Innovative Biodiesel Business Opportunity
By Barb Baylor Anderson
Illinois soybean farmers commonly are aware of numerous benefits that biodiesel provides versus petroleum diesel; reliable engine performance, cost effectiveness, fewer harmful emissions and a lower carbon footprint. But what farmers may not realize is new business prospects may exist if they focus on the value of carbon reduction to further build the industry.
“A misconception about the value of carbon reduction exists within agriculture. But farmers can change the paradigm by more aggressively participating in the debate,” says Rebecca Richardson, Illinois Soybean Association (ISA) biodiesel lead. “Those who can sequester carbon should not only be doing so but should begin looking into ways to quantify it. Carbon sequestration could find its way into a future farm bill much like the Conservation Reserve Program (CRP) evolved into an opportunity for farmers.”
In addition to benefitting from carbon sequestration for producing soybeans for biodiesel, these same farmers could profit through increased production and nationwide demand for biodiesel.
The U.S. Energy Information Administration (EIA) says U.S. biodiesel production climbed 18.6 percent from 2016 to 2018, or from 102,000 barrels per day to a record 121,000 barrels per day. EIA estimates production this year could increase to as much as 156,000 barrels per day.
“There already are Low-Carbon Fuel Standards on the West Coast. The East Coast is also developing renewable portfolio standards to generate electricity from energy lower in carbon, including renewable fuels,” says Richardson. “Farmers and the biodiesel industry should promote that biodiesel stores solar energy. That’s what makes it a powerful tool to reduce carbon. Biodiesel displaces fossil carbon emissions and complements other renewable sources.”
Best Option Out There
EIA considers biodiesel to be carbon neutral. “Plants used as feedstocks for making biodiesel, such as soybeans, absorb carbon dioxide (CO2) as they grow. Absorption of CO2 by the plants offsets the CO2 that forms while making and burning biodiesel,” the agency notes.
Don Scott, director of sustainability for the National Biodiesel Board (NBB), agrees. “Biodiesel is the best carbon reduction tool of any commercial liquid fuel. U.S. biodiesel reduces lifecycle carbon emissions, on average, 80 percent compared to petroleum diesel,” he says. “Biodiesel also cuts particulate matter and carbon monoxide from tailpipe emissions and offers health benefits by reducing the amount of carbon dioxide in the air. Biodiesel displaces more than 20 million metric tons of CO2 nationwide annually.”
In fact, Scott says using biodiesel is one of the most effective ways to cut greenhouse gas (GHG) emissions on the market today. While transportation specialists on the East Coast, for example, are exploring electric vehicle technology, using biodiesel right now in existing diesel vehicles would give them immediate carbon reduction results. California statistics show electric vehicle use in that state only reduced CO2 in 2018 by 1.2 million tons; one-third of the state’s diesel biofuel reductions. The U.S. transportation sector is the largest GHG emissions contributor.
“Biodiesel is ready to displace more petroleum immediately without having to wait for new technology. It is commercially viable today,” says Scott. “Installed biodiesel plant capacity is available, and soybeans could be one of the big players in meeting increased demand.”
GHG emissions remain a flashpoint in environmental discussions, which Scott anticipates could spark more cities and fleets nationwide to use biodiesel. He also is aware of budding discussion seeking to compensate farmers for carbon reduction.
“Farmers control a lot of land. They have a role in managing carbon. And while they may be worried about additional regulations, they can have a voice in how they are compensated,” says Scott. “It is a business opportunity. Farmers should be seen as part of the solution.”
California Case Study
Look no further than California for a real-world Low-Carbon Fuel Standard success story. The California Air Resources Board (CARB) reports biodiesel and renewable diesel have contributed to the largest cut in transportation sources of greenhouse gas emissions ever. Data show since 2011, biodiesel and renewable diesel have displaced more than 18 million tons of CO2.
According to Floyd Vergara, long time CARB official and now NBB director of state regulatory affairs based in Sacramento, the standard was put in place in 2008 when university research confirmed that transportation fuels create half of the state’s greenhouse gas emissions and small forming pollutants that lead to human health problems.
“Researchers identified both electrification and biofuels as solutions, and biodiesel and renewable diesel were found to be the best alternatives at this time,” he states. “Under the standard, credits can be generated in one area and sold or transferred to another.”
In California, the light-duty transportation sector needs credits that using high energy intensity liquid biofuels like biodiesel in the heavy-duty category can fill. The state says electrification in the heavy-duty sector will take several decades while biodiesel fills the need immediately. Since 2011, biodiesel and renewable diesel have represented 41 percent of the generated credits.
“That is a value-added market opportunity for soybean farmers,” says NBB’s Don Scott.
Vergara offers three tips for other states that wish to follow California’s successful lead:
- Don’t ignore the transportation sector. It generates half of the problem in California and is likely a similar percentage in most other states.
- Alternative fuels like biodiesel promote the use of mature technologies. Fleets have no problems with the fuel and can switch over seamlessly.
- Consider a Low-Carbon Fuel Standard like the ones in California and also Oregon. The standard provides a strong market signal that has incentivized biofuel producers to put more supply into the stream to meet the uptick in demand. California went from using 14 million gallons in 2011 to 600 million gallons estimated in 2019.
“Long-term, the approach has to be holistic. California hopes to be carbon neutral by 2045,” says Vergara. “That means policies must improve the carbon sink (storage) for agricultural lands. The goal is to absorb more CO2 in the ground to offset CO2 levels in the air.”