Long before Katrina and Rita devastated the Gulf Coast, diesel fuel was already destined to become a major story in 2006. Two significant developments — a dramatic increase in the production of biodiesel fuel and the introduction of ultra-low-sulfur diesel this October — have the potential to transform the perception and use of diesel engines in America.
"2006 will mark the beginning of a new generation of clean-diesel technology," says Allen Schaeffer, executive director of the Diesel Technology Forum, a trade group that represents manufacturers of engines, fuel and emission control systems. "This clean diesel milestone will be the result of an unprecedented level of investment in research and development of new technologies on behalf of the diesel industry."
Schaeffer is primarily referring to the ultra-low-sulfur fuel that will be available for on-highway trucks this fall. That fuel, which will contain 97% less sulfur than the current on-highway fuel, will play a key role in the emission-reduction technology to be introduced on 2007 trucks.
The public, however, is more likely to be caught up in the growing media attention swirling around biodiesel, a "farm-grown" fuel that has enormous public, political and environmental appeal.
Biodiesel can be made from a variety of organic sources, most notably soybeans. Plant-based biodiesel is inherently low in sulfur — less than 1 part per million (ppm) — and can significantly increase the lubricity of the fuel with which it is blended.
Biodiesel's popularity is not surprising, given the nation's desire for energy independence, a hefty federal tax credit to encourage biodiesel production and the potential boon to farming communities. Some estimates show that the price of soybeans could rise 10 cents a bushel for every 100 million gallons of biodiesel produced.
Biodiesel production triples
The National Biodiesel Board, an industry trade association, expects that 2005 production of biodiesel fuels will hit 75 million gallons, a three-fold increase from the year before and more than 100 times the 500,000 gallons of biodiesel produced just six years ago. There are already 45 active biodiesel refineries in 24 states throughout the country, with another 21 plants in the planning or construction stages.
The federal government's generous tax credit — up to $1 per gallon — has also drawn interest internationally.
Last November, EarthFirst Americas Inc., became the first company to import biodiesel into the U.S. from another country with 268,000 gallons of biodiesel fuel made from Ecuadorian palm oil. The company's ambitious goal — it plans to be importing 3 million gallons per month by the end of March — has enraged the American Soybean Assoc. (ASA).
"Importing biodiesel will only subsidize foreign farmers and biodiesel producers with U.S. taxpayer dollars," says ASA President Bob Metz.
In reality, soybean producers don't have too much to worry about. Even with 2005's record production numbers, less than 5% of the nation's soybean crop is being processed into biodiesel. Even if all of the nation's soybean farms converted their crops into fuel, they still would only generate 2 billion gallons of biodiesel, a fraction of the 60 billion gallons of distillate fuels the nation consumes each year.
Biodiesel is not feasible as a stand-alone fuel, but shows great promise when blended. Fuels containing up to 5% biodiesel provide the same power as standard diesel fuel with no impact on engine or fuel-injection components. The addition of biodiesel can also increase the fuel's lubricity while reducing greenhouse gas emissions.
Problems in Minnesota
There are challenges. Last year, Minnesota became the first state to mandate a 2% biodiesel blend for all diesel fuel sold in the state. But, in December, the state had to temporarily suspend it because fuel filters started to clog in the cold weather, stopping trucks, tractors and school buses.
The initial investigation by the Minnesota Department of Commerce attributed the problem to poor quality control at biodiesel refineries.
"While there may be multiple reasons for the cold-weather fuel problems that have been experienced, preliminary tests have shown that some biodiesel being sold in Minnesota does not conform to required fuel specifications," according to a department statement.
While gelling is a known challenge with 100% biodiesel, blending it with standard diesel was expected to fix the problem.
"People are surprised to see this problem in a 2% blend," says Joe Suchecki, a spokesperson for the Engine Manufacturers Assoc. (EMA).
EMA and its member engine companies have cautiously embraced biodiesel, balancing the fuel's popularity in one of the main off-highway markets — agriculture — with technological challenges of adapting a new fuel to existing engines. Most engine warranties allow the use of up to 5% biodiesel, but manufacturers are resisting pressure to accept a 20% blend. The problems in Minnesota validate their concerns.
"There's a lot of interest in biodiesel with numerous programs and mandates being proposed, but we remain cautious," Suchecki says.
"Biodiesel is a darling of the media right now," adds Schaeffer. "It helps put a new gloss on diesel, which is a good thing, but it still has to prove it can deliver on economics and performance."
Reducing sulfur content for on-highway fuels
Engine manufacturers have more faith in the other "clean diesel" that will hit the market this fall — the ultra-lowsulfur diesel refined from crude oil.
It will have a sulfur content of less than 15 parts per million (ppm), which represents a dramatic reduction from the current level of 500 ppm. That, by itself, will reduce an engine's particulate emissions by 10 to 15%. More importantly, the new fuel is necessary for proper operation of the particulate filters and oxidation catalysts required on 2007 on-highway trucks. Together, the ultra-low-sulfur diesel and engine changes are expected to reduce tailpipe emissions by 90%.
Refineries say they will be able to meet the October deadline, but there is some concern that the new fuel could impact the delivery of off-highway diesel. The massive underground pipeline system that transports the bulk of the nation's fuel from the refineries to regional shipping terminals simultaneously transports a variety of other fuel products, including jet fuel, kerosene, gasoline, diesel and heating oil.
Pipeline operators have figured out how to minimize the cross-contamination of these products as they are being transported, but ultra-low sulfur fuel presents a new challenge. The primary concern is that sulfur residue from offhighway diesel could contaminate the ultra-low-sulfur as it moves through the pipeline, pushing it above EPA's 15 ppm specification.
Some pipeline companies have hinted they may no longer accept the diesel fuel now used in construction and agricultural applications because of its high sulfur content. That could crimp supply — and significantly increase prices — for off-highway fuel.
However, recent legislative and market developments bode well, according to Michele F. Joy, general counsel of the Association of Oil Pipe Lines. "There have been some regulatory changes that have given us more latitude and more refineries are indicating they will be able to produce low-sulfur (500 ppm) fuel for the off-highway market by the end of this year," she says. "Because of this, we think it is less likely there will be disruptions."
Schaeffer is also confident. "From all accounts, everything is on track," he says. "Everyone realizes the handwriting is on the wall, to get sulfur out of the fuel."
Dave Jensen is a contributing writer based in Milwaukee, WI.
