Awake at the Wheel

Are you a CleanDrive member? If so, you are at the forefront of a movement towards tracking and monitoring you carbon footprint. A recent New York Times article discusses how visibility into our carbon output will become a part of our lives, and influence behavior for the better. From thermostat price monitors, to eco-mood jewelry – the article outlines several ways carbon savings, or lack thereof, will be worn on our sleeve. Have a read: http://www.nytimes.com/2008/03/25/science/25tier.html?ex=1207108800&en=30d6236cc4c256da&ei=5070&emc=eta1

So if you haven’t already, register for CleanDrive and be at the head of the carbon tracking revolution. Review you report with your family, or show your customers. It’s a powerful thing to see how your choice to use biodiesel is making a change for the better. Combined the Propel community has saved nearly 1 million pounds of CO2. Now that’s powerful.

Register for CleanDrive: http://propelbiofuels.com/content/cleandrive/

Check your CleanDrive account: https://www.propelbiofuels.com/site/clean/login.htm

Propel’s commitment to alternative fuel access and sustainability includes economic sustainability. As a retailer, Propel purchases biodiesel at wholesale prices, and sells to our customers at margins equal to or less than traditional petroleum retailers. As wholesale costs rise for biodiesel, Propel is committed to offering clean fuel access at a reasonable price point. And our fuels and vehicles team is aggressively looking at biodiesel supply options that meet our quality, cost and sustainability parameters.

There is one main factor driving the current pricing increase: the price of vegetable oil. In the past 12 months, March 2007 to March 2008, prices have jumped 90% for soy oil.

For biodiesel producers, between 80% - 90% of the input cost of biodiesel production is vegetable oil, like canola and soy oil. And vegetable oil is currently selling at a price equivalent of between $180-$190 per barrel. This is an increase is due to speculation, not market demand. Global demand for consumable veg oils has risen at a consistent 3% level for over two decades and continues at this level. There has not been a significant demand increase, or supply decrease, that explain the price run up in veg oils. Commodities across the board have risen at the same pace- petroleum, minerals, and all agricultural products. On the upside, current economics benefit USA farm communities.

Propel is dedicated to providing the most sustainable and renewable fuels that meet our cost and quality standards. We are working hard to open markets for new feedstocks and technologies that offer viable alternatives to petroleum. Together with you, we are pioneering new ground, creating economic opportunities, and building a sustainable future for our children. We will keep you informed as biodiesel prices change. If you have any questions don’t hesitate to write us. Thank you for your commitment to clean and renewable biodiesel.

We’d also like to credit Becky Lyle, a WA small farm owner, and NW Biodiesel Network, for the ongoing discussion of feedstock costs. Join the NW Biodiesel Network email list, visit http://www.nwbiodiesel.org/mail_list.htm.

Michael Wang of Argonne’s Transportation Technology R&D Center and Zia Haq of the Department of Energy’s Office of Biomass respond to the article by Searchinger et al. in the February 7, 2008, Sciencexpress, “Use of U.S. Croplands for Biofuels Increases Greenhouse Gases through Emissions from Land Use Change”

______________________________

Letter to Science

Michael Wang

Center for Transportation Research

Argonne National Laboratory

Zia Haq

Office of Biomass Program

Office of Energy Efficiency and Renewable Energy U.S. Department of Energy

The article by Searchinger et al. in Sciencexpress (”Use of U.S.

Croplands for Biofuels Increases Greenhouse Gases through Emissions from Land Use Change,” February 7, 200 provides a timely discussion of fuel ethanol’s effects on greenhouse gas (GHG) emissions when taking into account GHG emissions from potential land use changes induced by ethanol production.

Land use change issues associated with biofuels were explored in life-cycle analyses beginning in early 1990s (Delucchi 1991). In general, the land use changes that occur as a result of biofuel production can be separated into two categories: direct and indirect.

Direct land use changes involve direct displacement of land for farming of the feedstocks needed for biofuel production. Indirect land use changes are those made to accommodate farming of food commodities in other places in order to maintain the global food supply and demand balance.

