It’s been well-documented that trade wars with other countries have made it hard for farmers to find markets for their goods. However, not all markets for Midwest commodities are outside U.S. borders.
The National Biodiesel Board, in partnership with both the Kansas and Nebraska Soybean Growers Associations, found a solid market for Midwest soybeans on the west and east coasts of the U.S.
“Midwest farmers know a lot about the benefits of biodiesel,” said Kaleb Little, director of communications with the National Biodiesel Board. “What they might not know as much about is how much of that fuel is going to markets on the east and west coasts.”
One of the biggest buzzwords in environmental stewardship is carbon reduction, a niche where biodiesel fits well. Little said Midwestern residents are blessed with “clean air and open skies,” but when you cram a lot of people into the same areas along the coastlines, clean air can be a little harder to find. Reducing carbon is a long-time policy goal on each coast, but especially so in California.
“It started in California, but has expanded to both Oregon and Washington,” Little said. “They’ve implemented carbon reduction policies that are above and beyond what federal standards call for.”
Their environmentally friendly policies started with lower carbon from vehicle emissions, but those states also have programs in place for power generation, home electricity, and other areas.
“The vehicle side of things is where biodiesel really comes into play,” he added.
The big policy driver is called “The Low Carbon Fuel Standard.” Officials set percentage-based reduction goals, then score every fuel product that’s in the marketplace for its ability to meet those goals.
The policy is a win for consumers because, as Little points out, diesel technology is “really good” at moving consumer goods and freight. By putting biodiesel into the tanks of those commercial vehicles, California gets significant reduction in carbon emissions, which is a big reason why the volume of biodiesel shipments from the Midwest to California has jumped higher in recent years.
“California has finally come to realize we’re telling truth when we say biodiesel is a sustainable product,” said Bob Haselwood, chairman of the Kansas Soybean Commission. ‘Their high standards on carbon emission mean the market is always going to be there for a cleaner-burning fuel like biodiesel.”
By itself, California used about 800 million gallons of biodiesel and renewable diesel in 2019, according to the National Biodiesel Board.
“That’s bigger than the entire national market for biodiesel was 10 years ago,” Little said. “That number will continue to grow each year going forward.”
Moving biodiesel to large markets like California and other states along each coast has been very beneficial to producers, said Victor Bohuslavsky, executive director of the Nebraska Soybean Growers Association. After all, he said, farmers are always looking to get into new markets.
“It was a huge opportunity and a huge success story simply by funding some research to get the proof out there showing why biodiesel works in helping them reduce carbon emissions into their environment,” Bohuslavsky said. “it’s a large market and the research is out there to show those folks they won’t have the same issues you’d get by trying to use a synthetic product.”
When the National Biodiesel Board first approached potential customers in California about purchasing biodiesel, Little said they got a warm reception because biodiesel was already well-known in environmental circles. The board was involved early in the process to show data generated through the soybean checkoff programs.
“The support from soybean farmers to quantify how good of a product it is really opened the door for biodiesel to play such an important point in a policy like the Low Carbon Fuel Standard,” Little said.
Not only did biodiesel get a warm reception during its early years in California, soybean farmers periodically head to the coast to get a firsthand look at how well the product is performing. Nebraska Soybean took three farmers to the coast early last year to talk to biodiesel buyers and the people who buy soybean oil.
Recycled cooking oil from restaurants is used in a lot of production there, and there’s a lot available due to the large population going out to eat, Bohuslavsky said. Now with fewer people eating due to coronavirus, he expects California will need more feedstock from somewhere else. That means a lot of the production in the Midwest will be shipped out there, he said.
How valuable are the domestic markets on both coasts? Bohuslavsky points out a Cornell University study that showed increasing the use of soybean oil through biodiesel and bioheat on the East Coast adds about 73 cents to every bushel of soybeans produced.
Little says the “cool thing” about selling fuel in California is it’s a big chunk of the 60-billion-gallon national market for diesel, so there’s a lot of room for growth yet in that state alone. On the East Coast, heating oil is a bigger product because it’s used to heat homes and businesses, and they’ve focused emission reduction efforts there.
“The heating oil companies are making a big commitment to remove all carbon from the products that they sell,” Little said. “The only real way to do that with a liquid fuel is to move to all biodiesel.”
One of the northeastern heating oil associations is pledging to be carbon free by 2050. That could mean another 5-7 billion-gallon market for biodiesel, according to Little.
“We’ll be looking for more states like California that realize biodiesel is a sustainable fuel source down the road,” Haselwood added.
Chad Smith can be reached at email@example.com.
Editor's Note: A previous version of this story misstated the size of the diesel market in California.