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California Biodiesel Alliance News
California's Biodiesel Industry Trade Association
March 2012
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Greetings!, CBA is very excited to welcome our first petroleum industry member, Western States Oil. Western States has been selling biodiesel in California since 1999, and we are honored to have them as our newest small business member. This issue has important information in the Policy Updates section, including a call for letters of public comment to CEC on their 2012-2013 funding plan affecting biodiesel. The Who's Who article features an icon of California biodiesel, Doug Smith.
NOTE: California Biodiesel & Renewable Diesel Conference conference attendees who would like to download PDFs of speaker presentations can do so by logging onto the conference website, and clicking on View Presentation. If you've forgotten your password, please refer back to the email you received from the conference confirming your registration.
To view back issues of this newsletter and CBA Email Alerts click on the "View CBA Email Newsletter Archive" button on our Home page. |
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| NEW UST LAW TO ALLOW ALL BLENDS IN NEW AND EXISTING EQUIPMENT

On February 21st the State Water Resources Control Board (SWRCB) voted to approve the proposed amendment to the current underground storage tank (UST) regulations pertaining to the storage of biodiesel in double-walled tanks (containment and components). The new regulation will allow UST owner/operators to store all blends of biodiesel, including B100, provided they can show both the UL listing for petroleum diesel (until such time as a UL listing for biodiesel replaces it) and a written statement of materials compatibility for the relevant blend of biodiesel from the equipment manufacturer of their UST equipment.
The new regulation will take effect June 1st of this year and will replace the variance that has been in place for the last 3 years. SWRCB will provide guidance to all local enforcing agencies (CUPAs) on the new regulations. The SWRCB will also provide guidance to manufacturers (including those who've already posted on the CBA webpage) on what the statement of materials compatibility should include at a minimum. CBA will update the UST Compliance section of its Regulatory Matters webpage with that information as it becomes available and will continue to gather and post the written statement of materials compatibility letters from manufacturers and provide updates in this newsletter.
The new regulation applies to new UST systems as well as existing double-walled UST systems. Existing variance holders may be required to reapply to their CUPAs for permits to continue to store biodiesel. Those wishing to store higher blends must provide the documents required by the new regulations reflecting compatibility with the higher blend.
Many of the manufacturers with statement of materials compatibility letters on the CBA website do state compatibility for blends up to B100. Those that do not will be contacted for updated letters.
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RIN INTEGRITY TASK FORCE MOVES QUICKLY TO IMPLEMENT SOLUTIONS
The US EPA's renewable fuel standard (RFS2) mandates volume requirements for biofuels and includes a system of Renewable Identifications Numbers (RIN) that ensure that actual physical gallons are produced and blended by obligated parties (fuel producers and importers). RFS2 and the RIN market it has created have become an essential element of the US biodiesel industry. Last fall, when two high profile cases of RIN fraud threatened the integrity of that program and cast a dark shadow over the industry, the National Biodiesel Board (NBB) acted quickly to find solutions and restore confidence in the RIN markets.
NBB CEO Joe Jobe announced on February 5th, as the organization's 2012 annual conference began, that he would personally staff a new RIN Integrity Task Force with Gary Haer, NBB chairman. Shortly thereafter, Haer appointed a 12-member task force made up of representatives of the US EPA and all sectors of the industry including obligated parties, blenders, and biodiesel producers. The group was tasked to work within a 3-6 month timeframe to evaluate weaknesses in the RIN program and to consider both immediate and long-term strategies including regulatory changes in the administration of the program, insurance programs, and a privately run RIN integrity program for bonding RINs.
The RIN Integrity Task Force held it first meeting on February 28th. On March 8th, following a town hall meeting with its members, the NBB announced its exclusive endorsement of the RIN Integrity Network developed by Genscape, a provider of energy information for commodity and financial markets. A proprietary system of monitoring that provides obligated parties with key integrity documents, Genscape's system is designed to provide transparency while maintaining privacy and includes an overall health score for participating facilities.
