Biodiesel: Economics
and Incentives
L. Davis Clements
Renewable Products
Development Laboratories, Inc.
Portland, OR, USA
Advantages of Biodiesel
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Biodegradable, nontoxic, renewable
Very favorable energy balance, 3.2 to 1.
Lower emissions (Example: DDC Series 50)
 Carbon
monoxide: 38% lower
 Unburned HC: 83% lower
 Oxides of Nitrogen: 12.7% higher
 Particulates: 52% lower
 Smoke and odor are much better
Advantages of Biodiesel
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Requires no engine modifications (except
replacing some fuel lines on older engines).
Can be blended in any proportion with petroleum
diesel fuel.
High cetane number and excellent lubricity.
Very high flashpoint (>300°F)
Can be made from recycled restaurant oils and
animal fats.
Disadvantages of biodiesel
Lower energy content
Btu/lb
Btu/gal
No. 2 Diesel
18,300
129,050
Biodiesel
16,000
118,170
(12.5% less)
(8% less)
 Since diesel engines will inject equal volumes of
fuel, power will drop 8%.
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Disadvantages of biodiesel
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Soybean oil-based biodiesel will start to crystallize at
around 0°C. This can be mitigated by blending with
diesel fuel or with additives.
Biodiesel is less oxidatively stable than petroleum
diesel fuel. Old fuel can become acidic and form
sediments and varnish. Additives can prevent this.
NOx emissions increase in some engines.
Cost and supply have been problems. Vegetable oils
are widely available but expensive. Inedible animal
fats and waste greases are less expensive but have
competing uses.
Cost of Biodiesel
Cost is very feedstock sensitive (70 to 85
% of total production cost.
 Processing cost is generally estimated to
be about $0.20 - $0.50/gallon.
 New plant cost is about $1.00 per gallon of
annual capacity.
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Approximate Feedstock and Energy Costs
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Crude vegetable oil - $0.17- $0.25/lb
Recycled cooking oil - $ 0.13- $0.15/lb
Sodium methoxide (25%) - $0.45/lb
Methanol (99.7%) - $1.00/gallon
Natural Gas - $4.00/1000 cu ft
Electricity - $0.05/kwh
Superior Process Technologies TM
Relative Costs of Biodiesel Components
2%
Oil Feedstock
7%
3%
Chemical
Feedstocks
1%
12%
Energy
Direct Labor
Crude
Soybean Oil
at $0.17/lb
75%
General
Overhead
Depreciation
Superior Process Technologies TM
Sensitivity of Biodiesel Product Cost to Input Costs
Base Value
% Increase
From Base
Value
Change in
Product Cost
($/gal)
Oil Cost
$0.17/lb
25%
0.33
Catalyst Cost
$0.44/lb
25%
0.03
Methanol
$0.75/gal
25%
0.02
Energy
(combined electric and gas)
$0.05/kwh $4.00/1000 cf
25%
<0.01
Crude Glycerine selling price
0.27
25%
-0.06
Component
Product cost changes are from the effects of each component individually and are not cumulative
Superior Process Technologies TM
Biodiesel Production Models
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Small-scale Producer – 40 - 100 gallon (batch)
Community/Institutional - 500 – 2,000 gallons
per day (batch or continuous)
Commercial – 2 – 30 million gallons per year
(generally continuous)
Mega Producers - > 30 million gallons per year
Quality Assurance Benchmarks
ASTM D-6751
 BQ9000

 Certified
Producer
 Certified Distributor
ULSD and B - 20 Environmental
Performance Compared to # 2 Diesel
ULSD
HC - 13 % Reduction
CO - 6 % Reduction
NOx - 3% Reduction
PM - 13% Reduction
Opacity - ??
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Biodiesel
HC - 21 % Reduction
CO - 11 % Reduction
NOx - 2 % Increase
PM - 10 % Reduction
Opacity – 50 % lower
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Comparing ULSD and Biodiesel
Lubricity Performance
# 1 and # 2 Diesel are the design basis for
lubricity in diesel
 ULSD has significantly reduced lubricity,
requiring additives
 1 to 2% biodiesel provides ULSD with
lubricity equivalent to standard petrodiesel
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Availability of Biodiesel
450 retail pumps nationwide – and
growing
 1,400 distributors
 400 government and commercial fleet
users (typically B-20)
 Check out: www.biotrucker.com
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Federal Incentives for Biodiesel
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EPAct – Purchase of 450 gallons of biodiesel
with use as a B-20 blend = EPAct mandate for
purchase of one alternatively fueled vehicle.
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Federal Tax Credit - 1¢ per % biodiesel tax credit
up to 100 % (or $ 1.00 per gallon) paid to the
blender. First use oils only. Recycled oils up to
$ 0.50 per gallon.
State-level Incentives
Renewable Fuel Standards – Mandate a
percentage of biodiesel in all diesel fuels.
2 to 5 percent in typical.
 Tax Exemptions – Sales, excise, use tax.
 Investor Tax Credits
 Special financing for renewables
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Information Source for Incentives
www.disreusa.org is a frequently updated
compendium of Federal and State
incentives for all renewables.
 www.biodiesel.org National Biodiesel
Board lists incentive and industry
information
 DOE Alternative Fuels Data Center –
Production and prices.
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Summary
Biodiesel is an alternative fuel for diesel
engines that is produced from renewable
materials.
 Biodiesel’s advantages include lower black
smoke and particulate emissions, ~ 50 %
opacity reduction and higher lubricity.
 Biodiesel’s disadvantages include higher
cost and slightly higher NOx emissions.
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