By Gary G. Pearl, D.V.M.
President, Fats and Proteins Research Foundation
Editor’s Note – The following is a presentation given by Dr. Pearl at the Australian Renderers Association 6th International Symposium, July 25-27, 2001.
Biodiesel is taking a more prominent position in the world of fuels, primarily as a renewable source of fuel for diesel engines for transportation purposes; trucks and buses. Renewable and recyclable fuels must be a part of U.S. energy plans. The percentage of U.S. energy needs met by imported oil has been a linear increase beginning in 1973 at 25 percent, increasing to 35 percent in 1980, 47 percent in 1990, 58 percent in 2000, and projected to be 69 percent in 2010. The recently revised national energy policy, however, has been viewed with mixed emotions when evaluated for emphasis on renewable or alternative sources as compared to enhanced exploration and sourcing of petroleum sources. Biodiesel, when compared to other alternative fuel sources such as ethanol, is in a relative infancy stage. Biodiesel research and U.S. initiatives began in earnest in 1992, at which time ethanol was well into a commercialization stage that included favorable tax incentives – incentives that are currently a 52-cent (U.S.) per gallon fuel tax exemption. Thus, biodiesel is at a threshold in establishing its future role within the U.S. national energy plan and undoubtedly on a global basis. The remaining text will concentrate on the current status, problematic issues, and future outlook for biodiesel in the United States. Additionally, the use of animal fats and used cooking oils/restaurant grease as burner fuels without esterification will be referenced.
An Emerging Market
The current U.S. biodiesel market is relatively small but growing rapidly. Based on a recent National Biodiesel Board (NBB) industry survey, approximately 6.7 million gallons of biodiesel were produced in fiscal year 2000(1), up from approximately 500,000 gallons the previous year. There are currently 13 biodiesel suppliers in the United States, the majority of which are soybean oil based. Due to the structure of the industry, production capacity, as well as actual production of biodiesel, is difficult to quantify. An industry projection of 20 million gallons is expected for 2001. In comparison, it is reported that European motorists consume 250 million gallons of biodiesel annually.
There are three primary factors at force. The first being the unprecedented price of petroleum based fuel products while commodity fats and oils have been at near record lows. These two complimentary pricing forces place biodiesel in a much more favorable price competitive relationship to petroleum diesel than ever before. Thirdly, national and state regulations have required that fuel emissions become more environmental friendly.
Biodiesel is monoalkyl esters of long chain fatty acids that can be derived from rendered animal fats, recycled cooking oils/restaurant grease, and vegetable oils. It is technically an oxygenated fuel produced by the reaction of a triglyceride (fat and oil) with an alcohol (the United States uses primarily methanol) in the presence of a catalyst (Sodium hydroxide or Potassium hydroxide). The resultant reaction produces methyl esters (biodiesel) and glycerine. The combination of 100 units of triglycerides with 10 units of alcohol result in 100 units of methyl esters and 10 units of glycerine. Thus a 1:1 reaction rate of triglycerides into biodiesel is achieved resulting in approximately 7.35 pounds of fat/oil converting to a U.S. gallon of biodiesel.
There are several emerging technologies that incorporate process efficiency improvements. The basic capital costs for a biodiesel facility is approximately one dollar per gallon of annual capacity. Capital costs can, however, vary considerable and range from 50 cents to over a dollar per gallon of installed annual capacity for a high tech facility. The basic determinants are those that: allow for continuous production; the volume; the catalyst; used alcohol and glycerine recovery; and the capability for reacting high free fatty acid materials are primary. Similarly, the feedstock contributes approximately 65-75 percent of the final total cost of production. It has, therefore, been shown a cost benefit for the use of animal fats/recycled cooking oils over vegetable oil sources. Unfortunately for the rendering industry, historical price graphing for the two product categories illustrates an average of nearly two times price per pound greater for soybean oil.