Searchinger et al. used the GREET model developed by one of us at Argonne National Laboratory in their study (see Wang 1999). They correctly stated that the GREET model includes GHG emissions from direct land use changes associated with corn ethanol production; the emissions estimates in GREET are based on land use changes modeled by the U.S. Department of Agriculture (USDA) in 1999 for an annual production of 4 billion gallons of corn ethanol in the United States by 2010. Needless to say, the ethanol production level simulated by USDA in 1999 has been far exceeded by actual ethanol production - about 6 billion gallons in

2007 (Renewable Fuels Association 2008). Thus, the resultant GHG emissions from land use changes provided in the current GREET version need to be updated. Argonne, and several other organizations, recently began to address both direct and indirect land use changes associated with future, much-expanded U.S. biofuel production. Such an effort requires expansion and use of general equilibrium models at the global scale.

Many critical factors determine GHG emission outcomes of land use changes. First, we need to clearly define a baseline for global food supply and demand and cropland availability without the U.S. biofuel program. It is not clear to us what baseline Searchinger et al. defined in their modeling study.

Searchinger et al. modeled a case in which U.S. corn ethanol production increased from 15 billion gallons a year to 30 billion gallons a year by 2015. However, in the 2007 Energy Independence and Security Act (EISA), Congress established an annual corn ethanol production cap of 15 billion gallons by 2015. Congress established the cap - based on its awareness of the resource limitations for corn ethanol production - to help prevent dramatic land use changes. Thus, Searchinger et al. examined a corn ethanol production case that is not directly relevant to U.S. corn ethanol production in the next seven years.

Corn yield per acre is a key factor in determining the total amount of land needed for a given level of corn ethanol production. It is worth noting that U.S. corn yield per acre has steadily increased - nearly 800% in the past 100 years (Perlack et al. 2005). Between 1980 (the beginning of the U.S. corn ethanol program) and 2006, per-acre corn yield in the United States has increased at an annual rate of 1.6% (Wang et al. 2007). Seed companies are developing better corn seeds that resist drought and pests and use nitrogen more efficiently. Corn yield could increase at an annual rate of 2% between now and 2020 and beyond (Korves 2007). Despite these trends, Searchinger et al. used a constant corn yield, assuming that low yields from corn fields converted from marginal land would offset increased yields in existing corn fields. A more accurate approach would be to use the increased yields in existing corn fields, determine how much additional land was required for corn farming in the United States, and then use the corresponding yield of the new corn fields (some of which could be converted from marginal land). Searchinger et al. further assumed constant corn yield in other countries, many of which have lower corn yields and, consequently, greater potential for increased yields.

Searchinger et al. also assumed that distillers’ grains and solubles

(DGS) from corn ethanol plants would displace corn on a pound-for-pound basis. The one-to-one displacement ratio between DGS and corn fails to recognize that the protein content of DGS is much higher than that of corn (28% vs. 9%). The actual displacement value of DGS is estimated to be at least 23% higher than that assumed by Searchinger et al.

(Klopfenstein et al. 2008).

Searchinger et al. estimated that U.S. corn ethanol production (between

15 billion and 30 billion gallons) would result in an additional 10.8 million hectares of crop land worldwide: 2.8 million hectares in Brazil, 2.3 million hectares in China and India, and 2.2 million hectares in the United States, and the remaining hectares in other countries. The researchers maintain that the United States has already experienced a 62% reduction in corn exports. Actually, U.S. corn exports have fluctuated around the 2-billion-bushel-a-year level since 1980. In 2007, when U.S. corn ethanol production increased dramatically, its corn exports increased to 2.45 billion bushels - a 14% increase from the 2006 level. This increase was accompanied by a significant increase in DGS exports by the United States - from 0.6 million metric tons in 1997 to 3 million metric tons in 2007.

Searchinger et al. had to decide what land use changes would be needed in Brazil, the United States, China, and India to meet their simulated requirement for 10.8 million hectares of new crop land. With no data or modeling, Searchinger et al. used the historical land use changes that occurred in the 1990s in individual countries to predict future land use changes in those countries (2015 and beyond). This assumption is seriously flawed by predicting deforestation in the Amazon and conversion of grassland into crop land in China, India, and the United States. The fact is, deforestation rates have already declined through legislation in Brazil and elsewhere. In China, contrary to the Searchinger et al. assumptions, efforts have been made in the past ten years to convert marginal crop land into grassland and forest land in order to prevent soil erosion and other environmental problems.

