16 July 2008 17:31 [Source: ICIS news]
By Ben Lefebvre
HOUSTON (ICIS news)--The US biodiesel industry is growing up, but there are still a few things it has to do if it wants to leave its adolescent stage behind.
To see that the ?xml:namespace>
Hearing the company describe its brand new site as the largest biodiesel plant in the
But while the sheer size of the operation might not be impressive, innovations found here show that the company has done its homework. The latest generation of operators is doing everything it can to break the stereotype of the small, mom-and-pop business in the frozen
For starters, GreenHunter, like a few newer biodiesel plants, has recognised that biodiesel operators everywhere are going to have to widen their diet to include alternative, non-food feedstocks as soon as possible.
The surest way to cost-bloat and eventual bankruptcy is dependence on one feedstock, subject to foul weather, supply tie-ups and price hikes.
Refiners have seen the cost of soybean oil – which can account for more than 90% of the finished fuel product – triple since January 2005.
As such, smart refiners are going to have to broaden their raw material base. On the menu: chicken fat, beef tallow, canola oil, jatropha seeds and algae. Smart operations won’t settle for just one, but design their facilities to be open to all.
Companies trying to avoid feedstock price volatility are partnering with plantations around the globe to ensure steady streams of renewable feedstocks. If the chicken fat runs out in
Another important change has to do with real estate, where, as the old saying goes, it’s all about location, location and location.
Off to the side of GreenHunter’s plant, a ship is anchored along an embankment of the channel leading to the
Construction workers are lengthening a nearby rail line to connect the plant to an inland distribution system.
Other large biodiesel projects point to a migration towards the shores of the US Gulf and the west coast. With about 60-70% of
The third step is for producers to develop economies of scale. Already, companies like REG Energy have sought to hasten industry consolidation by buying smaller refineries or entering into agreements to manage their biodiesel.
The result – the Iowa-based company is now a major supplier, controlling about 220m gal/year of the renewable fuel. GreenHunter says it is exploring the possibility of new plants near the Gulf in
Smaller producers will still have a place as regional operators supplying local markets, but when behemoth fuel companies like ExxonMobil need a lot of biodiesel for blending and need it fast, they will look to work with a supplier with lots of material at easy disposal, analysts said. A 10,000 gal/year business in Spanish Fork,
Most market watchers believe the end of this decade will see four or five big players emerging from the current cast of over a hundred in the
Finally, many in the biodiesel industry say they are going to have to lobby harder for a coherent
Biodiesel supporters will point to cleaner emissions, better fuel efficiency and renewable raw materials as advantages their products have over petroleum-based fuels. But for now, they still depend on subsidies from state and federal governments to keep their products competitively priced in the market.
With Congress still stalled on the Renewable Energy and Job Creation Act and its $45bn in tax incentives, renewable fuel producers are worried that this crucial advantage may disappear.
The best thing, they say, would be a federal energy policy that maintains the subsidies and nudges the biofuels industry as a whole away from corn and petroleum.
Some would like to see a blending mandate akin to the European Union’s, which calls for a 10% blend of biofuels in all products sold at the pump by 2020, to foster domestic demand.
The fuels-versus-food debate may take that off the political table, however. A World Bank report on higher food prices leaked to the press says biofuels are responsible for a 75% jump in food costs since 2002.
There has been debate over the validity of that number, but the consensus is that biofuels play a major factor in increased food prices whatever the percentage may be.
In all, the industry as a whole still has lots of homework to complete. GreenHunter offers plenty of material for biodiesel students to study, however.To discuss issues facing the chemical industry go to ICIS connect
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