Development of Policy Analysis Tool for Determining Potential Biodiesel Consumption in MN by Season and Activity

Principal Investigator:

Jerry Fruin, Associate Professor, Applied Economics

Co-Investigator

Project Summary:

The goal of this research is to develop a policy analysis tool with current data to evaluate various proposals that contemplate the inclusion of biodiesel in blends of diesel fuel in the state. The seasonal aspects of diesel fuel and heating oil consumption in the state, both on-road and off-road, will be important in measuring the necessity of state-sponsored incentives for the use of biodiesel blends. The policy analysis tool will allow fiscal analysis of proposed state policies to operate certain classes of engines and fuel oil burners with alternative blends in various seasons of the year. Development of this data will allow estimation of the impacts of alternative federal proposals to reduce Federal Diesel Excise Taxes for on-road vehicles as well as any additional federal incentives for biodiesel blends that may be offered.

Biodiesel is a renewable fuel derived from vegetable oils or animal fats that can substitute for diesel fuel in engines or fuel oil in furnaces. Biodiesel is produced by the process of transesterification, a simple chemical process that breaks individual triglyceride molecules into three molecules of methyl esters consisting of long chain fatty acids, similar to diesel derived from petroleum. Biodiesel has proven lubricity benefits at low blends, which will be important when sulfur levels are reduced in the U.S. supply of diesel in 2006. In addition, blends of biodiesel and its usage in a pure form reduce particulate matter (PM), volatile organic compounds (VOC), as well as other toxic gases and Greenhouse Gases (GHG). Reduced emissions from biodiesel blends result from its zero sulfur content and higher oxygen content versus petro-diesel. Federal standards established by the U.S. Environmental Protection Agency (EPA) may force local authorities to implement a variety of policies to reduce VOC's, one of the precursors of ground level ozone formation, and other toxic emissions. There is also substantial concern among public health professionals concerning the formation of particulate matter (PM) from diesel engines, especially when originating from school buses, transit buses, and diesel-powered electrical generators.

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