To survive in this era of climate-focused policy, the oilheat sector must decarbonize for the industry and its thousands of multigenerational family-owned businesses. Widespread adoption of higher blends of Bioheat® fuel, such as 50% (B50) biodiesel and eventually B100, is the only viable way for heating oil to achieve the carbon reductions needed to stay competitive in the race toward net zero.
However, before this can happen, a great deal of work is needed to prove B50 and B100 Bioheat® fuels are fit for purpose. Furthermore, standards-development organizations such as Underwriters Laboratories (UL) and ASTM International, as well as equipment manufacturers like R.W. Beckett Corp. and Carlin Combustion Technologies, must approve the use of these higher blends under existing or modified fuel specifications and product warranties
The behind-the-scenes negotiations, testing, field trials and demonstrations required to accomplish all this is nothing short of exhaustive. Spearheading this tremendous body of work is a joint effort between longtime collaborators Clean Fuels Alliance America (formerly National Biodiesel Board) and the NORA.
“That collaboration is absolutely critical,” said Scott Fenwick, Technical Director of Clean Fuels. “Without it, we wouldn’t be where we are today. The willingness to partner and work together to solve any technical issues that might exist is very important.”
The same exhaustive efforts were undertaken over the years—decades, really—beginning in the 1990s to approve biodiesel use in on-road diesel vehicles, which culminated in the first ASTM D6751 biodiesel specification in the early 2000s. From there, a series of additional modifications to the standard, as well as approving blends up to B20 in on-road diesel fuel (ASTM D7467) and within the ASTM D396 heating oil spec ensued, all of which required extensive testing and data gathering. Today, however, B50 is the new B20 and shortcuts cannot be taken when proving a fuel is fit for purpose when one misstep can cause oilheat furnaces to shut down in subzero temperatures.
Tom Butcher, Director of Technical Research at NORA, noted that the working relationship between Clean Fuels and NORA is tremendously valuable.
“Their support in the work we’ve done, especially the field work, is really important in helping us push higher Bioheat® fuel blends, understanding what the challenges are and getting over those issues before these fuels can be broadly used,” Butcher said.
“There is also a great benefit from the exchange of information. We share perspectives from different viewpoints. Clean Fuels sees issues from a fuel perspective while NORA views them from an equipment perspective. There is huge value in being able to go back and forth on technical matters and discussing whether it’s a fuel or equipment question. We have the same end goals, but we approach them from different angles.”
Some of the most recent work resulting from this invaluable collaboration has led to important breakthroughs that ultimately will facilitate market acceptance of B50 blends of Bioheat® fuel and, eventually, B100.
Cold-flow Study
It is no secret that both petroleum fuel oil and biodiesel have issues in cold weather.
“One of the challenges we face as we go to higher Bioheat® fuel blends is cold flow,” Butcher said.
“Biodiesel can gel at significantly higher temperatures than petroleum diesel.”
Biodiesel made from soybean oil hits its cloud point at a lower temperature than biodiesel produced from animal fat, for example, so this function is highly dependent on feedstock.
Although most heating-oil consumers in the Northeast have tanks inside their basements sheltered from the severe winter weather, some are located outside. Considerations must be given to other points in the supply chain before the fuel gets to the end user, including distributors’ storage tanks and fuel-delivery trucks.
NORA and Clean Fuels have been investigating options to address cold-flow issues with higher blends of Bioheat® fuel for some time, Butcher said, including tank heaters and more. However, one particular approach holds significant promise, according to those involved.
“We’ve been working on the development of a new additive package that can dramatically improve the cold-flow properties of a B50 blend,” Butcher explained. In addition to Clean Fuels and NORA, the work is being performed in partnership with Advanced Fuel Solutions and Clariant; the effort began in early 2021.
As part of the project, Clariant dove into its vast portfolio of additive products to match different technologies together and rated them. After innumerable combinations of products were tested on B50 blends of Bioheat® fuel, “mix No. 5” was chosen, according to Paul Nazzaro, President of Advanced Fuel Solutions (AFS) and longtime supply-chain liaison for Clean Fuels. Nazzaro said the new B50 additive includes three active ingredients: a wax anti-settling agent (WASA), a cold-flow improver (CFI) and a synergist. The WASA keeps wax formations that are caused by fuel gelling suspended for up to 96 hours, while the CFI restructures the wax, preventing it from growing into large plates that can block lines or filters. Finally, the synergist is a specialty polymer designed to improve the performance of the base components. The additive package developed enhances the flowability of B50, improving the pour point but not the cloud point. According to Nazzaro, the trio of additives is most effective on B50 blends containing soybean oil-based biodiesel and, to a degree, biodiesel made from used cooking oil (UCO).
“This technology markedly improves blends up to B50, but they have to contain biodiesel from soybean oil or UCO—preferably soy because it’s easier to treat,” Nazzaro explained.
“This new technology is exciting, but it’s not an effective tool on B50 blends containing animal-fat biodiesel.”
After rigorous lab tests, Nazzaro said the additive package is now being introduced to the real world for field trials. Companies such as Cubby Oil and Hart Home Comfort are working with select customers over the next few months to test the new B50 additive technology in their oilheat systems. Every nuance is being extensively documented.
