Biodiesel: Economics and Incentives

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Biodiesel Economics and Incentives

• L. Davis Clements
• Renewable Products Development Laboratories, Inc.
• Portland, OR, USA

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Advantages of Biodiesel

• 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

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Advantages of Biodiesel

• 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 (gt300F)
• Can be made from recycled restaurant oils and
  animal fats.

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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

• Soybean oil-based biodiesel will start to
  crystallize at around 0C. 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.

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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

• 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
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Relative Costs of Biodiesel Components
Superior Process Technologies TM
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Sensitivity of Biodiesel Product Cost to Input
Costs
Component 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 lt0.01
Crude Glycerine selling price 0.27 25 -0.06
Product cost changes are from the effects of
each component individually and are not cumulative
Superior Process Technologies TM
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Biodiesel Production Models

• 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 - gt 30 million gallons per year

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Quality Assurance Benchmarks

• ASTM D-6751
• BQ9000
• Certified Producer
• Certified Distributor

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ULSD and B - 20 Environmental Performance
Compared to 2 Diesel

• ULSD
• HC - 13 Reduction
• CO - 6 Reduction
• NOx - 3 Reduction
• PM - 13 Reduction
• Opacity - ??

• 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 petro- diesel

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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

• EPAct Purchase of 450 gallons of biodiesel with
  use as a B-20 blend EPAct mandate for purchase
  of one alternatively fueled vehicle.
• 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.

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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.
• Biodiesels advantages include lower black smoke
  and particulate emissions, 50 opacity
  reduction and higher lubricity.
• Biodiesels disadvantages include higher cost and
  slightly higher NOx emissions.