Jennifer Case, CEO of San Diego-based New Leaf Biofuels and a member of the task force, said, " I am honored to be able to serve on the RIN Integrity Task Force, and I support a thorough third-party audit of feedstock and production records as a good first step to help restore the viability of the RIN program." She added, "I am hopeful that the Genscape RIN Integrity Network will provide a long term solution, but there is still much work to be done to prevent the actions of a few bad actors from permanently scarring small businesses who find themselves in a paralyzing situation where monetizing RINs is slow or even impossible."
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REGULATORY AND POLICY ISSUE UPDATES  
CALIFORNIA ENERGY COMMISSION (CEC) FUNDING Despite our industry's need for biodiesel infrastructure for terminals, the 2012-2013 Investment Plan for the Alternative and Renewable Fuel and Vehicle Technology Program Staff Draft states the following:
"An additional $3.1 million for upstream biodiesel infrastructure will be available in an upcoming solicitation using funds from the 2010-2011 Investment Plan. However, given the anticipated growth of renewable diesel, as well as the uncertain economics for the continued growth of biodiesel, the Energy Commission does not intend to reserve funding for upstream diesel substitutes infrastructure in the 2012-2013 Investment Plan. "
Regarding the funding of production facilities for gasoline substitutes, diesel substitutes, and biomethane, the plan says: "Unlike in previous investment plans, this allocation will not be divided between specific types of fuels. This will allow for more competition during the solicitation period, help ensure that funds go to the highest scoring project proposals (not just the highest scoring within a particular fuel type), and also reduce the number of partially-funded awards."
Please join CBA in submitting letters of public comment to CEC on this important matter as soon as possible. The plan and instructions for submitting to the docket can be downloaded from the CEC website.
LOW CARBON FUEL STANDARD (LCFS)
Amendments to the section of California's Low Carbon Fuel Standard (LCFS) regulation affecting how carbon intensity (CI) values are determined for the various fuel pathways became effective on February 21, 2012. The Final Regulation Order and related documents, the result of a yearlong process, can be found on California Air Resources Board's (ARB) webpage for LCFS Intensity Lookup Tables.
Notably, both used cooking oil pathways for biodiesel produced in the Midwest, BIOD004 and BIOD005, were changed slightly after it was determined that errors had been made for both of them related to emissions produced by transporting finished biodiesel from the plant to a bulk terminal as well in the inappropriate application of a glycerin co-product factor of .951. The CI for BIOD004 (cooking) was raised from 18.44 to 18.72 and the CI for BIOD005 (no cooking required) was raised from 13.52 to 13.83.
If your company is affected, ARB's Regulatory Advisory 10-04 will allow you to transition to the new CI any time between the date on which those pathways were approved (February 21, 2012) and six months from that date (August 21, 2012) with the best time to transition being the end of a reporting period, either March 31, 2012 or June 30, 2012.
The California Air Resources Board (ARB), Western States Petroleum Association (WSPA), the Engine Manufacturers Association (EMA), the National Biodiesel Board (NBB), and CBA held a conference call this month to discuss next steps for ARB's biodiesel emissions testing program. ARB is conducting further testing of B5 and B20 to gather additional data for its biodiesel/renewable diesel regulatory work. ARB indicated that a biodiesel/renewable diesel workgroup public meeting would be held in the near future. CBA is following this issue closely and will provide updates in this newsletter and on our Home page.
UST REGULATIONS
See lead article above.
RENEWABLE FUEL STANDARD (RFS2)
On March 5th, the White House received two letters, one signed by 26 US Senators the other by 34 US Representatives, urging the US EPA to abandon planned cuts and implement its original proposed 2013 volume increase for biomass-based diesel under RFS2 to 1.28 billion gallons. The National Biodiesel Board's all-out push to add signers to these letters successfully resulted in support spanning geography and ideology. Thanks to all who made calls and wrote letters and emails to members of Congress on behalf of this priority issue for the biodiesel industry.