“Our work so far shows this can dramatically reduce the pour-point temperature to well below zero, which has the potential to make it much easier to handle these fuels,” Butcher said.
Nazzaro said that while mix No. 5 may not be “the” solution, it is definitely part of it. “The best defense is to be water-free, and if you have water in your system, eliminate it,” he said.
“This additive package will give B50 Bioheat® fuel a fighting chance so
that, in cold conditions, the product will flow. This will take cooperation from users and sellers to do their due diligence and make sure the environment where the fuel is stored is properly taken care of. If not, no additive on the planet will succeed. Fuel is a breeding ground for everything. Based on our lab results, this new technology shows promise to protect systems that store B50 in outside tanks. However, like I said, it is feedstock-specific,” Nazzaro added.
Cold-flow additives for biodiesel blends have traditionally only worked on the petroleum side of the fuel blend. However, as the oilheat industry moves toward greater decarbonization and leverages B100 to achieve this, new approaches must be developed to improve cold flow in the biodiesel itself.
“This is a novel technology and as we work toward higher blends, which will have less petroleum fuel in them, we need to come up with new technologies to provide the cold-flow performance needed,” Fenwick said.
“While we have focused on B50 additives for the past two years, we have already begun early work on addressing B100 cold flow.”
Although much time has been spent focusing on outdoor residential tanks, Butcher asked, “What about the rest of the whole logistics system? Trucks set out overnight in terminals and terminals may not have heated tanks or lines. Then there are the lines on delivery trucks. As we go to higher and higher blends, we need to think about all of these things. However, this additive approach gives us a really interesting tool to manage challenges as we go forward.”
Standards
Late last year, an update was officially made to UL 296, the standard developed by UL for safety testing liquid-fuel-fired burners. The update expanded the standard’s scope to include liquid-fuel-fired burners intended for use with Bioheat® fuel blends ranging from B20 to B100. Prior to the update, the standard included procedures for evaluation of burners for use with biodiesel blends up to B20.
The updated standard was a huge victory for Bioheat® fuel and the movement to decarbonize heating oil.
“Representatives of the burner manufacturers, Clean Fuels—Scott Fenwick and Steve Howell—I and others were very active on the UL committee and we worked with UL staff on all the questions that came up about this whole approach,” Butcher said.
“I’ve got to give credit to UL, who realized the strong interest that the heating-oil industry has in moving to these higher blends. I think they were very practical about putting this together with short wait times. The test procedures that were developed were debated quite a bit among the technical folks involved. Each brought data to justify points and we worked collaboratively across the board to develop a procedure we were happy with.”
Butcher also pointed out several items in the procedure that the committee did well and made good decisions about.
“One is to have a test procedure that requires testing with B100 and testing with B20, and not having to test at intermediate levels along the way,” he said.
“If the [equipment] can perform well at these bookend points, then it can pass the test. I think that was a really good approach.”
Another important aspect was defining B100 using the ASTM D6751 standard. While D6751 is the ASTM fuel-quality standard for B100, it wasn’t originally intended for use as a neat fuel but instead as blendstock.
“That was one of the key decisions that enabled this UL 296 update to go forward,” Butcher explained.
“Since there isn’t a D396 (heating oil) B100 spec, and by using the D6751 blendstock spec for B100, this enabled the committee to go forward with the work and UL to develop the procedure rather than waiting for changes to ASTM D396, which could take a long time. That was a very important accomplishment. Materials can be so varied, and it’s hard to make sweeping statements about classes of materials. Instead, advice was provided regarding materials to avoid. If a manufacturer wants to use a certain material, then it’s got to be tested rather than UL categorically dismissing broad types of materials”, he explained.
Another part of the UL 296 procedure that Butcher said is “a cool idea” is testing the burner setup adjusted for use with B100 per the manufacturer’s specifications and then suddenly changing the fuel to B0, or fuel oil with no bio-content. The system still must perform well and pass the combustion-flow tests and other parameters.
“This is a thoughtful and useful approach that—as different users may find themselves needing to switch from high to low blends and back—ensures things will be okay in the field as they make fuel changes,” Butcher said.
“The hard work of the committee to debate and sort this all out really helped make that happen.”
Shortly after the UL 296 standard was officially updated, R.W. Beckett Corp. made a major announcement in January 2023. CEO & President Kevin Beckett announced at the Clean Fuels Conference that the company is manufacturing the first production run of oilheat burners with B100-compliant components, and that the B100-compliant burners will come with the company’s full warranty. This important move wouldn’t have been possible without the groundbreaking update to UL 296. Other burner manufacturers are working to also be able to release burners for high blends of Bioheat® fuel in the near future.
“In all of the work that’s been going on for the past several decades, this was just the next dot we’re connecting to work toward B100 as a replacement for petroleum heating oil,” Fenwick said.
“The recent announcement late last year on new protocols for UL 296 was crucial. Clean Fuels, NORA and equipment manufacturers all worked together cooperatively to develop these new protocols. It meant the creation of a B100 developmental spec, as well ,that we could use for these fuels to test new equipment, he noted”
The developmental spec, also referred to as an industry spec or trade-association spec, leveraged ASTM D6751 but added three more hours to the oxidative reserve, totaling six hours instead of three in Rancimat testing for measuring shelf life; this was to account for the extra time fuel may sit in storage tanks in Summer when heating systems are not in use.
