Abstract of NYSERDA’s Biodiesel Study
Richard Pilkington
(845) 313-2039
NYSERDA Makes A Proposal
This document is a synopsis of the “Statewide Feasibility Study for A Potential New York State Biodiesel Industry“ report commissioned via NYSERDA’s Request For Proposals (RFP): 734-02. Much of this brief has been clipped or quoted directly from the study/report, unless specifically noted.
The study was co-funded for $200,000 by the New York State Energy Research and Development Authority (NYSERDA) and the New York State Department of Agriculture and Markets.
The New York State Legislature created NYSERDA in 1975.
NYSERDA administers the New York Energy $martSM program . . .
Some 400 NYSERDA research projects help the State’s businesses and municipalities
with their energy and environmental problems. Since 1990, NYSERDA has successfully developed and brought into use more than 150 innovative, energy-efficient, and environmentally beneficial products, processes, and services. These contributions to the State’s economic growth and environmental protection are made at a cost of about $.70 per New York resident per year.
NYSERDA’s original proposal objectives (RFP 734-02) where to:
- develop an overview and forecast of supply and demand for both biodiesel feedstocks and products; [Task 2]
- provide an analysis of state-of-the-art production options for biodiesel and co-products; [Task 3]
- conduct a market assessment focused on New York State; [Task 4]
- provide a public policy overview; and analyze cost and benefit impacts of those policies under various scenarios, including impacts to New York's agricultural sector and environment; [Task 5]
- provide an overview of technological trends and research needs; and [Task 7]
- make specific recommendations for New York State, including options or policy alternatives designed to overcome the identified market and/or technical barriers. [Task 6; also covered in other sections]
Feasibility Study and Final Report
The “Statewide Feasibility Study for A Potential New York State Biodiesel Industry“ final report was prepared by LECG, LLC, with technical assistance by MARC-IV, IBFG and Advanced Fuel Solutions The report begins:
“The market for diesel fuel in New York is substantial. “
And so. Where there’s a diesel market, there’s a BIO-diesel market!
“This [final] report addresses the major issues and tasks outlined in the NYSERDA Statement of Work (SOW) for this project. The section numbers correspond to the Tasks outlined in the SOW.”
The feasibility study report is over 130-pages.
TASK
Section Title
No. of Pages
Report Pages
Executive Summary
8
1-8
Introduction
1
9
TASK 2:
Current and Forecast Supply and Demand Overview
26
10-35
TASK 3:
Production Analysis – Biodiesel and Byproducts
26
36-61
TASK 4:
Market Assesment
15
62-76
TASK 5:
Public Policy Options
17
77-93
TASK 6:
Analysis of New York State Public Policy Options and Associated Costs and Benefits
8
94-101
TASK 7:
Technology Trends, Research, Development and Demonstration Needs
8
102-109
Appendix 1-4
22
110-131
Beginning with the Executive Summary (the first Task), the report addresses NYSERDA’s objectives in sections (Task 2 through Task 7).
“The purpose of this report is to present the findings of a comprehensive analysis of the economic feasibility of creating a biodiesel industry in New York State. An integral part of the study is a review of possible policy options and an assessment of their costs and benefits to New York State and New York consumers.”
A B2 Mandate is Proposed
Total distillate fuel in New York was 3.2 billion gallons in 2002. A B2 mandate covering ALL END USES would create a market of 64.1 million gallons of biodiesel, a LIMITED mandate 23.3 million gallons in 2007.
New York can supply some but not all feedstock. Maximum capacity to produce biodiesel is about 30 million gallons.
New York agriculture would be a major beneficiary of biodiesel industry. Soybean acreage increased from 40,000 in 1991, to 100,000 in 1998, to 150,000 in 2002. 2003 estimate was 5.3 million bushels on 144,000 acres.
Other oilseeds have been successful. New York has limited capacity to divert acreage.
In 2003, nearly 2.9 million acres of major field crops were planted in New York. Over the past 25 years acreage planted declined, mostly to development, nearly 27 percent.
The demand for vegetable oil for biodiesel is significant. In the absence of a national energy program or New York State biodiesel policy New York soybean acreage is expected to expand reaching 188,000 acres by 2007.
It is significant to note, in late June the USDA’s National Agricultural Statistics Service (NASS) reported:
Soybean plantings are expected to total 170,000 acres, an increase of 21 percent from the 140,000 acres planted in 2003. An estimated 168,000 acres will be harvested for beans, up 22 percent from a year ago. The remaining acreage is expected to be harvested as silage.
Additionally, in November the NASS Crop Production report indicated the following results for New York State in 2004:
Soybeans for Beans:
Harvested: 173,000 acres
Yield: 36 bushels/acre
Production: 6.228 Million Bushels
As noted in Appendix 4, Table A4.2 (Energy Bill Scenario) of the Feasibility Study, just over one year ago, these achievements were not expected until 2006/2007.
The additional demand for soybean oil to supply a New York biodiesel industry under
a combined B2 mandate and supply incentive policy is expected to increase soybean
acreage by an additional 99,000 acres to a total of 287,000 acres by 2012.
A New York Biodiesel industry would require distributors to make investments
in infrastructure that would create economic benefits.
The key to implementation is using biodiesel blends in existing petroleum tanks and infrastructure. This is accomplished by blending biodiesel as far upstream as possible, i.e. petroleum terminals.
The cost associated with this investment is estimated at approximately $64 million.
A New York B2 incentive or policy should be phased in over time and should
be linked to biodiesel capacity in New York.
A mandate that would require that diesel use for one or more end use segments
contain a certain percentage of biodiesel (e.g. two percent, or B2) should be phased
in to allow adequate time for the necessary capital investment for production and
infrastructure to be made and should be tied to New York biodiesel capacity. For
example, a mandate would not become effective until at least 10 MGY of biodiesel
capacity is in place.
