Big Government Squashing Little Businesses

It looks as if the government is yet again serving the interests of big corporations instead of serving the public that elected them.

This particular case comes from another local biodiesel producer that also self-collects waste vegetable oil like we do.  The rendering industry in Virginia lead the charge to change the law that imposes a layer of regulation that adds significant compliance costs to small collectors.  The requirements are significant, and burdensome.  See to read the actual law.

The buzz is that this same group has hired a firm that is working the halls of the NC General Assembly to quietly pass some similar legislation that could negatively impact small collectors.   The rendering companies have seen an army of small collection companies chipping away at their restaurant accounts in order to sell their waste vegetable oil to biodiesel plants like TBI, so now they’re fighting back by changing the law to protect them.   Ironically, the small renderers typically provide better service, remove the oil more frequently, and generate a better product for us as biodiesel feedstock (the oil from the large renderers is usually rotten and full of water).  Furthermore, most of the oil collected by the large rendering companies never goes to renewable fuel plants, it goes to feed mill plants that add it to livestock feed, thus putting it back into the food chain.  Yes, you are eating animals that have been fed the carcasses, fat, and ground up parts of other animals in their feed.  Europe has banned this practice (Since October 2004, waste vegetable cooking oil can no longer be used as an ingredient in animal feed.   See Animal By-Products Regulation EC 1774/2002).

Want to help?   Contact your NC state representative and tell them that NC needs biofuels, and tell them you promote small business and don’t want tighter regulations on small companies trying to promote biofuels.   Contact Bev Purdue and let her know that Virginia made a mistake by choking off small companies that are trying to fuel the biodiesel industry, and doing so in North Carolina will kill what is left of the biodiesel industry in this state.

Contact Bev Purdue:

Find your state representative:

Nasty WVO Bin

The rendering industry in Virginia lead the charge to that got a law
(just singed by their governor last month) that imposes a layer of
regulation that adds significant compliance costs to small collectors.

My understanding is that they have hired a firm that is working the
halls of the NC General Assembly to quietly pass some similar
legislation that could negatively impact small collectors.  No bills
have been introduced so there's nothing to look at and they may be
positioning it as a technical correction to keep it below the radar.

More government regulation and reporting

Well, I was just joking with someone about the amount of government oversight and regulation that is in the biodiesel business being as bad as if we were producing weapons grade plutonium, and here I get a call from the IRS today telling me that there is yet another monthly reporting requirement coming up that is mandatory for biodiesel plants.

Aren’t they ALL mandatory and required by law with a civil penalty attached for non-compliance? I mean, if they weren’t we wouldn’t do them, right?!

So this report, which I have yet to actually see the form, is required to help the IRS track where the fuel I produce is sold and distributed to and for what purpose. Honestly. This really IS starting to sound like we produce nuclear material.

Folks, I make biodiesel. It’s non-toxic, biodegradable, carbon neutral, and clean burning. The only thing more safe to use, transport, and clean burning is wood.

We’re a small plant. We make a million gallons of biodiesel a year, that’s a drop in the ocean for petroleum products sold in the US. Yet I spend over two full days a month now doing NOTHING but mandatory government reporting. Enough already.  How about actually doing something to promote and increase my business and welfare for a change?

Earth Day News from the NBB

With Earth Day here, I thought it slightly ironic that the biodiesel tax credit still has not been passed, yet a large gathering in the National Mall in Washing DC is underway.  Earth Day is about climate change.  Biodiesel certainly has it’s place there since it burns much cleaner than petroleum diesel, but biodiesel is much more than that too.  It’s domestic, produced here in the USA.  It’s non-toxic and very safe to use and transport.  It’s biodegradable.   It’s a drop in replacement for existing fuel, no huge infrastructure changes required, and (by some accounts) if it were as heavily subsidized as petroleum, would be damn near free.   Congress is claiming that the tax credit will be passed by the Memorial Day recess.  Here’s hoping…

From the NBB:

Jefferson City, Mo. – With the 40th Anniversary of Earth Day upon us, it is imperative that Congress move immediately to ensure the survival of America’s first advanced biofuel – biodiesel.

“Lawmakers need look no further than the National Mall to see cleaner-burning biodiesel at work powering generators this Earth Day,” said National Biodiesel Board (NBB) CEO Joe Jobe.  “Not only does biodiesel have the best greenhouse gas reduction of any domestic transportation fuel, but also it is the only advanced biofuel currently in the U.S. commercial marketplace.”

In recognition of Earth Day, the National Biodiesel Board is urging Members of Congress to reinstate the biodiesel tax incentive immediately.  Since the credit lapsed on December 31, 2009, domestic biodiesel production has plummeted to nearly a standstill.  One of the most successful energy policy initiatives ever enacted, the program makes biodiesel price competitive with petroleum diesel.

