Biodiesel Industry Update

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Biodiesel Industry Update

• Clean Cities 2007 Statewide Annual Conference
• January 25, 2007
• Fred Henderson
• National Biodiesel Board

2
Biodiesel Credentials

• B100 has a full ASTM standard (D 6751) in place
• ASTM standard setting is currently in process for
  B20
• The biodiesel industry has implemented a
  voluntary quality control program BQ9000 for
  biodiesel producers and marketers
• Designated as an alternative fuel by the
  Department of Energy (DOE) US Department of
  Transportation (DOT)
• Energy Policy Act (EPAct) regulations allow
  fleets to earn EPAct credits by using biodiesel
  the least cost option for EPACT compliance
• Registered as a fuel fuel additive with the
  Environmental Protection Agency (EPA)
• Biodiesel is the only alternative fuel to have
  fully completed the health effects testing
  requirements of the 1990 Clean Air Act Amendments

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US Biodiesel Demand
Biodiesel Tax Incentive
Changes to EPACT
Bioenergy Program
2 Million
500,000
4
Current Market Drivers

• Energy Independence
• Biodiesel Tax Incentives / Legislation
• Energy Policy Act of 1992 (EPACT)
• Executive Order 13149
• Enhanced Lubricity
• Premium Diesel Market Grows as Consumers Demand
  More From the Fuel They Use
• Market Acceptanceand Competition--among OEMs
• Biodiesel announcements from GM, DaimlerChrysler,
  VW, and John Deere more in the works
• Environmental Benefits

5
Biodiesel Markets

• B20 EPACT, municipal, school buses
• Currently over 500 fleets using B20 nationwide
• B2 Ag fuels, premium diesel fuels, lubricity
  component for ULSD, potential RFS option
• Low blend is now an important strategy to Clean
  Cities program as well
• B100 Niche markets sensitive areas, power
  generation, garbage truck fleets, California,
  diesel passenger car enthusiasts

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Biodiesel Tax Credit

• Credit taken at the blender level
• Enables biodiesel blends to be marketed more
  competitive to diesel fuel
• 1.00 for agri-biodiesel (first use oils and fats)
• 0.50 for biodiesel (all other)
• Available for blends up to B99.9
• Structured to benefit all consumers (taxable and
  tax exempt markets)
• B20 gets 20 cents per gallon
• B2 gets 2 cents per gallon

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Biodiesel Tax Incentive Update

• Senate Bill S2401 extends the credit through
  2010.
• House Bill HR5650 provides for a permanent
  extension of the biodiesel tax incentive.

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State Policies--Biodiesel

• They remain critical to the industry.
• States are increasingly taking proactive steps to
  implement policies to enhance the use of
  biofuels.
• 2004 130 biodiesel specific bills 27 passed
• 25 states
• 2005 170 biodiesel specific bills 30 passed
• 36 states
• 2006 100 biodiesel specific bills
• 28 states

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States w/Favorable Biodiesel Policies/Programs
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2006 State Regulatory Update

• Louisiana 2006 B2 mandate passed (12 million
  gallon B100)
• Washington 2008 B2 mandate (12 million gallon
  B100) passed!
• New York 2 state fleet mandate (3 million
  gallon B100) passed!
• New York User Incentive of for BioHeat passed!
• Illinois Sales tax exemption on B11 blends
  passed! (20 million gallon market in 2006)
• Minnesota B2 mandate passed! (16 million gallon
  market)
• IA, FLA, SD, others

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Ranked Importance of Biodiesel Benefits for U.S.
Consumers
(Ranked by 1 ratings)
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Production Locations (8/28/06)
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Industry Plant Size
Plant Size (gallons per year) of Companies (81 total)
lt 1,000,001 19
1,000,001 5,000,000 32
5,000,001 10,000,000 14
10,000,001 15,000,000 6
15,000,001 20,000,000 2
gt20,000,000 8
Industry Capacity 565 million gallons per
year Avg Plant Size 7.0 million gallons per year
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Plants Under Construction Expansion (8/28/06)
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Size of Plants Under Construction Expansion
Plant Size (gallons per year) of Companies (82 total)
lt 1,000,001 12
1,000,001 5,000,000 20
5,000,001 10,000,000 18
10,000,001 15,000,000 6
15,000,001 20,000,000 1
gt20,000,000 25
Construction Capacity 1.3 billion gallons per
year Avg Plant Size 15.7 million gallons per year
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Production Capacity by State (Preliminary as of
8/28/06)
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Production Capacity Trends

• The industry is trending toward larger facilities
• Vegetable oil facilities are larger than recycled
  cooking oil plants
• Plants capable of handling multiple feedstocks
  are becoming more common
• Production capacity does not equal production for
  several reasons
• Some facilities are just starting up
• Some facilities choose to run less than 24/7
• Some facilities have not effectively
  debottlenecked their systems to maximize their
  output
• Some facilities overestimate their capacity

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Availability

• Over 1,731 petroleum distributors now
• offer biodiesel. Nine in Louisiana
• 1,051 retail locations. Two in Louisiana
• 589 truck stops or truck accessible locations
• Biotrucker.com
• 37 terminals
• http//biodiesel.org/buyingbiodiesel/guide/

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Distribution Locations (May 06)
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Biodiesel U.S. Looking Forward

• NREL Biomass Oil Analysis Research Needs
  Recommendations, June 2004
• Current Potential 1.7 Billion gal/year
• 5.5 of national on-hwy. demand
• Near-Term Potential (2015) 3.5 Billion
• 6.8 of national on-hwy. demand in 2015
• Long-Term Potential (2030) 10 Billion

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NBB Resources

• www.biodiesel.org
• Technical Library
• Biodiesel Bulletin
• Educational Videos Available
• Informational Resources
• Technical Resources
• On-line Database Spec Sheets
• Other web sites
• www.nationalcleancities.org
• www.nationalbiodieseleducation.org