Texas Biodiesel Industry Talks Big Business in Austin

Conference and Expo drift: Those who have raised biodiesel industry out of infancy seeking sustained growth

A sign of the times? This Mercedes-Benz R-series (R 320 CDI), emblazoned with a BIODIESEL emblem, is owned by Biodiesel Coalition of Texas General Council Mike Nasi. He and his wife share this vehicle and a Jeep Liberty CRD, also fueled with 99% biodiesel, a renewable fuel made from virgin and recycled veggie oil that's processed to burn in unmodified diesel engines. Biodiesel is now a $1 billion-per-year industry and Texas churns out more of the stuff than any other state.
A sign of the times? This Mercedes-Benz R-series (R 320 CDI), emblazoned with a "BIODIESEL" emblem, is owned by Biodiesel Coalition of Texas General Council Mike Nasi. He and his wife share this vehicle and a Jeep Liberty CRD, also fueled with 99% biodiesel, a renewable fuel made from virgin and recycled veggie oil that's processed to burn in unmodified diesel engines. Biodiesel is now a $1 billion-per-year industry and Texas churns out more of the stuff than any other state. (Photo by Daniel Mottola)

Years from now, will "big biodiesel" occupy a place among America's other economic juggernauts: big oil and big pharma? These days, concern over air quality, climate change, rising petroleum prices, and Middle-East-related energy insecurity has given rise to the rapid growth of a domestic biodiesel industry.

Few people realistically look to the fuel – which is basically vegetable oil stripped of its glycerin to permit combustion in unmodified diesel engines – as a silver bullet to cure our energy and environmental woes. That will require vast vehicular efficiency reforms and movement toward modern rail transport, as well as more walkable, bikeable communities. But meanwhile, more and more public and private diesel fleets, including the city of Aus­tin's, are looking to blend biodiesel with traditional diesel as a way to immediately cut emissions and oil imports. Lots of people also seek the fuel in its purest form as a means of pursuing petroleum-free driving. About a $1-billion-per-year industry, expected to produce up to 350 million gallons of fuel this year – with Texas, the No. 1 biodiesel-producing state, having grown its capacity from 120 million gallons per year to 280 million gallons this year alone – those who have helped raise the biodiesel industry out of its infancy now seek sustained growth. That was the drift of the sec­ond annual Texas Biodiesel Conference and Expo, held in Austin last Wednesday and Thurs­day by the Biodiesel Coalition of Texas.

Among the pressing topics highlighted at the event were emerging sources for lower-cost feedstocks, preferably from nonfood agricultural crops. Biodiesel backers were also briefed on the tankful of regulatory issues the industry had to contend with this year, including an important state production incentive left unfunded by the Texas Legislature and the Texas Commission of Environmental Quality's nearly 3-year-old threat to outlaw popular biodiesel blends if producers can't reign in emissions of smog-forming nitrogen oxides, or NOx, as part of its Texas Low Emission Diesel Program, designed to reduce smog and ozone pollution. While the incentive is uncertain, the TxLED issue is expected to be amicably resolved by early next year.

Jeff Trucksess, executive vice president of Green Earth Fuels and BCOT's regulatory chairman, schooled conference-goers on happenings at the congressional level. He pointed to the Biodiesel Promotion and Quality Assurance Act, a bipartisan congressional bill cosponsored by big-name senators, including Richard Lugar, Chuck Grassley, Dick Dur­bin, and Barack Obama. The measure would set minimums for domestic biodiesel use and impose quality-control regulations through the Ameri­can Society of Testing and Materials, which certifies all domestic motor fuels, allowing blends of up to 5% biodiesel to be sold as regular diesel. Trucksess, whose company will soon open a biodiesel plant on the Houston ship channel eventually capable of producing 90 million gallons per year, envisions all domestically sold diesel containing 5% biodiesel, something he says "will make a big national impact without forcing people to change their behavior." The low blends are approved by virtually all engine-makers (not true for higher blends), and they can be distributed using existing pipeline infrastructure without fear of cold-weather gelling, as with higher blends. Five percent across-the-board blending would "set the industry on fire," Trucksess said.

