Biofuels Northwest - City Club of Eugene 9/8/08

City Club of Eugene 9/8/08 Friday Forum.

Ian Hill of SeQuential & Mark Kendall with the Oregon Department of Energy discuss biofuels in the Northwest. Download from KLCC here.

US Department of Energy: Biofuels Lower Gas Prices

The US DOE went on the defense for biofuels in a press release last week. They tackled one of the hottest topics of today - price - but from a different perspective, the effect of biofuels on the price of petroleum. You can read the whole release here.

The release states that in the US for 2008, biofuels will have displaced the use of 5% of all petroleum.

This 5% decrease in demand amounts to a $0.20 to $0.35 reduction in price at the pump for petroleum products.

The report also stresses that this is the impact of "first generation" biofuels. Second generation technologies, like cellulosic-ethanol and algae-biodiesel, are much more energy efficient, which translates to increased volume at lower costs.

Other good quotes from the release:

Today’s Biofuels Account for Only a Small Percentage of the Increase in Global Food Prices.

Higher oil and gas prices leading to increased costs of fertilizer, harvest, and transportation

Increased demand as developing countries grow and people improve their diets

Two years of bad weather and drought leading to poor harvests in parts of the world

Export restrictions imposed by some countries

Fuel Prices

I've gotten many questions on what goes into the price - as you all know, the price of both petroleum fuel and biofuel has been going up and up. (While writing this article, the price of a barrel of crude oil has hit $118.28, a price far higher than forecasted.)

SeQuential has received numerous inquiries to why this is happening, and like everything in the world, there are many factors that go into the equation. This is not meant to be a complete list, but an overview of some of the key influencers. Feel free to post any comments or questions!

Limited Supply
Without getting into a discussion on how much oil is left underground, there is a very real constraint on oil output: refinery capacity. Since 2004, refinery output worldwide has not increased.

Demand from Developing Countries
The demand for petroleum by developing countries, mainly China and India, has put a strain on the already limited supply of petroleum. Classic economics shows that when there is a supply-demand imbalance, prices raise.

Weak US Dollar
The US Dollar has been loosing value as compared to other world currencies. Since the US imports about 60% of its petroleum, the dollar is not able to buy as much petroleum as it used to.

Effect on Biofuel
Like it or not, the price of petroleum has an effect on absolutely everything in our lives, even the price of locally produced biofuel. Every day in Oregon, only 0.7% (0.007) of the total fuel used is biofuel. SeQuential sources products from companies that use biofuels as much as possible, but the reality is that most companies use petroleum fuel, tying us and our prices to the rises in the price of petroleum.

Effect on Food Prices
There have been many articles in the news as of late on how the growing use of biofuel has impacted the price of food worldwide. This is an issue that SeQuential takes very seriously; there is a wrong way and a right way to produce biofuels. Wherever possible, SeQuential uses recycled or locally grown products and the most efficient processes for fuel production.

Our sourcing principle:

• Best – regionally-produced from regionally-available feedstocks. Emphasis on waste products and recycled products.
• Better – regionally produced from domestically sourced feedstocks.
• Good – domestically produced from domestically sourced feedstocks.
• Unacceptable – biofuels that have a negative energy balance or are produced from imported feedstocks. (Brazilian soy or Malaysian palm oil.)

The effect of petroleum prices, currency imbalances, worldwide crop failures and growing demand of developing nations for meat (which requires large amounts of corn and other grains) has been largely overlooked. Given the relative small size of the biofuel industry, these other macroeconomic factors have a much larger influence. For more reading: NY Times.

SeQuential is committed to finding ways to avoid competing with food crops, such as using Used Cooking Oil or Canola and Camelina grown regionally in rotation with grass seed and other crops.

SeQuential Carbon Challenge: Earth Month 2008

In celebration of Earth Month (Earth Day is not enough!), SeQuential, along with local businesses, organizations, and the Mayor of Eugene Kitty Piercy, is issuing the first annual Carbon Challenge to the City of Eugene:

Cut carbon dioxide emissions by 1,000,000 pounds during April

This is an ambitious goal , but with everyone pulling together, we can make a huge difference!

Participating in the Carbon Challenge is easy - simply go to any of the following locations and fill out an entry form that describes how you are (or will) walk, bike, bus or use biofuels instead of driving on petroleum fuels, thereby cutting your carbon footprint.


Bike Friday
Hutch's Cycles
Revolution Cycles
Down to Earth Home & Garden
SeQuential Fuel Station Eugene


You can enter once per visit for the end of month raffle. The prizes are:

• A Tikit folding bicycle from Bike Friday and Hutch’s Cycles
• A commuter bike from Revolution Cycles
• One of three $50 fuel gift cards from SeQuential
• One of five one-month bus passes from Lane Transit District
• A vine maple sapling from Down to Earth Home & Garden.

We are using how much fuel?!

I was going to do a different sort of analysis about this... but the scale of these numbers just wowed me so I'll let them speak for themselves.

