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Monday
Opening Session
The Monday
morning general session began with Joe Jobe addressing the rumored 4,000-member
audience (there were a lot of people, but I'm not sure it hit that mark) with a state of biodiesel discussion. Despite the huge industry success of biodiesel's role in the new Renewable
Fuels Standard and large gains in public awareness, he sees fuel quality,
feedstock development, and sustainability as the three most pressing issues
facing the biodiesel industry.
There was some
talk about the Farm Bill, which should be settled in the next 6 weeks. Jobe
sees the CCC Biofuels program as a very important program to assist in the
transition to diversity and wider availability of feedstocks. Many strides are
also being made at the state level, especially on the production and use side.
Don Reynolds
with 21st Century Forecasting gave a humorous and sobering talk on
the state of the global economy. Let me give you a hint, it’s not good. He
talked about globalization, the rise of China and India, the rise of the middle
class, problems in the banking and housing industries, and long-term
agricultural and energy trends.
Don said the
word “Chinese economy” is an oxymoron – a centrally planned free market.
Somehow, though, it’s working! He predicts that in 10 years the Chinese will
replace the US economy as the largest. Additionally, if you look at the 20
largest polluted cities, China has 16 of them. China will demand 10 billion
barrels per day of oil in 2010. Today, an excess of 3% in oil supply exists.
Within 2 years, China will eat this up. His best guess is that by 2020, we will
be pumping less oil every year. He predicts oil prices might stabilize for the
near term, but over the next couple of years we will see $120 or even $150 per
barrel. Intense, huh?
Don Reynolds
reiterated the sentiments of Daryl Hannah about the massive environmental
problems that we are facing, which are now, very much an economic issue. He did
echo how important it was for him, an economist (“show me the money”) from Texas
with oil roots (sound familiar - well, minus the economist part), to admit that Global Warming is becoming such an issue that he is
worried his children will not have access to the same quality of life and
access to the same resources as he has had. He said that global warming will make
4% of the worlds agricultural land useless – having huge economic implications.
State of the
States: Public Policy and Regulatory Update
Scott Hughes
kicked off this session with a whirlwind overview of incentives passed
throughout the nation. I’ll let you wait until the presentations are posted to
see the summary because I couldn’t even type as fast as he was talking.
He did say they
anticipate dispenser labeling requirements to be passed by the federal
government in the first or second quarter of this year. He also discussed the
new trend of states beginning to look at ways to enhance production of
feedstocks by providing incentives to growers.
Best
Practices of the Northwest
Nikola Davidson
with the North West Biofuels Association in Oregon, and founder of the largest
biodiesel cooperative in Washington gave a very energetic presentation about
what is happening in the Northwest as far as policy goes.
She discussed
Idaho’s biofuels infrastructure grants, which contributed to the tripling of
ethanol production in one year, how Montana has a large focus on rural and tribal
development, which savvy producers have figured out how to take advantage of
this large incentive base available.
Washington and
Oregon have both passed renewable fuel standards. Washington’s RFS is not
volumetric, as Oregon’s is. So, the whole state has to meet the mandate
collectively rather than just being B2 across the board. Washington also has in
place:
• Energy freedom loans: 1% rate, 10 year term, public-private partnership
• A state fleet mandate: starting in June 2009 all state
vehicles must use B20
• Tax incentives: reduced business & occupation rate
for manufacturers of biodiesel and feedstocks, retail and sales and use tax
exemptions for sale, use and for delivery vehicles and equipment
• Quality testing program: State Ag Department funded
program
• Funding for biodiesel research: to see what feedstocks
are a good fit in order to bring results to legislature for possible
legislation to stimulate growth
• Expedited permitting on the biodiesel retail and
distribution end of things.
Oregon’s RFS is
volumetric in that every gallon has to have at least 2% biodiesel. For the
mandate to become effective, the production from regional feedstocks total 5
million gallons per year (and is sustained for 3 months). Oregon also has in
place:
• Business energy tax credit: tax credit up to 50% of
product cost (capital cost), can be taken over 5 years, is a dollar for dollar
credit against Oregon business excise (income) of tax owned.
• Oregon’s Small Scale Energy Loan Program
• Production Credits: growers receive income tax credit
for virgin oil and was grease
• Consumer credit: if using B99 in your car, can get up
to $200 per year. Home heating (B20) also qualifies for up to $200 per year.
• Biofuels Investment Fund: funded in-line ratio blending
rack project, retail station conversion to biodiesel and ethanol, contracted
for outreach to commercial fleets to switch to B20,
• Portland’s fuel contract: ensures that the biodiesel
feedstocks and production are local. Portland is willing to pay a premium for
this and doesn’t set up a long-term contract but rather will pay x amount above
the cost of feedstock/product costs so they carry some of the risk with the
local biodiesel industry.
Nikola’s suggestion for a
successful biofuels policy portfolio is to have all the different components: RFS, tax
credits, funding for infrastructure, incentives for local feedstock production,
and mandatory fleet use.
North Carolina
Update
I’m always slightly
embarrassed to hear what North Carolina is doing as far as biodiesel goes. I
can drive to North Carolina faster than I can drive to Richmond, yet they seem
like a different planet in terms of their make-up of legislation and
coordination amongst all biodiesel stakeholders.
