What the Future Holds for Biodiesel

2010 federal requirements call for all diesel oil for vehicles and heating to have a 2% biodiesel blend. Some states are now requiring the mixture of biodiesel in all home heating oil with Massachusetts being the first. Many in the U.S. biodiesel industry are hopeful that The Cash For Clunkers program will lead to more diesel powered vehicles in America. Diesel is more efficient than gasoline and requires less engine maintenance. The result will mean more diesel cars on the road and the need for more biodiesel.
The Good News First…
Biodiesel from waste vegetable oils is better for the environment than biodiesel made from soy or other traditional raw feedstocks. Soy based biodiesel results in a mere 22% carbon emission reduction when considering the process from the planting to the end product (biodiesel). Compare that to the waste vegetable oil results of 80% carbon emissions reduction. Up and coming feedstocks such as pennycress (aka stinkweed) show a promising 90% carbon emissions reduction. Even better, pennycress does not require irrigation or prime food soil as it is merely a weed.
The Not So Good News…
The Biodiesel business in the U.S. took a blow when Europe instated the five year anti-U.S. tariff of biodiesel. Although the U.S. continues to export some biodiesel, we still face some stiff competition from Brazil, Argentina, Indonesia, India and other producers.
The main feedstock being used by Argentina and Brazil is soy which is leading to the destruction of native forests by way of clearing the land for soy crops. Coconut plays the starring role in feedstocks coming out of Indonesia, ultimately with the same result to the forests of Brazil and Argentina. Europe’s home grown feedstock is mainly sourced from Rapeseed and Canola with France existing as their number one producer.
The biodiesel industry as a whole is competing with the billions of dollars profited by the petroleum industry every year. Rapid growth within the biodiesel industry will require extensive capital and privately supplied capital is scarce.
Ending on a good note…
There is 230 million dollars of stimulus money that could apply to loan guarantees to biodiesel companies. In addition, federal energy bills passed into law could bring increased fuel mandates equating to more money and maybe even more federal direct spending.