Once fleets hear the economic, performance and emissions benefits of biodiesel, it often becomes clear to them why they should give the renewable fuel a try. What’s uncertain for them is how they can get started. It’s a conversation I’ve had many times. For those of you interested in biodiesel, here are three questions you should get answered before placing your first biodiesel order.
Should I buy blended fuel or blend myself?
Starting out, you will need to decide how you want to purchase biodiesel. One option is to buy diesel fuel that already has biodiesel blended into it. Check if your current diesel supplier has a biodiesel blended option or can make one available. If not, you can seek a fuel supplier that does. If you are new to biodiesel, you may not realize that some biodiesel producers also supply blended fuel. A producer with a strong diesel position can buy ULSD ratable and blend it with biodiesel from its production facility.
The other option is to do the blending yourself. This often provides the best margin opportunities for you but also comes with additional considerations. You will need to install a dedicated biodiesel storage tank and blending system. While the initial cost may seem expensive, it can provide a relatively quick payback of between six to 18 months.
If you purchase biodiesel from a producer, you will need to decide if you want the biodiesel with or without Renewable Identification Numbers (RINs). Every gallon of biodiesel produced generates 1.5 RINs. These can be traded for a monetary value, with the value fluctuating based on market conditions. If you buy the biodiesel without RINs, the RIN value should be captured in the price of the biodiesel. If you buy it with RINs, you will want to trade the RINs either yourself or by using a third-party vendor, who will likely charge a commission.
Do I have a reliable supplier?
Whether buying from a wholesaler or a producer, you should ensure the biodiesel meets ASTM D6751 standards for biodiesel and that the producer participates in the voluntary BQ-9000 quality assurance program. This is the best way to ensure you have a quality product. Also look for suppliers that are knowledgeable about the fleet industry and have a reliable and cost-effective supply chain to your locations.
What is the right blend level?
As I’ve written before, OEM support and engine performance with higher blends is strong. Still, many fleets start at lower levels, such as B5, before moving up. Weather can also be a factor, but maybe not as much as you think. Proper storage, handling and additive use allow fleets to run on B20 year-round no matter their location, but if you are in a colder climate you may feel more comfortable dialing the blend back a bit in the winter.
This article was contributed by Jon Scharingson, executive director, sales and marketing for Renewable Energy Group Inc. He can be contacted at (515) 239-8042 or [email protected].