“Changing the oxidative reserve makes a lot of sense to me,” Butcher said, adding that in order to make changes to ASTM D396, however, fuel producers, end users and others have to weigh in.
“I know changing the oxidative reserve is on the table, but we have to see where the whole committee comes out on this. Folks are going to want to see data as to why changes like this need to be made. We’ve already got a lot of that data, but to change an ASTM spec is a long process. In the end, we hope to get a really good standard that will serve everyone for a really long time. Meanwhile, it’s a very good thing that UL 296 moved forward to enable manufacturers to put products out there for use with high blends. The ASTM spec on fuel properties will come along in due time, but it’s not holding up the forward motion at the present time. For the long run, however, we really need D396 to have higher blends. Dealers and consumers can sell and use them based on that UL listing, and equipment manufacturers can make and sell products. When you look at the larger scene—building codes, municipalities, State governments—they will all feel more comfortable requiring higher blends to be used, or supporting and using the blends themselves, if it is in D396 and that step is done. We all realize that this isn’t over. We’ve got to get the changes in D396 in order to encourage broad use of the fuel,” Butcher added.
Net-Zero Home
To demonstrate B100 Bioheat® fuel’s effectiveness at carbon reductions, Butcher is using his own house in Port Jefferson, NY, to prove B100, coupled with solar panels, can bring a home to net zero carbon emissions.
The idea is to demonstrate how NORA’s zero-carbon home can achieve carbon reductions by using existing heating systems and commercially available solar-panel systems.
“For me, it’s just a great idea to be able to become 100% net zero carbon and I’m thrilled by the whole thing,” Butcher said.
“The use of B100 biodiesel has been really without concern at my house,” he explained.
“In addition to solar—and I love the fact that my utility bill is $15 a month for electricity—it really works. It was installed in July [2022] and it’s now the end of January [2023], and it’s pretty clear I’ll overproduce electricity for the year, making more electricity than I can use, which is exported to the grid” , he further explained.
Butcher shared that when he and his wife made the decision to invest in solar panels, they looked at the cost projections and payback period of 6.5 years, which appear to be on track.
“We are pretty thrilled that, between biodiesel and solar, we can say we’re net zero without having to invest in a lot of heating equipment, such as heat pumps,” he said, pointing out that incentives to install solar panels are even better now than when they made the decision.
“It just makes so much sense; the one thing that bothers me is that more folks aren’t doing it,” Butcher said.
Others have expressed interest in similarly outfitting their houses, Butcher added. State energy organizations are leading the charge for recruiting more demonstration sites, and NORA will help alleviate some costs associated with additional projects.
“We really want to have these out there as great examples of how to get to net zero with fuels, and without big investment costs,” he explained.
“As we get more people to do this, it’s important for us to use this as a communication tool. It’s not just about economics or technical ability, but for this next wave of sites we want to leverage it as an instrument of communication.”
GHG Calculator
To back up claims by biodiesel advocates that their fuel can actually achieve the greenhouse-gas (GHG) emission reductions they say it can, the industry needs an effective, scientifically sound and demonstrable device that can easily show its ability to decarbonize. In fact, if a tool can show Bioheat® fuel could effectively reduce GHG emissions at a significantly lower cost than other options, then considerable headway may be made in terms of supporting technology-neutral policy pathways toward decarbonization.
Thanks to Richard Sweetser, longtime NORA consultant, this flexible, user-friendly apparatus has already been developed. It’s called the GHG calculator.
“This is incredibly important,” Butcher said.
“The idea is to look at different major pathways for the future. One is the assumption that the grid will get Greener as more renewables come onboard. Another pathway considered is the biofuel pathway, where industry converts at a variable rate. The calculator is flexible, and you have the ability to put rates at which the grid gets Greener. The calculator shows the impact of that trend in GHG emissions over time, and the amount of investment costs required to achieve a particular pathway,” he explained.
The flexibility of the calculator allows for either broad, generic assumptions or specific State-by-State bases.
“You can input the rate at which a particular State decides it also wants the option to transition to biofuels,” Butcher futher explained.
“It’s intended to make the case that the biofuel pathway really needs to be more seriously considered by States. That is the most significant potential outcome of this work.”
Fenwick said the GHG calculator will help consumers better understand the benefits that biobased diesel fuels such as biodiesel bring to the table and how well they can compete against natural gas and electric heat pumps.
“Tools like this help a fuel dealer explain exactly the benefits associated with this fuel,” Nazzaro said.
“It takes over the need to use adjectives—you just plug in the volume, and it extrapolates the amount of GHG reductions. Any time you can use a visual to explain the benefits of a product, it’s a win. To take the story one level further, it gives the consumer confidence that the decision to use Bioheat® fuel is an intelligent one,” he noted.
Future Work
In the field of approving new fuels, work never seems to be completed. There is always more to do.
“We have a never-ending list of things we want to do,” Butcher admitted.
“We want to expand the number of B100 test sites we have out there to get more data.”
Another area NORA and Clean Fuels are interested in is filtration.
“Fuel and service issues go hand in hand,” Butcher said.