Glycerine as a co-product to the production of biodiesel is also an influencing cost factor. Its quality and thus value, depending on process, varies and must be considered in final cost production and economic evaluation.
The per-gallon cost of biodiesel has been a significant factor and deterrent to its full commercialization. However, via construction of higher volume facilities, technical advancement in processing, and the use of lower cost feedstocks and mixtures, the price of biodiesel has become more competitive. The Fats and Proteins Research Foundation (FPRF) does not involve itself with direct marketing but functions to develop transfer and guide research and technology to assist in the commercialization of biodiesel and bioenergy from its products on behalf of its members. One cannot overemphasize that new methods and technologies for biodiesel are improving rapidly and commanding considerable commercial attention.
Though pricing has a multitude of influencers such as volume, geographic distribution, delivery costs, Environmental Policy Act credits, and blend level, biodiesel has ranged in the $1.50 to $3.00 per gallon. Currently (June 2001) neat biodiesel (B100) costs are between $1.25 and $2.25 per gallon. This compares to a current price for No. 2 diesel at approximately $1.55 including state and federal taxes. Biodiesel is taxed as a diesel fuel (unlike ethanol), so taxes are added to the purchase price. Specific blends of biodiesel are commonly distributed products. B20 is a 20 percent biodiesel blended with 80 percent diesel and thus at current prices costs 13 to 20 cents more per gallon than diesel. The use of B20 has been shown to acquire a substantial reduction in the unfavorable emissions associated with petroleum-based diesel. Premium diesels that contain from two to five percent blend of biodiesel for specific properties such as lubricity generally command a premium price. Research has shown that the inclusion of two percent biodiesel into any conventional fuel is sufficient to address the lubricity concerns for low sulfur fuels. There are Environmental Protection Agency (EPA) regulations that are mandating a significant reduction in sulfur content from a current 500 parts per million (ppm) to a 15 ppm level by 2007. As sulfur levels are lowered, the lubricity properties of petroleum diesel become a concern for optimum engine operation and maintenance. This feature and market positioning are significant opportunities for biodiesel usage now and in the future.
Industry Hurdles
Biodiesel development and commercialization has not been without its challenges. In fact, they have been numerous. The NBB has been a lead U.S. organization whose primary funding is sourced through the U.S. soybean associations, which derive their revenues from mandated check off from the sale of each bushel of soybeans. As a project, biodiesel has received millions of “soybean” dollars to support demonstrations, research, legislative influence, regulatory, and the organizational structure of NBB for the respective activities.
FPRF has been an associate member of the NBB Board of Directors since 1993. FPRF has likewise supported a wide array of research and technical studies in support of the biodiesel initiative. Further, the renewable attributes of animal fats as a complimentary resource to biofuels and the recyclable benefits of used cooking oils/restaurant greases, which are primarily vegetable oil in origin, necessitates a strong cooperative effort. Both organizations have been supportive of fuel neutral policies consistent with the promotion of the interests for each feedstock. Feedstock neutrality challenges and special interest exploration has, however, become more frequent. As marketing programs are developed, legislative and regulatory initiatives formulated, and sale contracts are negotiated, feedstock special interests are a frequent deterrent to a unified effort.
Currently, several U.S. states are active in obtaining legislation that either mandates specified percentage blend levels to current fuels or provides various incentives such as tax credits for the use of biodiesel. Feedstock interest groups are very prominent in molding the terminology to include biodiesel produced from a specific feedstock at the exclusion of others. A major exclusion of animal fats and recycled cooking/restaurant grease from a major national biofuels incentive program occurred last year. Further incentives were granted for new production of biofuels from specific commodities, namely soybeans and corn, at the exclusion of animal fats and greases. In the United States, major oil seed and grain crops are eligible for market assistance programs that have not been extended to animal agriculture with perhaps the exception of milk. In the case of soybeans, an approximate deficiency payment of $1.03 per bushel is available. This accounts to an equivalent of 9.4 cents per pound for each of the 11 pounds of soy oil derived per bushel, or $45 per ton for the soybean meal produced. These issues have all been contributory to a less than satisfactory unified effort in commercializing biodiesel in the United States.
