Biodiesel Corner: Mailbag: Jeff Pieterick of NPP writes:

Happy New Year ?

Hoo, boy! 2008 began with crude oil breaching the $100 mark. This was immediately followed by record prices in the edible oils markets here and overseas.

Futures prices on soy, palm, and other edible oils now closely track crude oil prices in recognition that these commodities are also used in the production of biodiesel. If biodiesel production is in fact driving this upward surge, it cannot be sustained at levels that preclude the industry from accessing them due to prohibitive cost. Then again, it's been shown that commodity speculators can often remain irrational much longer than commodity buyers can sustain. Biodiesel producers throughout the country thus continue to limit expansion projects or suspend operations altogether as they wait out the markets.

The resulting reduction in actual consumption of these oils - along with the increased crop yields in soybean production and an increase of acreage planted for soybean and other oil crops - will create pressure for downward adjustments in the markets. Meanwhile, it is important for the future of our domestic renewable fuels industry to research, develop, and produce alternative feedstocks for biodiesel. Camelina, canola, and jatropha are only the beginning of possibilities to be explored.

The "Holy Grail" for biodiesel, however, may be found in the
commercial viability of algae as a feedstock for biodiesel. This feedstock alternative not only removes biodiesel as a competitor from the edible oils market, but it potentially provides numerous other public benefits, including:

(1) The establishment of an entirely new bioindustry that is fundamentally based upon creating renewable and sustainable sources for our fuels energy. As with any new industry, it can be expected that this pursuit will open avenues for research and development that will provide answers to questions that presently escape even our imaginations.

(2) The cultivation of algae offers opportunities to use the process itself to effectively capture carbon for its continual recycling - and perhaps even its ultimate sequestration.

The challenges we confront relative to global climate change and our dependence upon fossil fuels require a proactive public response of significant magnitude. In fact, an argument can be made that our pursuit of alternative energy should command an application of public resources that rivals those committed to the Manhattan Project or even the Apollo Program in previous generations.

As outlined above, the nascent biodiesel industry has already shown the way by which our invesrtment in renewable energy will provide significant dividends to the public at large. The creation of a commercially viable algae producing bioindustry, for example, clearly shows the types of unforeseen consequences that can arise as a side benefit of our pursuit of sustainable energy solutions; one which will help drive our economy for years to come.

As with the other "public works" projects like Apollo and the Manhattan Project, however, our renewable fuels objectives will not be accomplished overnight. Instead, we must move forward one step at a time in an efficient progression toward achieving energy independence and lower carbon emissions. In the transportation fuels sector of our energy requirement, the first steps taken will include support for the biodiesel industry through its growth stages by gaining increased distribution of the product; committing the resources necessary to develop alternative feedstocks such as algae; and establishing public financial supports that encourage private investment in this industry.

Let $100 oil be our wake up call to action. The roadmap to overcome the high price of oil and all the challenges in creating renewable sources of energy is laid before us, and biodiesel is an important way marker on the map. We must therefore resolve for 2008 to take the steps necessary - placing one foot ahead of the other - in a sustained public commitment that sets the foundation required for the successful establishment of this industry and others in the renewable energy arena.

Happy New Year, indeed! Let the record show that 2008 will be the year that moves us farther down the road in producing "Home Grown Fuel for a Better Wisconsin."

Regards,Jeff Pieterick