By DAVID R. BAKER
San Francisco Chronicle
July 05, 2006
He liked the idea of it, at least. The fuel comes from domestically produced, renewable sources such as vegetable oil, animal fat or used restaurant grease. It pollutes less than regular diesel and gives off fewer greenhouse gases. It can be used on its own or blended with regular diesel as a relatively cheap way to cut emissions. And it works in ordinary diesel engines like those in his 14 tractors and four trucks.
Now, after trying it, Foster wouldn't go back. He's burning roughly 15,000 gallons of biodiesel per year, using it to till 250 acres of land and haul organic lettuce, leeks and cabbage to market.
"I read up on it, thought about it, and it didn't seem too much of a risk," said Foster. "And basically, I've been happy with it from day one." He's even paying less for his trucks' biodiesel than he would for regular fuel, spending about $3.15, or 12 cents less, per gallon.
Biodiesel used to look more like a hobby than a business. It attracted a passionate following among environmentalists and people worried about the world's dependence on petroleum. They made biodiesel in small batches and burned it in their diesel-engine Volkswagens and Mercedes. It remained far from the mass market.
But in recent years biodiesel has started to make inroads in industries that consume large amounts of fuel. One by one, businesses such as Phil Foster Ranch are trying biodiesel and growing more comfortable with it. Government agencies with large vehicle fleets are testing it as well.
Nationwide production has soared, tripling in 2005 to reach 75 million gallons, although it pales in comparison to the nearly 140 billion gallons of gasoline the United States consumes each year. New biodiesel plants are under construction throughout the country, some of them funded by such corporate giants as Chevron and Archer Daniels Midland.
"We're talking about a way to turn the passion of this business into dollars and cents," said Theodore Lavoie, chief executive officer of Greenline Industries in San Rafael, Calif., which designs biodiesel plants.
Biodiesel used to be far more expensive than its petroleum-based counterpart. But prices for regular diesel have doubled in the last three years, narrowing the difference between the two fuels. Government biodiesel subsidies have also helped.
"The price of biodiesel hasn't changed much - the competitiveness has," said Pat O'Keefe, whose company, Bay Biodiesel, will open a biodiesel plant in Martinez, Calif., this summer.
Because of the fragmented nature of the biodiesel market, it's hard to quote an average price. While Foster spends about $3.15 per gallon, one San Francisco area purveyor charges $3.50. By comparison, regular diesel at California gas stations costs an average of $3.27.
But the market for biodiesel remains tiny, dwarfed by the United States' ravenous appetite for other fuels. Even ethanol - also renewable, also based on crops - sells more briskly, in large part because many states blend it into gasoline to control air pollution. Domestic plants produced nearly 4 billion gallons of ethanol last year, more than 53 times national biodiesel production.
Biodiesel converts see great potential for growth, especially among companies and government agencies that operate large fleets of vehicles.
But there are obstacles and possible limits to that growth. Diesel-powered cars are rare in the United States compared with Europe. Biodiesel has, in the past, varied in quality - something producers are pushing hard to change. In California, state regulations designed to protect drivers from substandard fuels have prevented biodiesel from being sold at regular gas stations.
And, as with ethanol, there are questions about how much fuel the country's farmland can grow.
"If everything went right, I would think that in 10 to 15 years ... you could possibly produce 10 billion gallons of biodiesel in the United States," said Robert McCormick, leader of biodiesel utilization research and development at the National Renewable Energy Laboratory, part of the federal Department of Energy.
He noted, however, that the country's overall demand for diesel is about 60 billion gallons per year. "There's just no way you're going to come up with 60 billion gallons of biodiesel," McCormick said.
The concept behind the fuel is not new. When Rudolf Diesel introduced his eponymous engine at the 1900 World's Fair, he ran it on peanut oil, not petroleum.
Biodiesel is not the same as raw vegetable oil. It can, however, be refined from many crops as well as the used grease restaurants churn out by the barrel.
While individual biodiesel enthusiasts often gravitate toward kitchen grease, most commercial plants in the United States use soy oil. That's not an accident. The soy farming industry has poured money into biodiesel research for years, much as corn farmers have done with ethanol.
As a result, most of the nation's 65 operating biodiesel plants listed by the National Biodiesel Board are in Texas or the Midwest, close to soy supplies. So are most of the 50 plants under construction.
The fuel they produce burns cleaner than regular diesel. A study by the National Renewable Energy Laboratory found that buses using pure biodiesel cut by 32 percent their emissions of tiny soot particles, which can cause breathing problems. Carbon monoxide emissions fell 35 percent. And emissions of carbon dioxide, the greenhouse gas most blamed for global warming, fell 78 percent, in part because the soy plants used to make the biodiesel absorb carbon dioxide from the atmosphere.
Blending biodiesel with regular diesel also cuts pollution, although to a lesser extent. Using biodiesel raises emissions of one pollutant, nitrous oxide, by about 13 percent.
Biodiesel's relative cleanliness has long been one of its main attractions. So has the idea of deriving energy from crops that can be planted year after year, rather than from that famously finite resource: oil.
Price used to be a barrier. But that changed dramatically last year. As oil costs topped $60 per barrel, regular diesel prices rose to nearly $3 per gallon after starting the year just below $2.
And in January 2005, a federal tax credit for biodiesel producers and distributors kicked in. For every gallon of biodiesel they blend with regular diesel, they receive $1. The credit encourages the use of biodiesel blends to reduce pollution. Producers who had been making pure biodiesel started adding 1 percent of petroleum-based fuel to the mix, took the tax credit and cut their costs.
Even before the tax credit, interest in the fuel had been growing. BioFuel Oasis, a co-op in Berkeley, Calif., has quadrupled its membership since it opened in 2003. It now includes 1,500 drivers.
"The market for the regular consumer, the average person, is growing pretty much as fast as people can find diesel cars," said Gretchen Zimmermann, one of the Oasis workers and owners.
Many Americans, however, aren't familiar with diesel cars and don't like the soot-spewing diesel trucks they've encountered on the freeway. Even many of biodiesel's backers caution against seeing the fuel as an easy way to replace petroleum.
"I think there's an appropriate place for biofuels, but it's not a magic solution," Zimmermann said. "Nothing is."
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