Update: May 3, 2008 –

Having just put down the Triangle Business Journal article which reads  “Biodiesel may be North Carolina’s next energy hedge”, I see the “No Journalist Left Behind” paradox continues.  (Read the full article here: http://triangle.bizjournals.com/triangle/stories/2008/05/05/story2.html)   Apparently Frank Vinluan didn’t take chemistry in high school or college, nor did he bother to have anyone check his article.  The photo caption, which clearly shows a man standing in front of tanks clearly labeled as Methanol and Potassium Hydroxide, reads “David Thornton shows methane tanks at a biodiesel plant he is working on as design-builder in the Chatham County town of Pittsboro.”  Okay, last I checked, Methane (CH4) is a gas, while Methanol (CH3OH or MeOH) is a liquid.  You don’t use Methane to make biodiesel, period. 

Starting to get why I’m so irritated with the media? 

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I just finished watching “Modern Marvels” on the History channel, where they did a special on truck stops and truckers.  They finished the show talking about biodiesel and Willy Nelson.  “Great,” I thought, “some good press about biodiesel in the media”.  Except, once again as happens way too many times, the reporter equates straight vegetable oil with biodiesel.

To the layman, I can see why it’s easy to confuse.  Rudolf Diesel first invented his engine to run on Peanut oil, as the reporter accurately claimed.  However, for a reporter, who is suppose to research things before he reports them, even an extra 10 minutes using Google or Wikipedia in his investigation would have told him that the modern engine looks almost nothing like Rudolf Diesel’s engine, and that while it’s true that they can run straight vegetable oil, almost none do because it’s harmful for the engine. 

The other thing he would have found, as posted other places on this blog and our corporate website, is that straight vegetable oil (SVO) and Biodiesel are not the same thing. 

I’ll say it once more in more simple format: “Vegetable Oil Is Not Biodiesel“. 

So, what do biodiesel and straight vegetable oil have in common?  Biodiesel is usually made from vegetable oil.  But, in truth, biodiesel can be made from animal fats too, or people fat, for that matter.  Through a process called transesterification, vegetable oil is stripped and converted into Biodiesel (which is technically called a mono-alkyl ester).  This new chemical, trade named “Biodiesel”, is now more chemically similar to petroleum diesel, and has many of the same characteristics of it’s petroleum cousin.  It is even accepted by the EPA as an approved fuel and fuel addative, and has an ASTM standard (D-6751).  Vegetable Oil doesn’t have any of that.

See, Vegetable Oil is food, Biodiesel is fuel.

I bet I’ve heard this mistake seven or eight times in the media over the last two years.  Is there some kind of “No Journalist Left Behind” policy in the university system that I’ve not heard of?  Seems like there isn’t much pride or professionalism left in that industry.  So, get it right next time, Mr. Reporter.  Do the homework, research, confirm, THEN publish.

You’re not helping our industry by adding to the confusion that the average consumer already has about biofuels.    

Biodiesel has been around since the 1930’s (Yeah, really.  Check out the patent filings for it online). It is accepted by the EPA as a registered fuel for on-road use, mandated by law for use in all federal and state government vehicles, has been well tested and documented by dozens of universities and public transportation systems, has been used in Europe for over 12 years, and is now readily available in all 50 states.  Yet, every single diesel engine manufacturer that exists today will not endorse using B100 in their engines.  Why?

I bet we get 20 calls a week from people asking us if they can burn biodiesel instead of petroleum diesel in their car or truck.  The answer is typically a groaning “well, you can, but your vehicle engine warranty may be in jeopardy, so we can’t officially recommend it”.   Even though most of us at the plant run it in our vehicles, and all our trucks run pure B100. 

Since April of 2008, Biodiesel has been cheaper than petroleum diesel by at least 10 cents per gallon.  In some cases, it’s been as much as 50 cents cheaper. 

 Yet, diesel engine manufacturers, all of them, can’t seem to figure out how to make their engines run on B100.  Or can they?  Today (June 9th, 2008) just about every engine manufacturer I’ve researched will at least endorse B5.  In fact, some companies are SHIPPING their engines with a tankful of B5.  Yet, very few of them will support their engine running biodiesel blends over B20. 

I can accept part of the reason being that the fuel still isn’t in the petroleum mainstream and there are some specific handling requirements about it that differ from dinodiesel (gel points higher, oxidation, mild solvent characteristics, etc.).  But these are fuel handling problems that the petroleum industry and the retailer need to deal with, not the engine manufacturer. 

