Minnesota Soybean Business

California Love

May - June 2018 by Drew Lyon

Some envision California as a coastal paradise dotted with palm trees; others call it America’s cereal bowl or the Golden State.

For a class of national soybean advocates, the flourishing California renewable fuels market is the booming Land of Biodiesel Opportunity.

“With as much growth as we’ve seen in the Minnesota biodiesel market, it really pales in comparison to California,” says Shelby Neal, director of state governmental affairs for the National Biodiesel Board.“We can’t afford to be left out in California.”

California is the nation’s largest biodiesel market, consuming about a quarter of the biodiesel in the U.S. But that distinction didn’t happen overnight, Tom Verry, director of outreach and development for the National Biodiesel Board (NBB), told a group of state soybean leaders during an NBB-sponsored agricultural tour of California held in February.

“We’ve put extensive money and time and research into creating a biodiesel market demand in California,” Verry said. “Aft er all those investments and resources, California is now on track to use a third of the nation’s biodiesel. Th is provides additional value for your investment in biodiesel.”

The Golden State didn’t initially welcome soybeanbased biodiesel with open arms. But times have changed, although regulatory and environment roadblocks remain in place. Biodiesel leaders chalk it up to the cost of doing business in America’s most populated state.

“California is a great place to do business,” says Karen Ross, secretary of the California’s Department of Food and Agriculture, “but nobody said it would be easy.”

Russ Teall, a charter member of NBB and founder of Biodico Refineries, believes it’s important to keep California in perspective. Th e republic’s regulations are far more conducive to conducting business than other countries.

From left to right: MSGA Director Chris Hill, and MSR&PC Directors Ron Obermoller and Jim Willers toured the Biodico Refineries facility in Five Points, Calif.

“You can get through the regulations here,” says Teall, whose company has operations in four states and Australia. “In the Central Valley they appreciate ag, so it was fairly easy compared to Australia, which was really difficult.”

In 2007, then-Gov. Arnold Schwarzenegger signed a regional Low Carbon Fuel Standard (LCFS) requiring the state reduce its carbon impact by 10 percent by 2020. Biodiesel benefitted – in the span of a decade, California’s biodiesel consumption has skyrocketed from 14 million gallons annually to a projected 700 million gallons in 2018, with a trajectory toward one billion gallons within a few years. Oregon and British Columbia are following California’s lead with their own LCFS.

“We have that flipped around because we generated relationships and data and were able to fight Big Oil’s attempt to defeat the Renewable Fuel Standard,” Verry says. “It wasn’t easy and it won’t ever be easy, but California and the West Coast is a wonderful market for soybean producers.”

By 2030, when the state aims to have reduced its carbon use by 18 percent, California is projected to consume two billion gallons of biodiesel, which could equate to twothirds of the national market.

“It’s a huge deal and really bodes well for our biodiesel market,” Neal says. “Reducing carbon by 10 percent doesn’t sound like much, but it’s been transformative for California.”

Verry predicts the RFS will be “punted” to Congress, which is likely an encouraging sign in the short-term for biodiesel.

“If that happens, with it being an election year, we don’t expect anything to happen to the RFS,” he says. “The bottom line is the RFS is working.”

For MSGA Director Chris Hill, understanding the inner workings of California, with its myriad of complex environment and labor regulations, was a vital part of the farm tour. Culturally and politically, it’s a long way from Hill’s native Jackson County.

“They’re our customers and we have the ability and infrastructure to supply them with our product,” Hilly says. “It’s different here with regulations, but we both share the belief that biodiesel is a renewable and reliable energy source.”

Hill was joined by MSR&PC Directors Jim Willers and Ron Obermoller, who have been involved in Minnesota’s biodiesel production since the B2 mandate was signed into law in 2000. Both say they’re buoyed by the progress they witnessed in California.

“This is a really beautiful and diverse place, and I’m glad we’re here to see how far we’ve come with biodiesel, but how far we still have to go,” Obermoller says. “I think if we keep our eyes on the prize and boots on the ground here, it’s going to bode well for our entire industry.”

MSR&PC Directors Jim Willers (left) and Ron Obermoller (right) visited Channel Island National Park in Ventura, Calif. The park once used a research vessel that ran on B100 (100 percent biodiesel).

The writing on the wall

Ryan Lamberg, executive director of the California Biodiesel Initiative, addressed the biodiesel group during a bus ride to California’s agriculture hub in the Central Valley. An environmental expert, Lamberg lived in the Bay Area for 20 years, and was at the formative stages of California’s biodiesel movement.

In those salad days, Lamberg remembers Californians renewable fuel advocates were more likely to use waste grease from restaurants for fuel. Looking back, Lamberg believes California’s renewable fuel proponents had a misguided view of Midwest farmers. Education and cultivating relationships with farmers changed those perceptions.

“We targeted the wrong people, but now we’re all on the same team,” he said. “The issue is about petroleum reduction, and that’s something we can all agree on.”