But in order to put more biodiesel on the market, producers must find feedstocks cheap enough to make biodiesel prices competitive with petroleum diesel.

European biodiesel-makers were chastised this year for buying cheap palm oil from the tropics, where the rain forest is slashed and burned to create farmland – the global warming equivalent of shooting oneself in the foot. Jeff Plowman, BCOT treasurer and co-founder of local startup Austin Biofuels, favors state incentives for oil crop production, "making it worth people's while to deal in oil crops and seeds." He noted that while Texas is No. 1 in biodiesel production, most of our feedstocks, like soy, come down the Mississippi River from the Midwest. That factor, he said – in addition to the fact that most biodiesel is produced from crops also used for food, feed, or cooking oil – has driven feedstock prices up, keeping profit margins low for Texas producers.

Searching for new oil crops, BCOT called in academics from across the state. Travis Mil­ler, associate head of Texas A&M's Extension Program for its Soil and Crop Sciences Department, said new feedstocks need to yield at least 100 gallons of fuel per acre – much more than widely used soy's 63 GPA – to be competitive. Fortunately, Texas has many opportunities for production, such as warm weather, lots of available farmland, and even more underutilized, unfarmable land. (Some of his findings are in the box to the left.) Gov. Rick Perry recently awarded $5 million from his emerging technology fund to A&M for advanced biofuel research, including "accelerated harvesting of nonfood crops." But the real biodiesel "holy grail," as one conference attendee put it, is microalgae.

The Texas Food and Fiber Commission's Bob Avant, an expert on microalgae fuel crops, had crowds abuzz – not only because of algae's astronomical 15,000 GPA output estimates, but because it could be produced on dirt cheap and underutilized West Texas desert lands, using brackish brine water, a pesky byproduct of regional oil production. Best of all, no one eats algae, so it would be the ultimate fix for the food vs. fuel conundrum. By Avant's calculations, 2.7 million acres of microalgae production could have satisfied all of the U.S.'s diesel demands for 2006. Put in perspective, the U.S. has 970 million acres of land devoted to crop production and grazing, he said. (Texas has 24 million.) Better yet, algae requires sunlight and carbon dioxide to grow, so "symbiosis with carbon sequestration – possibly from a coal plant" is possible, he said. Testing is under way at the Texas Agricultural Experiment Sta­tion near Pecos, where researchers hope to construct up to 2,000 acres of commercial demonstration ponds, with 500 acres planned within five years, Avant said.

Fourteen percent of U.S. fuel consumption now comes from diesel, and many energy experts proclaim the end of cheap oil is upon us. That means the biodiesel industry has significant room for expansion. Energy consultant Lee Anne Woods, speaking to conferees as a member of the governor's Renew­able Energy Initiative team, said the common goal is to see Texas "maintain and extend its role as the energy state."

Some Potential New Oil Crops

Members of the mustard seed family – specifically canola, rapeseed, and camelina – have solid Texas potential, average 84 gallons per acre, and can be grown in between other crop cycles and in cool weather.

Sunflowers are drought-hardy, can prosper on less than prime growing land, and yield about 98 GPA with little cultivation, but their oil is in high demand by snack-food makers like Frito-Lay. (How about using post-Frito frying oil?)

Castor beans yield a whopping 140 GPA but contain the toxin ricin. Scary! Breeders are now developing low-ricin varieties.

Jatropha, a tropical shrub, yields a staggering 1,200 GPA and is gaining popularity in China and India as a fuel crop; however, growers are challenged by a lack of mechanical harvesting equipment.

Chinese tallow, an invasive, now-wild-growing plant reportedly brought to the U.S. by Ben Franklin, offers an attractive 635 GPA, can grow on minimally cultivated lands, requires little irrigation and fertilizer, and can be harvested mechanically, similar to coffee. It's said to flourish in the South Texas coastal plains and grows wild in East Texas.

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biodiesel, Sec­ond Annual Biodiesel Conference and Expo, Biodiesel Coalition of Texas, Jeff Trucksess, Green Earth Fuels, Biodiesel Promotion and Quality Assurance Act, Jeff Plowman, Austin Biofuels, Rick Perry

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