In estimating the GHG emissions payback period for corn ethanol, Searchinger et al. relied on the 20% reduction in GHG emissions that is provided in the GREET model for the current ethanol industry. Future corn ethanol plants could improve their energy efficiency by avoiding DGS drying (in some ethanol plants) or switching to energy sources other than natural gas or coal, either of which would result in greater GHG emissions reductions for corn ethanol (Wang et al. 2007). Searchinger et al. failed to address this potential for increased efficiency in ethanol production.

In one of the sensitivity cases, Searchinger et al. examined cellulosic ethanol production from switchgrass grown on land converted from corn farms. Cellulosic biomass feedstocks for ethanol production could come from a variety of sources. Oak Ridge National Laboratory completed an extensive assessment of biomass feedstock availability for biofuel production (Perlack et al. 2005). With no conversion of crop land in the United States, the study concludes that more than 1 billion tons of biomass resources are available each year from forest growth and by-products, crop residues, and perennial energy crops on marginal land.

In fact, in the same issue of Sciencexpress as the Searchinger et al.

study is published, Fargione et al. (200 show beneficial GHG results for cellulosic ethanol.

On the basis of our own analyses, production of corn-based ethanol in the United States so far results in moderate GHG emissions reductions.

There has also been no indication that U.S. corn ethanol production has so far caused indirect land use changes in other countries because U.S. corn exports have been maintained at about 2 billion bushels a year and because U.S. DGS exports have steadily increased in the past ten years.

U.S. corn ethanol production is expected to expand rapidly over the next few years - to 15 billion gallons a year by 2015. It remains to be seen whether and how much direct and indirect land use changes will occur as a result of U.S. corn ethanol production.

The Searchinger et al. study demonstrated that indirect land use changes are much more difficult to model than direct land use changes. To do so adequately, researchers must use general equilibrium models that take into account the supply and demand of agricultural commodities, land use patterns, and land availability (all at the global scale), among many other factors. Efforts have only recently begun to address both direct and indirect land use changes (see Birur et al. 2007). At this time, it is not clear what land use changes could occur globally as a result of U.S. corn ethanol production. While scientific assessment of land use change issues is urgently needed in order to design policies that prevent unintended consequences from biofuel production, conclusions regarding the GHG emissions effects of biofuels based on speculative, limited land use change modeling may misguide biofuel policy development.

References

Birur, D.K., T.W. Hertel, and W.E. Tyner, 2007, The Biofuel Boom: The Implications for the World Food Markets, presented at the Food Economy Conference, the Hague, the Netherlands, Oct. 18-19.

Delucchi, M.A., 1991, Emissions of Greenhouse Gases from the Use of Transportation Fuels and Electricity, ANL/ESD/TM-22, Volume 1, Center for Transportation Research, Argonne National Laboratory, Argonne, Ill., Nov.

Fargione, J., J. Hill, D. Tilman, S. Polasky, and P. Hawthorne, 2008, “Land Cleaning and Biofuel Carbon Debt,” Sciencexpress, available at www.sciencexpress.org, Feb. 7.

Klopfenstein, T. J., G.E. Erickson, and V.R. Bremer, 2008, “Use of Distillers’ By-Products in the Beef Cattle Feeding Industry,”

forthcoming in Journal of Animal Science.

Korves, R., 2007, The Potential Role of Corn Ethanol in Meeting the Energy Needs of the United States in 2016-2030, prepared for the Illinois Corn Marketing Board, Pro-Exporter Network, Dec.

Perlack, R.D., L.L. Wright, A. Turhollow, R.L. Graham, B. Stokes, and D.C. Urbach, 2005, Biomass as Feedstock for Bioenergy and Bioproducts

Industry: the Technical Feasibility of a Billion-Ton Annual Supply, prepared for the U.S. Department of Energy and the U.S. Department of Agriculture, ORNL/TM-2005/66, Oak Ridge National Laboratory, Oak Ridge, Tenn., April.

