FOCUS: Biodiesel heating oil alternative in Europe?

19 October 2006 16:09  [Source: ICIS news]

By Nicolette Allen

LONDON (ICIS news)--Biodiesel may be used as more than an environmentally friendly fuel in the future if employing the product as an alternative to heating oil takes off in Europe, an industry expert said.

Former industrial chemist Andrew Robertson stressed the potential carbon reductions which would follow if UK heating oil users swapped to a more environmentally friendly option, at a talk named ‘Using Biodiesel as an alternative to Heating Oil' at the Biodiesel Expo in Nottingham on Wednesday.

Robertson said that if all heating oil customers switched to using biodiesel, potential carbon emission savings could reach 7.5m tonnes per year in the UK, vastly overtaking the government’s objective of reducing carbon emission by 1m tonnes per year.

In order to meet these targets, more rapeseed would have to be grown in the country, with approximately 6% of the total arable land in the UK needed, he said.

In the light of ongoing conflict in the Middle East, industry sources also believed that using biodiesel instead of importing foreign fuels would help to make the UK less reliant on commodity sources elsewhere.

In the US, blending domestically produced biodiesel with heating oil has been gaining momentum for the past several years, as part of efforts to steer the US away from its dependence on imported oil.

Now, this trend looks likely to gain more hold in Europe, as biodiesel market players as well as members of the public are becoming aware of the benefits of swapping to biofuels.

Biodiesel’s current principal use is for blending with mineral diesel, to create a clean burning, environmentally friendlier version of the fuel.

Demand for biodiesel is consistently strong across Europe, currently matching supply as more plants come on-stream across the continent.

European prices were assessed in a €690-760/cbm (€780-860/tonne) free on board (FOB) Northwest Europe (NWE) range for rapeseed-based biodiesel, according to global chemical pricing service ICIS pricing.

Current European biodiesel production has been estimated at around 6.1m tonnes, a 45% rise on 2005, and this figure was expected to rise significantly in the next two years as more projects start up.

Some biodiesel traders and consumers anticipated an oversupply of product in the next year or so, if demand remains steady and further production units start up across Europe.

However, if using biodiesel as an alternative to heating oil takes off in Europe, perhaps demand will continue to equal ever-increasing supply.

By: Nicolette Allen
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