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From Seed to Speed
Growing a Market for Biodiesel

By Jenn Lackey

There's an old saying among farmers, "Show me a market and I'll grow it". Forget about semi-conductor chips and athletic shoes, Oregon may soon increase its bottom line growing oil seed crops, such as canola and mustard for use as biodiesel.

The Oregon Environmental Council (OEC) has a 2005 legislative biofuels proposal that could jump-start the development of biodiesel in the state. It falls in line with Governor Ted Kulongoski's Renewable Energy Plan, paving the way for Oregon to become a national leader in renewable energy and renewable product manufacturing.

"We know there is a growing market for biodiesel on the West coast and we're looking for ways to help facilitate that growth," says Christine Hagerbaumer of the OEC.

Biodiesel is part of a rapidly growing biofuels market, which includes ethanol. While ethanol is primarily made from corn and other sugar-based crops grown in the Midwest, the more applicable crops in Oregon include canola and mustard for use as biodiesel.

Biodiesel is a cleaner burning alternative to petroleum diesel that can be produced from vegetable oil or animal fats. In it's pure form, biodiesel is known as B100. It can be blended with petroleum diesels such as B20 (20% biodiesel) and B5 (5% biodiesel). It's also widely known to reduce Co2 emissions (green house gases) to at least 78% used in a recently manufactured diesel engine or in a modified older engine.

Since diesel is much more fuel–efficient, farmers, city municipalities and businesses have long used diesel fleets as a way to save dollars at the pump. In 2003 production of biodiesel fuel rose 66%, according to the Department of Energy (DOE). Users consumed 25 million gallons of biodiesel, a 15 million gallon consumption increase from 2002. The DOE predicts an increase of more than 500 million gallons of biodiesel use by 2008, making it a billion dollar market.

With oil prices soaring and tightened federally mandated emission standards for the use of petrol-based diesel, the need for biodiesel is expected to grow. Clark county Washington, which includes the city of Vancouver north of Portland, OR, decided to run their municipal fleet on B20 to meet local air quality standards. "In two years, Portland's (biodiesel) market went from zero to roughly 700,000 gallons," says Tom Endicott of Sequetial Biofuels, "Now people are jockeying in the region for more local production or to import it from the Midwest where the majority of biodiesel is produced."

But before Oregon can compete with Midwest states for a foothold in the biofuels market, the state needs to attract business that will help create a processing infrastructure to produce biodiesel from harvested oil seeds. That's the purpose of the OEC biofuels package. Currently there are no biodiesel production facilities in Oregon, and crushing and refining facilities are needed to produce biodiesel before farmers will commit to growing crops.

"We can do a great job of growing mountains of this stuff, but we need to know what to do with it," says Daryl Ehrensing a farmer and professor with Oregon State University. "We need the market to pull us into production rather than having to push our way through it," says Ehrensing.

One goal of the OEC legislative package is to expand the market for biodiesel by reducing fuel taxes for the use of biodiesel. House Bill 3034 includes waiving the "use fuel tax," for farm vehicles burning 100% biodiesel. The legislative package also provides incentives for biofuels production in Oregon utilizing Oregon crops, and creates a renewable fuel standard. The idea is that Oregon could become a hub for the growing demand in biodiesel to serve local needs and the needs of neighboring states like California, which consumes 15 million gallons of biodiesel a year.

Other tax incentives include House Bill 3030, which expands the property tax exemption ethanol facilities currently receive to biodiesel production and oil seed crushing facilities. Such incentives would give a tax break to businesses like Salem-based Energy Recovery Group that is building a biodiesel manufacturing plant based on out-of-state demand.

"There is a major distributor in Southern California that has agreed to buy our first 30 million gallons," said Energy Recovery Group President Mike Carpenter in a recent Portland Business Journal article. Located at the Port of Morrow in Northeastern Oregon, Energy Recovery's $5 million refinery will use oilseed grown by farmers within a 30-mile radius. It is expected to come on line mid-May and will have capacity to produce 10 million gallons of biofuel annually.