I find it interesting that we just made a shift to ultra low sulfur diesel (ULSD), which also wasn’t in the petroleum mainstream and has different handling and performance requirements (less lubricity, sulfur contamination issues, oxidation), yet there was no reluctance from the diesel engine manufacturers regarding ULSD.  Why?  Because it wasn’t an option.  The EPA mandated it, and everyone had to follow. 

Did the engine manufacturers change anything in their engines to accommodate ULSD?  No.  

Is there any fallout to using ULSD?  Yes.  Many mechanics we talk to are telling us of premature injector failure because of the lack of lubricity in ULSD.  Ironically, this is one of the major benefits to biodiesel (biodiesel has outstanding lubricity), and a beautiful case for why we should be using it in ULSD.  Instead, it’s barely mentioned by the diesel engine companies or the petroleum industry.

Why is that?  I can only assume it’s because the petroleum industry doesn’t make biodiesel. Yet.

So, how about it Caterpillar, Cummins, Detroit Diesel, Volvo, Volkswagen, Mercedes, International, Mack?  When are you going to get off your collective asses and start supporting B100 for use in your engines? I can’t think of a better time to get an edge on your competition by producing an engine that was “Certified for B100” and putting it in a high MPG 1/2 ton pickup or minivan.  Imagine a truck or minivan that could run on B100 and get 35MPG.  You could charge $40,000 per unit and not be able to keep up with demand. 

Need proof that greedy government can kill biodiesel even as it says it’s promoting it?  Read the article from Reuters that talks about how Germany’s government decided to increase taxes on biodiesel to the point where plants are shutting down and being dismantled and sold overseas.   Nice going Ms. Merkel.  Germany was among the first countries to really start producing large amounts of biodiesel and distribute it to the retail pump. 

Think it can’t happen here?  Don’t under-estimate Big Oil.  

There’s a big push in the U.S. right now for going green, but sooner or later, the few bad apples are going to tarnish that “going green” idea and sour it for the public to where it becomes a bad name.  Watch.  If it does happen, then pressure from the wrong types might persuade government to stop subsidies for biofuels and the whole system will collapse.  We depend on tax subsidies and government endorsements.  Oh, yeah, just like petroleum products do too…

It’s sheer stupidity that we keep having to remind people that we’re running out of petroleum, and that biofuels aren’t a cute idea as an “alternative fuel”.  I wish people would stop calling it that.  They should be called “Next Fuels”, because quite simply, we’re running out of petroleum.  And like the stupid upright walking monkeys we are, we’re burning it instead of using it to make plastics, medicine, fertilizer, lubricants and other useful things like that.  

Want to tax something? Then put a $500 tax on every barrel of oil and treat it as a chemical resource rather than something you’re going to burn.  You can call it “petroleum hydrocarbon foundation chemicals” (or something more clever like that) instead of just “oil”. 

You can read the whole article about Germany’s legislative stupidity here on Reuter’s website: http://www.reuters.com/article/ConsumerandRetail08/idUSL1589672020080115

Bioheat appears to be gaining some acceptance with the heating and air
conditioning industry as a suitable additive and replacement for fuel
oil in oil heated homes. We’re using it to heat our production
facility, and so far, a 20% blend this winter has worked fine. Some
care must be taken to ensure your tank, tubing, and seals are Biodiesel
compatible if you’re going to run any higher blends. But staying at B20
or below should be tolerated in most any system.

I guess it was inevitable that we’d run into people taking oil from our contract restaurants sooner or later.  Today at one of our customers I ran into “Ken” who was quite brash about the fact that I’d just emptied our barrel and left him with nothing.  Despite the fact that I pointed out that the barrel had our company name and logo all over it, he still apparently felt that he should be able to take oil from the drum as he likes.

So, for those of you out there who are taking oil from us, Carolina By-Products, Griffin Industries, or the likes – please note, your entitlement to free oil ends at the point that other people have a financial investment at that same location to collect it.  We paid for the drums and bins, and in most cases have expended time, energy, and money to advertise and recruit customers to contract their oil to us. 

The law states that once it’s in the pickup barrel, which is owned by us, it’s ours.  Your taking it for your own use is called stealing, period.

Where do these people come from in government code compliance?  Do they have to have any experience or common sense to get their position?  There seems to be nobody interested in viewing the big picture and applying some common sense, only a desire to apply the rules of their microcosm and shuffle you off to the next bureaucrat. 

So while the government is busy telling me that my production facility is a really dangerous and hazardous place (nevermind that your neighborhood gas station handles 10-20 times more hazardous liquids per month than we do), they are now insistent that we be handicap compliant.  We’ve already had to put in handicapped parking, handicap access exit routes, a handicapped bathroom (and shower), a dual height water fountain, and now we have to put in a handicap access ramp to the temporary work trailer. 

