Biodiesel 101 & Technical Overview

1. Biodiesel 101 &Technical Overview By Steve Howell – Technical Director, National Biodiesel Board January 2008

2. Today’s Topics • Driving Forces—Why Biodiesel? • Biodiesel Basics • Production Process and ASTM Spec • Quality Programs • Attributes • OEM Support • Demand and Availability • Resources

3. Biodiesel Driving Forces • Reduce dependence on imported crude oil and petrodiesel from unstable parts of the world • Reduce global warming by using a renewable fuel • Reduce harmful emissions from diesel engines • Can be used in any diesel engine without modifications, existing fueling stations can be used • Easy to use--drop in substitute for petroleum diesel fuel • Produces over 3 times more energy than it takes to grow and process the fuel • Engine and vehicle companies approve the fuel for use • Over 100 million miles of on-road trouble-free use both here and abroad

4. Biodiesel Defined • Biodiesel, n. -- a fuel comprised of mono-alkyl esters of long chain fatty acids derived from vegetable oils or animal fats, meeting ASTM D 6751, designated B100. • Biodiesel Blend, n. -- a blend of biodiesel fuel with petroleum-based diesel fuel designated BXX, where XX is the volume percent of biodiesel. • This tight definition was needed in order to secure vehicle, engine and fuel injection equipment company support for biodiesel, as well as to secure ASTM specs

5. Biodiesel (B100) Definition • Eliminates: • Coal Slurries • Raw Vegetable Oils and Fats • Non-Esterified Oils • Partially Esterified Oils • Blends With Diesel • Non Ester Renewable Diesel • Most of these have caused serious problems in diesel engines in past testing

6. Oil or FatAlcohol Soybean Methanol Corn Ethanol Canola Cottonseed Catalyst Sunflower Sodium hydroxide Beef tallow Potassium hydroxide Pork lard Used cooking oils Biodiesel Raw Materials

7. Vegetable Oil or Animal Fat (100 lbs.) + Methanol or Ethanol (10 lbs.) Biodiesel Reaction In the presence of a catalyst Combining Yields Biodiesel (100 lbs.) + Glycerin (10 lbs.)

8. Important Biodiesel Parameters • Complete Reaction/Removal of Glycerin • Insured through total/free glycerin spec • Removal of Catalyst • Insured through sulfated ash spec • Removal of Alcohol • Insured through flash point spec • Absence of Free Fatty Acids • Insured through acid value spec All these insured through ASTM D 6751

9. Specification for Biodiesel (B100) – ASTM D6751-07b (Dec. 2007)

10. ASTM Current Status • ASTM D 6751 is the approved standard for B100 to be used for blending in the U.S. • If B100 meets D 6751 and petrodiesel meets D 975, the two can be blended up to 20% • Similar to how #1 and #2 diesel are managed • The MOST important factor is B100 meeting ASTM D 6751 prior to blending

11. ASTM Current Status • ASTM is in the process of formally approving specifications for finished blends of biodiesel • For these blends, all biodiesel used must meet D 6751 prior to blending • Allowance of up to 5% biodiesel into ASTM D 975, the specification for petrodiesel, has been approved at the ASTM subcommittee level. Final vote expected in June 2008 • A new ASTM spec for B6-B20 blends has been approved at the ASTM subcommittee level, with final vote expected in June 2008

12. Quality, Quality, Quality • B100 must meet D 6751 prior to blending to insure trouble-free use of B20 and lower blends • BQ-9000 fuel quality program helps to promote high quality fuel from producers and marketers • B20 and lower blends are recommended since most of the research and successful use of the fuel has been with these blends • See NBB Toolkit document “Use of Biodiesel Blends Up to B20” for more information • Blends over B20 require special precautions and should only be used by knowledgeable and experienced users • See NBB document “Guidance on Biodiesel Blends Above B20” for more information: http://www.biodiesel.org/pdf_files/fuelfactsheets/Use_of_Biodiesel_Blends_above_%2020.pdf

