1. The Perils of Winter Biodiesel Blending
Presentation to
Iowa Renewable Fuels Association
Michael Whitney
Musket Corporation
January 28, 2014

2. Topics Why We Use Biodiesel Cold Weather and Quality
Love’s/Musket Quality Protocols
Labeling Transparency and D975
Incentives that Work

3. Why We Buy Biodiesel We’re in the fuel business Biodiesel is Fuel
Quality
Cost
Ratability/scalability
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

4. Cold Weather Challenges
Filter Plugging
Stranded truckers
Driver downtime
Missed loads – less biodiesel volume
Higher maintenance costs
Negative quality perceptions
Managing actual blend levels
ASTM D975 “up to 5%”
Calibrating blending systems
Handling preblends
Handling Issues
Insulated trailers
Hot load temps – temperature degradation
Additive
Managing Cold Weather is an Industry Problem

5. Improper Handling in Cold Weather

6. Love’s Quality Program
Musket Spec
ASTM D6751
Monoglycerides
< .4%
< .8%
Cold Soak
< 200 seconds
< 360 seconds
Oxidation Stability
> 6 Hours
> 3 Hours
Water
< 300 ppm
< 500ppm
Total Glycerine
< .175%
< .24%
Protect our brand on quality
Protect our blending program
Protect the industry
A Quality Problem in Iowa is a Quality Problem Across the Country

7. 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

8. “Up to 5%” - The ASTM D975 Dilemma
We don’t know how much we are getting
Makes it hard to be fully transparent to our customers
State labeling and compliance issues
Audit costs for FAME content testing of rack preblends
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
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

9. 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

10. Questions?