same, about $.60 per gallon higher than petroleum diesel fuel.

North Carolina could help by adding additional tax incentives to biodiesel like many other states already do, but so far, nothing appears to be happening at the state level. We’re hearing rumblings that the US Senate may be getting something approved in the next several weeks. What we’re hoping for is a multi-year tax incentive that is retroactive back to January 1st. Anything less than that puts us right back in the same situation next year and will only further to inhibit the growth of renewable fuels like biodiesel.

Back on the Bean – Biodiesel from a customer’s perspective

Greetings everyone,

I’d like to introduce myself, my name is Chris, and Zack has graciously authorized me to write in the blog from a customer’s perspective. I, or rather my family, owns a variety of diesel-powered vehicles: I have a 2006 Jetta TDI with Unitronic performance software, my partner Butch has a 2005 Jeep Liberty CRD Diesel, and my father has a 1986 VW Golf Diesel hatchback. While it seems we are “no strangers” to diesels the facts are that we’ve only been involved with them for about three years.

I came across TBI from some friends of mine at NC State working on a greasetrap project. They mentioned the 2.99 price and I about fell over; see the only competition I am aware of charges both a membership fee and is still above $4.00 a gallon. I drove 70 miles to their Wilson plant and filled up. That was Monday, I think Barry was shocked to see me back on Thursday with 600 miles on the clock and 4 carboys in the trunk!

That was before the “big freeze” we had this past week. We had sustained lows in the 20s or below for nearly a solid week (granted on Sunday, at the time of this writing, it is 76F outside). Monday I didn’t even go to work. I had a little more than half a tank of B100 and I said “not tempting fate with the bald tires on ice.” Butch, however, had to go to work, as he manages a convenience store. He’d already started the Jeep by the time I got up, and left it idling (I generally don’t advise this practice). He said she fired up on the first attempt, but did turn over about 10 times longer than usual.

We had no issues with the Jeep that day and then I had to crank the VW up to go to work Tuesday. I didn’t let it go long enough, and she failed on the first attempt. I was surprised! So we tried it again, this time I waited for the glow plugs to go out and counted to three and yup… fired right up. She didn’t sound too happy, and the snow was still covered on all the windows (actually I had to really pull to get the door unstuck), and then I remembered I had 10 gallons of B100 in the trunk….

Thinking the worst, I opened the trunk to find that the fuel was still totally liquid, having sat in a trunk in plastic totes over night with lows in the teens for hours. Impressive, I wanted to know what additive they’re putting into this stuff. So, off I drove to work… not a care in the world. I have to say this WVO fuel is fantastic, it’s nice to have the looming scent of a kitchen following my car than the sulphur smell that comes with Diesel fuel.

In the end, we had no major problems with the fuel in this cold snap. I admit I was shocked to see liquid fuel in my trunk’s containers, last year I left a B80 mix of Chicken Fat biodiesel in the trunk from the other guys and it was a solid mass after a few hours in warmer temps than this batch was exposed to. Very impressed. I’ve used Biodiesel from Des Moines, Iowa, Austin, TX, Ocean City, MD and Marysville, TN — Wilson, NC’s is certainly ranked up in terms of quality (from my perspective).

For those concerned with long term usability, the VW i own has just crossed 80,000 miles. 60,000 of these were on B100 (mostly chicken fat), and my vehicle has had no ill effects. My vehicle is also chipped and makes around 126HP at the wheels (over 130 crank), I’ve only had this cars two years, this is about typical mileage for me — I’m a roaming computer repairman (part time). Day to day I put over 50mi on the car just go to and from work. I’ve averaged about 30,000 miles per year since I got my learner’s permit — I’m a southern boy (and there is no such thing as mass transit in the south, except Atlanta). It just feels good to know that the fuel your car uses is recycled, made local, and cleaner than the conventional fuel. All the way around it’s good for you and your community, and it only works in some of the toughest and longest lasting engines ever made.

It’s so good to be back on the bean….

Ford’s 2011 V8 Power Stroke Diesel Designed for B20

Finally, it looks like Ford and GM are getting their products inline and recognizing that biodiesel is not going away. Prior to this and the GM announcement (see older posts), most of the domestic diesel vehicles could only handle up to B5.

