1. Department of Environmental Quality Energy & Pollution Prevention Bureau October 21, 2010 Howard Haines Montana Bioenergy Program Manager 406 841 5252 hhaines@mt.gov Biofuels Montana Update- Havre Biofuels Summit: Biodiesel Biofuels Montana Update- Havre Biofuels Summit: Biodiesel Camelina Chester MT, 3/07 Ringling MT 8/93

2. OVERVIEW Update on Ethanol How much does Biodiesel cost Benefits, Challenges of Biodiesel Biodiesel Use & examples Local resources – what is next

3. RFS l 2022: 110 MGY starch, 25 MGY cellulosic Ethanol Use (all retail may or may not) State FYMGY blendMGY ethanol 2004172.4 2005303.1 2006303.0 2007 12.63.1 2008 40.669 non-EtOH gas 491.90 2009 170.679084 non-EtOH gas315.175 2010 174.592936 all other non-EtOH gas 311.196848

4. Proposed Ethanol Plants (Mont) Permitted MGY Feedstocks 0125 Wheat, corn, barley (expired Jul ’10, only 1 on MDT list) Recently studied 1 ? Wheat, barley Total planned125 MGY (383 MGY in July 2008) Operating/planned cellulosic pilot plants 0 (Aug 2008 had 1 in Butte, @ 150k/year capacity)

5. Cost: Oilseed Value Chain Biodiesel is the low value product Oilseeds Crusher Meal OIL Livestock Feed Composite Materials Adhesives Edible (culinary) Oils Biodiesel Bio-Lubricants, cosmetics, pharmaceuticals Fertilizers, soil amendments Pollution Control

6. Current federal excise tax credit WAS $1.00/gallon for biodiesel from virgin oil Biodiesel should be $1.80-$3.50/gallon (without road tax). Actual price is set by the market. Biodiesel is less than diesel in some areas (Portland Ore, June 2010). Cost of Biodiesel

7. Cost is feedstock sensitive (75-80%). Beginning 2008, production cost was generally estimated to be about $0.55/gallon (small plant) to $0.30/gallon (large plant). Production cost = 7.6 x [oil price, $/lb] +$0.50 per gallon. example, canola oil @ $0.28/lb gives $2.63/gal before tax Challenges for Biodiesel Price & Availability

8. Challenges for Biodiesel Extraction/ process efficiency 70% oil removal, crush eff. 20% removal, crush eff. Seed, $/lb0.15 % oil30% Oil/$/lb$0.714$2.5 Oil-per gallon, for processing $5.43$19.00

9. Biodiesel cost is feedstock sensitive (75-80%). Production cost is generally estimated to be about $0.95/gallon (small plant) to $0.55/gallon (large plant) increase in methanol. Production cost = 7.6 lbs/gal x [oil price, $/lb] +$0.55 per gallon. example, canola oil @ $5.43/gal gives $5.98/gal before tax Cost for Biodiesel “It Depends” compared to Petroleum Diesel

10. Oilseed Crushers/processors need to sell the other 60-to-70 percent by weight as meal at a profit (just like soy). Cost for Biodiesel

11. Challenges for Biodiesel Extraction/ process efficiency70% oil removal Seed, $/lb0.21 % oil40% Oil/$/lb (34# oil/100#seed) $0.75 Oil-per gallon, to process$5.70 (5.43 oil 5.99 BD) 60% meal @ $0.095/lb (240/tn-$60 truck~190/ton) $6.84/cwt Price oil/gal-meal credit$4.79 ($3.25/gal BD $3.50/gal BD, 98% recov)

12. RFS – 1 2022: 74 MGY (1.8 million acres/year) Biodiesel Use (variable, depends on cost) State FYMGY blend Gal B-100 20040.34570,000 20050.34771,000 20060.34871,149 2007 (thru Nov) nya336,180** 2008 946,328 2009 802,759 (t 245.243 mgy) 2010 758,560 (ttl 207.931 mgy)

13. Proposed Biodiesel Plants (Mont) Permitted MGY Feedstocks 1 0.1 Canola, safflower, camelina Listed 5 by MDT 0.029 camelina, canola, (39 in 2008)Juncea, safflower, sunflower, algae, other Total planned 0 (for ref 238.089 MGY in 2008) Operating (FY 2010) 40.015Used fry oil 10.100Canola, camelina, other * represented by engineering firms, contacting DEQ

14. Fleet Example: Yellowstone NP “Mission” market Reduces carbon footprint Helps meet executive/policy mandates Reduced odor & visibility issues (visitor complaints) Blends in any proportion

15. MDT Evaluation of Biodiesel November 2004 (field evaluation Dec 2003-June 2004) Used “B20” with positive experience Findings: No motor fuel tax implications Lubricity markedly improved w B20 No new fuel related problems Cost and availability

16. Havre SD Evaluation of Biodiesel School year 2008-2009 No engine issues Some additional time for blending Improved fuel economy Regulatory Mission Underground mines (particulates) Off-road equipment in areas of poor air quality (lubricity)

17. Cold Flow Not an issue if properly managed Specific compounds in diesel fuel and biodiesel crystallize at low temperatures. Crystals agglomerate to form large masses. This can cause filter plugging and eventually the fuel will become a solid mass. Soy biodiesel gels at 0°C. #2 diesel fuel gels at -10 to - 12 °C. Biodiesel from saturated feedstocks can gel as high as 12-14°C.

18. Filter Filter, filter, filter,… Biodiesel plant Filter Oil Filter

19. Fleet Conversion: materials compatibility New Feedstocks for Biodiesel Algae Starch & cellulosic biomass, DOE-$3 million

20. Biodiesel is Food and Fuel: 18 million acres~5.5 m-acre/year planted 1.8~2 m-ac/yr in rotation

21. FOR MORE INFORMATION Oil & Production costs: Joel Schumacher, MSU Bozeman Extension, (406) 994-6637, jschumacher@montana.edu Biodiesel Tech Course. Jon Van Gerpen, 208 885- 7891, jonvg@uidaho.edu Safflower, Sunflower, Flax: Jerry Bergman, jbergman@sidney.ars.usda.gov 406 433 2208 Canola, Camelina: Alice Pilgeram, pilgeram@montana.edu, 406 994 1986 Taxes: Vanessa Olsen, MDT, volson@mt.gov, 406 444 7276 Used Fry Oil: (Joe Blaine) 406 444 9879

22. FOR MORE INFORMATION www.deq.mt.gov, select “bioenergy/biodiesel” www.biodieseleducation.org www.biodiesel.org http://dli.mt.gov/WIRED/ Energy & Pollution Prevention 406 841-5200 hhaines@mt.gov

23. Summary: Price & Availability Problems with biodiesel usually come from “off-specification” fuel. Fuel quality is important to prevent the most common operational issue with biodiesel: filter plugging. Biodiesel does not void warranties. Biodiesel doesn’t require anything special – just do those things you should have been doing all along! The End. Thanks for Listening, Questions?