US biofuels laws threaten oleochems' tallow supply - producers

20 October 2009 21:33  [Source: ICIS news]

BERLIN (ICIS news)--The new renewable fuel standard (RFS2) proposed by the US Environmental Protection Agency (EPA) could limit tallow use for oleochemical companies, several producers said on Tuesday.

To qualify for the RFS2 program, the EPA proposed that renewable fuels must reduce greenhouse gas (GHG) emissions by 50% compared with the conventional diesel they are replacing. The GHG emissions reductions must also take into account indirect emissions such as land use, according to the EPA.

Soybean oil-based biodiesel will not be able to meet the EPA’s 50% requirement and therefore would restrict most of biodiesel feedstock to animal fats and restaurant grease, said Bob Drennan, chairman of the board US oleochemical company Vantage Specialty Chemicals.

Drennan spoke at the ICIS World Oleochemicals conference being held in Berlin.

“If the current EPA proposal goes unchanged, the oleochemical industry will compete against biodiesel industry for tallow. Tallow prices will then converge with degummed soybean oil prices,” said Drennan.

In 2009, 50% of US biodiesel feedstock is from tallow and greases, said Drennan. This is about 25% of the US tallow generated in a year, he added.

If the proposed RFS2 are realised, it will impact all tallow-producing countries and not just the US, said Rahul Kale, head of biofuels and oleochemicals at Indonesia-based Wilmar Oleo.

“Should it come in force, tallow would be a highly-prised commodity worldwide,” he added.

Another producer noted that tallow is a major feedstock for both US and European oleochemical producers.

The oleochemical conference, which was attended by over 160 delegates, ends Wednesday.

To discuss issues facing the chemical industry visit ICIS connect

By: Doris de Guzman
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