“Fuel-related service issues have been the No. 1 concern of this industry for a long time, so improvements can be made in the area of filtration. We’re doing research to provide updated guidance on how better filtration can improve performance. We want to know how well we’re really doing now, how we can do better and whether there are benefits to it. We want to know, if we improve filtration, whether we will decrease the frequency of maintenance needed on the burners,” he added.
Fenwick agrees that filtration is atop the priority list.
“As combustion technologies, engines or heating-oil systems improve and advance, those advancements require cleaner and cleaner fuels,” he said. “Biodiesel is ahead of that game currently, but there are still improvements that can be made. We know water contamination in fuel is one of the largest concerns the industry has. It can come into play via degradation and contamination throughout the distribution chain, so there are certain things we can address to tighten up the entire fuel-distribution system.”
If You Prove It, Will They Use It?
The comprehensive body of work being conducted by NORA and Clean Fuels has one single purpose, according to Nazzaro, who developed the concept of biodiesel-blended heating oil more than 20 years ago. That purpose is to ensure the commercial success of Bioheat® fuel in the market.
“This fuel is being exhaustively explored,” he pointed out.
“Any impediment we saw, we have addressed accordingly and successfully. Why do all this work? Why go through all these tests and developments? We are commercially introducing this product, so all this work is needed to instill confidence in the fuel dealer who’s going to sell it to their customers. This body of work is making this product market-ready today.”
The popular catchphrase from the baseball movie Field of Dreams was, “If you build it, [they] will come.”
For Bioheat®, the question of, “If B50 and B100 Bioheat® fuels are proved and approved, will they be carried and consumed?” will hopefully be answered sooner rather than later.
“From my standpoint in the technical program, our job is to address the technical barriers that might prevent our members from selling their fuel into these markets,” Fenwick said.
“However, capitalism in the marketplace will take care of supply. Right now, California and its Low Carbon Fuel Standard is willing and able to pay more for fuels and credits for low-carbon liquid fuels such as biodiesel. As the Northeast market develops, whether through State or regional programs, we’ll see higher blends over time. Certain providers and dealers may migrate faster, leading the way for others, but I do believe it’s our job to address the technical issues and let the marketplace decide when and where higher blends are most effective,” he explained.
One of those market leaders Fenwick speaks of is Star Group LP, one of the U.S.’ largest retail distributors of home-heating oil based on sales volume. The company earned an Influence Award at the Clean Fuels Conference in January for its leadership role in the adoption and acceptance of Bioheat® fuel. After starting with B20 blends, Star Group recognized that by providing increasing levels of biodiesel, it can offer an easy and affordable solution for home heating to help meet the goal of zero-carbon emissions by 2050.
Nazzaro noted that now that many of the technical challenges for higher blends have been addressed, it’s time to focus attention on supply issues.
“To say you can’t get Bioheat® fuel is unacceptable,” he insisted.
“Have a conversation with your supplier. Tell them how many millions of gallons you as a fuel dealer provide in a year. Tell them you want to carry B20 and have them figure it out. The conversation needs to be started. Are we problem solvers or order takers? It starts with communication,” Nazzaro concluded.
Until every technical and supply question is addressed and solved, NORA and Clean Fuels will, as Fenwick said, continue connecting the dots until a clear picture of the future emerges. ICM
JH: Back in 2007, my father, Ray Hart, who founded the company, felt that we, as an industry, weren’t doing enough environmentally for future generations, including his young grandchildren. We knew that sooner or later; customers would become interested in “Going Green.” To him, having a product that was sustainable, not only for us, but also for U.S. jobs, was and still is extremely important to him and our entire family. He therefore made the decision that we were going to create an infrastructure to provide an environmentally responsible and sustainable fuel to our customers.
ICM: It seemed like a choice of conscience, that this was the right thing to do.
JH: At the time [2007], biodiesel was not anywhere close to heating oil on the MERC—it was more expensive. To use biodiesel would have absolutely no financial benefit to us whatsoever. Also at the time, our initial investment in the injection blending system at the terminal was $250,000, but my father felt like this was the way it was going, that it was the right thing to do and that somebody needed to take responsibility.
ICM: In 2007, the discussion around biodiesel and bioheat was that it is a renewable, sustainable, U.S.-made fuel from U.S. farms. This was before the hard push to reduce greenhouse gases in our industry, which is the driving force behind the current transition to low carbon liquid fuels.
JH: We now believe it’s the way that the industry is going to go and it is for our own survival. At the time, we started with just a B5 blend; we currently deliver B100 to ten homes to evaluate it. It has taken a very long time for some of our business associates and people that are in the industry to jump on board with this. However, right now, we’re faced with New York City banning new fossil fuels in new construction and some NY counties (Nassau, Suffolk) and towns out east, including the Hamptons, banning any fossil fuels in new construction. The companies in our industry are forced to really look at what’s really happening here and what’s going to happen if they don’t make a move.
ICM: In 2007, your dad says, “I’ve got to do the right thing here for the environment, for my family, for my community.” He invested a fair amount of money to get off the ground with the injection. In those first few years, were there any specific obstacles that the company hit?