RFA (Renewable Fuels Association), 2008, Industry Statistics, available at http://www. ethanolrfa.org/industry/statistics/, accessed Feb. 13, 2008.

Searchinger, T., R. Heimlich, R.A. Houghton, F. Dong, A. Elobeid, J.

Fabiosa, S. Tokgoz, D. Hayes, and T.H. Yu, 2008, “Use of U.S. Croplands for Biofuels Increases Greenhouse Gases through Emissions from Land Use Change,” Sciencexpress, available at www.sciencexpress.org, Feb. 7.

Wang, M., 1999, GREET 1.5 - Transportation Fuel-Cycle Model, Volume 1:

Methodology, Development, Use, and Results, ANL/ESD-39, Volume 1, Center for Transportation Research, Argonne National Laboratory, Argonne, Ill., Aug.

Wang, M, M. Wu, and H. Hong, 2007, “Life-Cycle Energy and Greenhouse Gas Emission Impacts of Different Corn Ethanol Plant Types,” Environmental Research Letter, 2: 024001 (13 pages).

This week articles in Science and Scientific American blasted the use of crops as biofuel feedstocks. The studies question the environmental benefits of ethanol, forecasting gloomy scenarios based on corn-ethanol  farming technologies as they exists today. They do so by effectively changing the way the carbon footprint of the fuel is calculated by directly linking global forest and land depletion to biofuels.

However, the real driver of forest depletion is not biofuels, its people. Population growth across the globe is increasing demand for agricultural land for food, clothing, etc. If biofuels production stopped altogether, the deforestation outlined in the study would not change. It’s erroneous to link agriculture expansion solely to biofuels, when all agriculture products make up the demand for land. Past studies have singled out organic farming practices, animal feed, and coffee – to name a few. This study has opted to ignore all other agricultural sectors, see here: http://www.sciam.com/article.cfm?id=biofuels-bad-for-people-and-climate

Propel is providing access to the cleanest low carbon fuels available. Fuels that solve the problem, not add to it. Our feedstocks come from sustainable sources that do not deplete our essential forest lands. The world’s current fuel, petroleum – is not sustainable. And while a few scientists focus on calculating worst case scenarios, there are scientists and businesses actively working on second generation, low impact feedstocks, like algae, that have huge potential to provide truly sustainable biofuels.

So what are other experts saying? Here’s a sample…

NRDC
http://switchboard.nrdc.org/blogs/ngreene/biofuels_not_quite_dead_yet_th.html
There are no easy solutions to a low-carbon transportation sector that do not require a significant contribution from biofuels. The challenges facing vehicle efficiency, electrification, VMT reductions, smart growth are different from those facing biofuels (they lessen the benefits we can get instead of risking costs), but for me, they do mean that the just-say-no approach to biofuels is irresponsible.

25x’25 Responds to Media Coverage of Studies Published in Science Magazine

http://www.25×25.org/index.php?option=com_content&task=view&id=379&Itemid=57

Studies recently detailed in Science magazine address the possible consequences of a faulty approach to utilizing lands to produce biofuel feedstocks. Unfortunately, mainstream media coverage of the studies failed to report that they also identified ways to avoid these problems and insure that future biofuels give us both a new renewable energy source and greatly reduced greenhouse gas emissions.

Comment from Tim Raphael of Pac Ethanol

from Grist article: http://www.grist.org/news/2008/02/08/biofu/index.html

Land Use Impacts Analysis Flawed
Why should US-based corn ethanol, other crop-based biofuels, or advanced cellulosic fuels take a carbon hit for international land use changes for food or housing or other non-fuel related production?  By that logic:
*    Any US farmland not growing food crops is creating a carbon debt by increasing demand for international food production–What are the “secondary land use impacts” of US grass seed farmers? Or tobacco farmers?  Or nursery owners? Or cotton, tomatoes grapes and a myriad of other non-food related agricultural acreage in the US?
*    Every new subdivision and greenfield commercial, industrial or residential development creates a carbon debt by taking potential food-producing land out of production and shifting that demand to sensitive, international native ecosystems; and
*    Any effort in the US to protect ancient forests or native ecosystems creates a carbon debt by increasing demand for international sources of wood products.

