Have you been looking for ways to increase your fuel margins? Attract more customers? Hop on the sustainability trend? Introducing biodiesel blends to your product offering could help you do all three. And here are three tips to put you in a position to start taking advantage of biodiesel’s benefits.
Assessing Infrastructure Needs
If you want diesel fuel that already contains a blend of biodiesel, ask your diesel supplier if they can provide that to you. If they are unable to, find one who can. Some biodiesel producers also supply blended fuel.
If you want to blend your own biodiesel into the diesel fuel, the initial cost is greater but so is the return on investment. In fact, the return on investment is often achieved in only six to 18 months.
To do your own blending, you will need a dedicated biodiesel storage tank and blending system. The U.S. Environmental Protection Agency says existing tanks are compatible with biodiesel blends of up to 20% (or B20).
For your customers, biodiesel blends do not require any vehicle upgrades. Drivers can fill up their vehicles and go.
Finding A Supplier
Whether you intend to use your existing supplier or are looking for a new one, here are some biodiesel-related questions to ask them:
- How long have they been marketing biodiesel?
- What does the supply chain look like to your retail location(s)?
- What’s their knowledge of federal and state incentives for biodiesel?
- What is the quality of their product? Do they participate in the biodiesel industry’s BQ-9000 quality assurance accreditation program?
- Are they knowledgeable about the retail industry?
Picking Your Blend Level
Blends from B5 to B20 are good options to maximize profits when biodiesel is priced more competitively than petroleum diesel. Your location can factor in too. Several states have financial incentives for retailers selling biodiesel. Illinois, for example, offers a 20% exemption from the state’s 6.25% sales tax for B1 to B10 blends. That increases to a full exemption of the sales tax for B11 and above.
Weather can also be a factor, but maybe not as much as you think. Proper storage, handling and additive use allows retailers to sell B20 year-round no matter their location, but if you are in a colder climate you may feel more comfortable dialing the blend back a bit in the winter.
Also, don’t think you’re stuck with one blend level. Your supplier should be able to get you a range of blends. If you blend your own fuel, equipment can help retailers easily switch between blend levels. Sapp Bros. Travel Centers is an example of a retailer who does that. You can learn about their experience with biodiesel in this video case study.
Troy Shoen is senior manager, marketing, at REG, a leading biodiesel and renewable diesel producer.