As alternative fat and oil fuel sources, the United States produces an approximate 20 billion pounds of plant oils and 11 billion pounds of animal fats and recycled cooking oils annually (U.S. Department of Agriculture averages, 1993-1998) as illustrated below:
Vegetable Oil (Billion Pounds)
Soybean 14.935
Peanuts 0.282
Sunflower 0.868
Cottonseed 1.220
Corn 2.076
Others 0.649
Total 20.030
Animal Fats (Billion Pounds)
Edible Tallow 1.490
Inedible Tallow 3.623
Lard and Grease 1.306
Yellow Grease 2.633
Poultry Fat 2.215
Total 11.267
Soybeans, and thus soy oil, production has expanded in recent years. The expansion has resulted in considerable reserves and traditionally low prices. The 2000 soy crop produced some 2.75 billion bushels that far exceeded the traditional average for soy oil domestic production. The 2001 crop forecasts are for similar production levels. Animal fat production is related to animal production and the rendering industry’s involvement in recycled restaurant grease/used cooking oil sources. The later is a resource highly favored for biodiesel production or use as a neat burner fuel. Renderers in the United States have been the most resourceful and aggressive industry to provide this service and market. It has been difficult to access accurate industry volumes or even the potential without making several basic assumptions for the recycled grease and oil production.
Product Potential
A 1998 study conducted by Appel Consultants reported that there are approximately 1.4 U.S. restaurants per 1,000 population.(2) The correlating statistics did not vary appreciably by geographic location. In a separate study conducted by SFI International in 1989, over 440,000 commercial food service units in the United States were referenced.(3) It has been quoted that McDonald’s constructs a new facility in the United States every 38 hours. In a more recent study, it was reported that approximately nine pounds of recycled grease/oil is generated per population and approximately 6,300 pounds are available from each food unit. The wide range of food service units that provide resources for recycling statistics are difficult to document. Considering all of these inputs, the amount of yellow grease recycled in the United States annually is over 2.75 billion pounds.
The current annual usage of petrodiesel in the United States is approximately 53 billion gallons (1998). The major increase in fuel usage has been the market segment used by the heavy and light diesel transport truck segment, which used 38 billion gallons of the annual total. Therefore, if all of the current fat and oil sources were used for biodiesel production, about seven percent of the current demand could be met. It has been estimated that current U.S. biodiesel production capacity is 230 million gallons, well over the current usage. Thus, both an infrastructure for biodiesel production would be required as well as a major shift in current fat and oil uses to achieve such levels. The following summary statements address questions that are most commonly asked of biodiesel.
• Biodiesel is an alternative fuel, and in 1998 Congress amended the energy law to allow a 20 percent blend with petrodiesel (B20).
• Biodiesel is the only alternative fuel in the United States to complete the Environmental Protection Agency’s Tier I and II Health Effects Testing under Section 211 (b) of the Clean Air Act.
• There are specifications established for biodiesel, with the current provisional standards (ASTM/PS121) projected to have full approval by 2001.
• Biodiesel is the only alternative fuel that runs in any conventional, unmodified diesel engine. It can be stored anywhere that petroleum diesel fuel is stored.
• Biodiesel can be made from a variety of feedstocks (fats and oils) such as animal fats and recycled restaurant/cooking oils and renewable oil seed crops.
• Biodiesel can be used alone or mixed in any ratio with petroleum diesel fuel. The most common blend is known as B20, but blends as low as one to three percent provides lubricity in low sulfur diesel fuel.
• Biodiesel, according to the Department of Energy, when used in pure form in a standard truck engine, produces 43 percent less carbon monoxide, 57 percent fewer hydrocarbons, 55 percent less particulate matter, and up to 90 percent fewer air toxins than regular diesel.
