by Joel Glatz
Joel Glatz is vice president of Frontier Energy, a wholesale and retail biodiesel distributor headquartered in China, Maine. A 21-year veteran of the oilheat industry, he also offers consulting services relating to biodiesel and bioheat. You can reach him at (207) 445-5274 or email firstname.lastname@example.org.
Biodiesel is attracting a lot of attention from all sides. While the Biodiesel market in the United States is a decade old, over the last year or so there has been a marked increase in the level of knowledge of the product from the government, media and the public.
There are many reasons for this increased awareness, but in general, biodiesel is a hard product NOT to like. Government policy-makers see it as a part of the solution to air-quality concerns, as well as our dependence on foreign oil. It is no coincidence that Pres. Bush recently chose the site of a biodiesel production facility to deliver a speech promoting his energy policy.
American farmers identify biodiesel as a potentially huge market for agricultural products like vegetable oils and animal fats. And when contrasted to the perception of petroleum as limited in supply, polluting and political, the news media appreciates that this is a product that has strong public appeal.
Until recently, most of the attention on this cleaner, renewable fuel has been focused on biodiesel as a transportation fuel. This is due to the fact that, as a nation, we consume more distillate fuel for transportation than any other use. However, in the Northeast, this relationship is inverted. Maine, for example, uses three times more distillate for heating than for transportation. As a result, some fuel dealers have begun to recognize that there is a huge market that exists beyond biodiesel, and marketing ‘bioheat” blends can offer many advantages.
Using biodiesel as a heating fuel is not a new, untested idea. Extensive studies have been conducted in the lab, as well as in the field. Tests of bioheat showing positive results began in this country in 1993. Since then, extensive tests have been carried out by Brookhaven National Laboratory, the National Renewable Energy Lab and the National Biodiesel Board, among others. These tests have all proven that using Biodiesel in a blend with No. 2 fuel results in lower emissions and fewer service calls, in addition to requiring no equipment modifications.
In June 2001, Frontier Energy of China Village, Maine, became the first oilheat marketer in the United States to offer bioheat blends to consumers on a retail basis. Due to the premium cost of ‘neat” biodiesel (B-100), sales were initially limited to the most environmentally
conscious, or ‘green” customers.
However, market research indicated that there exists a significant percentage of oilheat consumers who identify with the ‘red-white-and-blue” attributes of bioheat, namely that it is an American-made product, therefore it offsets foreign oil imports and supports American farmers. This enables bioheat to be marketed to a much larger percentage of consumers than originally thought. In addition, a Federal Biodiesel Blender’s Credit, which became available in January 2005, enables blended bioheat products to be sold at essentially the same retail price as conventional heating oil, often at higher margins.
Marketers move ahead
What began as an experiment by Frontier Energy in 2001 gradually gained steam in the following years as a few other companies followed suit in other states. There are now oilheat marketers in at least six states that offer bioheat blends to their customers.
The reasons for this high level of acceptance in the industry have to do with one thing: it’s good for business. Oilheat dealers have begun to realize that offering bioheat is a way that they can ‘do well by doing good.”
Here are a few of the positive aspects of being in the bioheat business:
The Warwick, R.I., School Department conducted a test burning B-20 bioheat for a full heating season in one of its burners while burningregular No. 2 heating oil in an identical burner. The photo on the left shows the blast-tube assembly from the burner using No. 2, while blast-tube assembly from the burner using bioheat is on the right. Photos by Robert Cerio.
Bioheat burns cleaner and is lower in sulfur (B-100 has no sulfur), resulting in less soot, which means fewer service calls and a more efficient heating system.
Bioheat offers a method for dealers to differentiate their product from the competition. Conventional heating oil is a commodity being sold in a saturated market. The only way to be different is to offer better service (everybody claims this), or a lower price (a slippery slope). Bioheat is a completely different product that competitors don’t have.
Bioheat is a way to demonstrate that your company is ‘part of the solution,” something that, as a rule, is hard to claim in the oil business.
Bioheat can offer higher margins than conventional heating oil. It’s a premium product and many customers are willing to pay a higher price.
Bioheat reduces the public perception that oil is dirty, sooty and smelly, and disarms suggestions that oil causes higher maintenance costs versus natural gas.
Companies who sell bioheat get lots of attention from the media, government officials and customers alike. It’s a pleasure to have customers say, ‘Thank you so much for bringing me this product. I appreciate it that you are trying to make a difference.” It’s a switch to be on the good side of the environmentalists and an ego boost to receive positive media attention.
An all-in-one alternative
Oil prices are historically high and the market is volatile. The petroleum industry is under constant pressure from supply disruptions, increased foreign demand, environmental restrictions and limited refining capacity, realities that are unlikely to improve in the future. Biodiesel addresses all of these factors, is tested, enjoys public support, has quality standards and is available in every state. Now that a significant number of oilheat companies have entered the bioheat market, the question now is, which will be the last to do so?
Biodiesel can be made from any biological oil, including seed oils (soy, canola, cottonseed, etc.), animal fats and recycled restaurant oils.
Biodiesel is not ‘grease.” It is manufactured using a process called ‘transesterification,” which results in a fuel that has very similar properties to distillate fuels, but is renewable, non-toxic and biodegradable.
100-percent biodiesel is called B-100, a 20-percent blend of biodiesel and heating oil or diesel is referred to as B-20, a 5-percent blend is B-5, etc.
B-100 will gel at a higher temperature than No. 2 diesel (30(-45(F). Blending with winter spec fuels will lower the gel point accordingly. Adding a conventional cold flow additive to blended biodiesel is another method of solving this problem. In very cold climates, both strategies are recommended.