13. BQ-9000 Program • Biodiesel Industry’s “Good Housekeeping” TM seal of approval for biodiesel production & distribution companies • Quality Control System covers biodiesel manufacturing, sampling, testing, blending, storage, shipping, distribution • ASTM Grade Fuel, BQ-9000 Companies

14. Biodiesel (B100) Attributes • High Cetane (avg. over 50) • Ultra Low Sulfur (avg. ~ 2 ppm) • High Lubricity, even in blends as low as 1-2% • High Energy Balance (3.2 to 1) • Renewable, Sustainable, Domestically Produced • Increases overall fuel production capacity in USA • Reduces HC, PM, CO in existing diesel engines

15. Enhanced Lubricity • Equipment benefits • Superior lubricity • B2 has up to 66% more lubricity than #2 Diesel • EPA required sulfur reduction in 2006 • No overdosing concerns vs. other lubricity additives

16. Biodiesel and Global Warming • Closed Carbon Cycle: CO2 Used to Grow Feedstock is Put Back Into Air • 78% Life Cycle Decrease In CO2 • Energy Balance 3.2 to 1 • Compression Ignition Platform (i.e. diesel) 30% More Efficient Than Spark Ignition (i.e. gasoline, CNG, propane)

17. Economic Development: Biodiesel • Creates Manufacturing Jobs • Creates Expanded Markets for Agricultural Products • Improves Balance of Trade

18. Energy security • Increases Domestic Fuel Production Capacity • Putting renewable feeds through existing refineries doesn’t do this • Reduces Energy Imports andDependence on Foreign Oil Sources • Good Fit as ‘Distributed Energy’ for Energy Security

19. 2002 EPA HD Emissions Averages FTP Engine Dyno Summary - Higher % reductions occur at the lower blends - EPA is re-evaluating NOx data

20. Cold Weather Performance • Pure biodiesel does freeze faster than most petrodiesel • Your B20 supplier should provide blends of B20 that will not cause any cold flow issues in the winter • Exactly the same way they do with #2 diesel fuel • There are a variety of tools at the disposal of distributors to improve the cold flow operability of #2 petrodiesel and biodiesel blends • Blending with #1, cold flow additives, etc. • B20 has been used successfully in climates below -20ºF

21. Biodiesel Fuel Stability • The biodiesel specification contains parameters for insuring adequate fuel stability for normal applications • The shelf life of biodiesel blends is recommended by NBB as 6 months

22. Fuel Filters and Solvency B20 & Under • Monitor filters, less than 2% need to be changed • Mild cleaning effect • Storage tanks may need to be cleaned, or keep extra filters on hand at start up • Housekeeping protocols for generic diesel equally important prior to blending

23. OEM Warranty Statements and Biodiesel • All major U.S. OEMs support B5 and lower blends, provided they are made with biodiesel meeting ASTM D 6751, the existing ASTM International standard for pure biodiesel (B100) • Many are progressing toward support for B20 pending approval of a new ASTM standard for B20 blends • Use of blends higher than B5 will not necessarily void existing warranties • For a complete listing of OEM position statements on biodiesel, visit: • http://www.biodiesel.org/resources/fuelfactsheets/standards_and_warranties.shtm

24. Major OEMs’ Biodiesel Positions

25. Major OEMs’ Biodiesel Positions

27. Type of Seller Both Retail & Bulk (343) Bulk Distribution (1515) Retail Outlets (760) Distribution Locations 2007

28. Production Locations Current Production Capacity = 2.24 Billion Gallons/Year

29. Plants Under Construction & Expansion New Capacity = 1.11 Billion Gallons/Year Total Capacity (Existing + New) = 3.35 Billion Gallons/Year

30. NBB Resources • www.biodiesel.org • Technical Library • Biodiesel Bulletin • Educational Videos Available • Informational Resources • Technical Resources • On-line Database & Spec Sheets • www.BQ-9000.org • Biodiesel Quality Certification Program for Accredited Producers and Certified Marketers