A biodiesel boom (and conundrum) : Short Wave There's a biodiesel boom happening! It's fueled by incentives and policies intended to cut greenhouse emissions, and is motivating some oil companies like World Energy in Paramount, California to convert their refineries to process soybean oil instead of crude. NPR's food and agriculture correspondent Dan Charles explains why farmers are happy, bakers are frustrated and people who want to preserve the world's natural forests are worried. Email the show at shortwave@npr.org.

A biodiesel boom (and conundrum)

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MADDIE SOFIA, BYLINE: You're listening to SHORT WAVE...

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SOFIA: ...From NPR.

MARIA GODOY, HOST:

Hey, SHORT WAVE listeners. I'm Maria Godoy, your host today. And I am here with correspondent Dan Charles, who covers a little bit of food and a little bit of climate change.

DAN CHARLES, BYLINE: Hi, Maria. I have got a story today about food and climate change.

GODOY: I expect nothing less from you. Lay it on me.

CHARLES: OK. The story starts with a guy whose job is buying ingredients for bread and buns.

ED CINCO: My name is Ed Cinco. I'm the director of purchasing at Schwebel's Baking Company in Youngstown, Ohio.

CHARLES: And Ed has a problem. He cannot get enough cooking oil. They use soybean oil, mostly. But Ed says soybean oil suppliers won't even talk to him these days.

CINCO: The only quotes I can get for 2022 are from the person who I currently buy from. So basically, I am at their mercy.

CHARLES: A year ago, he was paying 35 cents a pound for soybean oil. Today, it's almost a dollar. And he says other food companies are in the same spot.

CINCO: We have had a lot of different conference calls with companies way larger than ours that are having the same problem.

GODOY: I'm confused. What's going on? Are we running out of soybeans? Are farmers just not growing enough?

CHARLES: No, American farmers are actually growing more soybeans than ever. This is where it gets really interesting. Ed has a theory. He says the companies that process the beans for oil are sending it somewhere else.

CINCO: They all want to go to biodiesel.

CHARLES: There is a biodiesel boom going on, Maria - just getting started, really.

GODOY: So they're turning that soybean oil into fuel for trucks.

CHARLES: Yes. It is all happening because of government policies that are promoting alternatives to fossil fuels, which is supposed to help the climate, cut greenhouse emissions. But it is happening so fast, and it could get so big it's setting off a whole new competition between bakers and truckers, but also potentially competition for the land required to grow our food or our fuel.

GODOY: Today on the show, we go inside the biodiesel boom.

CHARLES: What happens when oil companies decide to convert their refineries to process oil that would otherwise go for cooking, why farmers are happy and why people who want to preserve the world's natural forests are worried.

GODOY: This is SHORT WAVE, the daily science podcast from NPR.

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GODOY: Dan, I have got so many questions about this biodiesel business. First of all, a basic one - how do you actually make it?

CHARLES: OK, there's a version of biodiesel that's been around for quite a while. Call it biodiesel 1.0. That version is made with a simple chemical reaction. It's basically oil and alcohol and a catalyst. You can do it on a very small scale. But biodiesel 1.0 has some limitations. It stops flowing in really cold weather, for one thing, so it usually gets mixed into regular petroleum diesel in just small amounts.

GODOY: OK, so it's more of a niche product.

CHARLES: Right. And then there is biodiesel 2.0. In the industry, they call this renewable diesel. It's a version that burns and flows just like regular diesel. You can just flat-out replace regular diesel from petroleum with this renewable diesel. And this is what's taking off right now. It's made in big refineries, the same refineries, in fact, that big oil companies use for crude oil.

So I went to visit one of these refineries right near LA in the city of Paramount, Calif. It was amazing, acres and acres of big tanks and pipes - so many pipes, Maria, like a giant three-dimensional puzzle. I wondered if it all made more sense to my tour guide, Glenn Clausen. He's director of engineering at the plant.

You look at this maze of pipes. Do you know what each pipe does?

GLENN CLAUSEN: For the most part, yes.

CHARLES: (Laughter).

CLAUSEN: A lot of them don't do anything right now because we're not utilizing them.

CHARLES: A lot of them are...

This is a very old refinery. It was built nearly a century ago to refine crude oil from oil wells nearby. Now it's owned by a company called World Energy, and it has switched to processing a different kind of crude. Gary Grimes, the plant's director of sustainability and technology, showed me big, black railcars filled with it.

So these tanks are full of...

GARY GRIMES: Tallow.

GODOY: Whoa. Whoa, whoa, whoa. So, like, giant railcars full of fat - beef fat. That's what tallow is, right?

CHARLES: Yeah, exactly.

GRIMES: It's a waste product at slaughterhouses.

CHARLES: From within California?

GRIMES: No, all over the country and Australia. We bring it in via ocean tanker from Australia.

GODOY: Oh, my God (laughter).

CHARLES: This tallow or the soybean oil - they use that, too - gets purified, processed and eventually flows into a tall silver tower. Glenn Clausen explained it's a distillery that separates lighter fuels from heavier ones.

CLAUSEN: The gasoline goes over the top. The jet comes off of the side. And then the fuel will come out the bottom of that power.

GODOY: Wait. Hold up. So you mean they're taking this beef tallow, which I'm still sort of fascinated by - like, the fat - and soybean oil and turning it into jet fuel and gasoline and diesel fuel. And they're doing it in exactly the same way that the refinery used to make those fuels out of crude oil, like, a century ago.