A B2 policy or other policy incentive will attract investment, expand the State
economy, generate additional income for New Yorkers, and will create new
jobs. Each policy option has different revenue impacts for the State Treasury
and costs and benefits to consumers.
A mandate, supply incentive, and demand incentive each are expected to attract
direct investment to New York State. The investment will consist of capital
expenditures to increase soybean crush capacity and build new crush capacity, build
new biodiesel production capacity, and improve distribution infrastructure for each of
the terminals in the State.
Five Policy Options are Offered
- Stand alone mandate (Policy Option 1)
- Mandate combined with incentive for infrastructure (Policy Option 2)
- Mandate combined with a biodiesel supply incentive (Policy Option 3)
- Stand alone supply incentive (Policy Option 4)
- Combined supply and demand incentive (Policy Option 5)
Each Policy Option includes an infrastructure investment of $64 million.
The Executive Summary describes each policy option (Task 6 repeats descriptions almost verbatim). Two tables, titled “Economic Costs and Benefits of Alternative New York State Biodiesel Policy Options” summarize (the 5 policy options) in two scenarios; Table 1, “No National Energy Bill,” and Table 2, (with a) “National Energy Bill.” The data is “Cumulative 2007-2012.”
TASK 2: Current and Forecast Supply and Demand Overview
This section covers the U.S. and New York distillate fuel demand by end use segment. Feedstock supply is evaluated; beginning with oilseed crops, a table of New York soybean acreage and production by county (Table 2.3) is provided.
The primary soybean producing counties are located along and near Lake Ontario with the largest producers situated between Syracuse and Rochester. For counties near the Hudson Valley, Columbia and Montgomery averaged 1,800 and 1,200 soybean-harvested acres, respectively. Saratoga County had one year of harvest (300 acres) in 2001 and Dutchess, also one year, (300 acres) in 2002.
For the same period (2000-2002) New York State had a production average of 4.6 million Bushels. Nearby states, Pennsylvania and New Jersey, produced 14.6 million and 2.9 million bushels, respectively.
A limiting factor for a potential biodiesel industry in New York is soybean-processing capacity, the study notes. They identify three major producers, located in or near the largest soybean producing counties.
Animal Fat and Waste Grease (Yellow and Brown) feedstock are analyzed.
Limited availability of animal fat in New York suggests a reliance on other states, particularly Pennsylvania. Tens of animal fat rendering locations in New York, New Jersey and Pennsylvania are noted in the study.
Brown waste grease (commercial/industrial traps or waste water treatment) is very low oil yield due to high water content. Converting brown grease to biodiesel is currently experimental.
Yellow grease is manufactured from spent cooking oil [waste vegetable oil (WVO)]. Spent cooking oil can be vegetable oil or animal fat that was heated and used for cooking.
There are no published statistics on the production and consumption of yellow grease. Nor has the volume of used cooking oils and restaurant greases generated by the foodservice industry been well documented either.
A detailed footnote indicates the research and conversations with field experts to estimate yellow grease feedstock potential.
Table 2.6 provides per capita and per restaurant estimates of yellow grease production. It is suggested, the report concludes, that New York State produces somewhere in the area of 180 million pounds of yellow grease annually. If all of this were directed to biodiesel production, this would provide for 24 million gallons of biodiesel production.
A Point to Ponder
180 million pounds of Yellow Grease will be required annually for the feasibility of the biodiesel industry. Matter of fact, as Table 2.9: NY Biodiesel Feedstock Availability Summary indicates, Yellow Grease would provide 74% of feedstock requirements. Soybean oil being 20% and Animal Fats 6%.
Section Task 2 concludes with Co-Product Demand/Disposal Analysis, specifically glycerin and soybean meal. The results are inconclusive for glycerin. And, although the soybean meal market would be a minor impact, there would be a local benefit in the reduction of transportation costs.
TASK 3: Production Analysis – Biodiesel and Byproducts
New York State Production Options
The Biodiesel Plant Development Handbook© (The Handbook) published by the
Independent Biodiesel Feasibility Group (IBFG) is an excellent resource to help
determine the factors to be considered before investing in the biodiesel business and
installing a production plant. While The Handbook was written with the individual in
mind, it provides a useful starting place to make recommendations on the most
appropriate plant size and biodiesel technology for New York.
Feedstock quality is addressed; and, a biodiesel technology overview is presented.
Biodiesel Production Analysis is presented for different technologies, addressing plant sizes and capital costs. The results are displayed in four tables (3.1-3.4) indicating biodiesel costs per gallon. The cost to produce a gallon of biodiesel ranges from $1.36/gal. (yellow grease facility) to $2.38/gal. (soybean oil facility).
Access the complete synopsis online at:
http://itsmc.com/hvbc/index.html
(available after Feb 20, 2005)
Or, contact Richard Pilkington for snail-mail delivery.
Richard Pilkington
(845) 313-2039
Notes and Internet Links:
Statewide feasibility study for a potential New York State biodiesel industry
http://www.nyserda.org/publications/biodieselreport.pdf
See also, http://www.nysl.nysed.gov/scandoclinks/ocm56903698.htm
Statewide Feasibility Study for a Potential New York State Biodiesel Industry Request for Proposals (RFP): 734-02
http://www.nyserda.org/funding/734RFP.html
Soybean plantings are expected to total 170,000 acres, an increase of 21
percent from the 140,000 acres planted in 2003. An estimated 168,000 acres
will be harvested for beans, up 22 percent from a year ago. The remaining
acreage is expected to be harvested as silage.
Soybean production was valued at $33.8 million.