Oregon's 2006 consumption of petroleum fuel:
4,314,400 gallons per day of gasoline (source)
2,266,600 gallons per day of diesel (source)

Oregon's 2006 consumption of biofuel:
38,356 gallons per day of ethanol (source)
10,959 gallons per day of biodiesel (source, which is a estimate)


Now with that in mind, how much of this is actually being produced in Oregon?

Oregon's 2006 production of petroleum fuel:
121 gallons per day of production capacity (source, I don't know if this is actually being produced)

Oregon's 2008 production of biofuel:
405,479 gallons per day of ethanol (source)
7,547 gallons per day of biodiesel (source)

So... what is the take away message here? Only a fraction of the fuel we use in Oregon is made from biofuel, but the impact has been huge:

• Bringing fuel production back in state
• Giving farmers access to a new market
  
• Decreasing carbon dioxide emissions
  
• Proving that not only is there an alternative to petroleum fuel, there are thousands of people who want this alternative

Everyone who has chosen to fuel up with biofuel is part of this change; we are still at the beginnings of it, but there is nowhere to go but up from here!

Thought leaders piece; Where gas money goes

C3 Press [Carbon Constrained Communications] recently released their first issue of "Thought Leaders of the New Energy Economy", which included a piece by SeQuential CEO Dave Garten, as well as by leaders in other industries. Check it out here (255k pdf).

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The latest NACS (a gas station / convenience store association) magazine published some interesting facts regarding where money goes on a gallon of gas, using 2007 average prices.

• 58%: Crude Oil
• 17%: Refining
• 15%: Taxes
• 9%: Distribution and Retail (20% of which goes to credit card companies)
• 1%: store income

This is slightly misleading though, since taxes ($0.484 is Oregon + Federal tax), distribution and retail (a set few cents per gallon), and store income (a set few cents per gallon) are all fixed numbers that don't change with gas prices. Simply put, when you read of crude oil prices hitting all time highs, gas stations aren't making any more money, the people pulling oil out of the ground are.

For users of pure biofuel, the taxes, distribution and retail, and store income would all be about the same. I'm not sure how the rest of it goes, but my guess is that the raw materials (raw oil and other production inputs) would make up by far the largest percentage.

Register Guard Opinion Piece

The Register Guard just published an opinion piece by Ian Hill, a co-founder of SeQuential, in regards to recent articles about biofuels:

Oregon’s lower carbon biofuel industry

by Ian Hill

In response to recent articles claiming that the use of biofuel leads to increases in global warming, we would like to point out that not all biofuels are crated equal. The biodiesel and ethanol sold through our SeQuential retail station here in Eugene is some of the most sustainably-produced fuel currently available in the country.

The SeQuential-Pacific Biodiesel (SQPB) production plant in Salem uses recycled cooking oil from sources such as Kettle Foods, Burgerville etc. A small but growing percentage of the SQPB facility uses Oregon-grown canola oil that is grown as a rotational crop with wheat. Canola is typically grown one year in four to enhance soil quality, breaks up pest cycles and increases wheat yields. Other oilseed crops that can be grown on land not suitable for food production or in rotation with food crops are being currently researched by OSU.

It is important to note that the SQPB facility’s technology can efficiently produce quality biodiesel from a wide range of vegetable oils. This gives SQPB the ability to adapt to new sources of oil as they develop, such as certain types of algae which are the most efficient photo-synthetic producer of oil on the planet and can be grown using agricultural & municipal waste streams.

The majority of the ethanol that is sold through our retail station is sourced from Pacific Ethanol’s facility located in Boardman OR. This facility does use corn as its primary feedstock for producing ethanol. What makes this facility different is that they use ~30% less energy then most contemporary ethanol production facilities. They do this by selling most of their wet distiller grains (or WDGS the main by product of ethanol production) directly into a local livestock feed market.

Another item of interest about Pacific’s Boardman facility is that they recently received a Federal Department of Energy grant to build a pilot scale cellulose to ethanol production facility. This facility will focus on technology allowing the production of ethanol from local feed stocks such as wheat straw, corn stover & wood chips.

On a County level, there are a number of research projects underway that are looking at a variety of renewable energy sources. Such as anaerobic digestion utilizing food waste for energy production and pyrolysis technology for converting carbon based waste material into different forms of usable energy including liquid forms like butanol (a gasoline replacement).

These examples of Oregon-made biofuels are derived from raw materials that do not compete with food-producing acres. As a result, these biofuels reduce life cycle carbon emissions by 40 to 80 percent compared to standard petroleum-based fuels.

Oregon (and the Pacific Northwest) leads the nation with our use of high blends of biodiesel, specifically B99 (99.9% biodiesel). Oregon & Washington have the largest markets in the country for retail biodiesel. Government & business fleets in Oregon such as the City of Eugene, the City of Portland, Rexius, Sanipac, LTD and Tri-Met to name a few have proven that they are willing to vote with their fuel budgets to support Oregon made biofuel. This kind of support is critical to building a better, localized biofuel industry. From our municipal governments, to businesses with fleets, to the individual consumer the Northwest is leading the way in the development of a localized biofuel industry.

