Animal Fats Touted on World Biofuels Stage

By Bruce Ross, Ross Gordon Consultants SPRL

The annual World Biofuels Markets Congress took place in mid-March in Amsterdam, the Netherlands. The National Renderers Association (NRA) was in attendance this year and has had a presence at the congress for the last two years. The primary aims this year
were to:

• “test the temperature” of the global biodiesel sector and market;

• assess how much recognition is being given to animal fats as a biodiesel feedstock; and

• take the opportunity to promote animal fats and used cooking oils as sustainable feedstocks in both economic and environmental terms.

I attended as the NRA’s European Union (EU) representative to concentrate on the first two issues. Fred Wellons, formerly with Tellurian Biodiesel, took care of the third issue by giving a presentation on behalf of the NRA entitled, “Transforming Animal Fats and Used Cooking Oils into Green Fuels – Technology that Works.”

So what did we learn in Amsterdam?

Temperature of the Biofuels Sector
The mood of the record number of delegates was really quite buoyant, despite the reality that the market – in terms of prices and possible returns on investment – is not in great shape. One speaker talked about tremendous uncertainty, and the sector being in a very, very bad situation. One might also have expected a somber mood following the failed climate change talks in Copenhagen, Denmark, last December, talks that one speaker described as a “massive cocktail party.” And yet there was a buzz about the place.

So why the optimism?

It seems to stem from a feeling that some key fundamentals are starting to move in the right direction.

• The global economy is improving, the world’s population will grow (and grow more affluent), and thus the demand for fuel will also expand enormously.

• Due to climate change and energy security concerns, the bulk of this demand is likely to be for biofuels rather than conventional fuels, especially in the transport sector.

• The very negative press that the biofuels sector received in 2008 when high food prices were blamed on the supposed switching of crops from food to fuel production, has been shown to have been unfounded.

• Reliable, verifiable certification schemes are being put in place to show that biofuel feedstocks do come from sustainable sources (though there are apparently 67 certification schemes globally at present, just to confuse people).

With these ducks now lining up in a row, the political figures present at the congress – notably two former prime ministers, Gro Harlem Brundtland of Norway and Ruud Lubbers of the Netherlands – were able to talk positively about the future demand for biofuels. They stressed that we should all aim to create a low carbon economy. Lubbers is actively working towards this, among other things, as chairman of the Rotterdam Climate Initiative in the Netherlands.

Recognition of Animal Fats for Biodiesel
As far as the use of animal fats and used cooking oils as biodiesel feedstocks is concerned, there is good news and bad news.

The good news is there wasn’t a single negative word about animal fats and used cooking oils in any of the 25-odd forums within the congress (not that two people could attend all of them). Indeed, there were several speakers who underlined the fact that their production plants were using such feedstocks. For example, Andrew Owers of Greenergy, the leading United Kingdom biofuel producer, said that his biodiesel plant, which had previously run on vegetable oils, now exclusively uses animal fats and used cooking oils.

In the exhibition area, Austrian company BDI-BioDiesel International, a major supplier of technology to transform animal fats into biodiesel, as some U.S. players know well, was giving wide publicity to the machinery and other equipment it has supplied to a company at the Port of Amsterdam for the conversion of residual and waste materials, including animal fats, into biodiesel. When it comes online later this year, it will be the biggest biodiesel plant of its type in Europe.

The bad news is there was not enough being said about animal fats and used cooking oils in overall terms. Once again at this congress there was huge attention on algae, forest biomass, and jatropha oil-based biofuels, which are not even in commercial production yet and carry quite a bit of negative sustainability “baggage” with them. In contrast, animal fats and used cooking oils are competitively priced, already used in biodiesel production, and can present a very climate-friendly image.

Promoting Animal Fats and Used Cooking Oils
Partly in response to this imbalance, the NRA supplied a speaker to make a presentation in a session devoted to biofuels from waste. Wellons explained that legislation in the EU (the Renewable Energy Directive) and the United States (the new Renewable Fuels Standard and more recent California developments) are creating helpful conditions for animal fat-based biofuels. He talked the audience through some of the tricky, but surmountable, technical challenges of producing these fuels, such as higher cloud points and pour points, and expressed his hope that this part of the biodiesel sector would now take off. This lift-off would be largely based on the cost of the animal fat and used cooking oil feedstocks, and greenhouse gas emissions reduction advantages from such so-called “waste” feedstocks.

Much of what Wellons said was echoed by Dickon Posnett of leading Scottish biodiesel producer Argent Energy, which produces biodiesel from animal fats and used cooking oils. Posnett stressed in particular the gradual alignment of legislation, in the EU and elsewhere, that will help boost animal fat-based biodiesel. He strongly believes that it is legislation that helps create the market, and he gave examples of other parts of the world (e.g., Australia, New Zealand, and China) where a failure to put the right regulatory framework in place has hindered this sector.

There are many challenges still to be faced, such as:

• how to get animal fats and used cooking oil feedstocks to those who need them, i.e., organization of the supply chain;

• how to prevent competitors for the raw material from disrupting the regulatory works, trying to reduce the opportunities for animal fats and used cooking oils to take a bigger part of the biodiesel feedstock supply; and

• how to convince politicians to think long-term about how regulations can create a sustainable market for biodiesel. The consensus at the congress was that fuel mandates/obligations achieve this with much more certainty than tax credits and other incentives.

Of course no biodiesel discussion in Europe would be complete without the mandatory spat about international trade in biodiesel. Last year, Raffaello Garofalo of the European Biodiesel Board (EBB) pitted against Gene Gebolys of World Energy in the United States at a time when the European Commission was on the verge of imposing countervailing duties against imports of U.S. biodiesel into the EU. This year, Gebolys was able to act as referee as Garofalo went after the Argentinean biodiesel producers instead. I seem to remember that Gebolys predicted last year that U.S. biodiesel would be replaced on the EU market by Argentine product if the EU imposed duties, and he was right. The EBB seems to believe that raw material costs should be similar the world over, even though this is not a particularly realistic standpoint. Nevertheless, the EBB will eventually call for trade barriers against Argentine imports in order to restore “fair trade,” as they put it. You can bet on that!

International Report – April 2010 RENDER | back