Biomass-Based Diesel and Heating Fuel Substitute Opportunities in New York City Final Report May 2014 Submitted to: Office of the Mayor, New York City 253 Broadway Submitted by: New York, New York 10007 ICF International 9300 Lee Highway Fairfax, Virginia 22031 ICF Contacts Erika H. Myers 703-225-2370 John Mulligan 703-218-2776 Tom O’Connor 703-218-2768 [This page is intentionally left blank] Final Report Table of Contents List of Exhibits ............................................................................................................................................ v Acknowledgements ................................................................................................................................... vii 1 Executive Summary ............................................................................................................................ 1 1.1 Key Findings ................................................................................................................................. 2 1.2 Key Recommendations ................................................................................................................. 3 1.2.1 Regulatory Changes & Requirements ................................................................................... 3 1.2.2 Consumption Targets and Mandates ..................................................................................... 4 1.2.3 Fuel Quality Requirements ................................................................................................... 5 1.2.4 Feedstock Development Programs ........................................................................................ 5 1.2.5 Reporting ............................................................................................................................... 5 1.2.6 Training and Outreach .......................................................................................................... 6 1.2.7 Next Steps ............................................................................................................................. 6 2 Introduction to Biomass-Based Diesels ............................................................................................. 7 2.1 What are Biomass-Based Diesels? ................................................................................................ 7 2.1.1 Introduction: Biomass-Based Diesels ................................................................................... 8 2.1.2 Feedstock Sources for Biomass-Based Diesel .................................................................... 10 2.2 Environmental Benefits and Issues for Biomass-Based Diesel .................................................. 17 2.2.1 Greenhouse Gas Emissions from Biomass-Based Diesel and Heating Oil Substitutes ........................................................................................................................................... 17 2.2.2 Biomass-Based Diesel Lifecycle Analysis .......................................................................... 22 2.2.3 Environmental Safety .......................................................................................................... 25 2.2.4 Renewable Fuel Standard (RFS) and Biomass-Based Diesels ............................................ 26 3 New York City Initiatives to Biomass-Based Diesel ....................................................................... 28 3.1 Biomass-Based Diesel Programs in New York City ................................................................... 28 3.1.1 Sanitation Department ......................................................................................................... 30 3.1.2 Port Authority/JFK International Airport ............................................................................ 31 3.1.3 New York Department of Transportation (DOT) ............................................................... 31 3.1.4 New York City B2 Heating Oil Mandate ............................................................................ 32 3.2 Success Stories ............................................................................................................................ 32 i Final Report 3.2.1 Department of Parks and Recreation................................................................................... 32 3.2.2 Biodiesel Support for Disaster Relief ................................................................................. 34 3.2.3 Con Edison .......................................................................................................................... 34 3.2.4 NYC Biodiesel Procurement Requirements ........................................................................ 35 4 Supply, Consumption, & Infrastructure in NYC of Biomass-Based Diesel ................................ 36 4.1 Supply Chain ............................................................................................................................... 36 4.1.1 Production Capacity and Current Production of Biomass-Based Diesel ............................ 36 4.1.2 Wholesale Supply ............................................................................................................... 43 4.2 U.S. Supply-Demand of Biomass-Based Diesel ......................................................................... 47 4.2.1 Consumption ....................................................................................................................... 47 4.2.2 Imports-Exports of Biomass-Based Diesel ......................................................................... 49 4.2.3 Storage of Biomass-Based Diesel ....................................................................................... 51 4.3 Biomass-Based Diesel Consumption in New York City ............................................................ 52 4.3.1 Fuel Oil Consumption in New York City ........................................................................... 53 4.3.2 Biodiesel Consumption in New York City ......................................................................... 54 4.3.3 On-Road Fueling Station Infrastructure .............................................................................. 56 5 Economics and Incentives for Biomass-Based Diesel .................................................................... 58 5.1 Biomass-Based Diesel Market Landscape in NYC and NYS ..................................................... 58 5.1.1 Price of Neat Biodiesel (B100) ........................................................................................... 58 5.1.2 ULSD Pricing ...................................................................................................................... 60 5.1.3 Blended Biodiesel Pricing ................................................................................................... 64 5.1.4 Biodiesel Pricing Insights ................................................................................................... 68 5.2 Renewable Identification Number (RIN) Prices and Fraud ........................................................ 68 5.2.1 RIN Fraud ........................................................................................................................... 70 5.3 Federal, State, and Local Biomass-Based Diesel Policies .......................................................... 71 5.3.1 Federal ................................................................................................................................. 72 5.3.2 New York State ................................................................................................................... 73 5.3.3 New York City .................................................................................................................... 74 5.3.4 Impact of New Regulations and Incentives on Biomass-Based Diesel Infrastructure ....................................................................................................................................... 75 5.4 Regulatory Standards on Quality for Biomass-Based Diesel...................................................... 75 ii Final Report 5.4.1 ASTM International and NYS Fuel Quality Requirements ................................................ 75 5.4.2 BQ-9000® ........................................................................................................................... 76 5.4.3 ULSD Requirements ........................................................................................................... 77 6 Barriers to Biomass-Based Diesel .................................................................................................... 78 6.1 Equipment Limitations ................................................................................................................ 78 6.1.1 Boiler Compatibility ........................................................................................................... 78 6.1.2 On-Road Engine Compatibility .......................................................................................... 78 6.1.3 Underground Storage Tank and Fueling Dispenser Compatibility ..................................... 79 6.2 Regulatory Barriers ..................................................................................................................... 80 6.2.1 Permitting and Inspection ................................................................................................... 80 6.3 Other Barriers .............................................................................................................................