From the NBB Bulletin for September 2, 2009:

Biodiesel supporters are cheering Ford Motor Company’s announcement that its all-new Ford-built 2011 Ford F-Series Super Duty® diesel pickups will be fully compatible with a 20 percent biodiesel blend (B20).

“This is the first of what we expect to be many formal announcements of B20 approval in new clean diesel technology,” said Steve Howell, technical director for the National Biodiesel Board. “With the formal approval and acceptance of B20 in the 2011 Super Duty, Ford now has a clean and green engine of tomorrow that will also reduce NOx emissions by more than 80 percent. NBB already has inquiries from biodiesel fans wanting to purchase a new B20 pickup!”

The NBB and the National Renewable Energy Laboratory have spent more than $10 million testing B20 and understanding how it works in the new diesel engines and after-treatment technology during the last five years. That’s in addition to research and development efforts by the individual Original Equipment Manufacturers like Ford.

Ford’s support for B20 could have substantial market implications. Ford currently dominates the on-road diesel truck market with nearly a 46 percent market share of the diesel vehicle registrations in the U.S. according to the Alliance of Automobile Manufacturers.

The 2011 models will be arriving at dealerships in the first half of 2010.

Diesel Engine Updates for Biodiesel Compatibility

Like many biodiesel myths, rumors about the incompatibility of biodiesel blends with new light duty diesel vehicles’ emission control technologies are for the most part inaccurate. The fact is, B5 blends are virtually indistinguishable from diesel fuel in terms of engine performance and compatibility with emission control systems, making all diesel engines easily compatible with blends up to at least B5. The rumors about incompatibility, however, stem from concerns about the possibility of increased engine oil dilution that can come into play with the use of higher biodiesel blends (B10 and higher) in some of the new light-duty diesel vehicles that utilize an emissions control system with in-cylinder post-injection. This system utilizes a late in-cylinder injection of raw fuel to burn off the material collected on particulate traps required to meet stringent new emissions standards for particulate matter. This is predominantly limited to the light duty diesel product offerings from Volkswagen, Audi, Mercedes and BMW, which are a small portion of the U.S. market. The other light, medium and heavy duty diesel engine manufacturers do not generally use late in-cylinder injection of raw fuel and have not reported problems with B20 compatibility or excessive engine oil dilution in their new diesel models. They have opted for systems that utilize an exhaust-stream injection of fuel to regenerate the particulate traps, therefore mitigating the risk of engine oil dilution.

While recent research studies by Volkswagen in Germany as well as the National Renewable Energy Lab did conclude that use of biodiesel blends above B10 could lead to slightly higher engine oil dilution levels in diesels using in-cylinder post-injection systems, both studies also found that the absolute level of viscosities still remained in an uncritical range for the applied oil quality, and there were no negative impacts on vehicle emissions, engine performance, or parts wear as a result of the biodiesel use. The increase in oil dilution can be easily addressed with an oil change, and can be further mitigated through a proactive engine oil change service interval (e.g. consider an oil change at 7,500 instead of 10,000 miles). VW and NREL are also planning further studies on this issue.

GM’s next-generation heavy-duty Duramax diesel V-8 won’t just burn cleaner to meet tough new emissions standards for 2010; it will also burn greener — fuel that is. The so-called LML Duramax will be certified to run on biodiesel blends of up to B20, which is 80 percent ultra-low-sulfur diesel and 20 percent biodiesel, in GM’s 2011 model year 2500 and 3500 Silverado and Sierra pickups.

The move finally matches the B20 capability of the current 2007-09 Cummins 6.7-liter inline-six that powers the Dodge Ram HD lineup. The 2007 Dodge Ram 3500 was the only pickup in our last Heavy Duty Shootout that was able to burn B20. B20 is available at many truck stops today, but the current 2007-10 LMM Duramax and Ford’s 2008-10 6.4-liter Power Stroke V-8 are only approved for B5 biodiesel.

I never learn

You’d think after all the rants on this blog about how the media botches stories on biofuels that I would know better than to do an interview with a local business journal. Apparently not.