JH: Our biggest obstacle was trying to figure out how we were going to get product. Fortunately, we were able to reopen a rail spur on our property and we have rail cars that come in with biofuel. For the first couple of seasons, we had issues such as what other types of feedstocks can be used or what types of additives are out there so that if it’s freezing outside, the fuel doesn’t gel up and become unusable. There were those in the industry who thought that this was never going to work and we were never going to be able to use this product. It was just going to contaminate everybody’s system and rot everybody’s tank. We dealt with customers who felt that way, as well as some suppliers. We also had those who felt that the unusable part of the soybean that we utilized was taking food away from hungry families.
ICM: You do your own blending, which means you have your own bulk plants and you are handlingB100. How are you managing that in the cold weather?
JH: We wrap and heat all our terminals’ piping and we treat all of our product—both at the plant and with the individual bottles that go into the oil trucks. We change feedstocks to those more manageable in cold weather.
Most of our customers are on B20 to B50. Customers in Queens or Nassau County (NY) are getting above B20 up to B50 directly from our terminal. We try to keep Suffolk County at B20. This equates to approximately 5,000 customers in the B20-B50 range and another 5,000 with B20 and you have a handful of B100, which is part of a field test. We don’t really have any issues with freeze-ups.
ICM: Can I assume that you deliver to very few above-ground, unprotected tanks?
JH: We do have many Long Island homes that have outside, above-ground tanks and we make sure that this oil is treated. Drivers can put the chemicals in the tanks and treat it at the truck level.
ICM: What about the delivery fleet with B50? Does it ever have a cold flow issue while they’re sitting outside?
JH: Mainly for shrinkage reasons, we don’t load trucks the day before. If it’s going to be to be below freezing, we load up in the morning.
ICM: Have you seen any unusual service issues or a decrease in service issues since you went to B 20 and even up to B50?
JH: We have heard from our technicians that the nozzles are cleaner than they had previously been due to the lower carbon products and the addition of larger blends of biofuel. We recommend now that customers have a cleaning every 12–18 months; even at that point, technicians say that the parts are coming off clean. We have seen a reduction in the number of service calls, which was contrary to what a lot of our technicians thought in the beginning.
When we started this in 2007 at B5, my father would call the service department every day, asking, “Is anything happening…what’s happening?” There were no reports of service issues, so within a month he said, “Ok, let’s just go right to a B 20,”and still nothing happened regarding unusual service calls. Within two months, we had changed from a B5 right to B20. We’ve been providing a B20 since 2007.
ICM: How about the higher blends up to B50?
JH: We started delivering B50 in the summer of 2021.
ICM: You mentioned that some of the service techs were reluctant in the beginning. How about your employees across the board? Was it hard to get employee buy-in? Did you have to train or reach out to technicians and customer service representatives to pull this off?
JH: The office staff went along with what we were doing. We realized that they really needed good, solid information for customers who were calling. We therefore came up with a list of questions and how customer service representatives should address them. We sign everybody up for informational webinars because there’s always something to learn, always refreshers and reminders and always a customer who’s going to ask a question you hadn’t thought of. Our core group of ladies and gentlemen here has been through all of that, and they are really the experts. I can hear them from my office and I think, “OK, this is pretty good stuff.”
ICM: Let’s get to where it really counts—your customers had a lot of questions in the beginning and you trained your customer service people to answer those appropriately. What is the customer reaction then?
JH: We’ve done a lot of e-blasts, as well as mailings when that was the appropriate step to take. We’ve done leave-behinds and we’ve provided education through the field via technicians or drivers who answer questions. For the most part, customers don’t care as much as you may have thought about the benefits of biofuels because they’re very sensitive to an extra 5¢ a gallon, even with a 20¢-per-gallon New York State tax rebate. However, the people who are interested in Green products—they want to know when they can get on our B100 list.
We still have a very few customers who say, “Don’t give it to me, I don’t want it, I’m not taking it.” It requires constant education to say, “Listen, even if your previous company didn’t tell you that they were delivering biofuels, they are, we all are. New York has a law that states this is a mandate, and this is where we’re going.” We provide them with educational materials so they can begin to appreciate what we are doing.
ICM: Do you use your bioheat story as a hook for new customers? Does it attract them?
JH: Yes, we really have tried to attract new customers with it. We do use our story, which is all over our website, YouTube page, etc., and it works. We do a lot of marketing on Facebook and social media and Google AdWords.
The problem is that customers don’t get one consistent message from the oilheat industry. If they hear a message from us, they don’t realize that this is a big force that’s going to move them forward with a more sustainable product.
ICM: If the industry had a consistent message, what would it be?
JH: That Bioheat is here, it’s sustainable and it doesn’t require any system modifications. It’s not going to cost you thousands of dollars to change to a different heat source. It gives you the choice of fuel provider and an energy source. Bioheat is what we have already, and we’ve already been working on it. It’s already something that people are using and delivering and have been developing.
ICM: Where do you see Hart Home Comfort going with this? What is your long-term goal?
JH: We want to be completely B100 in the next 10–15 years, which is not really a long time for us because we’re innovative and we spend money on technology all the way down to our drivers and customer service representatives. We are committed, as individuals and as a family, to increasing bioblend and providing a more sustainable product and industry. We want people to recognize that we are doing something for the environment.
