Biodiesel Market Potential Report

May 26, 2009 - PRLog -- Ethanol and biodiesel are the most widely recognized biofuel sources for transport sector. Commercial production of biodiesel in the United States began in the 1990s. The National Biodiesel Board reported production of 500,000 gallons in 1999 and 6.7 million gallons in 2005. The most common sources of oil for biodiesel production in the United States are soybean oil and yellow grease (mostly recycled cooking oil from restaurants).

Biodiesel refers to a diesel-equivalent, processed fuel derived from biological sources such as vegetable oils, etc; which can be used in unmodified diesel engine vehicles. It is thus distinguished from the straight vegetable oils (SVO) or waste vegetable oils (WVO) used as fuels in some modified diesel vehicles. The concept of using vegetable oil as a fuel dates back to 1895 when Dr. Rudolf Diesel developed the first diesel engine to run on vegetable oil. Diesel demonstrated his engine at the World Exhibition in Paris in 1900 using peanut oil as fuel.

Biodiesel is made through a chemical process called transesterification whereby the glycerin is separated from the fat or vegetable oil. The 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).

By several measures, blends of biodiesel and petroleum diesel perform better than petroleum diesel alone, but the relatively high production costs of biodiesel and the limited availability of some of the raw materials used in its production continue to limit its commercial application. The EIA estimates that demand for biodiesel will be at least 6.5 million gallons in 2010 and 7.3 million gallons in 2020. These estimates are based on potential fleet demand for biodiesel to comply with the Energy Policy Act of 1992.

The major economic factor to consider for input costs of biodiesel production is the feedstock, which is about 80 percent of the total operating cost. It takes around 7.5 pounds of fat or oil to produce a gallon of biodiesel. If a feedstock (canola or mustard) is 13 cents per pound, the feedstock cost could be nearly $0.98 per gallon. Other important costs including plant overhead, labor and methanol, which must be added to the feedstock. Waste grease is in the range of 5 to 10 cents/pound and would be the most economical for initiating a biodiesel firm.

Based on biodiesel's potential as a lubricity additive, biodiesel demand could reach as much as 470 million gallons in 2010 and 630 million gallons in 2020.

Biodiesel was probably the first of the alternative fuels to really become known to the public. The great advantage of biodiesel is that it can be used in existing vehicles with little or no adaptation necessary. Biodiesel is, naturally, a compromise for this reason, but still balances positively on the energy scales. There are energy plants available that will produce a higher yield in kWh per area, but the simplicity of having a fuel that is fully compatible with present fuel and engine technology makes it very attractive.

Biodiesel Market Potential is a complete guide to help assess the feasibility of this alternative fuel source. It includes an examination of successful biodiesel applications, growth drivers of the industry, feedstocks used in biodiesel production, and much more. Current developments in R&D and the economics of biodiesel are also discussed in-depth in the report.

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