Any analysis that shifts away from a life cycle analysis of the carbon potential for a single product or fuel and attempts to distribute carbon potential to “secondary” or “tertiary” impacts will create a dead-end, through-the-looking-glass scenario that is inaccurate and unworkable.

The real implication of accepting “secondary land use impacts” is an on-going dependence on CO2 intensive, polluting, imported fossil fuels.  Inclusion of secondary impacts is the wrong approach–each product should stand on its own.

It’s Not Acre for Acre - Productivity Gains Means We Get More From Less

The analyses of land use impacts assume that for every acre of land dedicated to renewable energy feedstocks, another acre of land must be put into production elsewhere in the world.  This assumption is flawed for several reasons:

*    It fails to account for advances in seed and processing technology that are providing greater yields for each acre of feedstock.
*  Corn acreage in the US peaked in 1917 with 116 million acres planted, compared to 93 million acres in 2007.  During that period yields have increased by more than 1 bushel/acre/year, from 29 bushels/acre to 200 bushels/acre.  This year the US will harvest more than 10 billion bushels of corn, and exports are rising, so certainly US corn ethanol production is not causing a need for increased grain production in the world.

*    It ignores the value of the feed co-products that are produced at today’s biorefineries.
*    The food value of corn is not lost in ethanol production–distillers grain is a high protein, high nutrient co-product that is sold back into the food market.

*    It inappropriately assigns all of the impact to growth in renewable fuels, ignoring the effects of a growing world economy, increased demand for food, and urban sprawl.

The Environmental Impacts of Fossil Fuels are Increasing
The reports fail to account for the fact that every gallon of biofuel produced today requires less land, requires less water and is less energy intensive than a decade ago, while the opposite is true for oil production.  Every new gallon of oil produced is more energy intensive and requires much more water than before. 

The “easy” sources of oil have been found and are being depleted.  What is left are more remote, costlier and more environmentally damaging nontraditional sources like Canadian tar sands or Rocky Mountain oil shale.  By failing to capitalize on the opportunity renewable fuels offer to begin breaking our adherence to the oil standard, the world would be forced to develop these nontraditional sources of oil that carry significant environmental price tags.

Even traditional sources of oil have steep environmental costs that are not accounted for in the land use reports.  Where is the accounting for oil drilling in the Amazon?  Oil spills in San Francisco Bay?  Or asthma deaths from air pollution?

NW Biodiesel Network Monthly Meeting:

Sustainability in the Biodiesel Industry, a moderated panel of local biodiesel businesses talking about what our biodiesel is made from and how it gets to us.  Moderated by Peter Moulton of Washington State Dept. of Community, Trade, and Economic Development, this panel will include Dr. Dan’s Alternative Fuelwerks, Imperium Renewables, Propel Biofuels, Standard Biodiesel, and Whole Energy.  This discussion will be a great opportunity to hear our local biodiesel industry address  Food vs. Fuel, Transportation Costs, Palm Oil, GMO Soy and other topics.  All we read is the negative.  Come get the real, inside scoop on sustainability in this exciting industry!  There will be plenty of time for Q&A.  7:00 pm to 9:00 pm, Seattle Phinney Center, 6532 Phinney Ave. N, Seattle WA 98103. Cost is Free.  Information at http://nwbiodiesel.org/.

A comprehensive independent peer reviewed study of Canadian canola for biodiesel has determined the emission reductions to be even more compelling than previously known.

Link to PDF 

Surfing the Perfect Storm: Opportunities and Challenges in the Emerging Biofuels Industry
Location : Hyatt Regency Bellevue Hotel
900 Bellevue Way NE
Bellevue, WA
Date & Time : October 17, 2007 - 5:00pm - 8:30pm

This Dinner Program Is Exclusively Sponsored by

Wilson Sonsini Goodrich & Rosati

Surfing the Perfect Storm

Opportunities and Challenges in the Emerging Biofuels Industry

Join the MIT Enterprise Forum of the Northwest as we take an inside look at the emerging biofuels industry.

The perfect storm in the trillion $ petrofuels energy world–with issues of energy security, peak oil and global warming all converging–has created remarkable opportunities for the emergence of a major new industry: biofuels.