All this for a manufacturing facility that isn’t open to the public, doesn’t have visitors, and has no positions suitable for handicapped employees. Now, I have absolutely nothing against handicapped people, but really, come on.  Our facility is one of the last places any handicapped person could ever work.  No handicapped person in their right mind (or left mind, wouldn’t want to discriminate against them either) would ever want to or be able to work at our facility.   It requires heavy lifting, full dexterity of your hands to operate machinery, extensive safety training, good vision and hearing, full ambulatory capability to gain access to ladders, and climb over berms and containment walls.  So what’s left?  It’s like saying you can’t be blind if you want to be a bus driver…  OF COURSE YOU CAN’T!  It’s not discriminatory, it’s simply the job. I understand the law.  I get it that there are business and public entities that have historically been discriminatory (unintentionally or otherwise) against handicapped people in the past, and that the only way to motivate them is to legislate it into existence.  Fine.  But apply a little common sense, will ya?  We’re a startup.  A private, small business, with limited resources and four employees.  So instead of purchasing production equipment or filling staff positions, I’m spending tens of thousands of dollars on handicap access provisions which will never be used.   Thanks. 

So, back to my frustration about the lack of logic and common sense in government.  Here’s the question Mr. Bureaucrat, is my business really a dangerous entity, or handicap accessible facility?  Is such a dangerous place really a good location for handicapped personnel?   If I wanted to ban handicapped people from my facility (think of a handicapped placard with a slash through it), would that be illegal?  Probably so.  Yet, I’m a private company.  Shouldn’t I be able to keep whomever I want off my property? So if a healthy, white male named Timmy comes to my property, and I simply don’t like the way he looks,  I can ban him from my property all day long (think of a sign that says “Timmy” with a slash through it.).  Right, I can ban ALL people named Timmy without any fear of incrimination.  Turns out that there’s currently no protection for white men named Timmy.  What a wonderful country we live in.

Stunned and disgusted as I am?  Then call your local government official and tell him how governement has no business bullying around small business.  If we fail as a business, it will be because of stupid, imbicilic laws like this that were created in a vacuum and applied without any notion of common sense.  

The following is a list of NC legislation that is currently in effect.  There are others pending, of course, but these are what have been passed.

Alt Fuel Infrastructure Tax Credit

A tax credit is available for facilities that dispense biodiesel and ethanol/gasoline mixtures consisting of at least 70% ethanol.  The credit is equal to 15% the taxpayer’s cost to construct and install the dispensing facility, including pumps, storage tanks, and related equipment, that is directly and exclusively used for dispensing or storing the fuel. Equipment for storing and dispensing must clearly be identified as being associated with renewable fuel.  The credit must be taken in three equal annual installments beginning with the taxable year in which the facility is placed in service.  Facilities must be placed in service before January 1, 2011.
Public Law:  NC Gen. Statute 105-129.16D

Renewable Energy Property Tax Credit

Taxpayers who construct, purchase, or lease renewable energy property are eligible for a tax credit equal to 35% of the cost of the property. Renewable energy property includes: equipment that uses renewable biomass resources to produce ethanol, methanol, biodiesel, or methane produced via anaerobic biogas utilizing agricultural and animal waste or garbage; and related devices for converting, conditioning, and storing the liquid fuels and gas produced with biomass equipment.
A ceiling of $2.5 MM per installation applies to renewable energy property placed in service for any purpose other than residential and must be taken in five equal installments beginning with the taxable year in which the property is placed in service. Property must be placed in service before January 1, 2011.

Public Law:  NC Gen. Statute 105-129.16A

Biodiesel Production Facilities Tax Credit

A taxpayer that constructs and places in service a commercial facility for processing renewable fuel is allowed a credit equal to twenty-five percent (25%) of the cost to the taxpayer of constructing and equipping the facility.  Biodiesel is included in the definition of renewable fuel.  The entire credit may not be taken for the taxable year in which the facility is placed in service but must be taken in seven equal annual installments beginning with the taxable year in which the facility is placed in service.  A taxpayer that constructs and places in service in North Carolina three or more commercial facilities for processing renewable fuel and invests a total amount of at least $400,000,000 in the facilities is allowed a credit equal to 35% of the cost to the taxpayer of constructing and equipping the facilities. Facilities must be placed in service before January 1, 2011.