Anne Tazewell with the NC Solar Center spoke
about what North Carolina has done to stimulate biodiesel growth: EPAct credit
and banking program, state petroleum displacement plan (20% for state fleets),
producer credits, biofuels center, North Carolina Biodiesel Association trade
group…
The majority of
biodiesel used in North Carolina is used by non-taxable entities including manipulates,
school systems, and transit. In North Carolina, there is a statewide purchasing
contract, which makes biodiesel available to all entities at a price premium of
around 4.5 cents per gallon (last year’s average).
One of the coolest
parts of her presentation was a discussion of their EPAct credit banking and
selling program. EPAct requires regulated fleets to purchase AFVs, and
biodiesel use can meet half of the EPAct credit requirements. Since North Carolina
has been a leader in biodiesel use statewide, the North Carolina Department of Administration
and the NC Department of Transportation have accrued several hundred credits
through the use of E85 and B20. After a 2-year rule making process, legislation
was passed to allow the state to sell their excess credits at a net profit of
about $480,000 that has been placed in an alternative fuel revolving fund for
alternative fuel infrastructure.
North Carolina also
passed a state petroleum displacement plan requirement that says there must be
a 20% reduction or displacement of current petroleum products by the state
fleet. The goal is that by 2010, 4.65 million gallons of petroleum will be
displaced.
In 2005, a
biodiesel producer credit was passed allowing for those producing at least
10,000 gallons to claim an income tax credit. In 2007, the state budget
included $5 million to fund a Biofuels Center of North Carolina and another tax
credit was passed for biodiesel producers.
Capitol Gains:
Federal Legislative Review and Outlook
Either I need to
take a refresher course in political science, or the speakers thought they were
still on Capitol Hill.
It was difficult
for me to understand what was going on in this session – yes, I probably do
need a refresher course. But, in a nutshell, I think I got it. A lot of
legislation is pending, and the NBB is focusing it’s efforts on getting the
biodiesel tax credits (small producer and blender) extended, addressing splash
and dash and co-processed renewable diesel, and reinstating the CCC Bioenergy
Program which sunset in 2006.
I’m With the
Federal Government and I’m Here to Help
This session felt
like a family reunion with a lot of Clean Cities Coordinators in the audience,
Jill Hamilton moderating, and Linda Bluestein presenting first. As much as
folks bash the federal government for never getting anything done, there are a
lot of federal programs and federal employees that have a lot to offer.
EPAct
Alternative Compliance
Linda Bluestein
presented on the differences between the new EPAct alternative compliance rule
and the old standard compliance coverage. Basically, I will put you to sleep if
I write about all the details (if I haven't already put you to sleep), but alternative compliance allows for more
flexibility in meeting the rule and will hopefully allow for more biodiesel
growth by the removal of the 50% cap.
Linda said the main
takeaway is that if a fleet decides they want to work on a petroleum reduction
program (versus the old plan), they have to become approved by DOE to do it, but they then have more
flexibility to do it. DOE has a great tutorial online to walk you through the
new alternative compliance rule: www1.eere.energy.gov/vehiclesandfuels/apact/state/index.html.
Biodiesel,
DPM & Underground Mine Worker Health
The Mine Safety
and Health Administration proposed new health standards for underground coalmines
using diesel powered equipment. You can only imagine the levels of diesel
particulate matter that miners are exposed to.
Richard Nelson
presented on the new standards and how the industry might achieve them. The
original thought was to add particulate traps to equipment such as front-end loaders
that would have met the first revision standards proposed. However, the current rule cannot
be met with just PM traps. As a result, a lot of investigation into the use of high-level
biodiesel blends is in the works since biodiesel meets the elemental carbon
exposure limits. This may be a fast growing B99 niche market. And since it's a worker health issue, price won't be much of an issue. It's either pay the incremental cost of biodiesel, or pay fines to the EPA.
EPA’s
SmartWay and Grow & Go Programs
Cheryle Bynum
with US EPA kicked off her presentation with these thoughts: “By the end of
2007, the market in “green” investing grew to 1.3 trillion US dollars
worldwide, a 35% increase over 2006. This rise due in large part to awareness
over climate change. What does this mean to individuals and organizations and
how is EPA advancing climate-friendly solutions?”
So Cheryle
transitioned into some of the climate focused programs EPA has in place
including: Climate Leaders, Green Power, CHP, SmartWay, and Energy Star.
We’ve talked
about SmartWay before, so you may know a little bit about it. It’s basically an
Energy Star program for trucking fleets. It was launched in 2004 to help
quantify strategies for fleets to improve efficiency and save money. Last year,
EPA released the technical specification and every truck manufacturer offers at
least 1 SmartWay certified truck.
Grow and Go is a specific part of the SmartWay program. It helps partners implement
strategies to: measure, track, and report progress. The program identifies and
promotes GHG savings attributable to the use of biodiesel and recognized
partners for their achievements. Some of the current partners are:
Anheuser-Busch, Coca-Cola, GM, Whole Foods, JB Hunt, and Kimberly-Clark.
Since 66% of GHG
contributions in the US come from passenger vehicles, EPA wants to turn some of
the focus to the consumer market. The Department of Transportation is
authorized to work with EPA and DOE to put out fuel economy standards for
passenger vehicles that could be expanded to commercial vehicles. EPA is
currently working with key stakeholders to develop better test metrics and
methods. Stay tuned.
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