Tremendous amounts of capital have already been invested in the biofuel industry in the last 18 months, in spite of uncertain economics and rapidly evolving regulation. Much of the activity is occurring in Seattle.

On Wednesday October 17, 2007, join Seattle-based moderator Ross Reynolds of KUOW to learn more about what is enticing local entrepreneurs into a sector that includes bio-feedstocks, processing plant technology, new distribution chains and more.

Panelists for the program will include:

§ Rob Elam, President of Propel Biofuels

§ Tomas Endicott, Chairman of Sequential Biofuels

§ Nancy Floyd, Founder, Nth Power Venture Capital

§ Dan Parker, CEO of Parker Messana

§ Michael Weaver, CEO of Bionavitas

Topics to be explored by Ross Reynolds and the panel include:

§ The current development status of the biofuels industry (an overview of terms and topics will be provided for those new to this industry)

§ Why companies around the world are investing in a space that is yet to be proved profitable, and what they see down the ‘2nd Generation’ road

§ Which companies and which strategies are likely to prosper

§ Why local entrepreneurs and professionals from other industries are jumping into biofuels

§ What will happen to our baby biofuels companies if the petrofuels ‘elephant’ rolls over on them

Mark your calendars for this provocative dinner event.

 From High Plains Journal...

Luke Jaeger was fed up with high fuel prices.

Jaeger and his wife Darcy farm with his family in the Clark County area, raising a variety of row crops, including wheat and sorghum. When Jaeger found just how little of their acreage could be devoted to an oil crop production and still meet his farm’s energy needs, he knew that it was time for action.

“Dryland farmers, in western Kansas, if they would just put 1 to 2 percent of their farm acres to winter canola or sunflowers, they would have enough acreage to get diesel fuel to run their farm for the whole year,” Jaeger said. He planted 60 acres of winter canola because it holds moisture in the soil, similar to sorghum, and because it can protect soil from erosion at even the early stages in its growth cycle. Also, canola seeds have higher oil content, about 40 percent, than other oil crops like sunflowers or soybeans, Jaeger said.

Imperium CEO Martin Tobias and Founder/President John Plaza. Photo: Imperium

A major milestone for the WA state biodiesel industry: Imperium announces 1m gallon canola contract with Yakima Valley farmers. Propel will make this locally grown biodiesel available to customers at our existing retail sites when the fuel becomes available. Look for rapidly expanding retail outlets in spring/summer this year.

“We’ve always said that we’d be the state’s biggest customer for Washington state produced canola oil, and today we are,” Imperium founder John Plaza said. “This is just the beginning of what we hope will further establish a new market for Washington state farmers.”

The owner of Natural Selection Farms said the deal with Imperium was a winner.

“Diversifying our crop base to include canola makes both great agricultural and business sense,” Ted Durfey said. “I hope others will realize the benefits of adding canola to their crop mix.”

Natural Selection Farms is focused on environmentally responsible agriculture, and since 2003 has been working with the federal and state governments to construct an oilseed pressing facility on its property that is the first in the state.

We wrote about the inevitable biodiesel surplus in our 2007 prediction post. Ethanol faces the same market dynamic. The ethanol business has its origins in top down, mandate and blending based, constructed market pull. Midwest Gasahol in the 80s. This has changed a bit recently, with marketing dollars and high gas prices building a viable consumer demand near corn production regions where economic upside is local, and FlexFuel vehicles are available. For most fuel retailers, the downside MPG of e85 limits retail pricing power, limiting consumer access to niche providers.

Biodiesel, on the other hand, delivers near equivalent MPG and is the ultimate “FlexFuel” i.e. backwards compatibility with any diesel engine powered vehicle. Biodiesel users pay for the upside benefits: CO2 reduction, renewable and domestic fuel advantages without a significant performance or MPG penalty. Biodiesel’s lifecycle energy balance is also significantly more positive than ethanol. Yet, these two fuels remain linked not only in D.C. policy but in Big Oil uptake blending contracts and downstream supply choices, and of course crude oil contracts and price at the pump.

