Biodiesel Economics and Incentives L Davis Clements Renewable

Biodiesel: Economics and Incentives L. Davis Clements Renewable Products Development Laboratories, Inc. Portland, OR, USA

Advantages of Biodiesel n n n 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 n n n 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) n Since diesel engines will inject equal volumes of fuel, power will drop 8%. n

Disadvantages of biodiesel n n 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. n Processing cost is generally estimated to be about $0. 20 - $0. 50/gallon. n New plant cost is about $1. 00 per gallon of annual capacity. n

Approximate Feedstock and Energy Costs n n n 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 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 n n 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 n BQ 9000 n Ø Certified Producer Ø 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 - ? ? n n n Biodiesel HC - 21 % Reduction CO - 11 % Reduction NOx - 2 % Increase PM - 10 % Reduction Opacity – 50 % lower n n n

Comparing ULSD and Biodiesel Lubricity Performance # 1 and # 2 Diesel are the design basis for lubricity in diesel n ULSD has significantly reduced lubricity, requiring additives n 1 to 2% biodiesel provides ULSD with lubricity equivalent to standard petrodiesel n

Availability of Biodiesel 450 retail pumps nationwide – and growing n 1, 400 distributors n 400 government and commercial fleet users (typically B-20) n Check out: www. biotrucker. com n

Federal Incentives for Biodiesel n EPAct – Purchase of 450 gallons of biodiesel with use as a B-20 blend = EPAct mandate for purchase of one alternatively fueled vehicle. n 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. n Tax Exemptions – Sales, excise, use tax. n Investor Tax Credits n Special financing for renewables n

Information Source for Incentives www. disreusa. org is a frequently updated compendium of Federal and State incentives for all renewables. n www. biodiesel. org National Biodiesel Board lists incentive and industry information n DOE Alternative Fuels Data Center – Production and prices. n

Summary Biodiesel is an alternative fuel for diesel engines that is produced from renewable materials. n Biodiesel’s advantages include lower black smoke and particulate emissions, ~ 50 % opacity reduction and higher lubricity. n Biodiesel’s disadvantages include higher cost and slightly higher NOx emissions. n