By MICHELE F. MIHALJEVICH
Indiana Correspondent LIMA, Ohio — An increase in biodiesel production and demand could be on the horizon after a couple of slow years, according to a speaker at last week’s Ohio Grain Farmers Symposium.
“If you look back at what biodiesel means to soybean farmers, it has been very important in regard to profits,” said Alan Weber, a founding partner of MARC-IV, a consulting company. “It will continue to be so, but there will be some bumps, bruises and hiccups. It’s important for us in the ag sector to remain focused.”
Growth in the biodiesel industry was stagnant the last couple of years because of the credit crisis in the summer of 2008, which created issues with working capital for many firms, Weber said.
Also contributing to the lack of growth was the imposition of tariffs on U.S. biodiesel sold in Europe beginning in March, and uncertain federal policy signaled by a one-year delay in the implementation of renewable fuel standards by the U.S. Environmental Protection Agency (EPA), he said.
“Any one of these factors alone would have been a challenge. The combination was an overwhelming challenge to the industry. The renewable fuel standard should have been implemented by now, but hasn’t been,” he added.
There have been signs of recovery this year, however, as production has been increasing month by month, he said. Healthy industry growth will depend on petroleum prices, federal legislation, consumer confidence in biodiesel and feedstock availability, Weber said.
“Federal policy remains critical. It can serve as an effective catalyst for the biodiesel industry – for example, extensions of the biodiesel blenders tax credit and the small producers income tax credit. The industry would be happy with extensions in any form.”
Soybean farmers and others in the industry shouldn’t be concerned about statistics that show decreases in the percentage of soybean oil used in biodiesel production, he said. In 2007, of all feedstock used, 80 percent was soybean oil. That number dropped to 60 percent in 2008.
“Don’t get lost in the statistics. Each year, about 400 million gallons of soybean oil were used,” he said, predicting the percentage of soybean oil used this year will decrease to 50 percent.
Increased ethanol mix needed
The federal government will probably need to look at increasing the minimum amount of ethanol allowed as a fuel additive in order to meet a goal of producing 36 billion gallons of renewable fuels by 2022, said Geoff Cooper, vice president of research and analysis for the Renewable Fuels Assoc.
Nearly all ethanol-blend fuel is E10, which is 10 percent ethanol by volume. E10 has been approved for all vehicles. E85, which is 70-85 percent ethanol by volume, may be used only in flex fuel vehicles (FFVs). Mid-level blends, such as 20, 30 or 40 percent ethanol by volume, also may only be used in FFVs.
“Meeting renewable fuel standard targets will require an approval of blends greater than E10 for use in conventional automobiles,” Cooper said. “Approval of mid-level blends will be necessary for renewable fuel standard compliance in the near future.”
For mid-level blends to be considered for conventional vehicles, a fuel waiver must be granted at the federal level, and the EPA must find that mid-level blends are substantially similar to current blends, such as E10, he said. Also, a change would be needed for auto and small engine warranties, and there must be clear certification of storage and dispensing equipment.
A fuel waiver would show that the fuel or fuel additive won’t cause or contribute to a failure of any emission control device or system, he said.
The EPA is studying catalyst durability data for mid-level blends and said earlier this month it would delay a decision on a waiver until mid-2010, Cooper explained.
“A mid-level blend such as E15 wouldn’t solve all our problems, but it would push the blend wall off five years or so,” he said.
The symposium, sponsored by the Ohio Corn Growers Assoc., the Ohio Soybean Assoc. and the Ohio Wheat Growers Assoc., was Dec. 17. |
