Biodiesel poised for a big 2013

By Matt Reese

Biodiesel is poised for a big year in 2013 as a number of important components have fallen into place for the industry in recent months. The renewal of the $1 tax credit, the increasing volume requirements of the renewable fuel standard and more marketplace integration have set biodiesel up for a good year.

“We’ve got a lot of momentum as we go into 2013. This industry is poised to produce more gallons of biodiesel. The renewable fuels standard has increased the base demand for us to 1.28 billion gallons and we’re looking forward to a very good year for biodiesel here in the U.S.,” said Gary Haer, Chairman of the National Biodiesel Board. “We’re seeing the fuel become more available to customers and we’re seeing some markets doing very well, but it has been a long time coming and we still have a lot of work to do.”

Biodiesel is now more than just soybean-based.

And, in turn, biodiesel has been playing an increasingly important role in agriculture as the types of feedstocks for biodiesel production have expanded.

“In the U.S., soy oil contributes about half of the production of biodiesel. The other feedstocks that we use are inedible corn oil that comes from extracting it from DDGs and we use animal fat from pork, poultry and cattle. We also use recycled cooking oil,” Haer said. “For biodiesel, the return to the soybean farmer was $1.04 per bushel for soybeans last year. Corn farmers, through the inedible corn oil we use for biodiesel, get over 30 cents per bushel for corn. And for the livestock producers, it is over $16 per head for beef producers and $4 per head for hog production that we add by using animal fats. The use of those feedstocks for fuel production is returning value to the farm gate and that is a great thing for our country and for agriculture.”

With high prices for soybeans in 2012, feedstock diversification became more important and the benefits become more apparent.

“With the drought, I think soybean farmers who have supported this industry forever, saw that diversity with feedstock is ultimately a good thing for the industry and for agriculture,” said Joe Jobe, National Biodiesel Board CEO. “Biodiesel has doubled the value of soybean oil, lowered the value of protein for livestock producers and increased the grain checks for soybean farmers selling whole beans. When animal fats are in the feedstock mix, it is good for the livestock industry, which is good for soybean farmers.”

Jobe said the biodiesel industry is set up for a very bright future.

“It is not about replacing every drop of petroleum; it is about continuing to diversify transportation energy so we can meet our needs affordably and sustainably,” Jobe said. ”Biodiesel will play an increasing role to help protect fuel consumers and the U.S. economy from unstable energy markets that are grossly distorted by political factors in the most politically unstable region in the world and by nationalized oil companies of totalitarian regimes.”

Eight years ago NBB set a goal to be 5% of the diesel fuel supply by 2015, a goal then viewed as aggressive. With a billion gallons produced in 2011 and 2012, the biodiesel industry is well on its way to achieve that goal and possibly hit it earlier than expected.

“No one could have predicted the changes and challenges of this industry, but we have been deliberate and intentional as we map our potential,” Jobe said. “This year, biodiesel marks 20 years for the trade association, 10 years for the conference and lays out the vision for the next ten years to come.”

At the Biodiesel Conference & Expo this week, Jobe announced the industry’s 10×22 goal envisions a more diversified future energy portfolio that would include biodiesel making up 10% of the diesel fuel supply. This goal is benchmarked to the onroad volumes but expected to be used in various blend levels in various applications. The goal is intended to be a stretch but yet attainable. It accounts for continuing technological breakthroughs in research on raw materials like one announced today.

Researchers at the Danforth Plant Science Center have developed technology that has demonstrated 2% and possibly higher increases in the oil content of soybeans. Preliminary data suggests these benefits occur without loss of yield or negative impacts on protein quality. The development has the potential to add one-half billion gallons of oil to the feedstock supply in the near term without negatively impacting soybean meal and animal feed.

 

 

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