City, producers skeptical about legislator's biodiesel proposal

Sen. John Brueggeman, R-Polson, says it's time the nation got serious about energy independence. With that in mind, he has introduced the Renewable Fuel and Energy Independence Act, which aims to jump-start a biodiesel industry in Montana.

Brueggeman's Senate Bill 432 would require all diesel fuel sold in Montana to contain a percentage of vegetable oil, but only if the state develops the infrastructure to produce fuel from crops.

"I definitely think it's time for us as a nation to have a stable, affordable and clean source of energy," Brueggeman said. "Oil is a scarce resource, and as developing nations demand more, it's going to be especially difficult to get."

Dan Downs, owner of Montana Seed & Grain and Chemical in Billings, has invested thousands of dollars in a study to test the feasibility of a farmer-owned oilseed crushing plant in the Billings area. He supports SB432.

"We don't know where (the plant) is going to be yet. But as soon as we know if it's going to work, we'll get the investment," Downs said. "It will be a co-op owned by farmers and ranchers."

Billings City Councilman Ed Ulledalen has two words to describe the bill: "Unfunded mandate."

"It's a feel-good bill that's poorly worded," Ulledalen said.

SB432 has passed the Senate and is scheduled for a public hearing Monday before the House Transportation Committee.

In a recent conference call with Jani McCall, the city's lobbyist, Ulledalen urged the city to oppose SB432. Deputy City Administrator Bruce McCandless estimated that a state mandate for biodiesel could increase the city's fuel costs by $200,000 a year. But other council members said they needed more information before they can make a final decision.

"I know there is strong support for this kind of a bill in the rural areas," said Councilwoman Peggie Gaghen.

Russ Doty, chairman of the Billings Energy and Conservation Commission, said he's familiar with Brueggeman's bill, but the commission has yet to make a recommendation to the City Council on SB432.

When the city of Billings solicited annual bids for fuel last fall, biodiesel was bid as an alternative. Two firms offered a biodiesel blend, but the city chose to buy traditional fuel because it was cheaper.

Biodiesel flopped when it was introduced to the Billings retail market last summer.

Town Pump offered biodiesel at its convenience store on 32nd Street West and King Avenue. The company discontinued sales by the end of the year because motorists wouldn't buy it.

"Sales were very poor so we had to make a decision, and when it got close to winter, we decided that we needed to offer another kind of product," said Jim Kaneally, supply and distribution manager for Town Pump.

Kaneally said the Billings station initially introduced biodiesel at a price slightly higher than conventional diesel. "Eventually, we had to drop it to the same price, but it still wouldn't sell," Kaneally said. "We tried it in Great Falls and we had the same result."

Kaneally said he wasn't opposed to biodiesel, recognizing that "it will be needed eventually."

One of the problems with biodiesel is that it can gel or block fuel filters in cold weather, Kaneally said. Biodiesel advocates say that certain biodiesel blends perform about the same as traditional diesel fuel in cold weather.

Dave Galt, executive director of the Montana Petroleum Association, said mandating the sale of biodiesel would require distributors to build new mixing facilities. At a cost of $2 million per terminal, the state's 11 terminals would have to spend $22 million on new equipment if the bill passes, he said.

Fuel marketers also worry about where biodiesel comes from, Galt said.

"Quality is the biggest issue," he said. "It doesn't mean that all biodiesel coming from producers is going to meet the right specifications" for motor fuel.

"I think anybody who drives a diesel vehicle or uses a diesel generator should be concerned," Galt said. "The market for biodiesel will be driven by demand, but it's wrong to mandate it."

"I'm not a big fan of mandates," Brueggeman conceded. "But this is an attempt to have a market system with the greater good of the country in mind. We're taking some tangible steps toward creating a greater public good."

SB 432 also would require the state to make sure all biodiesel sold in Montana complies with motor fuel standards set by the American Society for Testing and Materials, an international organization that establishes quality standards for many products.

City departments in Bozeman and Missoula have been using biodiesel for years.

John Van Delinder, street superintendent for the city of Bozeman, said biodiesel has performed well in city vehicles there and in a fleet of buses operated by Montana State University and Gallatin County.

Van Delinder said Bozeman's street department and forestry department use a B20 blend (20 percent vegetable oil and 80 percent diesel fuel) in the summer, and a B5 (5 percent vegetable oil) blend in the winter. Bozeman has been using biodiesel since 2001. The fuel has caused no maintenance or weather-related problems, and the price is about the same as regular diesel fuel, he said.

Bozeman Forestry Department workers who use a diesel-powered chipper say biodiesel exhaust doesn't smell as bad, Van Delinder said.

"I drive a diesel pickup, and there's less smoke when you accelerate," he said.

Ed Gulick, a member of the Yellowstone Valley Citizens Council and the city's energy and conservation commission, said local manufacturing and distribution systems are key to helping a biodiesel industry get started.

"Research has shown that the price of biodiesel is extremely competitive in areas where there are distributors," Gulick said.

The mandate of SB432 would go into effect only if a Montana biodiesel industry managed to produce the equivalent of 2 percent of all Montana diesel fuel sales from 2005. Based on state Department of Transportation figures, that would require biodiesel production in the state of around 9 million gallons a year.

The minimum biodiesel content for motor fuel would increase to 3 percent if the capacity of the state's biodiesel industry increases to around 14 million gallons per year.

According to the National Biodiesel Board, 105 biodiesel plants have been developed or are under construction in the United States, but no commercial scale plant is operating in Montana.

Ultimately, economics could derail Montana's efforts to develop biodiesel, Ulledalen said. Most plants producing ethanol and biodiesel are being built in the Midwest, where corn and oilseeds are plentiful and rail traffic is readily available.

"In Montana, we're at the end of the road," he said.