Biodiesel Basics

The use of biodiesel is on the rise, but truckstop and travel plaza operators often wonder about how to introduce the fuel to drivers. NATSO sat down with Jon Scharingson, director of sales/marketing for Renewable Energy Group, to get answers to frequently asked questions.

How do I integrate biodiesel into my distillate offerings?
Biodiesel is a drop-in replacement fuel for distillate. Biodiesel blends, but not 100 percent biodiesel, can generally be used in conventional diesel engines with no modifications to the engine. Biodiesel and biodiesel blends can generally be transported using the same trucks, railcars and barges used to transport petroleum- based diesel and can be dispensed through the same terminals and retail pumps as petroleum-based diesel.

Pure biodiesel can be purchased from a commercial-scale biodiesel facility. B100 is biodiesel not yet blended with petroleum diesel. Truckstop operators should assess their current distillate supply chain and infrastructure status to determine how to first integrate biodiesel into the mix.

How do I prepare my pumps and tanks to sell biodiesel?
Dispensing equipment does not need to be modified for blends of 20 percent biodiesel or lower, unless there is an issue with specific elastomers (rubbers) that are not compatible with B20. According to the National Biodiesel Board, occasional fuel filter plugging has been reported, and some people filter the biodiesel dispensing systems may need protection from freezing in cold climates.

Blends higher than 20 percent should always be stored in clean, dry tanks as recommended for conventional diesel fuel.

Can I switch between biodiesel and on-road diesel?
Yes. Truckstop operators may switch back and forth between biodiesel blends and non-biodiesel. Over the course of 2011, blending economics were positive for retail fueling locations.

For fuel managers purchasing B99 or B100 there are significant margin opportunities. Those entities can purchase biodiesel (wet gallons) to which RINs (Renewable Identification Numbers) are attached. Truckstop operators can register with the EPA and aggregate RINs for sale/trade to a petroleum refiner or importer who must collect RINs for compliance. Through November 2011, the Oil Price Information Service’s average RIN value for each gallon of wet biodiesel purchased was $1.95. [Editor’s note: Learn more about RINs at www.biodiesel.org/news/RFS/20070919_ BDMLetterRINSSept07.pdf.]

In addition, we continue to see strong demand in states with biodiesel incentives or requirements. For example, Illinois offers an exemption from the generally applicable 6.25 percent sales tax for biodiesel blends that incentivizes blending at 11 percent biodiesel, or B11. Illinois’ program has made that state the largest biodiesel market in the country.

Currently, Iowa retailers earn $0.02 per gallon for B2 blends or $0.045 per gallon for B5 blends. For 2013 through 2017, retailers earn $0.045 per gallon of B5. The new law also creates a biodiesel production incentive of $0.03 per gallon in 2012, $0.025 per gallon in 2013, and $0.02 per gallon in 2014, for each gallon produced in an Iowa facility up to the first 25 million gallons per production plant.

South Carolina has a retailer cash incentive of $0.25 per gallon of B100 or $0.025 per gallon of B10. In Texas, biodiesel blends are exempt from state excise tax, which results in a $0.20 per gallon incentive for B100.

According to the U.S. Department of Energy, more than 40 states have implemented programs that encourage the use of biodiesel. Minnesota requires a B5 blend. Oregon and Pennsylvania have implemented a B5 biodiesel blend requirement.

Several states have adopted or are considering adopting a low carbon fuel standard, or LCFS, requiring a reduction in the amount of lifecycle carbon intensity in their transportation fuels. Biodiesel has lower carbon emissions than petroleum-based diesel and is thus expected to benefit from increased demand in states like California that have adopted a LCFS.

REG believes that RFS2, along with the $1 per gallon federal tax incentive program and state biodiesel blending policies, will spur the development of infrastructure. [Editor’s note: The federal biodiesel tax credit was expired at the end of 2011. At press time it was not clear if Congress would extend it.]

Additional investment in terminal locations, pipeline movements, and blending facilities will position the biodiesel industry as a sustainable part of the nation’s renewable energy complex.

What do engine manufacturers say about biodiesel?
More than 20 engine manufacturers, including Cummins, Inc., Ford Motor Company, General Motors Corporation, Deere & Company, Mack Trucks, Inc., Volkswagen of America, Inc. and Volvo Truck Corporation, have approved biodiesel blends for use in their engines ranging from 5 percent biodiesel blends (B5) to 20 percent biodiesel blends (B20). Blends of B20 or higher are accepted by several engine manufacturers, though minor engine modifications are sometimes necessary

What type of labeling is required for my pumps?
In October 2008, the international standards developing organizations ASTM amended the definition of standard diesel fuel, ASTM D975, to include up to 5 percent biodiesel. B5 is considered the same quality as diesel fuel if both the B100 and the diesel fuel alone meet their specifications. ASTM also established a new specification, ASTM D7467, for blends of biodiesel between B6 and B20. Federal Trade Commission label requirements mirror the ASTM quality specification and denote three categories for biodiesel blend labeling.

•B5, No Label Required: Fuel blends containing no more than 5 percent biodiesel and no more than 5 percent biomass-based diesel and that meet ASTM D975.

•B6-B20 Labels Required: Fuel blends containing more than 5 percent but no more than 20 percent biodiesel or biomass-based diesel.

•B20+ Labels Required: Fuel blends containing more than 20 percent biodiesel or biomass-based diesel.

What should I look for in biodiesel suppliers?
First, choose a BQ-9000 Accredited Biodiesel Producer. The BQ-9000 program is run by the National Biodiesel Accreditation Committee, a cooperative and voluntary program for producers and marketers. It is a quality systems program that includes storage, sampling, testing, blending, shipping, and distribution and fuel management practices. Since the creation and adoption of the BQ-9000 program, the quality of biodiesel in the marketplace has improved greatly.

Second, purchase only ASTM Specification Biodiesel. B100 biodiesel must meet ASTM D6751’s 19 quality specifications. REG- 9000 branded biodiesel exceeds 10 of those specifications and tests for six in addition to the minimum requirements.

Biodiesel production technology, not the feedstock, impacts finished fuel quality. Lower cost and lower carbon feedstocks include inedible animal fats, used cooking oil and inedible corn oil. Higher cost virgin vegetable oil feedstocks are soybean, palm and canola oils.

Third, ask for a certificate of analysis. Producers following the BQ- 9000 process should make testing results available for the specific lot of biodiesel you purchased. REG maintains retain samples for six months in case customers have questions when the biodiesel (or biodiesel blend) reaches its end consumer.

Resources

Biodiesel handling and use guide

National Biodiesel Board main website

Information on biodiesel and engine manufacturers

Renewable Energy Group

{Editor's Note} To learn more about biodiesel, attend the NATSO U Breakout on Monday, Feb. 20, at 2:45 p.m. at The NATSO Show.

Renewable Energy Group® is the nation’s largest biodiesel producer with a nation- wide distribution and logistics system. Utilizing an integrated value chain model, Renewable Energy Group is focused on converting natural fats, oils and greases into advanced biofuels. With more than 210 million gallons of owned/operated annual production capacity at biorefineries across the country, REG® is a proven bio- diesel partner in the distillate marketplace.More
Source:
Stop Watch Magazine
Supplier Focus:
Renewable Energy Group

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