Diesel accounts for 30% of U.S. transportation fuel. In many uses (like trucking), there is no replacement technology in sight. The use of diesel in Europe is double that of the U.S. Bio-diesel is an excellent replacement for oil-derived diesel since it requires only minor infrastructure change or engine change (unlike methanol and ethanol). However, our sources for bio-diesel are limited today. We need to create a larger bio-diesel market (demand), so investors will substantially increase investments in bio-diesel production.
The government needs to create a regulatory environment which will speed up the move to bio-diesel. Effects on Global Warming – B100 reduces CO2 emissions by 75% and reduces other pollutants (increases NO emissions). Provides 3.2 times the energy it takes to produce it.All future diesel engines could be sold only if they can run on B100 (100% bio-diesel). The mandate could be in effect in two years.
There are no real technology or production issues preventing the industry from executing the mandate immediately.A warranty for B20 blends. All engines in the market can run on 20% bio-diesel blend with no (or minimal) consequences. However, many of them are warranted only for up to 5% (for no real reason). Anyone who wants to sell new diesel engines in the U.S. will have to warrant B20 on all its old engines.
The liability issue here is unclear. The government should simply force the issue and let the market work. Adequate provisions should be enacted to eliminate lawsuits and to compensate extreme cases.A B20 blend mandate – an aggressive schedule to make the B20 a minimum blend requirement for all diesel suppliers. The schedule should follow reasonable supply forecast.
Consider mandating blenders to buy any bio-diesel quantity available in the market for a minimum market price of diesel (before incentives). It will boost investment in production.Mandate the use of bio-diesel in all diesel powered government vehicles (including DOD, but only after DOD impact analysis).
The DOD is the largest government consumer of all fuels. It can act fast and the fuel flexibility will add to our national security.Mandate the use of bio-diesel in all diesel powered vehicles of government supported organizations, state and local governments.
This mandate will kick in when supply is available.A bio-diesel purchase mandate for diesel fuel distributors. Force them to buy any quantity of bio-diesel offered to them at diesel price (before incentives).
This is not required yet, but should be considered at a later stage if the adoption pace is not satisfactory.Maintain the current producers’ and blenders’ tax credit programs and extend them until 2018. Extend other bio-diesel tax credits to 2018.
Investors in bio-diesel production need a stable long term horizon.Invest in R&D to create better bio-diesel sources.
There is a prior issue. Increasing the market demand will not do anything to solve the problem of limited supply because per acre yields of oils from oilseeds are so low (about 60-100 gallons per acre vs 400 gallons per acre for corn ethanol). Intensive research efforts are needed to figure out the ways to increase the per acre yield of biodiesel before any demand side policies will have a positive effect.
There are several companies that are developing “advanced biofuels” from biomass other than food grains and oils. Some use waste chicken fat, some cellulose, and some fish oil. The fact that biodiesel from vegetable oils and animal fats has its own ASTM standard (D-6751) is a quirk of history. The specifications are made to fit the methyl (and potentially ethyl) esters that make up what is marketed as biodiesel. The “advanced biodiesels” have excellent properties and can be used as diesel, but do not meet the requirements of the ASTM standard simply because they are not made from vegetable oil. Does it make sense to establish a fuel standard that has a specification for the feedstocks?
While amendments to extend the tax credits for renewable diesel until the end of ’09 shows continued support, the exclusion of “co-processing” took its toll on ventures like the Conoco/Tyson plant. If indeed this was the straw that broke the camel, it is a warning to not to lean on these credits in a business model. Remember that they are merely start-up incentives, otherwise investors will view it as masking risk (when it should be mitigating) and the poultry waste might just end up back in the landfill.