Pullo anticipates the startup of the Metro Biofuels plant to “dovetail” with the passage of a citywide Bioheat mandate driven by New York City Councilman Jim Gennaro, who ran for a state senate seat in November in a close race that is under a recount. The legislation was previously proposed in council but it ran into several obstacles during the past year. “The legislation put forward by Gennaro is good legislation, but we commented on it and we do have some things that need to be addressed in it, in particular making sure the product is available on a regular basis,” says John Maniscalco, executive vice president of the New York Oil Heating Association. He says approximately 480 million gallons of heating oil is consumed in New York City annually, so a B5 heating oil mandate would require 24 million gallons of B100 per year. The plan, however, is to begin the mandate at B5 and eventually ramp it up to B20, in which case 96 million gallons of B100 per year would be required to satisfy the mandate.
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“We also need price sensitivity,” Maniscalco says. “Everybody wants to be green until they find out it costs them a lot more green to be green, and then all of a sudden they change their shade, so to speak.” The infrastructure also needs to be in place to blend that much biodiesel. “You can’t just say, ‘We’re going to Bioheat within six months,’” Maniscalco cautions. “You’ve got to give my terminals enough time to make infrastructure changes, whether it’s additional tankage or putting in an injection system.”
For New Yorkers, it’s less a question of if a Bioheat city mandate will be enacted and more a question of when. “Whenever it does come, we assume there will be two phases,” Maniscalco says. “The first phase will be city-owned buildings, and the second phase would be all buildings citywide.”
Long Time Coming
Michael Cooper, vice president of Ultra Green Energy Services LLC, says he learned how to sell biodiesel by not being able to sell biodiesel. “I made my first sales call for biodiesel into the New York metro region on Oct. 31, 2000,” Cooper tells Biodiesel Magazine. “I made for first long-term contract for biodiesel in the metro region on Nov. 1, 2007—seven years and a day later.” He says his company was the first to blend biodiesel in heating oil and sell it as Bioheat in 2001 in Maine. “Back then there was no excise credit and biodiesel was selling for $3 a gallon and heating oil was 75 cents a gallon,” he says. “It was a massive uphill battle.”
He tells a story about a client picking him up from New York’s LaGuardia airport, asking Cooper straight away, “Which side is the penny on?” Meaning if they had to pay more for biodiesel than for heating oil, they wouldn’t buy any of it; and if biodiesel was less than heating oil, they’d buy it all. “So I had to ask myself, “How do I supply Bioheat—biodiesel—into a mature market?’” Cooper says. “How do we solve the problem of getting the penny on the right side?”
After years of trying to solve this, Cooper says he’s created a financial tool—a pricing mechanism—to finally get the penny on the right side for Bioheat. “We hedge our biodiesel, which allows us to purchase and resell our products on an index price,” he says. “We can hold a product in a tank and it fluctuates with the price of the petroleum product we’re pinning it against, whether that’s heating oil, ULSD (ultra-low sulfur diesel), whatever.”
The biodiesel UGES blends and distributes is made from recycled greases or animal fats. In early November, Cooper released his company’s new branded Ultra Green Biodiesel. “Recently both of my markets—New York and United Kingdom—have incentivized biofuels that are sustainable socially, economically and environmentally,” Cooper says, adding that his product, once considered disadvantaged compared with soy biodiesel, is slowly becoming the premium product. Now, after eight years of moving zero gallons of Bioheat into the New York City area, moving millions of gallons is “gorgeous,” Cooper says.
A statewide penny per percentage point bioheat tax credit, up to 20 cents a gallon for B20, helps keep Bioheat competitively priced. Pullo says Metro price-points Bioheat at the net-back same price as its heating oil. “We’ve been successful at keeping our B20 at 20 cents above heating oil, so the net effect to the consumer is the same price as heating oil,” he says. As a BQ9000 certified marketer, Metro moves more than 5 million gallons a year of biofuel, according to Pullo. He explains the importance of being BQ9000 certified. “If you’re trying to introduce a new fuel in one of the toughest markets in the country where you’re dealing with very savvy customers on the motor fuels side and heating oil side, you need to be assuring them in every possible way—not because I give you my word on it, but because I can prove that this product is the highest quality product out there,” he says. As a future producer, Pullo says he intends to barge in virgin domestic feedstock for its 100 MMgy plant once it’s operational. Metro has already engaged in talks with major crushers who have the ability to use barges.
Clearing the Air
In Los Angeles vehicle emissions are a major component of air pollution, but Cooper says it’s a different situation on the East Coast. “Most of our pollution is from buildings, not from cars,” he says. “Thirty-five percent of the pollution in this region is from cars, and the remainder is from No. 2 oil, No. 4 oil, and No. 6 oil. Now is the time to push this mandate forward.”
Daniel Falcone, owner of Total Fuel Services Corp. and wholesale manager with UGES, says he is working closely with Gennaro on repackaging the citywide Bioheat mandate. Gennaro, who is also the chair of New York City’s Committee on Environmental Protection, was unavailable for comment so Falcone filled Biodiesel Magazine in about the history of the mandate and ongoing work. “The only issue with the Bioheat bill was Gennaro also included No. 4 oil and No. 6 oil blends,” Falcone says. Some buildings in the city burn the heavier No. 4 and No. 6 oils, which are significantly cheaper than No. 2 oil. Thus, a bill mandating Bioheat for those fuels would have negative price impacts. “Part of the bill sought to regulate sulfur content in heating oil, making it all ULSD,” Falcone says. “There was protest because there is no availability of ultra-low sulfur heating oil on the market today—it is not practical.” Falcone says he met with city council members two months ago on these issues and the appropriate language for the mandate is being crafted now. “We’re right on the brink of passing this bill by January,” he says.
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