Golden Opportunity For Biodiesel

California’s new carbon-reduction policy has made the state a new target market for biodiesel producers. U.S. soybean farmers, who sustainably produce the soybean oil used to make much of that biodiesel, are also taking notice.

Biodiesel’s ability to reduce carbon emissions – and the subsequent market opportunity that comes with it – were reoccurring messages at the recent National Biodiesel Conference and Expo. As a result, attendees heard how the fuel is becoming a darling for diesel users in the Golden State.

“The one overriding message I’ve taken away from this conference is carbon,” says Matthew Stone, who, for the past 10 years, has been monitoring the global biodiesel marketplace for biofuels-analytics firm Prima. “The markets for carbon reduction in biofuels have grown. There’s no escaping it – carbon [reduction] is the way to go, and the industry would do well to adopt it.”

Biodiesel producers stand to make generous premiums from California’s Low-Carbon Fuel Standard (LCFS) and from similar requirements in other states and Canada.

The LCFS has some in the industry already changing their mindset, says National Biodiesel Board (NBB) Director of State Regulatory Affairs Shelby Neal.

“We are in the business of providing carbon reductions; carbon reductions are our product,” he explains. “To ignore that fact is to miss significant business opportunities. The LCFS holds the potential for a lot of additional revenue for biodiesel producers.”

The LCFS requires a 10 percent cut in statewide greenhouse-gas emissions by 2020, and biodiesel is providing more than its fair share of those cuts. Neal points out that diesel fuel makes up 20 percent of the fuel used in California, but biodiesel is providing 39 percent of the carbon reduction required by the LCFS.

That’s because biodiesel made from U.S. soybean oil has a carbon-intensity (CI) value of about half that of ultra-low-sulfur diesel (ULSD) – 51.83 for soy biodiesel compared with 102.76 for ULSD.

Part of biodiesel’s excellent carbon-reduction story is being written on U.S. soybean farms, says Robert Stobaugh, a soy checkoff farmer-leader and NBB Governing Board member.

“The more sustainable we are as farmers, the more sustainable our products will be for our end users,” says Stobaugh, who farms in Atkins, Arkansas. “With biodiesel and government requirements for carbon reductions, we’re already seeing how our sustainability is leading to additional markets for our products and more value for us.”