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The evolution of 

The expanding market presence and the breakthrough of refiners into the biodiesel sector are discussed along with commercialised and emerging production technologies

Adrienne M. Blume and Amy K. Hearn
Hydrocarbon Publishing Company
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Article Summary
Biodiesel has been available worldwide since the 1930s, though as crude prices began to soar in 2004, clean fuels advocates around the globe began acting to expand its use. The term ‘biodiesel’ refers specifically to mixtures of alkyl esters of long-chain fatty acids, which are derived from these sources and which conform to ASTM D6751 specifications for use in diesel engines.

Biodiesel offers some advantages over other alternative fuels: it can use existing fuel distribution routes, such as pipelines, rail cars and shipping; it can also be used ‘neat’ or blended with conventional diesel at various percentage rates. Since it is biodegradable, spills pose little or no environmental threat. However, this property can also speed up the degradation of petro-diesel. Also, as biodiesel’s molecular structures are close to those of paraffins, it has relatively poor cold-flow characteristics, and additives are needed to ensure its winter operability.

Nonetheless, an array of animal and vegetable oil feedstocks can be used to produce biodiesel, and if vegetable feeds are used, less CO2 is emitted. Biodiesel is also naturally lubricating, which makes it an excellent blending additive as low-sulphur regulations come into effect for conventional diesel. Finally, diesel also has higher fuel efficiency than motor gasoline. For these reasons, biodiesel’s popularity has soared in recent years, especially in the EU, the USA and some parts of Asia where biodiesel feedstock (such as palm oil) is a prominent crop.

Expanding market presence
Over the next 15 years, the percentage of petroleum demand that is replaced by renewable fuels will rise by 18% in Europe, more than double in Brazil, and will likely rise in the USA as more states establish their own blending mandates, encouraging producers of conventional fuels to pay close attention to the renewables trend. According to a July 2006 estimate by Frost and Sullivan, the biodiesel market could generate €8.5B of business by 2011 as it expands by 27%/y from 2004-2011. Germany’s Oil World estimates that global biodiesel capacity will rise from the 6MM mt as of December 2005 to 13.5MM mt in December 2007 – a 125% increase. A separate market study estimates that boutique diesels, such as biodiesel or coal-to-liquid (CTL) and gas-to-liquid (GTL) diesels, could account for 8.0-9.0% of total global on-road diesel consumption by 2020. Biodiesel and GTL technologies are also predicted to provide 600K bpd of ULSD by 2010, representing 6.0% of ULSD demand worldwide.

Europe is by far the main producer and consumer of biodiesel. The industry is supported by a blend of subsidies, tax breaks and mandates, and the production and market for biodiesel is expanding as oil prices remain high and tax incentives are offered for biodiesels in many countries. Biodiesel marketing varies in Europe. Unlike the USA, neat biodiesel is currently available at a number of service stations. Biodiesel blends are also more common than in the USA. French oil company, Total, has been selling such fuels in Europe for years.

Biodiesel consumption in the USA is spurred by support for agricultural production, by energy security concerns, and by its use in fleet vehicles. USA marketers of biodiesel products have generally sold their fuels in additive packages or as blends. While neat biodiesel is available in the USA, it is used more for electricity generation than in vehicles. Many of these products have been farmer-focused, but recently government fleets and commercial consumption have become important markets in some states.

In Asia, much of the interest in biodiesel is for power generation. Although production seems to be growing more slowly in the USA, Asia (particularly Japan) is pursuing proprietary positions in unconventional processing schemes such as the use of enzymes and supercritical conditions. At least in part, this is probably motivated by the high production costs for biodiesel when using conventional approaches such as acid-catalysed esterification to treat free fatty acids (FFAs) and base-catalysed transesterification of fatty acids and alcohol.

Biodiesel production is gaining particular attention in nations whose economies are suffering under the weight of huge fuel import bills, as seen in southeast Asia, Africa and Latin America. Tax incentives around the globe are also supporting biodiesel production as countries seek to reduce their dependence on fossil fuels, specifically foreign oil imports. Table 1 offers a look at regulatory trends and blending mandates around the world, as well as regional information on biodiesel tax incentives, production and consumption.
Refiners are eyeing biodiesel production
Among the major oil firms that are breaking into the biodiesel sector is US-based Chevron Corp. The company announced on 31 May 2006 that it had established a business to develop ethanol and biodiesel production technology and to pursue commercial operations in the USA, including a grassroots biodiesel plant with Texas’s Galveston Bay Biodiesel. Also, longtime CVX senior executive Patricia Woertz was recently elected to take on the position of CEO at Midwestern biofuels producer Archer Daniels Midland, signalling an imminent crossover between the petroleum and biofuels industries.

Another USA major, ConocoPhillips, is building a biodiesel plant in the UK with Global Commodities and Novaol that is expected to come online in 2006. Meanwhile, UK-based global major, BP, announced on 14 June 2006 that it would spend an unprecedented $500MM over 10 years to set up a centre for biofuels research, to be called the Energy Biosciences Institute. BP also pledged $9.4MM in 1Q 2006 to a project by The Energy and Resources Institute (TERI) that will investigate the feasibility of producing biodiesel from the non-edible, oil-bearing jatropha plant in the Indian state of Andhra Pradesh. The project is expected to produce 9MM L/y of biodiesel. Elsewhere in Europe, oil majors CEPSA (Spain), Total (France) and Neste Oil (Finland) are integrating their refinery operations with biodiesel production and constructing new plants.
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