Public Law:  NC Gen. Statute 105-129.16D

Alt Fuel Tax Exemption from Sales & Use Tax

The retail sale, use, storage or consumption of alternative fuels is exempt from the state’s sales and use tax. Sales and use tax is applied to conventional off road fuel sales and is 7% of the sales price. For example if the price of B100 is $3.00 per gallon, the sales tax exemption would be a savings of .042 cents per gallon on a B20 blend. This incentive includes biodiesel blended with fuel oil for heating applications.  Biofuels distributors must first register with the NC Department of Revenue as an Alcohol Fuel and Biodiesel Provider (Form GAS 1264) and post a minimum of a $2,000 bond. The amount of the bond is in proportion to on road fuel sales. Fuel sales are reported on Form E500.  Biodiesel may be splashed blended up to a B20 blend with mechanically dyed off road diesel (as per IRS Transitional Rules).   To register as a fuel provider, call the North Carolina Motor Fuels and Tax Office for more information: 877- 308- 9092 or 919-733-3409.

NC Gen. Statute 105-164.13 (11)

 Biodiesel Provider Credit

This law provides for a biodiesel provider credit equal to the per gallon excise tax the producer paid on the biodiesel. Only a biodiesel provider that produces at least 100,000 gallons of biodiesel during the taxable year is allowed a credit. The credit does not apply to tax paid on diesel fuel included in a biodiesel blend. The credit may not exceed five hundred thousand dollars ($500,000).   To obtain the credit the biodiesel would have to be sold to a user with a NC destination which would carry the tax. The undyed biodiesel would be taxed at 29.9 + .25 = 30.15 (road and inspection taxes). The dyed biodiesel would be taxed at .25 (inspection tax). Any fuel sold to exempt entities would be taxed at .25 (inspection tax). The biodiesel provider must be registered with the Department and file a return displaying all receipts and disbursements. Off road diesel does not have the road tax imposed so it would not be eligible for the credit.

Biodiesel is defined as a liquid fuel derived in whole from agricultural products, animal fats, or wastes from agricultural products or animal fats. “Biodiesel provider” is defined as a person who either:

• Produces an average of no more than 500,000 gallons of biodiesel per month during a calendar year. A person who produces more than this amount is a refiner; or,
• Imports biodiesel outside the terminal transfer system by means of a marine vessel, a transport truck, a railroad tank car, or a tank wagon.

This law is effective for taxable years beginning on or after January 1, 2008 and is repealed for taxable years beginning on or after January 1, 2010. Now Public Law 2006-66. Amends Article 3B of Chapter 105 of the General Statutes, § 105‑129.16F.
 

Recycle your Thanksgiving day turkey fryer grease at TBI!  If you fried a Turkey (or anything, really) for Thanksgiving, We’ll take your waste oil at our Wilson or Raleigh locations.  Please try to make sure you oil doesn’t have any water in it!  No open containers permitted.  Collection drop-offs are Friday and Saturday,  November 23rd and 24th, from 8am to 4pm.

Our collection points (May be unstaffed, please leave sealed containers near the posted signs):

Wilson, NC – TBI Facility, 1724 Baldree Road South, Wilson, NC 27893

Raleigh, NC – Fairgrounds Parking Lot off Trinity Road, Raleigh, NC (tentative, awaiting confirmation)

Jacksonville, NC – Coastal Carolina Community College, Jacksonville, NC (tentative, awaiting confirmation)

While visiting London to check out a possible source for some biodiesel production equipment we might use, I came across a very interesting observation.  It seems that 3 of 4 cars I see on the road here are all turbo-diesel vehicles.  (Nice ones too, like the Audi A6, the Mercedes A190, or the 2007 VW Passat.  We should be running some of the cars in the states that I see here.)   Diesel fuel seems to be about the same price as gasoline here, currently around 97 pence/liter (about $3.70 /gallon).

Still, there appears to be absolutely no biodiesel available in the country.  I cannot find it at a single pump, and those I ask about it either go “huh?”, or tell me that they’ve heard it’s coming sometime in the future.  Amazing.  Doesn’t that sound familiar?  It’s the same thing we hear in the US.   Considering how much of it there is in Germany, France, and other European countries, I was a bit surprised not to see it here this late in the game.  I thought we were the only ones playing catchup.

To make it worse, they seem to have the same B.S. coming from the car manufacturers here as we do in the states.  Check out the photo from the 2007 VW Passat TDI Wagon I rented during my trip here.  Now, I got 43 MPG on this nice ride, but VW is up to it’s same old tricks by stating that you can’t run biodiesel in the vehicle or it will void the warranty.  (Uh, except I’ve been running biodiesel in my 2005 passat for a year and a half with no fuel related wear problems).  Sad.

Get with it folks.  I can’t believe we’re in 2007 and STILL having to convince people that biodiesel is the right way to go.  What exactly is the sign that you’re waiting for?