Biodiesel producers expect strong
demand 
“Biodiesel production projects are a hot
sector,” said Rob Elam, founder and president of Propel Biofuels
– a biodiesel distribution and services firm headquartered
in Seattle. “Demand is rapidly increasing due to the increasing
cost of petroleum, state and federal mandates, and business concern
over health and global warming issues.”
Seattle has the highest individual adoption rate
of biodiesel of any city in the country, Elam said. The demand is
coming from both the public and private sectors, benefiting firms
like Propel Biofuels, which owns and operates biodiesel pumps for
both fleets and public use. It also provides refinery design and
build-consulting services.
The strong demand for biodiesel is not just a
West Coast phenomenon, however. The United States used approximately
100 million gallons of biodiesel in 2005, Elam estimated. Large
biodiesel producers across the country include Minneapolis-based
Cargill Inc. and Archer Daniels Midland Co. in Decatur, Illinois.
Smaller producers are also entering the market. “Start ups
are popping up in most every state,” Elam said.
The biodiesel industry tripled from 2004 to 2005
across the country, said Amber Thurlo Pearson, a spokeswoman for
the Jefferson City, Missouri-based National Biodiesel Board (NBB)
– a trade group representing the industry. “We foresee
the industry doubling this year,” Pearson said. “We
have confidence all the supply will be utilized. Many interested
parties are looking at new or different feed stocks for making biodiesel.”
There are currently 65 plants producing biodiesel
across the country. The NBB estimates that there are 50 or more
facilities, either being built or expanding production. Biodiesel
is made through a chemical process called transesterification whereby
the glycerin is separated from the fat or vegetable oil, according
to the NBB. The production process leaves behind two products —
methyl esters (the chemical name for biodiesel) and glycerin (a
valuable byproduct usually sold to be used in soaps and other products).
Biodiesel can be mixed at any level with petroleum
diesel to create a blended product. It can be used in diesel engines
with little or no modifications, said Kenneth “Pete”
Moss, vice president of marketing services at Frazier, Barnes &
Associates in Memphis, which provides consulting services to the
biodiesel industry. “You could conceivably run 100 percent
biodiesel in any diesel engine with little or no modification,”
Moss said. “However, it is generally recommended that you
run it in lower blends.”
Since the country uses around 65 billion gallons
of diesel fuel every year, that leaves plenty of room for biodiesel
production to expand beyond 100 million gallons a year, Moss said.
He said their needs to be continued support from both the state
and federal government to make sure the industry continues to develop.
Another area that is needed is further research into higher yielding
oilseed varieties for biodiesel production.
“That will be at some point the limiting
factor in the growth of the industry. It is just a question of when.
We certainly don’t have 65 billion gallons of biodiesel available,”
Moss said. “Because we do have limited supply of biodiesel,
it makes more sense to use it in blends than at a pure level and
you get many of the benefits even when you blend it.”
Most biodiesel across the country comes from soybean
oil, Moss said. But there are a few projects utilizing recycled
vegetable oil as well as animal fat, either virgin or recycled.
“Basically any vegetable oil or animal fat can be used. But
the predominant usage right now is soybeans because of its availability
and purity,” Moss said.
Paris-based Veolia Environment SA recently announced
a project designed to use recycled vegetable oil. The water, waste
management and environmental services company plans to construct
its first biodiesel production plant in 2008. It will produce 60,000
tons of biodiesel from used food oils that will be blended with
virgin vegetable oils. Veolia plans to spend over $25 million to
construct the facility in France.
Veolia said the location of the facility near
Paris will allow for water transportation of incoming materials
and produced products. It will also provide energy exchange synergies
within Veolia due to the facility being located by existing sites
and the direct collection of used food oils from a dedicated subsidiary
of Veolia.
“When you utilize waste vegetable oil from
a restaurant it has to be cleaned up. But the characteristics of
that oil are very good, because typically we fry with a high quality
vegetable oil for edible purposes,” Moss said. “You
can only use it so many times in cooking and you start to pick up
different flavors. But if you clean it up, remove the contaminants;
you still have high quality oil feed stock that can be used for
biodiesel.”
While many farmers are joining together to build
ethanol facilities across the country, there are not as many farmer
cooperatives building facilities in the biodiesel industry, Moss
said. “There is quite a bit of interest among capital investment
groups and what I would call more investor type projects, versus
farmer related projects,” Moss said.
Will the biodiesel market still be viable even
if the price of oil drops? “Much of it depends on the price
of the feed stock,” Moss said. “If you assume the price
of the feed stock drops as well it would still be viable. People
were making biodiesel and selling it when oil prices were low. It
just so happens that those prices went up considerably.”
The market for biodiesel would not expand as quickly
if oil prices would drop, however, Moss said. “There will
still be a market for it,” Moss said. He said that the main
reasons are the environmental benefits and additional lubricity
in the engine.
“Some studies have shown that blended levels
get an increase in fuel mileage, even though there is a slight British
thermal unit (the amount of heat required to increase the temperature
of a pound of water one degree Fahrenheit) content reduction,”
Moss said. “It’s very clean, environmentally sensitive,
and non-toxic. So I think there is a market for that.”
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