When ethanol/biodiesel is cheap, the refiners blend low and make money on volume. When ethanol isn’t cheap, the refiners only blend to state or Fed mandates. E100/B100 blend stock has no pricing power when feedstock prices rise and petro prices fall. Ignorance of the last mile delivery, positioning, and greed, are leading to the inevitable crash and investor bloodbath of 2007. The small, feedstock isolated biodiesel production start ups will be the first to go, as their “creative” project financing scenarios allow investors to pull the plug vs throwing good money after bad into a small market that now includes Cargill and ADM. Feedstock and scale win.

EnergyWashington reports: Congress May Be Needed To Keep Ethanol Bubble From Bursting

Plummeting oil and gasoline prices, spiking corn prices, historically high natural gas prices and ethanol production capacity reaching 15 billion gallons in a few short years are all the ingredients needed for a market massacre in the ethanol industry. Unless Congress comes riding to the rescue.

…So, if the price of gasoline were to drop substantially below the price of ethanol, why would any refiner add a high priced fuel additive, beyond the 5.4 billion gallon 2008 requirement of the renewable fuel standard (RFS) when cheaper alternatives exist? Suddenly a 15 billion gallon ethanol industry could find demand is only 5.4 billion gallons. The market solution is to cut ethanol prices, and a market collapses. Small, high cost producers would be the first victims, many of them pioneers in the farmer co-operative approach to building a viable U.S. ethanol industry. Small producers face not only the cost pressure of higher feedstock and operating costs but they also lack the capacity to store their product to wait out price declines. Increasingly the railroads, which ship the bulk of ethanol in the U.S., are demanding ethanol plants ship via so-called unit trains, i.e. single commodity ethanol trains consisting of 100 cars or more. Ethanol plants must have a quarter mile or more of railroad spurs available to process unit trains, which many of the smaller plants do not have, putting them at a further disadvantage.

The speculative money pumped into biodiesel production start-ups is about to reach it’s expected outcome: a very oversupplied domestic market. In fact, this market condition already exists, with much domestic biodiesel production heading to Europe in late 06.

One industry insider, who prefers to remain anonymous,  predicts…

“Total U.S. biodiesel capacity will be at less than 50% utilization in 2007, which will effect planned delays in several new plant construction projects as well as some complete plant shutdowns; marketers and retailers will benefit from good pricing.”

Some 80% of on-road diesel is sold at public fueling locations. So will Big Oil help make biodiesel available? American Petroleum Institute President Red Cavaney, in an exclusive interview with EnergyWashington senior editor Peter Rohde, says…

“You have got to remember, when you get down to retail only 5 percent of the retail stations are owned by the oil companies or the refiners. The rest of them are owned by individual businessmen or women. Some of them are jobbers, but a lot of them are just independents. Those are the ones that make those decisions. So they have got to see in their community enough demand to make them feel comfortable, and the government is going to give them credit so they can factor that in and all, and I am sure to a degree that will help a lot of people in their decision, but at the end of the day it is individual business men and women that are going to make these decisions. So the oil company is not going to decide this.”

So all the biodiesel demand side pull will come from mandated RFS laws? Or will a true, ground up market develop? Of course, this could all change if crude reaches $85/bbl and stays there. But this doesn’t seem likely in the near term, given the market’s new-found ability to withstand the same events that shocked crude up $5 a day back in ‘05 (like Nigerian oil worker kidnappings or threats of war against Iran).

We expect biodiesel wholesale prices to squeeze in 2007 and beyond. The producers with control over feedstocks will be in the best position to ride out the storm (Cargill, West-Central, etc).

What does this mean for biodiesel users? Frankly, don’t expect Big Oil to offer biodiesel at the pump anytime soon. They have nothing but upside should biodiesel producers fail. Like any true market, the answer will come from businesses serving a demand that really exists. Propel will continue to target biodiesel outlets at business and communities that are willing to pay for the benefits of biodiesel. In fact, they just may end up paying less in the end.

Biodiesel innovation is occurring at blinding speed. The latest: Prince Charles has developed an insulating artificial turf, suitable for garage wallpapering, that will keep his B100 powered Range Rover and Jaguar above the dreaded Cold Filter Plug Point. Many of you northern climate types may be familiar with the plug-in engine block heater. That is history. The Moore’s Law of biodiesel cold flow properties has been defined, and it is astroturf.

