MINNESOTA SOYBEAN PROCESSORS NextGen Meeting August 7, 2008 BIODIESEL MINNESOTA SOYBEAN PROCESSORS NextGen Meeting August 7, 2008

Production Economics Roughly 7.5 # oil/fat = 1gal Biodiesel Example 7.5 X 60 cent # CBOT = $4.50 feedstock cost Bushel of soybeans yields about 1 1/3 gallon of biodiesel MnSP refines about one-half of its soybean oil into biodiesel About 16 million #/month, or Yield of about 25,000 acres of soybeans

TRANSESTERFICATION Producing biodiesel is fairly easy React oil/fat with alcohol in presence of catalyst Methyl ester = Biodiesel (when reacted with methanol, ethyl ester when reacted with ethanol)‏ Glycerin About 10% of biodiesel production is glycerin Biodiesel is easy to produce but hard to produce consistently high quality product Learning curve….as much Art as Science

BQ9000 BQ9000 is process where biodiesel production processes, procedures and quality inquiries are standardized, documented and audited for compliance Third party audit of BQ9000 manual prior to BQ9000 approval BQ9000 is designed to standardize product quality Not the same as meeting product specifications Quality specifications are done through ASTM

ASTM D-6751 ASTM is a cooperative standards setting process by all interested parties such as: Biodiesel industry Oil Companies Regulators Engine makers ASTM D-6751 is THE quality specification for biodiesel used in the U.S. Biodiesel must meet D-6751 to be eligible for tax credits Meet D-6751 for engine makers warranty Meet D-6751 for EPA approval as motor fuel Biodiesel is only alternative fuel to have specific ASTM specification

ASTM D-6751 D-6751 is not a static specification Always under revision just like lubricants or motor fuel Latest revision instituted a Cold Weather Filtration Test (CWFT) Based off of Minnesota’s 2005-2006 winter experience More study on this issue underway With the approval of the CWFT, biodiesel blends up to 20% are essentially now ‘diesel fuel’ This will bring more quality and performance demands upon biodiesel refiners since biodiesel blends are now considered ‘branded’, e.g., Amoco diesel fuel or Shell diesel fuel. Oil companies DO NOT want fuel problems associated with ‘their’ diesel fuel under any circumstance

NEW FTC BIODIESEL PUMP LABELS FTC has just issued rules regarding the labeling of biodiesel blend retail pumps Allows biodiesel blends up to 5% without labels Biodiesel blends 6% and greater will have various generic disclosures regarding the blend level Labels will indicate the difference between biodiesel and bio-mass biodiesel Some biodiesel pumps may have two labels depending on the source and % content of the biodiesel

ALTERNATIVE FUEL CHALLENGES Performance Public demands gasoline/diesel-like year around vehicle performance Perception Public does not comprehend the immense size of today’s fossil fuel consumption Public mistakenly believes that today’s alternative fuels are THE ‘Silver Bullet’ Public mistakenly believes ‘alternative’ means cheaper than petroleum based Distribution infrastructure Petroleum industry has 100 years of capital investment in the distribution infrastructure

ALTERNATIVE FUEL CHALLENGES Economics In real world reality ‘green’ fuels are only worth a couple of cents Food v. fuel…not just a U.S. issue Energy density Product Quality 1970’s ethanol problems are still alive today, just like the 2005-2006 Winter of Biodiesel

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