Several weeks ago I did a 20 – 30 minute interview with the Triangle Business Journal regarding the biofuels industry in North Carolina. I did not know the context of the article, but simply answered Frank’s questions regarding the status of the industry in this state and how the market economy was treating biofuels in general. I stated over several sentences that if the commodities market didn’t improve to invert high feedstock prices and low petroleum prices, that the biodiesel industry would be in trouble and that we (NC biodiesel plants in general) would be in trouble like many of the other plants in the industry which are either idle or out of business.

Somehow that 20 minute conversation got translated into one sentence that quotes me as saying “We’re not that far from shutting down”. Thanks.

So to all of my customers, creditors, and friends out there worrying about whether or not I’m about to go bankrupt, the answer is no, we’re doing fine. Things are a little tight for us just like everybody else right now, but we’re far from shutting the doors and turning out the lights.

Thanks Triangle Business Journal for your very succinct and insensitive journalism. That will be my last interview with you.

Read the full story on the Triangle Business Journal at:

EPA RFS2 Blunder


A YouTube video of EPA official Margo Oge testifying before a House panel in May reveals her providing radically incorrect information about the amount of corn and soybeans it takes to make biofuels.

The blunder occurred when Rep. Aaron Schock (R-IL) asked Ms. Oge, who is responsible for regulating all emissions within the United States, about the indirect land use issue. “It’s my understanding that the EPA’s Renewable Fuels Standard 2 methodology assumes that for every acre of soybean crop that is used to produce biofuel, an equal acre of ground is used in the Brazilian rainforest to replace that acreage, is that correct?” asked Schock.

“Obviously we know that it takes about 64 acres for a gallon of soy biodiesel,” she begins, and then corrects herself, even more incorrectly. “It’s actually the opposite. It takes 64 acres for corn ethanol and over 400 acres for a gallon of biodiesel.”

Actually, one acre of soybeans makes 64 gallons of biodiesel and one acre of corn makes over 400 gallons of ethanol. This may have been just a simple mistake – or maybe she really doesn’t know – but it is now possible that members of the U.S. House Small Business Committee believe that it takes a huge amount of corn and soybeans to produce biofuels because that is what she told them.

The YouTube video with commentary was posted anonymously by an account called “FreedomIs1st” and no one in the biofuels industry has taken credit for it – but it is very good and should be shared. In fact, it might be good for people in the industry to write to their congressional representatives, especially if they are on the House Small Business committee, to make sure they have the facts.

The Food for Fuel Myth – Part Deux

Watching the soybean oil and yellow grease prices today, I am struck by the fact that we’re supposed to be in the “Memorial Day Squeeze” right now with gas prices peaking and all energy costs surging. Instead, while it’s true that gas and diesel prices are up about 20 cents since the beginning of the year, it’s nowhere near as much as predicted.

Why? Because we still have a surplus of crude here in the US, with tankers of it parked out in the Gulf of Mexico. So why is soybean oil at .41/lb ($3.11 per gal) and Yellow Grease at .28/lb ($2.13 per gal)? Greed.

I don’t hear the media chiming away at the party line about how biodiesel and ethanol are driving up fuel prices this year. Again, why? Because most of the biodiesel and ethanol plants are shut down in 2009 because feedstock prices are too high, and fuel prices are too low. So apparently the “Food vs. Fuel” argument has lost a good bit of its steam. It’s not true this year… It wasn’t true last year. It was just circumstances that permitted the Ag industry to jack up prices and make extra profits. Good for you guys.

Now as the government claims to be pushing renewable fuels and trying to save the environment and become less dependent upon foreign fuel imports, we have no resources to do it that are priced reasonably.

The problem appears to be obvious. So why is nothing being done?

Somebody help, please…

Biodiesel $1.00 Tax Credit Not Working

It’s pretty obvious by now, to everyone except Washington, that the $1.00 per gallon tax credit for biodiesel producers isn’t working. What it has seemed to accomplish however, is to drive the cost of soybean oil up by $1.00 per gallon. Bravo. As of today, soybean oil is $.37 per pound or $2.77 per gallon. Diesel is $1.45 per gallon at the rack (before taxes). The math is pretty simple.