The biodiesel tax credit allows the U.S. to reap the significant environmental benefits associated with the sustainable fuel, including:

Biodiversity: Biodiesel is the most diverse fuel on the planet, made from a wide variety of oil and fat by-products of regional crop and livestock production.

Regional diversity: More than 150 biodiesel plants support green jobs and green investment in nearly all 50 states, producing fuel from regionally available resources.

Carbon reduction: Last year, biodiesel’s contribution to reducing greenhouse gas was the equivalent of removing over 774,000 passenger vehicles from America’s roadways.

Energy balance: Biodiesel produces 4.5 units of energy for every 1 unit it takes to make the fuel, boasting the highest energy balance, and the highest energy content of any American-made renewable fuel.

Both the House and Senate have passed bills to retroactively extend the biodiesel tax credit.  However, the two chambers must still reconcile the differences between the two versions of the bill before it can be sent to the President.

Biodiesel Sampls

Soy Biodiesel Lab Samples

Want to sell Biodiesel at retail?

Want to sell biodiesel at retail? Triangle Biofuels is looking for businesses in the Raleigh/Durham area that already sell diesel fuel what want to sell B20 or B99 biodiesel, or for new business that would be interested in selling B99 biodiesel. We can offer great margins (B99 sells for $4.00/gallon or more in the RTP area) and we will direct traffic to your store from our existing RTP customers and our websites and other biodiesel fuel websites.

Tank and Pump for biodiesel

2000 Gallon Tank and Pump

We can also furnish for lease a new, 2000 gallon double-wall, UL listed tank with Tokheim retail fuel pump (pulser and relays included for fuel control and sales).   All pump materials are rated for straight biodiesel or any blend. Installation and setup would cost extra, and will most likely require permits. NC Weights and Measures certification will be required (free) unless you intend to use it for internal fleet fueling only.

Right now there is a shortage of available biodiesel in the USA.    We can supply you with with pure biodiesel or any biodiesel blend down to B5.  Biodiesel fuel for highway use is taxed the same as regular diesel in North Carolina, so there is no additional paperwork for the retailer.   See our website for more information about high ratio biodiesel blends an precautions you may need to take for existing equipment.  Lower biodiesel blends can usually be added without any additional precautions or modifications to your existing equipment.

For more information, use the Contact Us page and we will be happy to discuss how we can help you sell biodiesel at retail.

Biodiesel Tax Credit Update

From the National Biodiesel Board:

On Wednesday, April 14, 2010, the U.S. House Committee on Ways and Means, the committee with jurisdiction over tax issues, held a hearing on energy tax incentives. While the hearing focused primarily the energy tax incentives enacted early in 2009 as part of President Obama’s economic stimulus package, several members of the committee expressed concern with the lapse of the biodiesel tax incentive and signaled their desire to resolve this issue. Michael Mundaca, the Assistant Treasury Secretary for Tax Policy, also confirmed the Obama Administration’s position in support of extending the biodiesel tax incentive retroactively through the end of 2011. The NBB submitted written testimony explaining the time sensitive need to retroactively extend the biodiesel tax incentive as well as the merits of H.R. 4070 and S. 1589, legislation to provide a multiple year extension of a reformed biodiesel tax incentive.

During the hearing and in subsequent press accounts, U.S. Representative Sander Levin (D-MI), the Chairman of the Ways and Means Committee, signaled his desire to complete consideration of the tax extender package that contains an extension of the biodiesel tax incentive prior to the Memorial Day recess. The biggest barrier to passage remains identifying revenue raisers to offset costs associated with the extension of expired tax provisions. NBB’s Washington, DC staff will continue to advocate for immediate action to address this issue. NBB members and biodiesel stakeholders are urged to contact their federal elected officials with a similar message. Please visit the Members Only section of the NBB website to review the written testimony submitted to the U.S. House Committee on Ways and Means and additional information on this important topic.

Federal Grants for Biodiesel Being Revoked?

Last week I received an email from the grant administrator for a Department of Energy (DOE) grant we had been awarded in 2009.  The grant was awarded in June of 2009 but was being held up because of a new review process to determine if the funds were going to legitimate plants that were meeting federal requirements for fuel quality.  Fair enough.  However, almost 9 months later, I still have received no funds.  Hard to plan equipment purchases, contracting, and employee hiring under those circumstances, eh?

But the latest email I received last week told me that upon further review, we were not being awarded the grant money after all because we did not meet the criteria for renewable energy and sustainability.  What?!  We’re a biodiesel plant.  We take waste cooking oil, and turn it into a fuel you can burn in your truck.  How is THAT not renewable?  How is THAT not sustainable?

