Biodiesel complexities: Two sources of botheration.

I’ve started the new year reflecting on two complications impacting the production and distribution of biodiesel; feedstock sourcing and accessibility to health effects data. These issues might not be issues that solely plague the emergent biodiesel industry. The biofuels industry is immature, and currently does not benefit from a well-established infrastructure of diverse players occupying a well-stratified marketplace. Consequently, the sources of annoyance for me in the biodiesel industry probably have equivalents in the ethanol industry as well. I believe it is important to address these issues now or risk that they will go on to effect the production and consumer value proposition of second generation biofuels if solutions are not arrived at soon that can be successfully modeled.

The feedstock situation is a constantly evolving muddle. A few companies with big names like ADM and Cargill control the majority of the domestic virgin oil used by the largest biodiesel (and ethanol) producers. It is important to understand that these entities not only “control” the cost and destination of finished, harvested, product but the intellectual property related to the genetically modified seedstock used for planting.  Although most in the industry currently acknowledge that biomass is the future of widespread biofuels production, it will still be the case that the companies that develop the technologies used to convert waste products to fuels, whether those technologies are genetically modified algae or enzymes or future tech, will likely control the licensing or monopolization of the technologies they have developed.

In a similar sense access to health effects data is an issue of growing concern to the biodiesel industry. Currently there is one organization that has successfully submitted the health effects data required by the EPA to produce B100 (or pure biodiesel). That organization is the National Biodiesel Board or the NBB. That’s not to say that other health effects data isn’t out there for biodiesel. At least one other organization has submitted health effects data for B20 (or 20% biodiesel mixed with 80% petroleum diesel), but if you want to commercially produce the pure stuff, you must currently have demonstrated to the EPA that the NBB has given you permission to rely on the set of data they have submitted. The catch is that the NBB requires any would-be producer to join, and although the EPA will stop requiring producers to submit either health effects data or proof of access in 2015, current NBB membership policies require producers to pay a per gallon “tithe” when they reach certain production levels. The commitment to pay this fee currently extends beyond 2015 for members.

The NBB does also offer access to the data to non-members for a $25,000 fee. This is obviously no small sum to would-be small producers.

Further complicating the health effects data issue is the EPA’s policy related to the Tiers of data required. Basically, the EPA can require that organizations provide up to 3 tiers of data, with each tier requiring further study and more investment.  For biodiesel only two tiers were required for initial submission. 

In reality, small producers only need access to Tier 1 (the first tier) of data. Only large producers require proof of access to both Tier 1 and Tier 2 data. NBB does not explicitly make this distinction in its membership requirements but does offer a reduced cost non-voting membership ostensibly for small producers.

I personally believe an argument can be made that their is sufficient health effects data in the public domain to satisfy EPA’s Tier 1 requirements. (I will have more to say on this topic in future posts.) At any rate, I do believe that any combustible energy source needs to be thoroughly tested to protect the public health.

Health effects data is required for any fuel, whether it is toxic or non-toxic, to determine the effects on the general public after exposure. The data compiled includes animal testing and emissions data.

The data gathering and packaging into an EPA compliant format is expensive. And this is where this issue effects the biofuels industry in general. Historically the EPA has adopted a strategy to protect the technology licensor, allowing those responsible for the research and development of a fuel product to recoup the cost of research as well as profit from their endeavors.

But this may be a case where government policy has not kept pace with a changing marketplace and research environment. Oftentimes much of the new research is subsidized with government grants, also known as taxpayer dollars, and preserving a system where an organization can receive public monies to do research and then profit from the research is difficult to balance.

Energy independence is a rising American priority of tremendous importance. It is critical that the mechanisms that allow for widespread production and distribution are constantly examined to evaluate potential inefficiencies and inequities.

I also believe that the need is so great, and the consequences for failure are so dire, that we need to support as citizens a revised approach to allowing small biofuels producers to thrive.

Make it a better place,

Todd

 

 

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