FEDERAL TAX INCENTIVE
Last week, the Senate voted down two amendments that would have extended the biodiesel tax incentive through 2012. The amendments, one from Sen. Debbie Stabenow, D-Mich., and another from Sen. Pat Roberts, R-Kan., included a variety of other provisions and ultimately were the victim of broader politics. The incentive was one of only a handful of energy tax provisions that made it into both the Democratic and Republican amendments.
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CBA WELCOMES NEW MEMBERS  Western States Oil Company has been reliably delivering petroleum products throughout the 17 Western states and parts of Asia for more than 50 years and selling biodiesel since 1999. ______ JOIN CBA AS AN INDIVIDUAL OR A SMALL BUSINESS _____ If you are reading this and are not yet a member, please join us. CBA is now offering membership levels of $100 for individuals and $500 for small businesses with an easy online payment option. Membership benefits include: - CBA's Email Newsletter with important industry updates and features about Who's Who in biodiesel in California.
- CBA's Email Action Alerts that let you know when your help can really make a difference.
- Your company's logo and link on our Members webpage (for small business members).
- Participation in quarterly member meetings and legislative/regulatory visits.
- Discounts on CBA events.
_______ SIGN UP FOR EMAIL ALERTS _____ Anyone can sign up to get CBA's special Alert emails, which we send out when we need biodiesel stakeholders and enthusiasts to take action on important issues facing our industry. Visit our Home page and add your email address. _______ VIEW PAST NEWSLETTERS AND EMAIL ALERTS _____ Just click on the "View CBA Email Newsletter Archive" button on our Home page. |
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WHO'S WHO IN CALIFORNIA BIODIESEL
Doug Smith
R&D/QA Director, Baker Commodities
Doug Smith started working at Chemol Company, the Oleo Chemicals Division at Carolina By-Products, in 1987 in the quality lab. He worked his way up to plant supervisor and then went on to become manager of the Chemol Corporate Lab for both Chemol and Carolina By-Products in Greensboro, North Carolina. Beginning around 1990, Doug started making batches of methyl ethers out of soy at the instruction of Fred Wellons, his boss and General Manager of Chemol, who was working to diversify the company's product line and customer base. Doug recalls that because of biodiesel's biodegradable characteristic, Fred successfully targeted boaters as well as other soy-based biodiesel users. The biodiesel made in Doug's lab at that time was some of the first ever to be sold on the East Coast.
Doug, who holds a B.S. in Chemistry, a B.A.S. in Business Management, and an A.A.S. in Industrial Management, said, "At the time I was somewhat skeptical of biodiesel because I thought it was always going to be a small niche market." He added, "I enjoyed the hands-on process of making biodiesel, though not the greasy part, and looking back I realize that those were memorable times and that's when I got my biodiesel education."
Those very early batches had to reach just a few purity specs, mainly cloud point, to get the fuel to stay clear and keep it from setting up. But even then, Doug remembers, the process was all about trying to improve the product. Fred brought in a variety of different oils and fats, and Doug learned how to make methyl ethers from different sources and in batches ranging in size from 500 milliliters to 10,000 gallons. In 1992, the lab got a copy of what was known then as the Kristina Plank test method form the Kristina Plank Institute in Graz, Austria. They started running free glycerin, mono-, di-, and triglyceride levels to calculate the total glycerin in the biodiesel produced.
Doug says that Chemol was extremely fortunate to be one of the companies invited to do some of the first round robins for Williams Pipe Line Company (now Magellan Pipeline Company) and became increasingly involved in working to set standards. "Although, we didn't submit many samples our experience in processing was valued, Doug said." In the early days, Chuck Haber of Williams took the lead in this testing, and eventually wrote up the protocols and authored the original of the ASTM method we have today.
Chemol was sold to a textile products company in 1996, which Doug says was a good thing at the time. Unfortunately, in later years, the chemical division resorted to layoffs to deal with the resulting tight financial situation. Fred Wellons was already working as a private consultant, and in May of 2001, Doug became a consultant, as well, focusing his work on a variety of biodiesel plants.