Ok. In layman’s terms, what happens to high blend biodiesel at cold temperatures? B100 soy biodiesel begins causing problems at 30 degrees, +/- 5. At this temp biodiesel begins to form crystals in the tank. These crystals are too large to fit through the fuel filter. Eventually, they will clog the filter and stop the flow of fuel to the engine. The temperature at which this happens is called the Cold Filter Plug Point (or CFPP). When asking your biodiesel supplier about cold weather performance, ask for the CFPP test results. CFPP is a more appropriate metric than Cloud Point (CP) when considering biodiesel cold flow performance, because it is the true operating limit.  If you operate in temps below the advertised CFPP, you should consider a lower biodiesel blend level.

Do B100 additives help? Our research has shown that cold weather additives don’t have any affect on biodiesel above B60. Why? The additive is working on the diesel portion of the blend, but not the biodiesel. The most effective current additives remain petroleum based- petrodiesel (aka D2) or kerosene (aka D1). The chemists promise new and improved non-petro additives soon.

What to do if your vehicle stops? Warm it up. And don’t excessively crank the engine.

The National Biodiesel Board randomly tested biodiesel for quality this fall. The results were discouraging (.pdf). So remember these keys for winter biodiesel driving:
All biodiesel is not created equal. Buy from a reputable retailer or supplier.
Plan ahead! Blend with D1 or D2 as temps are forecasted to drop below 40.
If buying pre-blended fuel, ask your supplier about the blend stock, winter additives and CFPP rating.
Demand ASTM certified B100.

Of note in the biodiesel blog world:

• The videoblog RyanIsHungry is running a super cool video interview (biodiesel… the shameful hack!) with NorCal biodiesel evangelist and Googler/Blogger Eric Case. He credits Matt Haughey for the biodiesel heads up. Eric fills at the SF Biodiesel Coop.
• SF Biodiesel Coop leader and all around biodiesel superman Eric Bowen has thoughts on Imperium and the Women of Biodiesel calendar.
• Martin points to AG Edwards warning re peak petro refining capacity .
• The Imperium Blog points to NYT article on biodiesel demand.
• Piedmont blogs on canola and Big Soy.
  
• Grist is running a series of articles on biofuels. The unwaveringly cheeky tone employed by Grist’s wannabe Second City-esque team of editorial interns does, indeed, grind on the reader, and the “status quo until we have perfection” usual suspects dominate the comments (I demand a carbon negative teleporter- Star Trek style!). Yet this series of articles does a great job illustrating the confusion surrounding biofuels, and the need for incremental positive steps forward. None of the contributors are recognized biofuels experts, so don’t expect them to drop any profound knowledge. All in all, a decent general compilation. Highlight: The Big Three

And a special note unrelated to biodiesel:

A loss for words: Thank you Leslie Harpold. Leslie has been an ongoing inspiration and confidant. Read more about Leslie’s profound impact on people everywhere.

A quick link re: a subject we’ll drill down on, way down, in future posts. Chip Keen writes the DriveTime column for The Oregonian. A reader wrote presuming biodesel’s net energy negative conspiracy. Chip breaks down the factors from the “competing scientists” (Pimental and Patzak enjoy the equivalent science community peer status as climate change non believers)…

It draws this conclusion: “Biodiesel yields around 3.2 units of fuel-product energy for every unit of fossil energy consumed in the life cycle. By contrast, petroleum diesel’s life cycle yields only 0.83 units of fuel-product energy per unit of fossil energy consumed.”

In other words, petrodiesel has a negative energy balance of 17 percent, while biodiesel has a positive energy balance of 220 percent. Biodiesel crops yield more than double their fossil energy input. Petrodiesel is the fuel that takes more energy to produce than it provides in return.

See Propel’s about biodiesel page for more info.

The difference between how much energy is created when producing these top four fuel sources (longer bars are better)

Fuel	Energy IN	Energy OUT
Biodiesel (soy bean)	1.0	3.2
Ethanol	1.0	1.34
Petro-diesel	1.0	0.84
Gasoline	1.0	0.81

Joint study by U.S. Dept of Energy (DOE) and U.S. Dept of Agriculture (USDA), 1998.