The viability of electric cars was discussed throughout the week; some concerns were expressed but Lamberg insists biodiesel proponents shouldn’t be wary of electric cars. Both factions, he says, share a common interest. And now biodiesel has another partner carrying weight in reducing America’s dependency on foreign oil, Lamberg says.

“We should love and embrace the electric revolution because without it, the environmentalist wouldn’t be pushing to lower carbon,” Lamberg said. “We have a lot of things working in our benefit. We were the ones pushing the boulder up the hill on renewable fuels and alternative and clean fuels for the last decade, and now it’s electrification.”

Lamberg hopes to bring California biodiesel influencers to the Midwest later in 2018 to see firsthand how soybeanbased biodiesel is produced in Minnesota.

“We need to do more to bring the Californian decisionmakers to the Midwest,” he says. “It’s important to get people to the farm to see what it takes to make biodiesel.”

NBB Shelby Neal presented a federal legislative and Renewable Fuel Standard update, and championed Minnesota’s role as a leader in the biodiesel movement ahead of the highly anticipated May 1 implementation of B20. Biodiesel in Minnesota adds an estimated $1.7 billion in economic output impact to the state’s economy, creates more than 5,000 jobs and increases demand for soybeans by 13 percent.

“Minnesota has been the benchmark for biodiesel for a long time,” Neal says. “They saw the writing on the wall.”

Neal singled out Mike Youngerberg, Minnesota Soybean’s senior director of product development and commercialization, for his foresight in eyeing California as an untapped biodiesel market. About a decade ago, Youngerberg approached Neal two weeks into his tenure at NBB. “What’s your plan with California?” Youngerberg asked. Flummoxed, Neal admitted he didn’t have one. Youngerberg then consulted with farmer leaders in Minnesota, and presented a plan to Neal.

“Thanks to Mike for all these frequent fliers miles I’ve racked up traveling to California,” Neal said, laughing. “We’ve had some of the best people in the world here to do this work, and that’s been the secret to our success.”

Indeed. During his introductory speech to farmer leaders, Verry called the California biodiesel tour a victory lap for the luminaries who had been carrying the water for biodiesel for decades.

“This really is a ‘Biodiesel Legends’ tour,” Verry says. “Many of the people who helped spur the national biodiesel movement were here this week to see our hard work is paying off in California. We’ve come a long way, but there’s always going to be more work to be done in California. We can’t rest on our laurels.”

After a lengthy discussion on the state of California politics headed by political expert Louie Brown, the tour headed down the scenic US-101 coast to the surfing community of Ventura, Calif., to tour Channel Islands State Park. Former faculty manager Kent Bullard worked with the National Park Service for 30 years; in 2000 he was instrumental in bringing biodiesel to 23 national parks, including Yellowstone and a 56-foot research vessel on Channel Islands that ran on B100 (100 percent biodiesel).

“I’m a big believer in biodiesel and renewable fuels and I like to ‘walk the talk,'” Bullard says. “To grow our own fuel is a great thing.”

Because of vendor issues and underground tanks, the Channel Islands no longer is allowed to use biodiesel, Bullard lamented. Island Packers, which works with the National Park Service transporting visitors to Channel Islands, used B20 for three years and would prefer to resume using America’s first and only Advanced Fuel.

“We had really good luck with B20, we were happy to use it. Our engines were very clean” said Island Packers Capt. Alex Brode. “We’d love to go back to biodiesel – it was stable and balanced out the volatility of prices.”

The second leg of the tour brought the farmers north to California’s Central Valley. Walnut, garlic and pistachio farms lined the roads. The farmer leaders visited the “Farm of the Future” at West Hill College Coalinga, where they learned about the challenges and successes of California agriculture from Interim Director Terry Brase.

The Farm of the Future was created in 2001 and sits on 230 acres in the Central Valley.

“The key is technology,” Brase says. “We’re trying to point out that California agriculture isn’t just field work. The students here aren’t out there picking garlic.”

West Hill is in the San Joaquin Valley, one of the most ag-rich but impoverished areas in the country. Hundreds of crops, most of them dependent on irrigation, are grown in the Valley. In nearby Huron, more than 20 languages are spoken.

“In the Central Valley, there are a lot of disadvantaged communities and because of that, they get priorities of the funding that’s available for renewable energy and biofuels,” Teall says.

The tour visited Red Rock Ranch family farm in Five Points, Calif., and walked the fields with local growers. The day was highlighted by a tour of the nearby Biodico facility. The company’s California location produces 20 million gallons of biofuels annually, and is a zero netenergy farm.

“Russ has been at the frontlines of biodiesel for 25 years,” Neal says. “In some circles, the NBB gets a lot of credit for what’s going on in California, but that shorts our California members. It’s been a great partnership. I think it’s worked out for everybody, now and into the future.”

The Minnesota contingency returned home to frigid Minnesota optimistic for biodiesel’s long-term outlook in California and beyond.

As goes California, so goes America.

“There’s a lot for us take back home with us,” Willers says. “We saw a wide array of how biodiesel can be – and is – used in California. I think we all came away excited about the biodiesel market in California and how it relates to Minnesota. Basically, we need each other.”


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