CHARLES: Yeah, pretty much. There are some changes they had to make to account for the different chemistry of the different raw materials, the different contaminants, but it's still basically refining oil. Just in the past year or so, a bunch of companies, like Marathon Petroleum, Phillips 66, have announced that they're going to convert refineries to make renewable diesel. According to the U.S. Energy Information Administration, if all these companies follow through on their announcements, production capacity of renewable diesel would go from a little over half a billion gallons last year to around 5 billion gallons a few years from now, so almost a tenfold increase. At that point, it would equal close to 10% of the nation's diesel fuel consumption.

GODOY: That actually sounds like a significant amount. My question is why now? Like, why did everybody, all these big companies suddenly decide, yeah, let's make the switch? What's changed?

CHARLES: So California has this law which promotes what it calls low-carbon fuels, fuels for cars and trucks that don't put so much carbon dioxide into the air. And according to California's calculation, making and burning biodiesel generally releases less than half as much greenhouse gases as burning regular diesel.

GODOY: Oh.

CHARLES: Because, you know, that soybean plant as it grew was using photosynthesis to capture carbon from the air to make that natural oil. So when you add it all up, when you include the carbon that the soybeans removed from the air and then balance that against the carbon released by burning the fuel, it ends up being cleaner, better for the climate.

GODOY: OK, so it's not that the biodiesel necessarily burns any cleaner than the diesel made from the crude, but it was made by a much greener process.

CHARLES: That's right, at least for the carbon calculation. Renewable diesel actually does burn cleaner in the sense that it releases less pollution like soot - you know, particulates. But that's a separate issue.

Anyway, this low-carbon fuel standard makes it really profitable to sell renewable diesel in California. Because it's a low-carbon fuel, you get low-carbon fuel credits that you can also sell. And on top of that, there are incentives from the federal government, too.

GODOY: Money - of course. So there's big money to be made from selling these low-carbon fuel credits. That's why everyone's jumping in.

CHARLES: Right. Energy consultant Paul Niznik with the company Argus Media says the oil companies always knew they could refine vegetable oils if they wanted to.

PAUL NIZNIK: All along, they've known they could do this. Then all of a sudden, one day they're like, think it's time to do that.

CHARLES: He says big oil companies were looking at all this, the incentives for biofuels, a decline in their traditional oil business because of regulations pushing better fuel economy.

NIZNIK: And then you look at the guy who's making renewable diesel who's getting a bunch of credits, and you suddenly realize, I need to shift. And you have a situation where it looks almost stupid not to get into the business.

GODOY: Well, so quick question, Dan - what are all these new refineries going to make biodiesel out of?

CHARLES: It's mostly going to be plant oils like soybean oil. There's not nearly enough of that beef tallow you're fascinated by...

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CHARLES: ...Or other feedstocks to supply all those new biorefineries.

GODOY: All right. But I'm wondering, are there enough soybeans or canola fields or whatever to feed these refineries? Like, what happens if there aren't? Can we run out?

CHARLES: That is the key question, and a lot of people are starting to ask it. Depending who you ask, though, you get very different answers. On the one hand, you have Gene Gebolys, who is CEO of World Energy, that renewable diesel producer.

GENE GEBOLYS: And the answer is there is no limit.

CHARLES: He says companies are finding ways to make fuel from new materials, like municipal waste or algae. But also, Gene is not apologizing for competing with food companies for soybean oil. If we are serious about confronting climate change, he says...

GEBOLYS: We have to get over this notion that we got to protect the status quo at the same time. There's going to be change. And so if your cookies cost you 10% more than they cost you last week, that might be part of it.

GODOY: OK. He's saying you want greener fuel, you're going to have to pay a little more for your food.

CHARLES: Yeah, but there are a lot of environmentalists who say this biodiesel boom is not just putting cheap cookies at risk. It's actually endangering the planet's natural ecosystems - environmentalists like Jeremy Martin from the Union of Concerned Scientists.

JEREMY MARTIN: Yeah, my reaction is to be quite alarmed.

CHARLES: I have to mention, by the way, both the Union of Concerned Scientists and the national biofuels board have been sponsors of NPR. Anyway, Jeremy says, just look at the numbers. A third of all soybean oil produced in the U.S. already goes to make biodiesel even before this big expansion of renewable diesel over the next few years.

MARTIN: It's not very complicated math to see, you know, something really doesn't add up. There just isn't that much feedstock available.

CHARLES: Feedstock means what you make the biodiesel from. Those other potential feedstocks, like municipal waste, he says, won't fill the gap anytime soon. So the worry is skyrocketing demand for these raw materials could persuade farmers around the world to plow up grasslands or clear even more forest to grow soybeans or further expand palm oil plantations. That would release lots of carbon, which totally contradicts the environmental goals of the low-carbon fuel standard and also destroy wildlife habitat.

GODOY: OK, so if that could happen, is there any chance California might roll back its incentives?

CHARLES: It is possible. You see something like this in Europe, where they also have regulations promoting biodiesel. They ended up with a lot of biodiesel made from palm oil grown in the tropics, which could mean more clearing of forests there, so they backed off a bit on the biodiesel. Something similar could happen with low-carbon fuel standards here. Jeremy Martin from the Union of Concerned Scientists says he's not totally against biodiesel. He thinks there's probably a place for it - just not so much, so fast.

GODOY: Well, so how do you slow this biodiesel train down?

CHARLES: You know, I think what this ultimately shows is we are so deep into our addiction to fossil fuels that getting out will not be easy. You know, just finding other fuel to burn but driving cars and trucks the way we always have just runs into other problems. So we're going to have to look for some really creative solutions. Drive less. I don't know. Is that going to fly in California?

GODOY: Thank you so much for the great reporting, Dan.

CHARLES: Thank you, Maria.

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GODOY: This episode was produced by Brit Hanson, edited by Sara Sarasohn and fact-checked by Rasha Aridi and Margaret Cirino. I'm Maria Godoy. Thanks for listening to SHORT WAVE from NPR.

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