Local biodiesel firms applaud new tax credits

When President Bush signed the 2005 Energy Bill on Aug. 8, two Northern Colorado companies cheered for the opportunities the bill could bring for them.

Blue Sun Biodiesel LLC of Fort Collins and Rocky Mountain Biodiesel Industries Inc. of Berthoud are both producing and selling biodiesel, and hope the signing of the bill will help the industry’s momentum.

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Among the Energy Bill’s benefits for biodiesel producers is extension of a federal excise tax credit, which is worth up to $1 a gallon for pure biodiesel. Blended biodiesel – a mixture of biodiesel oils with petroleum diesel fuel – would earn a lesser credit, probably about 20 cents a gallon.

The tax credits allow biodiesel producers and marketers to lower prices at the pump, which makes it more competitive with conventional diesel fuel.

“In the end, it makes it easier to gain a market for the fuel if the price is lower,´ said Greg Weeks, operations manager for Rocky Mountain Biodiesel Industries.

Biodiesel is concocted from sources such as soybeans and canola, or from used cooking oil. The pure version of biodiesel is known B100. Blended biodiesel, or B20, is a combination of 20 percent biodiesel and 80 percent petroleum diesel. Both fuels can be used by diesel-burning engines.

Blue Sun Biodiesel entered the scene in late 2003 by selling its branded biodiesel at local pumps. The company now operates six pumps in Colorado and will begin selling at an additional five pumps by the end of August.

The company operates a blending terminal near Alamosa, where the company blends its B20 fuel. At the moment, Blue Sun is transporting raw ingredients to the terminal because construction has not begun on their production plant.

“Things are going well and the market is expanding,´ said John Long, director of business development for Blue Sun. “We have new customers from the least likely of sources who are converting their fleets.”

Blue Sun and Rocky Mountain Biodiesel Industries are both seeking to find their niche in an expanding market and in the past competed face-to-face over a pump in Fort Collins.

Blue Sun originally sold biodiesel and marketed a pump at Poudre Valley Cooperative. But Ed Race, operations manager for Poudre Valley Co-op, discovered the biodiesel produced by Rocky Mountain Biodiesel was less expensive than what Blue Sun provided.

The pump is now labeled with Rocky Mountain Biodiesel’s logo. Blue Sun hopes to have another pump in Fort Collins by the end of the year.

Meanwhile, Rocky Mountain Biodiesel is planning on buying the American Pride gas station in Berthoud to sell its biodiesel along with ethanol, off-road diesel, propane and conventional fuels.

“We will initially lease the property but should own it by the end of the year,” Weeks said.

Rocky Mountain is also in the process of doubling its current production to 2 million gallons per year from its Berthoud plant.

To accommodate the increased production, Weeks has contracted Rocky Mountain Sustainable Enterprises to collect and pre-process raw materials. RMSE will collect used cooking oil from local restaurants and virgin oil from corn and other crops, filter the oils and deliver the product to Rocky Mountain Biodiesel for further processing.

DeWayne Perry, managing director of Rocky Mountain Sustainable Enterprises, is in the process of constructing a pre-processing plant in Berthoud to better serve the biodiesel producer. The plant should be operational by the end of September.

“With us doing this processing for them it allows them to really focus on what they are good at – making biodiesel,” he said.

Rocky Mountain Biodiesel is also placing a small biodiesel plant on the University of Colorado at Boulder campus in conjunction with CU.

“They want to put in a small plant – it will probably produce 1,000 gallons per month – on campus to raise awareness for the fuel and apply the fuel towards campus usage,” Weeks said. “This is a stepping stone for the industry … We hope to make Colorado the biodiesel center of the galaxy.”