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Published January 06, 2014, 09:55 AM

Building biodiesel markets

With Minnesota preparing to switch to a higher biodiesel mandate, soybean industry officials in the state recently visited New York to learn more about biodiesel use there.

By: Jonathan Knutson, Agweek

With Minnesota preparing to switch to a higher biodiesel mandate, soybean industry officials in the state recently visited New York to learn more about biodiesel use there.

“We wanted to show them (New York officials) that they have soybean farmers’ support, that we think biodiesel is a good deal. And they told us they think it’s a good deal, too,” says Bill Zurn, a Callaway, Minn., farmer and chairman of the state Soybean Growers Association new uses committee.

Zurn and several other Minnesota soybean officials were among about 50 Midwest soybean representatives who were in New York City Dec. 16 to 18. They visited with both city leaders and home heating industry officials.

Biodiesel already is used to heat homes and power vehicles in New York City. Officials there are considering whether to mandate even more biodiesel use, according to published reports.

Natural gas has replaced fuel oil as a heating source in many homes in the northeastU.S., Zurn says.

But soybean officials on the trip found that many people who sell fuel oil in New York think environmentally friendly biodiesel will shore up home heating demand, he says.

“There’s a feeling they (the home heating oil industry) can hold their market with bio. They’re happy to go with the bio,” Zurn says.

City officials, in turn, like using biodiesel to power vehicles and want more of it, Zurn says.

Expanding the use of biodiesel, in New York, Minnesota and elsewhere, is a priority for the soybean industry, he says.

Minnesota is the nation’s third leading producer of soybeans, and bean growers in the state have worked for years to expand its use in biodiesel.

Area of emphasis

Minnesota will be the first state to have a B10 mandate, which will be in place only from April to October. The mandate will revert to B5 in the rest of the year.

Currently, every gallon of diesel fuel sold in Minnesota contains a blend of 5 percent biodiesel, commonly known as B5. A blend of 10 percent biodiesel, in turn, is known as B10.

Blends can range from 2 percent (B2) to pure biodiesel (B100).

Illinois offers a tax credit for using B11 (a blend of 11 percent biodiesel). But Minnesota, with B10, will have the highest state mandate, says Mike Youngerberg, senior director of field services for the Minnesota Soybean Growers Association.

B5 in Minnesota is made primarily from soybean oil, as will be the case with B10.

About 40 million gallons of biodiesel are used annually in Minnesota under B5. An additional 20 million gallons will be used under B10, according to the soybean industry.

Criteria met

The move to B10 is written into a state statute passed in 2007. Originally, B10 was supposed to be implemented in 2012. But the move was delayed until several criteria, including making certain that “adequate blending infrastructure and regulatory protocol are in place,” are met.

The Minnesota departments of Agriculture and Commerce, along with the Minnesota Pollution Control Agency, decided in September that the criteria had been met. The change to B10 can’t be implemented until 270 days after the decision was announced, so the higher mandate will go into effect July 1.

Under the 2007 legislation, Minnesota is scheduled to go to B20 by 2015.

Biodiesel helps improve air quality, with the use of B5 in Minnesota removing an estimated 644 million pounds of carbon dioxide annually, according to information from the American Lung Association.

Offsetting losses

The soybean industry is pushing greater use of biodiesel, in part, to offset sales lost to the trans fat issue.

In response to health concerns, food producers have reduced the amount of trans fats in their products. That’s hurt sales of soybean oil, which contains trans fat, and helped competing oils, such as canola and sunflowers, which don’t.

Since 2006, the U.S. soybean industry has lost 4 billion pounds of annual edible-oil market share to other oils, according to industry officials.

A potential ban on trans fat increases the importance of developing other markets for soybean oil, Youngerberg says.

Two billion pounds of partially hydrogenated soybean oil are still used annually in food production, Youngerberg says.

“That’s 2 billion pounds that needs to go someplace else” if and when trans fats in foods are banned, he says.

Expanding the use of soybean oil in biodiesel “helps keep the bottom from falling out of the soybean oil market,” he says.

Biodiesel is “really a great long-term opportunity for soybean producers,” he says.

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