I really feel that it’s vital for our survival, as well as that of other businesses, to really take this seriously. If we don’t all start to get together and move forward, policymakers will put us out of business. We’re passionate about this industry and that’s why the majority of my family has been in it for 40 years. ICM
Mark Twain famously said, If you don’t like New England weather, wait a few minutes. As we enter yet another heating season, the weather is indeed changing—and so is home heating, thanks to political and regulatory directives from every facet of government. While Twain’s quote lives on, mine probably won’t endure the test of time, but here it goes: If you don’t like the New England heating-oil market, just wait—it’ll change too.
I’ve been beating the drum for years—even decades—now about how this market must be willing to future-proof itself, so much so that my hands are sore and the drum skin worn thin. A grassroots movement—such as the Bioheat® fuel revolution—starts with innovative leaders at influential companies leaping blindfolded and headfirst into unsettled waters, allowing safe diving for those behind them. That was done years ago.
Have you tested the water yet or are you still on dry, scorched land wondering where everyone went? The water’s fine and those in it are enjoying the benefits that come with the swim—namely, not languishing in the destruction of indecision.
There was a time when indecisive or complacent heating oil dealers in this market could survive, maybe even thrive, without giving two thoughts about carbon intensity, greenhouse gases (GHG) and the future of their industry. With congressional passage and President Joe Biden’s signing of the Inflation Reduction Act (IRA), those days are over.
IRA, Biofuels & Home Heating
The massive spending bill is a revived, scaled-down version of President Biden’s “Build Back Better” agenda that cleared the House late last year but got held up in the Senate over lack of support from Sen. Joe Manchin. With a new name and smaller price tag, Senate Majority Leader Chuck Schumer secured the much-needed Manchin vote in the evenly split chamber and the legislation passed on a straight party-line vote through the budget-reconciliation process, with VP Kamala Harris breaking the tie.
IRA kicks electrification of every U.S. energy sector into high gear, including home heating. The cost of conversion, which is particularly untenable for lower-income residents, is one area the heating oil industry has long felt it’s had an edge over electric heat pumps. However, IRA makes $4.275 billion available to States and $225 million available to Native U.S. Tribal Communities through Sept. 30, 2031 to create electrification-rebate programs for single-family homes and multifamily buildings. Only low-to-moderate income households are eligible for rebates under this section.
Despite its arc toward electrification, IRA also includes several key biofuel and Green-energy incentives. It extends the $1-per-gallon biodiesel blenders tax credit through 2024, which was set to expire at the end of this year. The new law also extends the 50-cent-per-gallon (cpg) alternative fuel tax credit and includes various other important incentives for the biofuels industries, including carbon capture and storage, Green hydrogen and renewable natural gas. It also includes, for the first time, a sustainable aviation fuel (SAF) tax credit, which starts in 2023 and runs through 2024, and ranges in value from $1.25 to $1.75 per gallon, based on GHG reductions.
One particular aspect of IRA that may be ringing alarm bells in downstream markets such as the heating oil sector is how a newly created clean fuel production tax credit, whose value will be based on how much GHG emissions reductions a fuel delivers, will replace the biodiesel blenders tax credit come 2025. No longer will blenders be in control of the credit, nor is it likely that the value of the producer credit will ever reach that of the blenders’ credit. For instance, today, soybean biodiesel on average reduces GHGs by 57% compared to petroleum diesel fuel. Such reductions would only net the producer 20 cpg. While this in itself is inherently concerning, SAF achieving the same GHG reductions in this so-called “technology-neutral” approach would receive 35 cpg.
In its analysis of IRA, the National Energy & Fuels Institute (NEFI) pointed out that the legislation’s drive to incorporate more biofuel into aviation will have only nominal short-term impacts on the heating and on-road transportation sectors.
“Future demand for renewable fuels and related feedstocks in the aviation sector may have longer-term implications across all sectors,” the organization stated. “NEFI is working with [the National Oilheat Research Alliance] and partners in the renewable fuels industry to assess short-term and long-term impacts, both positive and negative.”
NEFI is also skeptical that the Internal Revenue Service and Treasury Dept. will be able to establish this “complex tax incentive” by 2025, referring to the clean fuel production tax credit.
“NEFI has warned Congress that the shift from a blender to producer credit harms marketers that are investing millions of dollars in downstream biofuel blending and storage,” NEFI stated. “We alerted Northeast lawmakers that establishing a credit only for domestic biofuel production will discourage imports of biofuels from Canada and other U.S. trade partners and restrict regional fuel supplies. It is [also] possible this policy may violate World Trade Organization rules.”
Clean Fuels Alliance America stated that, for the next two years while certainty of the blenders credit exists, it will focus on regulations implementing the producer credit—and making sure all its members have fair access to it.
There is a lot to unpack here and there is more in IRA yet to cover. However, as you might expect, the transition of the biodiesel tax incentive from a blender to a producer credit, the sliding value of it, along with the need of accurate systems to fairly determine a fuel’s carbon intensity, are creating some significant unknowns downstream.
