Monroe County, Ind., Buses Doing Well Burning the Cleaner Bean

In terms of performance, soy biodiesel passes the test. But is it affordable? The verdict is still out.

Jan. 4--In terms of performance, soy biodiesel passes the test.

But is it affordable? The verdict is still out.

Buses burning soy run as well in cold weather as their counterparts on petroleum diesel. It works on old buses, requires no mechanical modifications and causes no mechanical problems, local bus service directors report after using the fuel in a yearlong pilot project.

According to Mike Clark, transportation director for the Monroe County Community School Corp., fuel filters also last twice as long when using the cleaner-burning alternative fuel. It even smells better, he said.

Bloomington Public Transportation Corp. general manager Lew May said he has observed a visible decrease in tailpipe emissions. Although no tests were administered on local buses, studies show using biodiesel reduces particulate matter by about 12 percent.

Not to mention that the fuel comes, in part, from Indiana soybean fields -- reducing dependence on foreign oil and potentially generating jobs in the Heartland.

But the single greatest roadblock to using the fuel in local bus fleets is money. A gallon of biodiesel today costs about 50 cents more than a gallon of conventional diesel.

The cost of the pilot program -- begun in late 2003 and involving a handful of buses from the school system, Bloomington Transit and Indiana University Campus Bus Services -- was a drop in the bucket, directors say. Running all buses on B20 -- the 20 percent soy biodiesel, 80 percent petroleum diesel fuel blend used in the pilot project, may not be feasible.

The school system made the switch this fall, however. With the help of a $30,000 state grant, MCCSC's 107 buses now are running on part soybean fuel.

A once-skeptical Clark went from sticking his toe in the bean patch a year ago to jumping in with both feet in August.

"We're done with the experiment and running it at 100 percent," he said earlier this year.

But the MCCSC may not be able to afford to do the same after this school year. In 2005, it is expected to join Bloomington Transit and IU in the undecided category. Much depends on the effects of a newly passed federal excise tax incentive.

Under a provision in the American Jobs Creation Act of 2004 -- signed by President Bush in October -- biodiesel suppliers will get federal assistance equivalent to 1 cent per percentage point of biodiesel blended with petroleum diesel for so-called "first-use" oils.

These include soybean oil, which is used in soy biodiesel. That would mean B20 would cost 20 cents less per gallon, with the savings expected to be passed along to consumers. A half-cent incentive would apply to biodiesel made from other substances, such as recycled vegetable oil.

According to a U.S. Department of Agriculture study, the incentive is expected to bolster biodiesel demand from 30 million gallons in fiscal year 2004 to 124 million gallons per year.

That would fuel an economic surge in several sectors of the country's economy "including manufacturing, agriculture, and all sectors that provide support services to these industries," according to a report from the American Soybean Association and National Biodiesel Board. Up to 50,000 jobs could be created on a national level, the report says.

The tax incentive has a two-year life and was to take effect on New Year's Day. But some regulations still need to be written, pushing back the implementation date. As a result, some diesel customers are waiting before moving forward with alternative fuel plans.

Local bus directors say they will take another look at incentive-adjusted soy biodiesel prices when all the i's are dotted and t's crossed. In addition to federal regulations, they are watching variations in the price of fuel.

Soy-blended fuel cost 13 cents more per gallon than petroleum diesel in early December 2003, when Bloomington Transit began using the alternative fuel. This December, it was around 53 cents more per gallon. It hit 62 cents more in November.

Overall, the average difference throughout the pilot program has been about 44 cents per gallon for IU and city bus services, which are exempt from state sales tax. It's been about $1.64 per gallon for biodiesel, compared with $1.20 per gallon for conventional diesel, according to figures May compiled.

That difference may not mean much for a few buses, but for a city fleet of 37 buses and an IU fleet of 27, it's a different story.

"We're waiting to see what the final cost differential is going to be next month," May said.

Since the city and IU share space and gas tanks at the bus center on Grimes Lane, May said whatever decision is made will be made in cooperation.

Also to be figured into the decision would be the potential savings of buying in bulk, May said.

He said the White River Co-op estimated customers could save around 25 cents per gallon if they transport larger quantities of soy biodiesel. At present, only one tank at the Grimes Lane bus station is used for biodiesel, so tanker trucks can only be partially full when they deliver fuel.

If the city and IU bus services go to biodiesel fleetwide, they would also be eligible to apply for state funding, May said.

If all Bloomington Transit buses were to switch to biodiesel today, the annual cost increase would be around $75,000 -- though it would be less if savings from the federal tax incentive were included. Even on a $5 million budget, it's no small consideration, May said.

Another consideration is whether bus manufacturers will honor warranties on new buses if they run on alternative fuel. May said he'd heard talk they might not, but has received no definitive answer from manufacturers. In their pilot program, the city and IU used the fuel in older buses.

Clark said Monroe County school buses were still covered under warranty up to a B20 blend -- the blend being used.

Bloomington Transit plans to keep using the alternative fuel in at least a handful of its buses, May said. It has used biodiesel in about four to seven buses at a time since the pilot program began.

Likewise, the MCCSC system will continue burning the bean in all its buses through the winter.

Clark said he still has "some anxiety" over the tendency in cold weather of soy fuel to gel at higher temperatures, even though the MCCSC buses in the pilot program experienced no cold-weather problems last year.

Even so, he's warming up to the bean.

"I'm confident it will work," he said.

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© 2005, Herald-Times, Bloomington, Ind. Distributed by Knight Ridder/Tribune Business News.