GHG Benefits Increase as Biodiesel Grows

Posted on January 14th, 2014

When the biodiesel industry grows, so do the greenhouse gas benefits of displacing fossil fuel. The federal Renewable Fuel Standard (RFS) is the key driver for responsible growth of biodiesel and biomass-based diesel. Not only is the RFS driving gradual increases in overall volumes of biomass-based diesel, but it is accelerating industry diversity, and this has a compounding effect on the environmental and economic benefit.

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Figure 1 illustrates the volume growth of the biodiesel industry. The commercial biodiesel industry was quite nascent in 2004. Investors responded to the biodiesel tax credit by immediately building production capacity to process surplus soybean oil into biodiesel. Gradually, some of that capacity was converted to also run on animal fats and used cooking oil. By 2007, the industry had ramped up to 500 million gallons a year with 79% of that volume coming from vegetable oil. Growing in 2008 to 690 million gallons, the industry rapidly increased the use of alternative feedstock to 43%.i.

The biodiesel tax credit lapsed in 2009 and 2010. EPA was also late in implementing the RFS. The failure of public policy and the economic downturn dealt a significant blow to the biodiesel industry. The industry contraction significantly decreased the volume of biodiesel consumption; the number of independent biodiesel companies still doing business; and it caused a slight reversion to greater reliance on traditional vegetable oils.

2011 was the first full year of implementation for the RFS including an 850 million gallon requirement for biomass-based diesel. With the tax credit in place to help obligated parties establish infrastructure needed to offer more low blends of biodiesel into main-stream petroleum distribution, the biodiesel industry exceeded goals by producing over 1 billion gallons of biodiesel. This trend of surpassing goals continued through 2013, when total biomass-based diesel production reached 1.7 billion gallons.ii. This record level of production was aided by the tax credit and biodiesel’s ability to satisfy RFS requirements for Advanced Biofuel.

2013 was a tremendous year for biodiesel. The enthusiastic growth of biomass-based diesel was matched by record increases in feedstock diversity and GHG reduction. Significant volumes of new feedstocks came into use from used cooking oil, animal fats, inedible corn oil, and various other sources. Together, these wastes and new feedstocks grew by 88% in 2013.iii.

While domestic crush of soybeans remained steady to meet the demand for protein meal and livestock feed, the demand for soybean oil was stagnant. A contributing factor for this decline in food uses remains the move away from partially hydrogenated vegetable oils due to trans fats. The FDA states that trans fat consumption has dropped by 74%.iV. While the federal government continues to consider further mandating reductions in its use, state and local bans signal a continued decline in the use of partially hydrogenated oil for food. In contrast to the increasing use of soybean oil for biodiesel production, the use of canola for biodiesel dropped significantly. Combined, these traditional vegetable oils used for biodiesel increased by 14% in 2013 while the overall production of biomass-based diesel increased by 55%.v. The excess supply of vegetable oil available for biodiesel is also reflected in the falling price of vegetable oil. Soybean oil is now selling for 25% less than it did at the onset of 2013.vi.

Diversifying feedstocks improves the GHG reduction of the biodiesel industry. Individual feedstocks have all been evaluated for their lifecycle emissions, including potential indirect effects, which vary significantly according to USEPA analysis. Figure 2 shows that as the biodiesel industry grows, the average GHG reduction for the aggregate industry improves.

For a consistent frame of reference, the green line on Figure 2 uses GHG scores assigned by USEPA in their rulemaking implementing the RFS. In 2010, EPA concluded that biodiesel produced from waste and recycled grease reduces greenhouse gases (GHG) by 86%. After applying precautionary analysis for potential indirect land use change, EPA assigned a score of 57% to biodiesel made from soybean oil. These scores are all relative to average 2005 petroleum diesel.vii. Figure 2 shows that increasing the use of new and waste feedstocks results in improving the GHG score of the aggregate biodiesel industry. It can also be noted that the aggregate score worsened somewhat after that last industry contraction in 2010. While growth has consistently favored rapid increases in new feedstocks, the industry’s only period of contraction had a slightly larger negative impact on wastes and new feedstocks.