IRA also provides $500 million over 10 years for downstream biofuel-infrastructure grants, supporting the Trump-era cost-sharing grant program from the U.S. Dept. Of Agriculture (USDA) called the Higher Blends Infrastructure Incentive Program. Importantly, as amended by IRA, the Program provides “home heating oil distribution centers or equivalent entities” and biofuel-distribution systems with up to 75% in cost-sharing grants for blending, storing, supplying or distribution of biofuels. These changes were included in NEFI-backed legislation, and NEFI “strongly encourages” wholesale and retail fuel marketers to apply for these grants.
On Aug. 23, USDA opened a $100 million round of funding for these projects, specifically noting that the funds are open to home heating oil distribution centers. However, fast action is required, because grant applications are due by Nov. 21.
The infrastructure must support biodiesel blends of at least 20% and may include “installing, retrofitting or otherwise upgrading fuel dispensers or pumps and related equipment, storage tank system components, and other infrastructure” related to dispensing of biofuels. Transportation-related infrastructure that is not located on-site is excluded.
The final bill also includes crucial changes advocated for by NEFI and the Oilheat Manufacturers Association that allow an oil-fired furnace or hot-water boiler to qualify for a $600 tax credit if it’s placed into service after Dec. 31, 2022 and before Jan. 1, 2027, meets or exceeds 2021 Energy Star® efficiency criteria, and is rated by the original equipment manufacturer (OEM) for use with at least 20% biofuel blends. If the equipment is placed into service after Dec. 31, 2026, it must achieve at least 90 annual fuel utilization efficiency (AFUE) and be rated by the OEM for use with at least 50% biofuel blends.
The writing is on the wall, and the takeaway message to heating oil dealers is that survival lies in the transition to higher blends of Bioheat® fuel. This will save your business and the more businesses like yours that are saved, the more industry too can find salvation. However, this blended clean fuel won’t just fall in your lap. You have to work for it.
Securing Bioheat® Fuel in Today’s Market
I can’t tell you how many times, particularly in today’s market, that I’ve heard dealers say they would offer higher blends of Bioheat® fuel, but they can’t find the biodiesel to make it happen. Today, wholesaler tank inventories of heating oil are purposely low, sometimes just fumes, because of backwardation. If terminals and wholesalers are not bringing in more heating oil volumes than what’s committed to because inventory carried into next month will create unsustainable losses, then they’re not bringing in biodiesel either—because there’s no discretionary heating oil volumes with which to blend it on-site.
In other words, as crazy as this might sound, biodiesel supply availability is not the reason biodiesel supply is not available. What I’m trying to say here is that we must reengineer the thought process of the buy-sell agreement.
Getting B20 on demand in this market is unlikely to happen because of the reasons mentioned here. There are ways, however, to successfully secure B20—but it requires communication. You have to communicate with the wholesaler and tell them straight up, “I’m a million-gallon fuel dealer and I want to sell B20. I need this much by this date—what’s my number?”
Conversation, commitment and collaboration are needed in this new era of purchasing. I strongly encourage you to work with your chosen suppliers, whomever they might be, to open the discussion. Believe me, they want to sell product to you. With renewable diesel on the rise out West, the Northeast is a bastion for biodiesel—perhaps one of the strongest out there—but domestic biodiesel producers need to know there are those willing to commit to purchasing this low-carbon fuel from them.
We can’t control commodity values, the war in Ukraine or what the Administration does, but don’t tell me you can’t get blended fuel. You can make a deal and make it happen, but you have to be prepared to pick up the phone and make that call. This may be a different way of doing business, but it doesn’t cost a penny. ICM
Aside from harvest and Halloween, October is best known for Major League Baseball and World Series heroics. An even more anticipated event took place this October as supply-chain executives, hosted by the National Biodiesel Board (NBB), came to Boston, MA. The event discussed the challenges and opportunities associated with the creation of a ratable, efficient and competitive biodiesel supply chain designed to ensure New England and Mid-Atlantic Bioheat® fuel dealers reach the goals established within the 2019 Providence Resolution.
This resolution demands increased biodiesel content be blended into generic heating oil through 2050. Domestic biodiesel producers in attendance shared their business acumen, addressing the manufacture of sustainable, homegrown renewable fuels, while learning about “how things work” here on the ground, behind the terminal gates. The event provided both groups—fuel dealers and biodiesel refiners—the opportunity to share and learn about one another with the endgame being growth for both sectors.
Throughout the day, the basis of their discussions centered on how to strategically transport, store, blend and make available approximately 800 million gallons of biodiesel a year (mgy) throughout the Northeast and Mid-Atlantic as the 2023 deadline for Phase 1 of the resolution approaches. For those unfamiliar with the Providence Resolution, the targeted biodiesel concentrations in home heating oil and timeline by which these targets should be met are B20 by 2023, B50 by 2030 and net zero (B100) by 2050.
With the knowledge of expected demand in mind, it’s important to determine where all the biodiesel will come from. Capacities and projections shared below are based on volumes tracked by the U.S. Energy Information Administration (EIA) and reported on its website, www.eia.gov.
Currently there are approximately 75 domestic biodiesel plants strategically located throughout the nation. As reported by EIA:
• 13 plants producing 150–170 mgy are in PADD 1 (Petroleum Administration for Defense District) (East Coast)
• 37 facilities producing one billion gallons of total annual production capacity are in PADD 2 (Midwest)
• 15 biodiesel refineries manufacturing 580 mgy are located in PADD 3 (Gulf Coast); and
• 10 plants in PADD 5 (West Coast) can produce 174 mgy
PADD 4 (Rocky Mountain) biodiesel production capacity is negligible.
