Evonik commits to biodiesel future

Evonik affirms its commitment to the struggling US biodiesel industry with the opening of a new catalyst plant in Mobile, Alabama

Despite the dismal market conditions that have forced several US biodiesel refineries to shut down in recent months, Germany-based specialty chemicals producer Evonik Industries is bullish on long-term prospects for the industry.

The company, which opened its new biodiesel catalyst plant in Mobile, Alabama, US, on April 28, expects demand to pick up and grow significantly in the coming years.

“Of course we react to the economic downturn by all means of cash management, but strategically, we will stick to the biodiesel industry as one of the significant growth options for us,” says Thomas Haeberle, member of the board of Evonik Degussa, the North American arm of Evonik. “This is going to stay during the crisis and after the crisis. We are convinced about that.”

Biodiesel represents a combination of specialty chemicals and sustainability, explains Haeberle. “We are the leading supplier of sodium methylate globally, and of course we have seen that sustainability is a global issue,” he says. “And with the US being our second home market, it of course has a high priority for us.”

Evonik opened the 60,000 tonne/year sodium methylate Mobile plant just eight months after breaking ground. Sodium methylate is used as a catalyst to convert plant oils to biodiesel. “The biodiesel market is growing at double-digit rates worldwide, and we expect that for a good while,” says Jose Berges, head of electrolysis products & alkoxides business line at Evonik. “Bringing this new capacity onstream will adjust the capacity to the current demand levels we are seeing and will allow us to meet demand we expect to see in the coming years.”

Evonik’s quality, flexibility and logistics systems have been highly recognized by the market, and the company is unique in that it has two different technologies for producing sodium methylate – an electrolysis process at its Germany facility near Cologne, and reactive distillation at its Mobile facility, according to Berges.

“We consider ourselves the leading company in this field – not only by market share but also technology-wise,” Berges says.

US biodiesel producers depend largely on exports, but this market has hit a roadblock.

“Roughly 75% of all biodiesel produced in the US last year went into exports and the biggest chunk went to Europe,” says Stefan Welbers, Evonik vice president and general manager, North America, electrolysis products.

However, in March, the EU slapped temporary antidumping duties on US biodiesel for six months and could extend them longer.

“But, nevertheless, there is a mandatory blending regulation in the US, and we think that as soon as this legislation is enforced, there will be a recovery in the market,” Welbers says.

“Our focus here in Mobile is producing material locally for the US market. We believe in the development of the US biodiesel market and that local demand is still developing. Mandatory blending is currently 500m gallons but we expect that percentage to grow,” he adds.

“When we took the decision to build this plant here, we had a worldwide growing market for alkoxides to be used in biodiesel and the expectation of growth in the US based on the second stage of the Renewable Fuels Standard (RFS-2) law passed in 2007,” Berges says.

But RFS-2 has not yet been implemented, which is causing the current struggle in the US industry, according to Evonik.

“We sincerely believe that RFS-2 will be implemented relatively quickly and with that, it will create a strong local demand for biodiesel in the US. It will reduce the dependency of the US biodiesel industry on exports, and, in our opinion, this is the only way of having a sustainable industry,” Berges says.

Read Simon Robinson’s ICIS Big Biofuels Blog