First, some telling stats: Last year, blenders throughout the U.S. made 75
million gallons of the fuel, up from 25 million just a year prior in 2004.
Reflecting this growth, attendance at the National Biodiesel Board's (NBB)
conference was more than 2,500, up from around 1,500 the year before.
And just days prior to the conference, President George W. Bush's State of
the Union address included a suggestion that biofuels will play a critical
part in lowering the nation's dependence on foreign oil. Critics may
legitimately grumble (and grumble they did) that any effort to reduce
dependence on foreign oil should include a mandatory rise in vehicle fuel
efficiency standards and a DOE budget for renewable energy that doesn't
eliminate key programs like geothermal to make way for others, but the
President's mention of biofuels in such a public platform was icing on the
cake for an industry that's optimistic about continued growth.
The President's FY 2007 Budget includes $50 million for clean diesel
programs -- a $38 million increase -- and $11 million for implementation
of the Renewable Fuels Standard.
It was fitting then that Environmental Protection Agency (EPA)
Administrator Stephen L. Johnson addressed the conference as the keynote
speaker, his first public appearance after the President's speech.
"Our country is on the verge of a dramatic change for how we power our
cars, our homes and our businesses. And innovation - including innovations
in biodiesel - is the catalyst of this change," Johnson said.
There's a host of factors driving the growth in biodiesel, and federal tax
credits are chief among them. Just as solar, wind, and other renewables
received helpful tax credits in the Energy Policy Act of 2005, biodiesel
too benefits from tax credits through the year 2008. And just like those
other industries, they are cautiously optimistic the credits will be
extended.
Jenna Higgins, Communications Director for the NBB, said having the head
of the EPA as the keynote speaker shows biodiesel is now a priority with
the Administration and is seen as an important part of its overall energy
strategy.
"We've never had such a level of support at our yearly conference,"
Higgins said. "That really shows biodiesel is in the eyes of our
government."
If the EPA's top administrator represented serious federal support then
country-singer and biodiesel advocate Willie Nelson brought the star power
and a specific plug for the nation's trucking industry to embrace
biodiesel. Nelson headlined a press conference that was broadcast live to
an XM Satellite radio show popular with truckers. Later, Nelson headlined
an event to celebrate the opening of a dedicated BioWillie biodiesel pump
at a San Diego gas station.
Beyond the headlining speeches and star power, there were a few issues
rising to the surface at conference that are playing an increasing role in
the biodiesel industry: bioheat and quality certification.
Bioheat
First off, "bioheat," a name the industry has only recently agreed on for
the use of biodiesel blends in heating oil, is widely seen as a successful
new avenue for growth in with the homegrown fuel. Currently, most
biodiesel sales are targeted to fleets of vehicles such as the military or
transportation companies, but bioheat is the use of biodiesel in home
heating oils, usually in small blends such as five percent. This is widely
seen as promising and relatively untapped new field that offers the
possibility of being a substantial market for the fuel, especially in
places like the Northeast where it has already seen steady growth.
"Bioheat has become a passion, an obsession, a cause, a cause we're all
here to celebrate. I can see the growth that's going to occur," said
Michael Devine, of Devine Brothers Inc., a fuel distributor in Connecticut
who has expanded his operation into providing bioheat and co-presented at
the Bioheat session.
Devine didn't say bioheat is without its challenges. While bioheat was
actually cheaper in many areas after Hurricane Katrina struck, Devine said
bioheat is typically four or five cents more per gallon than regular
heating oil. He also stressed the second point that continuously came up
in the conference of a need for quality in the product and the overall
industry. Everything from how the fuel is blended to how it's stored and
transported must be done to the highest standards. While B20 -- a 20
percent blend of biodiesel with 80 percent regular diesel - is most
popular for transportation-based biodiesel, Devine suggested lower blends
such as B5 and B6 for home heating purposes. Among his suggestions for
bioheat distributors was to hire a PR agency to help take advantage of the
fuel as a value-added product that can sell itself, despite the slightly
higher cost.
"This is a public relations dream," Devine said. "For those of us who were
in the oil business, talk about being in the uncool business, but bioheat
is a great public relations opportunity for us. Bioheat gives you an
opportunity to look unique."
Quality Certification
Concerning the importance of quality, as Devine mentioned, the NBB is so
concerned about quality they recently established a list of guidelines for
governing production, transportation, storage and other issues that are
critical to biodiesel. It's called BQ-9000 and is similar to ISO ratings
or other certifications for products in other industries.
"A lot of new fuel suppliers are going to be coming online so attention to
quality will be more important than ever," NBB's Higgins said. "It's
critical that the fuel meet the specifications. An off-specification batch
can create problems and a bad batch of fuel can be devastating."
The same mix of factors like tax credits and high energy costs that are
driving the biodiesel industry, if left unchecked or unregulated, could
lead to bad batches of fuel that could give the industry a black eye. That
would be similar, historically, to solar energy, particularly the solar
hot water industry, in the '70s when federal tax credits strongly drove
the market but many a fly-by-night operation sprang up to take advantage
of the business leading to poor customer service and many defective
systems.
Bad batches leading to ruined engines or home heating boilers have not
been an issue, but Higgins says the certification is just a sound,
preemptive precaution and a sign of a maturing industry.
Biodiesel Industry Snapshot
So far the industry is fairly well distributed between large and small
operations. There is no one major player, some plants are farmer owned and
operated, quite a few are small producers in the couple million
gallon-a-year range while there are a few 30 million gallon-a-year
operations.
And just as the ethanol industry has its wild, but conceivable dream of
someday being largely distilled through cellulosic technologies that could
use plant waste or high-yield plants like switchgrass, biodiesel hopefuls
look to breakthroughs with algae or mustard-seed as a feedstock for the
fuel.
On the shorter term, maintaining those tax credits will be crucial, just
as it is for the solar industry or wind power industry. And another
immediate hurdle, says Higgins, is educating the public about the fuel.
She said the public is getting more familiar with biodiesel but that
doesn't always mean they're putting it in their diesel vehicle tanks or
home heating systems.
"The needle is definitely moving," Higgins said. "But there's always a
fear of the unknown so introducing biodiesel to the public is one of our
missions here."
While there's been plenty of federal attention at using hydrogen and
fuel-cell driven cars to solve the nation's transportation dependence on
foreign oil, Higgins says she's optimistic that biodiesel brings an
immediate solution requiring no major modifications or research
breakthroughs.
"There's no one silver bullet to our energy needs but biodiesel is
absolutely one of our best tools to make a difference in energy supply and
works with what we already have. It can play a valuable role in
diversifying our energy supply and increasing the amount of fuel that is
domestically produced. It's here today and it works immediately. For an
alternative fuels to be successful it has to work with what we have."
