Diesel's New Age?

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.