So after all this talk of making a “green” economy, biodiesel and ethanol plants are shutting down because they can’t compete with petroleum (again) and the Ag companies are raking in cash.  What’s the best part?  The biodiesel companies have to file all the paperwork with the IRS and wait a couple of months to get their subsidy back!  The Ag companies get their cash up front, and have no extra paperwork to file for it.   Nice.

Seems like we never learn.

What should they do? Well, for starters, the tax credit should be indexed against the market. Having a flat $1.00 per gallon credit just doesn’t make sense. Second, the credit should be given in such a way that it provides incentive for CONSUMERS to purchase biodiesel instead of to the producing companies or feedstock suppliers.   Less paperwork for us, direct benefit to the consumer (who’s the one actually using the fuel).

Alternatively, in an environment where Ag companies are used to price supports and price fixing, it’d also be nice to see a fixed price per gallon for inedible soybean oil that is specifically used for biodiesel, and mandatory allotments that must be sold. (Think tobacco, and it doesn’t sound that harsh.)

Whatever the solution, what we’re currently doing isn’t working. Everybody seems to be getting fat except the industry that is supposed to benefit from it.   Don’t believe me?  Ask any biodiesel producer about the wonderful US EPA Renewable Fuel Standard and RIN credits.  As a biodiesel producer who typically sells pure biodiesel, we don’t get a penny of the RIN credits unless we actually blend the fuel down to B80 (80% biodiesel / 20% diesel) or less (which means we have to become a petroleum blender).  The credit ends up getting passed on to, you guessed it, the petroleum industry for all their “hard work” in blending the fuel and selling it.   Again, great work Mr. Bureaucrat, you’ve stuffed more money in the Big Oil’s pocket once again.

Hey, I’m ready for that “Change” everybody was singing about back in November.  It can start any time.

Media Retraction about Minnesota Biodiesel Bus Gelling

Seems the media is finally making corrections about the Minnesota school bus fuel gelling that was all the rage to disparage and mock last month.  Bravo, although I’m sure it won’t get quite the coverage that it did before.

In the Minneapolis Star Tribune (, the posted the following article:

Editorial: Unearned black eye for biodiesel fuel

It made national headlines last month when some Bloomington school buses stalled during a subzero stretch, forcing the district to cancel classes for a day. The too-quick-on-the-draw mechanical diagnosis? Biofuel that gelled up in the cold. Fox TV commentator Glenn Beck didn’t call Minnesotans bio-fools, but he came darn close, holding up the state’s first-in-the-nation biodiesel mandate as evidence of how government screws things up.

“Lawmakers put children’s safety at stake because they don’t want their buses to run on a politically incorrect kind of fuel,” opined the bombastic Beck last Friday.

With Minnesota poised to transition to a higher percentage of biodiesel this spring, it’s important to set the record straight on the Bloomington bus issue. Biodiesel wasn’t the culprit causing the school buses to stall out. Unfortunately, the brouhaha has given the state’s pioneering mandates and the promising biodiesel industry an undeserved black eye.

Minnesota law currently mandates that virtually all diesel in the state contain 2 percent biodiesel. Almost any oil can be used to make biodiesel, according to Ed Hegland, an Appleton, Minn., farmer and chairman of the National Biodiesel Board. In Minnesota, it’s mostly made from soybeans, then blended with regular petroleum diesel. Petroleum diesel is the fuel on which most of the nation’s trucks, tractors and road equipment run. Minnesotans in particular are long acquainted with regular diesel’s drawbacks in cold weather. When the temperature drops below a certain point, wax crystals can form and gum up fuel filters. It’s why truckers idle their trucks overnight in cold weather and why many who rely on diesel during the winter switch to a different blend to minimize the problem

News and Observer Article about Cary, NC Recycling Program

The Raleigh News and Observer did a follow up report which highlighted TBI picking up the used cooking oil from the town of Cary to be used as biodiesel feedstock. 

“From mid-November through the end of January, Cary residents who collected a half-gallon or more of cooking oil and/or animal fat could call the town for curbside pickup. The grease was collected by Triangle Biofuels Industries of Wilson, which turns it into biodiesel.”

Read the article here:

(And no, there were no inaccuracies in the reporting on this article.  Well done, N&O.)