It should be noted that EPA’s score for soy biodiesel including indirect land use change should be considered conservative due to the predictive nature of their modeling published in 2010 and its inability to predict the actual decrease in vegetable oil prices that the market has produced since 2010. All biomass-based diesel exceeding a 50% GHG reduction threshold participate equally in the RFS. Other peer-reviewed studies and EPA’s own analysis support a GHG score for biodiesel without indirect land use change ranging from 78% to 89%.viii.; ix.; x.

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Since the biodiesel industry is using more diverse feedstocks with even greater carbon benefits and also improving in the efficient production of biodiesel from traditional feedstocks,xi. additional changes are illustrated by the yellow line in Figure 2. The carbon intensity of petroleum diesel has increased by 7% since 2005, which is included in place of the 2005 baseline. The yellow line also includes more current lifecycle analysis from the California Air Resources Board with more precise analysis for biodiesel from inedible corn oil and renewable diesel from tallow.xii. While still maintaining an abundantly conservative penalty against traditional vegetable oils for theoretical indirect land use change, the aggregate biomass-based diesel category of the RFS is achieving a GHG reduction in excess of 81% relative to current petroleum diesel.

Biodiesel is one of our most powerful tools for reducing the greenhouse gas emissions of heavy duty transportation fuel. Biodiesel stores solar energy in a liquid form and allows us to substitute that solar energy in place of fossil fuels. Instead of extracting carbon from deep underground and pumping that into the air, biodiesel recycles carbon. The net effects are quantified in Figure 3. The more biodiesel we use, the more GHGs we save. In 2013, we displaced a record 18 million tons of CO2. EPA’s proposal to hold biomass-based diesel volumes at 1.28 billion gallons for 2014 will significantly reduce the effectiveness of the RFS to reduce greenhouse gases. In fact, EPA’s proposal is likely to increase GHGs by almost 8 million tons by relying on petroleum diesel to back-fill the absence created by EPA’s shuttering of biodiesel plants. More than just a temporary increase in GHG emissions, those 8 million tons of fossil carbon will remain in our atmosphere for decades, and delay our demonstrated trend toward continuing diversification and lifecycle improvement.

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Don Scott serves as the Director of Sustainability for the National Biodiesel Board.

Footnotes

i. U.S. Census Data M311K reports
ii. USEPA EMTs data http://www.epa.gov/otaq/fuels/rfsdata/2013emts.htm
iii. Energy Information Administration http://www.eia.gov/biofuels/biodiesel/production/ provides feedstock data for biodiesel.
iv. FDA takes step to further reduce trans fats in processed foods,; Nov, 7, 2013; http://www.fda.gov/newsevents/newsroom/pressannouncements/ucm373939.htm
v. Energy Information Administration http://www.eia.gov/biofuels/biodiesel/production/ provides feedstock data for biodiesel.
vi. Chicago Board of Trade
vii. Federal Register, March 26, 2010, page 14788-14789, http://www.gpo.gov/fdsys/pkg/FR-2010-03-26/pdf/2010-3851.pdf
viii. National Renewable Energy Laboratory; Lifecycle Inventory of Biodiesel and Petroleum Diesel for Use in an Urban Bus; 19989; http://www.nrel.gov/docs/legosti/fy98/24089.pdf
ix. Federal Register, March 26, 2010, page 14788-14789, http://www.gpo.gov/fdsys/pkg/FR-2010-03-26/pdf/2010-3851.pdf
x. Wang, Huo, Arora; Methods of dealing with co-products of biofuel in life-cycle analysis and consequent results within the U.S. context; Energy Policy 2010
xi. Pradhan, Shrestha, Van Gerpen, McAloon, Yee, Haas, Duffield; Reassessment of Life Cycle Greenhouse Gas Emissions for Soybean Biodiesel; American Society of Agricultural and Biological Engineers; 2012; http://www.researchgate.net/publication/234143981_Reassessment_of_Life_Cycle_Greenhouse_
Gas_Emissions_for_Soybean_Biodiesel/file/d912f51234a621f896.pdf
xii. California Air Resources Board; Carbon Intensity Lookup Table for Diesel and Fuels that Substitute for Diesel; http://www.arb.ca.gov/fuels/lcfs/121409lcfs_lutables.pdf

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