The legislative package follows suite to a similar legislative initiative that Minnesota adopted in 1997. In 1997 Minnesota passed a law requiring all gasoline in the state to be blended with ethanol. Due to the legislative mandate, Minnesota produces 400 million gallons a year of corn-based ethanol, creating a $580 million net annual benefit to the state according to Minnesota Department of Agriculture. Gasoline consumption in the state has been reduced to roughly 10%, and today the Mid-West state is easily touted as the biofuels leader.

The Minnesota sate legislature also passed a law requiring a 2% biodiesel blend in all diesel fuels sold in the state by July 2005. This law is expected to create an annual market for approximately 8 million gallons.

House Bill 3033 will set a renewable fuel standard for Oregon. The bill with the most opposition from petroleum producers, it requires a minimum blend of renewable fuel in gasoline and diesel sold in the state: 10% ethanol by 2010, and 2% biodiesel by mid 2006 rising to 5% biodiesel by 2010, creating a sure market for the use of biodiesel in Oregon.

Recent Federal mandates already locked in place, also provide incentives for the use of biodiesel. The Environmental Protection Agencey (EPA) has issued upcoming emissions rules that will require all petroleum-diesel sold for use to be refined as ultra-low sulfur diesel (ULSD). ULSD greatly reduces the level of sulfur pollutants that produce smog and highly affects air quality.

While this is great news for clean air advocates, the refinery process that produces ULSD strips it of lubricity. No lubricity can spells disaster for fuel-injection equipment, and biodiesel makes a great lubricating agent at just a 2% blend.

In addition to growing oil seed crop for its lubricity qualities, Biodiesel advocates also say oil seeds, particularly canola, make excellent rotational crops for Oregon wheat farmers.

According to the Oregon Department of Agriculture canola can increase wheat yields by up to 30% in those fields where it has been used. Crushing bb-size black seeds can produce oil that has both edible and industrial uses. The seed meal left after the oil extraction is also valuable as cattle feed and other products.

But not all farmers are optimistic about the current legislation encouraging the growth of oil seed crops for use as biodiesel. Some farmers fear growing brassica oil seeds, particularly, canola, in the Willamette Valley.

Much of the Willamette Valley is a restricted production zone for brassica oil seeds. Canola, also known as rapeseed, is a member of the brassica plant family and it can easily outcross existing seeds that share the brassica family umbrella and weaken other seed and vegetable crops. It can increase vegetable seeds' susceptibility to disease and insect infestation, and it can invade current crops with weedy plants making existing vegetable crops, like green beans, susceptible to white mold.

In a recent Agriculture Weekly article, Farmers like Nick Tichinan, owner of Universal Seed Co. in Independence, OR, voiced a great concern. He says any field planted to brassica oil seed crop wouldn't see a brassica vegetable seed crop for years, because of the cross pollination and disease problem. "If they do this (grow brassica oil seed crops in the Valley)," he says, "We're done."

Perhaps a greater fear is the potential of genetically modified (GMO) seeds making their way into Oregon fields. Offshore vegetable seed customers do not tolerate GMO crops, which account for a large part of vegetable seed producer's buyers.

Karen Lewotsky, OEC program director for agriculture and water programs understands these farmers' fears. While some farmers are skeptical about what the ODA is willing to do in order to protect existing crops, Lewotsky says the ODA is currently working with farmers to combat disease and insect infestation. Farmers can also work with the ODA to create rules that don't allow the use of GMO brassica seed and continue to enforce growing restriction zones that would require oil seed crops to be grown within safe distances from vulnerable vegetable seed crops.

Lewotsky also points out that the current legislation isn't about telling what farmers to grow or produce. "It's about creating a market and letting farmers choose how they want to take advantage of it," she says, "We're simply trying to create a market and a hospitable atmosphere to process plants and create value added products to what farmers can grow."

Clearly thoughtful coordination and planning is key to a successful production of brassica oil seed crops. Brassica oil seeds will have to be safely transported in airtight trucks or processing and seed crushing facilities will have to be strategically placed where cross-pollination isn't an issue.

Despite some farmer's skepticism there has been an unusual coalition of support from environmental democrats and rural Republicans. Organizations like OEC and the Oregon farm Bureau have been working hard together to help inject needed dollars into Oregon's rural economy, and help Oregon become a renewable energy leader. Hopefully all the effort will enable Oregon to claim home to a new and forward thinking industry.



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