Rest assured, I was told, we were not the only applicant to be denied.  The other 4 biofuel plants in NC were also denied under similar circumstances.  Well, at least I wasn’t being singled out…

So what does that tell us?  It tells us that there is a policy shift going on somewhere in Washington.  Either they don’t actually have the money to fund the grants, and are delaying the awards until they do; or somebody somewhere decided that grant funds should be going to a different group than biofuels.

Regardless, I was encouraged to “repurpose” my grant application and resubmit it, which I quickly did; hoping that it will be received and accepted under whatever ethereal guidelines determine its worthiness.  Fingers crossed.

Oddly enough, I am in the middle of drafting a grant proposal for 2010 funds that will fall under the very same guidelines.   Wonder what will happen to this one.  For those of you who don’t know (as I didn’t until I was knee deep in this process), writing a grant proposal is not a trivial process.  It has a certain structure, must meet certain criteria, takes time to write, requires money for subconsultants and engineers to develop your grant proposal basis (in my case energy and thermal calculations), and time and effort to get quotes from installation contractors and equipment suppliers.  All of this effort for something you may not even get awarded to you.  Couple that, with the review process taking longer than expected (which means the vendor quotes you got, which are typically only good for 90 days, are no longer valid), and it makes it very difficult indeed to use grant money to fund anything that is critical (or maybe even useful) for business operations.

So, the trick is to write a grant proposal for something that is nice to have, but not something you absolutely need to have, unless you are a patient person (which I am not).   Unfortunately, we’re still in the “need to have” phase.  We need these funds in order to expand.  We are able to grow.  Other plants are going out of business, and I’m trying to expand, in the worse economic period in recent history.

We have a government that pledges it will support biofuels, and says it wants to support small business.  Great.

So it creates grants to provide funding but doesn’t ever award them, provides stimulus money to banks that won’t lend it to consumers, and won’t renew tax incentives for biofuels to encourage producers to make it and consumers to buy it (see other rants here in my blog about that one).

It is not yet clear what is going on in Washington around biofuels.  I’m in a microcosm.  I really only follow politics related to stuff that affects my bottom line.  Maybe EVERYBODY is dealing with this because as a country we’re broke.  I don’t know.  But hopefully there will be a change here soon so that we can get back to business.

We have the ability to make a domestic product right here in the USA.  Not many of us factories left here.  I want to add jobs.  We make a renewable product from a waste stream.  We make a product that burns 80% cleaner than petroleum.  We have a plant that is making this product right now, right here, using existing technology.  This isn’t a “pilot” project, or a “theoretical model”.  It’s here, now.

Just exactly what else would we need to be in order to be more attractive to government policy makers?

Biodiesel Pump

Biodiesel Pump

State Tax Rates for Biodiesel

North Carolina has had 8 plants that produce biodiesel.  That is not as many as some other states in the Midwest, but it’s a good amount for the Southeast.   What is odd about that is the fact that North Carolina is not a very good host to biodiesel, in spite of what the state government claims.

There have been many lobbies to try to get additional support for biofuels in North Carolina, yet very few of them have been enacted.  There was a push several times for a tax holiday on biodiesel, didn’t happen.  There was a push for mandated biodiesel blends for all diesel sold in the state, didn’t happen.  There was a push for a supplemental tax credit for biodiesel sold in the state, nope, didn’t happen either.

What’s interesting is how many other states actually have done something.  The following information was provided by the NC Department of Revenue, Motor Fuels Tax Division.  It lists the number of states that do not charge tax for biodiesel.  Oddly, NC has the highest tax on diesel fuel in the Southeast at $.30 per gallon (Georgia has the lowest at $.15).   So, if NC had no tax on biodiesel it means that B99 (pure biodiesel) would be cheaper by $.30 per gallon, and blends such as B20 would be $.06 cheaper per gallon.

States with no tax on biodiesel:   Idaho, Kentucky, Missouri, Montana, New Jersey, New Mexico, Oklahoma, Oregon, South Carolina, Tennessee, Vermont, Washington, Wisconsin, Wyoming.

That’s 14 states that seem to want to promote biodiesel by providing an incentive for the customer to by not taxing it.  The rest apparently can’t seem to do without the tax revenue.  Pity.

North Carolina has a state funded Biofuels Center called the Biofuels Center of North Carolina, and a goal, as published on their website that says “The goal of North Carolina’s Strategic Plan for Biofuels Leadership is that by 2017, 10% of liquid fuels sold in North Carolina will come from biofuels locally grown and produced”.   Considering that South Carolina, Tennessee, Kentucky, and Virginia all have better incentives for biofuels than NC, I don’t see that happening unless the NC Legislature starts taking this seriously and providing incentives for producers to make biofuels, and consumers to buy it.  So far, that’s not even remotely happening in this state.

