RECENT NEWS
The Hindu Business Line  Jun 24  Comment 
Shipping Minister Gadkari wants standards set for 100% usage of the green fuel
The Hindu Business Line  Jun 24  Comment 
The Union Shipping Ministry has decided to utilise 20 per cent of its diesel requirement through bio-diesel at 12 major ports. Union Minister for Road Transport and Highways and Shipping after ina...
Reuters  Jun 17  Comment 
Repeated delays to the introduction of a levy on palm oil shipments from Indonesia are frustrating traders, who find it hard to set prices, and have raised doubts over whether the levy will be successful in generating planned biodiesel subsidies.
Wall Street Journal  Jun 12  Comment 
Biodiesel policy changes in Malaysia, Indonesia and the U.S. support palm-oil prices, despite robust production and a stock overhang.
Financial Times  Jun 11  Comment 
Washington mandates less ethanol and greater biodiesel use
The Hindu Business Line  Jun 9  Comment 
Southern Online Bio Technologies has bagged an order for supply of bio-diesel from South Central Railway (SCR). On June 5, SCR for the first time used diesel locomotive, fuelled with 5 per c...
The Hindu Business Line  Jun 7  Comment 
The Railways has started getting biodiesel at ₹7 cheaper than petrol diesel at Hyderabad, which will be subsequently blended for use in locomotives. Simultaneously, they are also trying...
The Hindu Business Line  Jun 5  Comment 
The first diesel engine with 5 per cent mix of bio-diesel will make its debut on the South Central Railway on the occasion of World Environment Day today. This is part of the several meas...
USAToday.com  May 29  Comment 
Renewable fuels, farm and oil groups criticize EPA proposal on ethanol, biodiesel standards.




 
TOP CONTRIBUTORS
Biodiesel is a nearly perfect substitute to petroleum derived diesel fuel. It is derived from the transesterification of biogenic oils such as vegetable oil and animal fats. The US biodiesel industry is burgeoning- it has tripled each year during the past few years. So much so, in fact, that vegetable oil prices, which account for around 80% of production costs, have almost become prohibitive to biodiesel's production as demand for biogenic oils - mainly soybean, palm, and rapeseed (canola) - has pushed their prices to unprofitable levels. Biodiesel has a well defined place in a sustainable energy portfolio, but the nascent biodiesel industry has a long way to go.

State of the Industry

Recent Soybean Oil Prices
Recent Soybean Oil Prices

The National Biodiesel Board(NBB) just published the latest US biodiesel capacity numbers. 148 existing plants are reported (up from 105 in January 2007), for a total of 1.39 billion gallons/year of capacity. 96 new projects, and 5 expansions are currently underway, which will account for 1.89 billion gpy of capacity when they come online by the end of 2008. Here are the maps: existing and in construction.

The total is 3.28 billion gallons. This is a nameplate capacity: the output possible when running 24/7, 350 days/year. Collectively, US biodiesel plants run at about 25% of their capacity, a severe underutilization of assets. To put that 3.28 billion gallons per year capacity in perspective, at full capacity it would replace 5.1% of US diesel consumption, take up 126% of US soy oil production, take up 113% of all US vegetable oil production, and take up 84% of all US animal fat and vegetable oil production.

Future Developments

Food for Fuel

Clearly, biodiesel demand pushes up food prices. High oil prices, and subsequently biofuel prices, will cause food prices to rise, potentially pricing out poor people. This effect is well recognized, and many countries, including China, have set limitations on biofuels to combat the possibility of hunger problems resulting from biofuels.

Carbon Credits

Biodiesel reduces carbon dioxide emissions significantly- 70% is a frequently quoted percentage reduction of carbon emissions. The reduction won't approach 100% any time soon- it takes fertilizers, diesel tractors, petroleum powered transportation measures, and methanol to get biodiesel to the pump. However, [Carbon Trading] has the potential to benefit biodiesel producers immensely- on an energy basis, substituting a gallon equivalent of biodiesel for diesel (biodiesel has about 92% of the energy content of petroleum diesel) saves about 6.5 kg of CO2 emissions. It takes about 150 gallons to eliminate a metric ton (mt, or 1000kg) of CO2 emissions, making the roughly $4/mt carbon credit that the Chicago Climate Exchange offers reduce the price of a gallon of biodiesel by a mere 2.6 cents. To eliminate the need for the $1/gallon subsidy currently in place, the price of a ton of CO2 would have to be about $150.

Alternative Feedstocks

In its current form, the biodiesel market scope is small. For the long term, soybean, rapeseed, and palm biodiesel are not great solutions: soybean and rapeseed crops compete with food and have low oil/area yields relative to plants like palm and jatropha. Palm oil is a great feedstock, however it is currently being developed in a highly unsustainable form: deforesting land for palm oil production. It takes many decades to recapture the carbon emitted from forest destruction by planting biodiesel crops. Renewable fuels must become globally traded commodities if they are to have any significant impact on the world's energy portfolio.

Who stands to benefit

Companies who have their hands in jatropha plantations and those with logistics favorable to an international oilcrop market.

Who stands to lose

Companies in the middle of Iowa.

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