BUILDING AN ENERGY ECONOMY ON BIODIESEL

VERY DIFFERENT OIL FIELDS

New book explains why biodiesel is preferable to petrodiesel, how feedstock costs could be reduced, and why it can reach up to 25 percent of U.S. diesel consumption.

WHEN you hear about running cars on biodiesel, do you picture co-op members brewing old frying oil into fuel in their garages, or a renewable energy industry powered by Archer Daniels Midland, Cargill and their brethren? Either way, you're half right.

Biodiesel is a fast-growing, diverse industry and an important piece of the answer to current energy and environmental challenges. In his new book, Biodiesel: Growing A New Energy Economy, Greg Pahl provides a readable history of biodiesel technology, a survey of current activities worldwide, and an assessment of how it can help to meet some fraction of global clean energy demand.

The building blocks of biodiesel are esters, or compounds formed by reactions between an acid and an alcohol. Vegetable oils are esters, but they are more viscous than diesel fuel because they contain glycerin, a thick, syrupy liquid that is widely used in soaps and other products. Making biodiesel is a relatively simple process in which the glycerin is separated from the fat or vegetable oils by adding a catalyst and alcohol. This process "cracks" the oil molecules, producing biodiesel and glycerin, which is sold as a by-product.

Biodiesel can be produced from many feedstocks, either singly or in combination. Crops currently used to make biodiesel include oil palm, coconuts, rapeseed (canola), sunflowers, mustard and soybeans. Animal fats and used frying oil (UFO) are also important sources in many areas, although UFO requires more treatment to remove any impurities that remain after using it for cooking. (In several European countries, McDonald's donates UFO to biodiesel producers.)

Rapeseed has the highest oil yield per acre of any conventional crop currently � used to produce biodiesel. It is the main feedstock used in Europe, the major biodiesel-producing region, and accounts for 84 percent of world biodiesel raw material resources, followed by sunflowers at 13 percent. Most biodiesel produced in the United States is made from soybeans, in part because U.S. soybean farmers are wellorganized and politically influential. (Biodiesel fuel choices are one important factor shaping the future of the industry, as will be discussed further below.)

ENVIRONMENTAL POSITIVES

From an environmental standpoint, biodiesel is clearly preferable to petrodiesel (conventional diesel). An EPA analysis found that either BlOO (100 percent biodiesel) or a B20 blend (20 percent biodiesel, 80 percent petrodiesel) produced significant reductions in nearly all exhaust emissions except for nitrogen oxides.

Biodiesel also reduces greenhouse gas emissions compared to petrodiesel. There is some debate about how to calculate its full life-cycle greenhouse gas emissions, but the National Renewable Energy Laboratory estimates that biodiesel produces 78 percent less carbon dioxide than regular diesel fuel when all relevant petroleum fuel use for activities such as operating farm equipment, fertilizing crops, and transportation is factored in. In its 2004 report, the National Commission on Energy Policy stated that if biodiesel is produced from agricultural crops or wastes, it has the potential to achieve near-zero net carbon emissions.

In addition to reducing air emissions, biodiesel offers other environmental, safety and health benefits. It is ten times less toxic than table salt and has a higher flash point (temperature at which the vapor can be made to ignite in air) than petrodiesel, so it is safer to store and handle. Because biodiesel degrades about four times faster than petrodiesel, spills have less impact, which makes it a preferable fuel for use in sensitive areas such as forests, waterways and national parks. And biodiesel production generates lower levels of wastewater and hazardous solid wastes than petrodiesel.

EFFICIENT PERFORMANCE

When the rubber hits the road, biodiesel also measures up well in performance terms. It has better ignition and lubricant properties than conventional diesel, and burns more efficiently, although it has a slightly lower energy content. Pahl estimates that biodiesel provides about five percent less torque, power, and fuel efficiency than petrodiesel, a difference that most users don't notice. On the positive side, he notes that some large biodiesel users, such as school bus fleets, have saved money on maintenance activities such as oil changes and fuel pump replacements, because biodiesel burns more cleanly and lubricates engines more effectively. In most vehicles and other applications, such as home heating, biodiesel can be used in a pure form (B100) or blended at varying levels with conventional diesel or Number 2 fuel oil.

Biodiesel's biggest drawback is that it is consistently more expensive than conventional diesel. Most feedstocks (which account for about 70 percent of the cost of making biodiesel) are more expensive than petroleum, and prices for commodities such as soybeans often fluctuate dramatically on world markets. But Pahl describes several factors that may change this calculus. Most importantly, the United States adopted a federal biodiesel excise tax credit in 2004. According to the National Biodiesel Board, B20 cost $1.72/ gallon in the fall of 2004, compared to $1.53 for Number 2 diesel, but the tax credit could eliminate all or most of this differential.

Pahl also notes that biodiesel is an elegant option for meeting EPA's new restrictions on sulfur levels in fuel for on-road diesel vehicles, which will be effective in 2006. The refining process used to lower the sulfur content of petrodiesel reduces its lubricity, which may cause higher engine wear - but this factor can be offset by blending in small quantities of biodiesel. More broadly, continued high oil prices will erode the price gap between biodiesel and conventional diesel, and government actions to reduce conventional and greenhouse gas emissions will help to offset biodiesel's higher cost.

INDUSTRIAL-SCALE PRODUCTION

Much of this book is devoted to recounting how industrial-scale biodiesel production has evolved in the United States and, on a much larger scale, in Europe over the past 20 years. The U.S. biodiesel industry developed largely from the grassroots, although large energy and agriculture companies have started to take interest in recent years. In Europe, by contrast, biodiesel has benefited from strong government support at the national and regional level, including sales targets, fuel standards, and tax exemptions that were put in place much earlier than comparable U.S. measures. Germany alone produces 185 million gallons of biodiesel annually (compared to 30 million gallons for the United States in 2004), and the largest European biodiesel plant, located in France, has an annual production capacity of 70 million gallons. Recent European Union measures to comply with the Kyoto Protocol have provided significant support for biodiesel use.

Pahl does a good job of showing how these different approaches have shaped the respective industries, and rightly notes that on both sides of the Atlantic, biodiesel needs to reduce its reliance on government support and subsidies over time in order to grow. His broad analysis of biodiesel policy is insightful, and he provides a useful overview of the potential for biodiesel production in developing countries, using locally-appropriate feedstocks such as coconuts and oilseed-bearing trees. For many developing countries, biodiesel production is less important as an environmental policy than as a way to promote local economic development, strengthen agricultural economies, and reduce expensive fuel imports.

Pahl cites several key issues for the development of a robust biodiesel industry: Assuring fuel quality; Reducing the cost of feedstocks; Developing more cooperation between the public and private sectors; and Finding key niche markets worldwide, including small-scale community-based projects. In the United States, integrating diverse biodiesel constituencies that range from backyard producers to major multinational corporations is an additional challenge.

While biodiesel will never fully replace petrodiesel, analysts estimate that it could substitute for something between five and 25 percent of U.S. diesel consumption (not bad, since we consume some 58 billion gallons of middle-distillate fuels every year), and roughly 10 percent of diesel use in other countries. As Pahl shows, it provides many health and environmental benefits that are increasingly being recognized and monetized. His book makes a good case for developing some very different oil fields.

[Author Affiliation]

Jennifer Weeks is a Massachusetts writer specializing in energy and environmental issues. The book, Biodiesel: Growing A New Energy Economy, by Greg Pahl is published by Chelsea Green.