Tax map for diesel

Diesel Taxes Map

100 Days and Counting

Congress is on its Easter recess until April 12.   Today was the 100th day since the tax expired.   Meanwhile, plants across the US are idled, or out of business.  In NC, two biodiesel plants are still in operation, out of 8.

Triangle Biofuels is one of them, producing about 2 truckloads a week currently.   But without the tax credit, we cannot continue to operate unless the commodities market inverts (vegetable oil being cheaper than petroleum).

The second jobs bill that has the $1-per-gallon tax credit for biodiesel for 2010 awaits action by the House Ways and Means Committee.  The bill, H.R. 4213, is called the American Workers, State, and Business Relief Act.

There is some buzz, mostly rumors I hope, that the large Ag concerns are lobbying hard for congress NOT TO PASS the bill anytime soon in order to weed out the small biodiesel plants.   It’d be easy to play up on that from the conspiracy theory standpoint, but it’s gossip as far as I know.  The evidence sure seems to point that way though.

Want to help?  Email, call, or write your senator and congressman and ask him/her why they haven’t moved HR 4213 into law.

The Case for Soy

With the recent crazy pricing for Waste Vegetable Oil (WVO), we have begun to analyze looking at alternative feedstocks (remember when WVO was an alternative feedstock?). I developed a spreadsheet where I could plug in the price per lb of the feedstock and the conversion efficiency of that feedstock based upon FFA, moisture, and glycerin value. What I quickly discovered was that virgin soy currently has a higher value than WVO as a biodiesel feedstock! Don’t believe me? Follow the math.

Crude Degummed Soybean Oil – < 1% FFA, < 1% MIU
WVO Yellow Grease – 7% FFA, < 4% MIU

Cost FOB Per lb Per gal
Soy $       0.40 $       3.00
WVO $       0.28 $       2.10

Looking at the material costs only, not overhead (additives, labor, production costs),  the table below shows the cost of the feedstock, raw materials and the costs needed due to the conversion factor of the feedstock (due to the impurities in the WVO, and it takes more methanol and catalyst to process WVO).

Per Gal to process Soy
Feedstock $       3.00 $       2.42
Methanol $       0.23 $       0.40
Catalyst $       0.10 $       0.15
Wash $       0.02 $       0.04
Total COGS $       3.35 $       3.01

So far this makes sense, Soy costs more, so it costs more to make biodiesel.  Right?  But wait.  The value of B100 (as of today) made from soy is more than WVO, and the glycerin purity is higher and worth more.  Thus, per gallon, the total value per gallon of soy biodiesel is higher than WVO.

B100 Value $       3.52 $       2.94
Glycerin Value $       0.22 $       0.11
Recovered MeOH $       0.02 $       0.06
Total Value $       3.76 $       3.11
Profit $       0.41 $       0.10

So something is clearly wrong when the Jacobsen report is showing WVO at .28 per lb for WVO and Virgin Soy is at .40.  This, at a time when B99 biodiesel is selling cheaper than petroleum diesel fuel.   Something is very wrong in Kansas, and our congress just sit on their hands.  So, for now, we’re buying Soy.  If you’re selling WVO, get your pricing right, or don’t bother calling us.

Soybean Oil for Biodiesel Feedstock.

Food for Fuel, Again.

Well, it’s March, and the biodiesel tax credit has been in limbo for it’s third month, with no real idea when it will be reinstated.

Given the media hype in the recent past about renewable fuels causing food prices to skyrocket, you’d think that the market would breathe a huge sigh of relief and that commodity food prices would have plummeted to the bottom.  After all, almost 85% of the biodiesel plants in the USA are either idled or out of business. So where’s the pressure to keep price up, right?

Well, as of today, soybean oil is $.40 /lb. That’s $3.00 per gallon. Waste Vegetable Oil (WVO), another biodiesel feedstock, is $.26 / lb, or $1.95 per gallon. The average price per gallon for biodiesel right now is just slightly more than petroleum diesel, at around $2.25. What were prices for soybean oil and WVO back in March of last year? Around $.32 / lb for soybean oil, and around $.21 lb for WVO.

So who’s driving the price of raw feedstock materials up?  Not biodiesel, that’s for sure.   To me, it looks like the agricultural and food industries, just like they were before. They are currently exporting oils to Asia and South America. That’s good for everybody, except biodiesel. But yet the public perception when I talk to people is that we’re driving the price of food up.   Alternative feedstocks, such as algae oil, hold high hope for renewable fuels.   It provides a cheaper feedstock for us, and shuts up the critics of current feedstock supplies, unless they find something wrong with algae…

Soybean Oil Price Graph 2009