All in, U.S. biodiesel production capacity totals 2.4 billion gallons per year.
As good as this sounds, biodiesel production capacity in our “local” PADD I region is in short supply because the region requires 800 mgy to hit the B20 targets in the Providence Resolution by 2023 and is only capable of producing 150–170 mgy. Where could that shortfall be made up?
Imports are a natural, obvious answer, but the domestic biodiesel suppliers in attendance of the October Boston meeting made it clear they would like to be a strategic supply partner to close the gap for regional wholesale terminal operators. For that to become reality, producers will have to work to improve their supply-chain costs to be considered long-term providers of this much-needed volume.
West Coast LCFS programs
Assessing the bigger supply picture, we see that U.S. demand of both biodiesel and hydrotreated renewable diesel exceeded three billion gallons a year in 2020– 2021. Meanwhile, 4.5 billion gallons of additional annual production capacity of renewable diesel through expansions, new builds and petroleum-refinery conversions have been announced and are in the works. The Northeast should reserve celebration, however, because this new production is being minted for the West Coast to satisfy low carbon fuel standard (LCFS) programs in place in California, Oregon and Washington State.
When the term Bioheat® fuel was knocked around nearly a decade ago, there was no concern of a formidable LCFS program to strain supply in other regions. Today, there is. Policy and innovation have driven increased production of cleaner biomass-based diesel from a more diverse range of raw materials—all good for the future of low-carbon liquids in general. It’s exciting to have so many benefits to finally share with our liquid-fuel customers. Benefits that originate with Bioheat® fuel are obvious, and they can be summed up with three simple words: better, cleaner and safer.
For those seeking an expanded storyline, Bioheat® fuel:
• Positively addresses climate-change concerns;
• Is obviously sustainable;
• Provides a much-needed low carbon fuel option;
• Is a predictable greenhouse gas reduction tool;
• Delivers cleaner combustion, generating lower particulate matter to reduce cancer risk and respiratory disease
• Promotes domestic job development, energy security and can be leveraged today to sustain and grow liquid- fuel markets.
These are all great points that pique interest and promote discussions to accommodate increased availability of biodiesel throughout the regional supply chain. The conversation was not a difficult one to have. Those in attendance agreed that the competition for low-carbon biodiesel will not be fossil fuel or even renewable diesel, but rather electrification. Electrification is an energy source being irresponsibly fast-tracked by legislators unwilling to acknowledge the adverse impact their recommendations will have on the grid and the consumer, who will be forced into a fuel that requires huge capital investments and will likely come up short when performance counts.
Also, let’s not forget the challenges of going from being served by a family Bioheat® fuel dealer to a utility. Instead of human interaction and attentive customer service, get used to hearing: Please hold.
With Connecticut, Rhode Island, New York and Massachusetts all now enjoying policy incentives centered on biodiesel, and more leading fuel dealers adopting the transition to B20, it has become obvious that more focus is needed to identify and secure ratable, competitive supply while downstream wholesalers continue to prepare their assets for receipt, storage, blending and distribution to the dealer.
The benefit of the nation’s liquid home heating epicenter being situated near the water and major ports was also addressed during the summit. Regional wholesalers, who recognize that, much like heating oil, seaborne shipments of biodiesel are clearly more convenient and economical when weighed against rail or even pipeline movements, explained why imports would be relied upon to get the job done.
This was not a surprise to domestic biodiesel producers, who understand they will have to be more creative if they are to play any appreciable, long-term role in Bioheat® supply to the Northeast. This meeting was also a time for the U.S. biodiesel industry to reiterate it is not anti-imports, but rather the domestic sector stands strongly against trade practices that give foreign supply unfair advantages.
Feedstocks: staying neutral
Another misconception addressed at the gathering in Boston was that, contrary to some beliefs, the NBB is not all about soy. Of course, soybean oil is a feedstock that remains the primary source of U.S. biodiesel production, but the organization is feedstock neutral—and it needs to be. No single feedstock can be relied upon to establish a legitimate industry long-term.
According to EIA data, 54% of all biodiesel introduced into the U.S. market in 2020 was manufactured from soybean oil, 14% from distillers corn oil, 13% from used cooking oil, 12% from animal fats and 7% from canola. This exemplifies how the industry, and the trade association that represents it, are feedstock neutral. In order to meet the volume requirements necessary to replace all petroleum-derived fuel oil with bio-based liquid alternatives for the entire heating oil sector— the 2050 end-goal of the Providence Resolution—it will take all of these feedstocks, and others not on the radar today.
All in all, the event proved quite successful and valuable between the groups’ leadership. Of course, any post-event communication among those in attendance now remains confidential between those planning to play an instrumental role in ensuring future supply.
It is clear, however, that the East Coast will be comfortably supplied by both domestic and imported sources, the feedstocks will be varied, the specification consistent with ASTM D6751 parameters and the physical handling of the products on the ground in the Northeast and Mid- Atlantic will be managed as all liquids have been for decades—with the highest level of attention and professionalism to ensure the longevity of liquid fuels prevails. ICM