The work to build a localized, cleaner, sustainable energy economy is an important incremental step, not an overnight miracle. Our company is named SeQuential for this very reason. There is no single panacea to our current energy crisis. Rather we are faced with a diversity of solutions that must be pursued simultaneously. Conservation taking the form of higher efficiency diesel & gasoline vehicles, increasing the use of electric vehicles, greater use of public transit systems, riding bikes and walking are all solutions that must also be employed.

As a company we are committed to helping build an Oregon based, lower carbon biofuel industry that is cleaner burning and that supports our local economy. SeQuential can only do this in partnership with our customers.

Ian Hill is a Co-Founder of SeQuential Biofuels, an Oregon-based retail biofuels company that provides biofuel blends for every vehicle.

The daily commute

We all have to work, be it in an office, a service job, or caring for the family and getting around requires some sort of transportation. There are many ways to get around; driving, biking, busing, etc., all of which have their own trade offs in terms of convenience and emissions.

Driving can be the most convenient way of getting around (baring traffic jams), but out of all of the alternatives, driving weighs in at the high end of emissions. There are, of course, many jobs and situations where driving is essential, so it is fortunate that cleaner-burning biofuel is available!

On a per-person basis, the more people you can get into a car, the better. The average car, over the course of a year, emits about 12,100 pounds of carbon dioxide (calculate your CO2 emissions here - for gas burning cars using petroleum only). Carpooling can cut this number down significantly - one person per car emits 12,100 pounds of CO2 per person. Four people in that car would only emit about 3,025 pounds of CO2 per person. Talk to your co-workers and see if you can organize a carpool!

Speaking of emissions per person, riding the bus (or light rail) is another great option with most buses fitting 40+ people on board. The tradeoff is that buses are on a fixed schedule and have fixed routes. That said, bus routes go along major arterials and chances are that there is a bus heading to where you need to go. If you factor in the time it takes to find a parking spot, buses can be faster than driving. Plus, most public buses use biofuels!

I am an avid bicyclist, so I love having the opportunity to ride into work. Having put in substantial hours driving for work in the past (pizza delivery), I realize how lucky I am to live close to work (4 miles) and to drive so infrequently. Riding a bike is a non-polluting way to get around and is good exercise to boot! Biking is slower than any of the other options (and there is always the chance of getting caught out in the rain), but since it is so clean, it is a winner in my book.

Carshares like Zipcar (who recently acquired Flexcar) are another great option - even if you mainly use an alternative to driving, there are sometimes where you just need a car. Being able to rent a car for a few hours works great for a lot of people, but it does require some planning for your reservation.

Here at SeQuential, almost all of us own cars, but we don't always use them. Having our office be in downtown Portland means there are lots of transportation alternatives that we are very lucky to have. On the average day, these are the main ways SeQuential's administrative staff get to work:

• Alan, retail manager: biodiesel car
• Bo, development: bus, bike
  
• Ciara, retail manager: biodiesel car
• Carrie, accounting: bus, bike
  
• Dave, CEO: bike, running
  
• Gavin, sales: bus, biodiesel car
• Gloria, accounting: walking, ethanol car
  
• Ian, founder: bus, walking, biodiesel car
• Sasha, marketing: bike
• Sue, marketing: bike
• Tomas, founder: bus, biodiesel car
  
• Tyson, founder: bus, biodiesel car
• Will, marketing: bus
  

Not all biofuels are made the same

(This is a quick response to the New York Times article that came out today http://www.nytimes.com/2008/02/08/science/earth/08wbiofuels.htm)

As you know, not all biofuels are made the same; cutting down the rainforest to grow biofuel crops is a terrible idea. Growing crops locally has been proven thru many studies to create lowered emissions and a net gain of energy over the life cycle of the fuel. Life cycle assessments follow a product from "cradle to grave" and all the inputs in between; for biofuels, this would be taking everything from planting, to fertilizing, harvesting, transport, conversion, distribution and combustion, into consideration.

Soybean-based biodiesel (grown in the US) has a lifecycle impact of lowering carbon dioxide emissions by 78% as compared to petroleum diesel. (http://www.nrel.gov/docs/legosti/fy98/24089.pdf)

SeQuential has always relied upon government laboratory research; we feel it is the least biased source we can find. If you want to do some further reading, here is a page with a whole bunch of links to documents that support the benefits of biofuels: http://www1.eere.energy.gov/biomass/publications.html.

Most studies are done with Midwest grown soybean based biodiesel. The SeQuential-Pacific plant in Salem primarily makes biodiesel out of used cooking oil, adding the element of recycling into the mix. I have not seen any studies on how many times better this makes the environmental impact, but I imagine it is many-fold.