BioDiesel: We got the supply, Mandated demand!

The Energy Policy Act of 2007 mandates a minimum of 500 million gallons of biodiesel (B100 / B99.9) usage in 2009, growing to one billion gallons in 2012. The new Administration may increase this.

Above and beyond that California, Ohio, Hawaii, and Montana have passed legislation requiring that state governmental agencies use biodiesel. Portland's biofuels mandate began July 1 2007 and requires 10 percent ethanol blends in gasoline and 5 percent biodiesel blends. The cities of San Francisco, Santa Monica and Glendale have all mandated the use of B20 for their municipal diesel fleet. New York, Illinois, Iowa and Tennessee provide excise tax waivers or credits for biodiese usage. California is implementing a Low Carbon Fuel Standard that requires a 10% reduction in carbon intensity in diesel and gasoline fuels by 2020. Biodiesel is one of the primary options that refiners, blenders and importers can use to reduce the carbon intensity of diesel fuel. The Department of Defense is the single largest purchaser of biodiesel in the U.S.

Biodiesel has been used in Europe on a commercial scale for over 15 years. Many countries in the European Union have biodiesel mandates or targeted levels of biodiesel consumption. Estimates for biodiesel usage in the EU in 2007 range from 1.3 to 1.6 billion gallons. Over half of the biodiesel produced in the U.S. in 2007 was exported to Europe to meet this high level of demand for biodiesel. Safeway, UPS and Waste Management Corp use biodiesel blends in their fleets.

Massachusetts, New Mexico and Louisiana have approved biodiesel mandates that have not yet taken effect. Here are some updates on the four states that require or will soon require a minimum percentage of biodiesel be sold across their state. All start at B2 or 2% biodiesel and some go up to B20 or 20% within 6 years! Pennsylvania is just met the production threshold to begin at a 2% blend and Minnesota is moving up to B5 - 5% in May.

Pennsylvania

CST Pennsylvania Gov. Edward Rendell announced Jan. 15 (2009) that the state has met the first in-state biodiesel production threshold of 40 MMgy. As a result, within one year every gallon of on-road diesel sold in Pennsylvania must contain a minimum of 2 percent biodiesel. Pennsylvania House Bill 1202, which was signed into law July 2008, established a state renewable fuels standard, which requires biofuels percentage increases to occur as in-state production for biodiesel and ethanol reach certain levels. Under the legislation, all retail diesel fuel sold must contain:
2 percent biodiesel once in-state production reaches 40 MMgy
5 percent biodiesel once in-state production reaches 100 MMgy
10 percent biodiesel once in-state production reaches 200 MMgy
20 percent biodiesel once in-state production reaches 400 MMgy

Full articles here:

http://news.moneycentral.msn.com/provider/providerarticle.aspx?feed=AP&date=20090116&id=9520730

http://www.dtnethanolcenter.com/index.cfm?show=10&pid=22&mid=77

http://www.biodieselmagazine.com/article.jsp?article_id=3178

Minnesota

Minnesota, the first state to mandate biodiesel in its diesel fuel, will increase the B2 requirement to B5 effective May 5 (2009). The increase in the mandate was signed into law in May 2008. The mandate progressively hikes the biodiesel concentration in diesel fuel from B5 starting in 2012 for non-winter months following a review that increasing to a higher blend ratio doesn't cause economic or environmental harm, and that the supply will be available. Additionally, at least half of the biodiesel must be produced within the state. If these stipulations are met, Minnesota will require a B10 blend in diesel fuel beginning May 1, 2012, until October 2012 when it is reduced to B5. The state returns to B10 from April through October, and moves to a B20 formula on May 1, 2015.

http://www.dtnethanolcenter.com/index.cfm?show=10&mid=77&pid=25

Washington

The standards start at 2%, and ramp up to 5% for biodiesel and 10% for ethanol. Senate Bill 6508 mandates fuel dealers to sell 2 percent biodiesel out of their total diesel sales and 2 percent ethanol out of total gasoline sales. This new state biofuels standard makes Washington a leader among other states that are moving in the direction of supporting renewable energy. It also complements a similar Federal law called the Renewable Fuels Standard (RFS) that mandates the US reach 7.5 billion gallons of biofuel use by 2012.

http://www.renewableenergyworld.com/rea/news/story?id=44298
http://www.biodieselmagazine.com/article.jsp?article_id=879

Oregon

Oregon Biodiesel Mandate May Begin by Summer (2009)
12.18.08
Oregon's biodiesel mandate could begin by the summer of 2009, OPIS reports. Once in-state production reaches 5 million gallons per year for three months, 2% biodiesel in state diesel fuel will be required. After 15 million gallons per year is reached, the mandate increases to 5%.

http://www.worldenergy.net/public_information/show_news.php?nid=818

*****

August 29th, 2008
Oregon Biodiesel Plant Opening Triggers Mandate
Posted by John Davis
The opening of the 5-million-gallon-a-year Sequential Pacific Biodiesel refinery in Salem, Oregon today is attracting celebrities and kicking in a new biodiesel mandate. The Eugene (OR) Register-Guard reports not only is country music legend and biodiesel backer Willie Nelson expected at the opening, but Oregon’s new biodiesel mandate will start: Once the plant is producing at the 5-million-gallon capacity, that will trigger the state’s renewable fuel standards for diesel, requiring that all diesel sold in Oregon include at least 2 percent biodiesel. Hitting that threshold should help Sequential and the biodiesel industry because it guarantees that a certain amount of biodiesel will be consumed in Oregon, company co-founder Ian Hill said. The new standard will double demand for biodiesel to about 20 million gallons per year, Hill said.

http://domesticfuel.com/2008/08/29/oregon-biodiesel-plant-opening-triggers-mandate/

http://www.biodieselmagazine.com/article.jsp?article_id=1715

Conclusion: The market for BioDiesel is tremendous. In PA alone 1.8 billion gallons of diesel are sold over the course of a year. With even a 2% mandate, that equates to 36M gallons of biodiesel. At five percent it is 90M gallons. Most of these state tie to at least a portion to being internal state production. However, the biggest problem they have in implementing these mandates is finding enough product. With these mandates, biodiesel can get unhooked from the price of diesel. The price is tied to demand. Minimal demand is mandated. The price of biodiesel can run up to a dollar more than the price of petro-diesel. Just the place you want to be if you are the producer with the low cost feedstock - corn oil. At this moment the price of the two is similar.

Good Hunting,

SkunK