In January 2002, Baker Commodities, one of the nation's leading providers of rendering and grease removal services, had a plan to produce biodiesel and a joint venture in place. Fred Wellons had become their R&D manager and brought Doug in as special projects manager to run the corporate lab and oversee rendering and biodiesel projects in 2003. Baker purchased a biodiesel process and design engineering firm, which they still have in Minneapolis, where Doug is also the General Manager of Superior Process Technologies. The biodiesel plant designs have gone through a number of changes over the years. Doug explains that the owner of Baker is still interested in building, but the projects are on hold until the economics improve and meet the companies ROI requirements.
When asked about the most important issues facing the California biodiesel industry now, Doug says that even though we have made progress, such as with underground storage tank regulations, there are still quite a few other obstacles, including slow approval processes and emissions regulations uncertainty. He describes what he sees as a throwing the baby out with the bathwater situation when it comes to regulatory processes that inhibit clean industry in California with the result that both pollution and American jobs get exported. "We need a middle-ground so that we can keep jobs here instead of overseas and still protect the environment," he said.
In his speech at the California Biodiesel and Renewable Diesel Conference this January, Doug made the point that the industry needs a new name for what is now erroneously called "waste cooking oil," a title that suggests a lack of value. He offers a possible new title - "recyclable cooking oils." In fact, recyclable vegetable oils have become so valuable that Baker Commodities suffered a loss of over one million dollars last year in grease theft alone at the hands of thieves who are using increasingly destructive methods. A bit more attention has been paid to grease theft in the last few years, but much more needs to be done.
Doug works to address the problem of grease theft with the Pacific Coast Renderers Association and the only enforcing agency that has this issue on their radar, the USDA. Doug reports that the USDA can only do so much and penalties are not high enough to be a real deterrent. Most police agencies are beginning to recognize the thefts and make arrests, but many District Attorneys decline to prosecute as they think it does not present any real community danger or serious damage. So far, Baker's best strategy to combat this problem has been to put locking collection tanks inside their client businesses, a more expensive system. Doug brought this issue up at the recent CBA member meeting and it is on the agenda for further discussion.
Doug, now R&D/QA Director at Baker, praises the company's top-down culture of honesty and ethical practices, which he sums up simply as, "You gotta do business right." Doug has been doing just that for 25 years, bringing his vast rendering and oleochemicals industry experience and knowledge of production, R&D, analytical testing, and safety and hazardous materials management to these volunteer industry positions:
- Governing Board Member, National BIodiesel Board
- Commissioner, BQ-9000 National Biodiesel Accreditation
- Member, National Biodiesel Board Sustainability Task Force (in recess)
- ASTM member for Cold Flow Properties in D02
- Secretary and co-founding member, California Biodiesel Alliance
- National Renderers Association (NRA) in the Fats and Protein Research
- Pacific Coast Renderers Association
- Foundation (FPRF) and the Animal Co-Products Research and Education Center (ACREC) at Clemson University on the Research Committee
- Clean Water and Environment Association (CWEA) in California, working with water treatment divisions
When asked how he makes the time for so much volunteer work, Doug says that sometimes it's hard, but he really enjoys doing work that he believes is helping to create a better future, and thanks the owner and sons of Baker Commodities for being supportive. He is motivated by his sons, ages 12 and 14, whom he'd like to bequeath a world well on its way to cleaner, cheaper, and more sustainable types of energy that no one ever has to go to war for.
Doug Smith is proud to have been "born and bred in the hillbilly Blue Ridge Mountains" of North Carolina. CBA is grateful for his early work in biodiesel there and happy that he ended up in California where we benefit tremendously from his commitment to the state's biodiesel industry.
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Thank you for your time and efforts on behalf of biodiesel in California. We look forward to working with you.
Sincerely,
Celia DuBose for Eric Bowen, Chairman California Biodiesel Alliance
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