Why We Buy Biodiesel - Iowa Renewable Fuels Association

advertisement
The Perils of Winter Biodiesel Blending
Presentation to
Iowa Renewable
Fuels Association
Michael Whitney
Musket Corporation
January 28, 2014
Topics
•
•
•
•
•
Why We Use Biodiesel
Cold Weather and Quality
Love’s/Musket Quality Protocols
Labeling Transparency and D975
Incentives that Work
Why We Buy Biodiesel
1. Biodiesel is Fuel
•
•
•
Quality
Cost
Ratability/scalability
2. RFS and State Incentives
•
•
•
Biodiesel is cheaper than diesel
Drives competitiveness into our pricing
Creates diversity of fuel supply
We’re in the fuel business
Cold Weather Challenges
1. Filter Plugging
1.
2.
3.
4.
5.
Stranded truckers
Driver downtime
Missed loads – less biodiesel volume
Higher maintenance costs
Negative quality perceptions
2. Managing actual blend levels
1. ASTM D975 “up to 5%”
2. Calibrating blending systems
3. Handling preblends
3. Handling Issues
1. Insulated trailers
2. Hot load temps – temperature degradation
3. Additive
Managing Cold Weather is an Industry Problem
Improper Handling in Cold Weather
Love’s Quality Program
Quality
Musket Spec
ASTM D6751
< .4%
< .8%
< 200 seconds
< 360 seconds
Oxidation Stability
> 6 Hours
> 3 Hours
Water
< 300 ppm
< 500ppm
< .175%
< .24%
Monoglycerides
Cold Soak
Total Glycerine
•
•
•
Protect our brand on quality
Protect our blending program
Protect the industry
A Quality Problem in Iowa is a Quality Problem Across the Country
Love’s Quality Program
•
Every gallon of biodiesel comes from an approved plant that meets
the Musket Spec
•
We visit and audit every plant for quality and compliance
•
We control blending accuracy and quality by taking supply directly
to the stores where we blend it with diesel
•
We actively monitor the weather and proactively shut down
blending
•
We look at not only where the truck fills up but where it could go
•
In Winter every diesel load that contains biodiesel must have cold
weather additive
“Up to 5%” - The ASTM D975 Dilemma
•
We don’t know how much we are getting
•
•
•
•
We don’t know the quality of the biodiesel in the 5%
•
•
Difficulty isolating potential biodiesel related quality issues
Creates macro compliance issues on exports that damage RIN value
•
•
•
Makes it hard to be fully transparent to our customers
State labeling and compliance issues
Audit costs for FAME content testing of rack preblends
Systematically weakens RIN value and blend margin
Indirectly reduces producer margin
Increases fuel cost to consumers
•
•
•
Forces us to reduce demand for biodiesel and fuel discount for blends above 5%
Rack sellers price B5 at a clear ULSD value when there is not a clear ULSD option
Degrades the value of product when shipping on a pipeline
•
Risk of blends above 20% invalidating engine warranties
•
New QAP rule
Biodiesel Incentives that Work
• Market oriented incentives that use achievable targets
•
RFS
• Downstream tax incentives
•
IL, IA, TX
• Mandates raises the cost of fuel and reduce supply
availability
•
MN, OR, PA
Policy makers are very focused on cost
It is tricky to argue that something that is mandated must also be subsidized
Questions?
Download
Related flashcards

Economic indicators

17 cards

Economic indicators

18 cards

Demographic economics

17 cards

Public economics

11 cards

Create Flashcards