18 • OIL
&
ENERGY
Bioheat
REG Expands
Biodiesel Supply
in Northeast
HEATING OIL DEALERS WHO ARE MANDATED
to sell Bioheat
®
or wish to sell it on their
own can now count on the support of the
nation’s largest biodiesel producer.
Renewable Energy Group, also known
as REG, is now supporting marketers in the
Northeast with four terminal positions in
the New York City Metro area and another
in Ontario, N.Y. The NYC area locations are
in Port Chester, N.Y., Yaphank, N.Y., New
Hyde Park, N.Y., and Whippany, N.J. REG
became a publicly owned company in 2012.
REG operates seven commercial pro-
duction biorefineries with a capacity of 225
million gallons per year and combined 2012
production of 189 million gallons. Director
of Sales and Marketing Jon Scharingson
discussed REG’s operations and provided a
producer’s perspective on biodiesel during
the recent Atlantic Region Energy Expo in
Atlantic City, N.J.
TREMENDOUS GROWTH AHEAD
While some heating oil dealers have
been using Bioheat for 10 years, the biodiesel
industry is still in its early stages, according
to Scharingson. Just 10 years ago, in 2003,
U.S. production was only 14 million gal-
lons. In the past decade, production has
risen and fallen as the federal government
tinkered with incentive policies.
The federal Blender’s Tax Credit for
biodiesel first took effect in 2004, and U.S.
production grew steadily, reaching 678
million gallons in 2008. The subprime
mortgage collapse and new tariffs in the
European Union caused production to drop
for two years, and then the Blender’s Tax
Credit lapsed in 2010. By 2012, U.S. pro-
duction had fallen to 309 million gallons.
The production decline halted in 2010,
when the U.S. Environmental Protection
Agency (EPA) enacted Version 2 of the
Renewable Fuel Standard (RFS2), which
anointed biodiesel as the only Advanced
Biofuel being produced on a commercial
scale across the U.S.
RFS2 greatly increased the mandated
level of biodiesel that refiners are required
to blend with petroleumproducts, including
on-road diesel and heating oil. As a result,
U.S. production increased to 1.1 billion
gallons in 2011 and 2012. It is expected to
reach 1.28 billion gallons in 2013. “With
RFS2, you started to see the development
and growth of the biodiesel industry,”
Scharingson said.
“Biodiesel is now a mainstream fuel,
and obligated parties need to blend it,” he
added. Producers still have plenty of room to
expand production. Built capacity exceeds 2
billion gallons per year, and feedstocks are
readily available, according to Scharingson.
The robust pace of biodiesel production is
continuing in 2013, with record production
reported in both January and February.
MORE FEEDSTOCKS IN THE MIX
REG is best known for producing
biodiesel from soybeans, but the company
now draws on a wide variety of feedstocks,
including waste cooking oil and animal
fat. With this shift, the company is better
positioned to purchase feedstocks readily
and at favorable prices, Sharingson said.
“There might not be enough soy available
economically at some points, and there
are lots of readily available oils and fats to
convert,” he added. REG now brands its
biodiesel as REG 9000.
With advanced production technology,
REG can make high-quality biodiesel from
feedstocks including soy, rapeseed, inedible
corn oil, white pork grease, beef tallow,
poultry fat and yellow and brown grease.
“What it takes to do this is chemical exper-
tise and running the plants well. Today,
more than 50 percent of biodiesel is made
from non-soy feedstocks,” Scharingson
explained. Factors affected by feedstock
choice are cloud point, oxidative stability,
cetane number and sulfur content.
Scharingson said it is very important for
Oilheat dealers to purchase high quality fuel,
which they can do by choosing producers
and marketers who have attained BQ-9000
accreditation. A BQ-9000 producer designa-
tion indicates that the company makes fuel
that meets the ASTMD6751 biodiesel specifi-
cation. BQ-9000 companies also use a system
to monitor biodiesel quality with sampling
and testing. Some equipment manufacturers
specify in their warranties that customers use
fuel from BQ-9000 producers.
HIGH QUALITY BIODIESEL
Biodiesel’s former reputation as a fuel
of variable quality made by small producers
no longer applies, because 81 percent of all
U.S. biodiesel is made by BQ-9000-certified
producers, he said.
Government support of increased biod-
iesel production is invaluable, according to
Scharingson. The industry is now creating
blue-collar jobs, improving air quality and
enhancing U.S. energy security with the
help of Blender’s Tax Credit, RFS2 and state
incentives, he said.
Northeastern states have enacted some
mandates that have helped support biod-
iesel production, notably New York City’s
Bioheat mandate, which took effect in 2012,
requiring heating oil dealers to include at
least 2 percent biodiesel in all heating oil.
New York State has also incentivized Bioheat
use statewide with a tax credit of one cent
per gallon for each percent of biodiesel used,
i.e. a 20-cent credit for each gallon of B20.
In addition, Pennsylvania mandates
B2 for on-road diesel, while New Jersey,
Connecticut and other states are con-
sidering Bioheat mandates. “There is
tremendous positive momentum in state
legislatures now,” Scharingson said. “From
where we sit, Northeast legislatures are on
the forefront.”
Jon Scharingson, Director of Sales and Marketing for REG,
addresses an audience at the Atlantic Region Energy Expo.