• Biodiesel is 11 percent oxygen by weight and contains no sulfur. Its use can extend the life of diesel engines due to its enhanced lubricity. Fuel consumption, ignition, power output, and engine torque are relatively unaffected by biodiesel.
• Biodiesel research has been supported by FPRF since 1993. Its efforts have supported the alternative fuel designation, B20 approval, EPA’s common feedstock designation, specification establishment and analysis, and an associate member of the NBB as the major stakeholder contributors to biodiesel commercialization.
• Biodiesel is safe to handle and transport because it is as biodegradable as sugar, 10 times less toxic than table salt, and has a flashpoint of 300° Fahrenheit (F) as compared to 125° F for petroleum diesel fuel.
• Biodiesel, when burned in a diesel engine, replaces the offensive odor of petroleum diesel with a pleasant smell of food.
• The Congressional Budget Office, the Departments of Defense and Agriculture, and other governmental agencies have determined that biodiesel is the low-cost alternative fuel option for fleets to meet requirements of the 1992 Energy Policy Act.
Other Alternative Fuels
Similar to transportation fuels, home heating fuels and commercial burner fuels have increased in cost during the past year by 40 to 100 percent, depending on geographics. Fuels used for these purposes are primarily natural gas, No. 2, and No. 6 fuel oil. Due to the associative and substantial operating costs, all factions have been seeking alternatives to trim the expenses. One of the more successful for the rendering/packing industries has been the utilization of the product they produce as fuel energy alternatives. Tallow, choice white grease (lard), poultry fat, and yellow grease (recycled cooking/restaurant greases) have all been used with success. FPRF has served as a “clearing house” for air quality, burner fuel characteristics, heating value, and combustion emission data generated by the industry members.(4) Facilities have remained confidential but the summary data has served to define the respective fat source products as an industry composite which combines a variety of burner types and systems.
Burner conversions and retrofitting of most facilities have not required extensive engineering and have involved primarily pumps, nozzles, and atomizing equipment. Under nearly all burner conditions and firing rates, all of the fat sources when burned provided very favorable emissions of carbon monoxide, hydrocarbons, sulfur dioxide, nitrous oxides, and particulate matter. Nitrous oxides were less than 70 percent and solid emissions less than nine percent for the burning of tallow when compared to heavy fuel oil. The heating values derived (British Thermal Units) were from 92 to 97 percent as those derived from petroleum fuel oil. On the basis of current price structures and the success in utilizing fats as alternative fuel, a substantial number of facilities have been converted and a number are in the process. A June 2001 comparison indicated that the energy value of yellow grease is approximately 12.5 cents as compared to an eight-cent per pound market. It has been further estimated that from 15 to 30 percent of the animal fats, excluding tallow, have been utilized as burner fuel since early 2001. Most of the usage has been internal within the rendering industry; however, a retail market certainly exists. The burner fuel usage may deter the exploration of biodiesel by many facilities as its use can be accomplished with little infrastructure or capital costs.
Outlook
The entry of biodiesel and fat sourced burner fuels to the home heating market has been limited but offers potential. Additionally, numerous specialized markets exist for alternative fuel products derived from the animal fats industry. Their development may command premiums but long term, the industry must recognize that in most fuel markets, including biodiesel and burner fuel, a competitive price will be demanded. Though short term several indicators are positive for their use in these markets, long term remains questionable as to whether it is the most value added. The energy market establishes a price level of which animal fats have not been accustomed. It is therefore paramount that research initiatives be persistent in exploring all alternative uses that reflect and develop value added products that provide the greatest magnitude for profit.
References:
(1) National Biodiesel Board
(2) Appel Consultants, Urban Waste Grease Resource Assessment
(3) SFI International, U.S. Production and Uses of Yellow Grease
(4) FPRF Directors Digest #306, March 2001
Tech Topics - August 2001 Render