June 11, 2008

Byrnes (left) and Senator

Statement by Robert Byrnes, Nebraska Renewable Energy Systems to Congressional Small Business Subcommittee on Rural and Urban Entrepreneurship, June 11, 2008.

I operate an Energy Farm in Northeast Nebraska that has produced its own energy for years and these advanced biofuels will continue to be part of our mix. This facility is currently in use to as an energy training facility to help others reach these types of energy goals. I co- founded the Nebraska Renewable Energy Association in 2006 and am in the process of spinning off another energy business focused on the needed processing of the materials that will supply these second generation oils and feed to the market. Transportation to (and from) this hearing is being done using 100% biodiesel fuel produced in Nebraska (and Virginia ) using my unmodified 2005 Jeep Liberty.

As the first registered producer of biodiesel in Nebraska, I have been involved with developments in my state from the ground floor and just recently completed technical development and commissioning of a second generation commercial biodiesel facility capable of 5 million gallons of biodiesel per year. This facility is also currently the largest completed facility in Nebraska and is 100% farmer owned. I am now personally involved in the development of second generation feedstocks for biodiesel and processing facilities on a daily basis and appreciate the opportunity to visit with this committee.

Nebraska finds itself way behind in developing these technologies.

US Current Situation:

When we started the Northeast Nebraska Biodiesel facility two years ago, soybean oil was $0.23/lb which reflected the ten year average. Since soybean oil tracks with petroleum, board values have increased as well and are currently trading in the $0.67/lb range which reflects almost a doubling of the cost of a gallon of finished biodiesel. Biodiesel production cost per gallon is 75% feedstock based and currently costs about a dollar a gallon to convert the oil into fuel that meets the strict ASTM (American Society for Testing and Materials) tests that are established for this material using standard base catalyzed technology. As a result of this surge in commodity vegetable oil costs, at least half of the biodiesel production capacity built in the last three years is currently off line. Similar price surges have also been seen in animal fats and used vegetable oil markets. It is clear that the first generation of feedstocks available for biodiesel have run their course.

A diverse pool of biodiesel plants have been built. The seemingly more profitable large biodiesel facilities in the 30-50million gallon/year (MM GPY) range have not done as well as many would have expected. Most of these larger facilities that were required to buy refined vegetable oil as a biodiesel input became the first to shut down as their processing technology required them to buy the most expensive oils available. Many have looked to increasing their …