Apr
23
Will Biodiesel Survive?
April 23, 2010 | 9 Comments
Almost all biodiesel production is in serious financial straights as the U.S. government’s $1 a gallon tax credit for the blenders has expired. When a gallon of biodiesel is blended at 2% spread over 50 gallons of selling product the higher price of biodiesel isn’t much of an issue. But for the biodiesel producer that incentive is quite important to keep profitable operating margins and volumes.
Some states have mandated the biodiesel blends be sold – thus pressing the small added cost to the consumer. A biodiesel blend can cost a penny or more per gallon without the tax credit incentive. Yet the industry is in desperate straights, looking for breakthrough technology and lower cost feedstock.
Minnesota’s Augsburg College is where the intellects that developed the McGyan process for producing biodiesel did their research. Now the McGyan licensees just might be producers that prosper and survive.
The McGyan Process. Click image for the largest view.
The key for McGyan’s success is its flexibility in converting plant and animal oil and fat sources into useful biodiesel. Here is a partial long list of sources published so far and its said to be incomplete: Corn Distillers Oil, Acidulated Soapstock, Yellow Grease, Brown Grease, Algae Oil, Free Fatty Acids (Plant), Free Fatty Acids (Animal), Refined Lard, Choice White Grease (Swine Tallow), Walnut Oil, Sesame Oil, Refined Algae Oil, Olive Oil, Soybean Oil, Palm Oil, Almond Oil, Grape Seed Oil, Rice Oil, Sunflower Oil, Corn Oil, Canola Oil, Peanut Oil, Safflower Oil, & Coconut Oil. That’s quite a list. The list covers most of the world’s major plant and animal products – much of which is inedible, contaminated, gone rancid or surplus.
The biodiesel producers that are in trouble tend to be “one feedstock shops” and compete with food grade cooking oils. Now that petroleum prices are down the food vs. fuel issue has the advantage for the food producers. Odd how that turned out isn’t it?
Bill Luetscher Vice President of Operations and Planning at Growth Design Corp of Forest City Iowa where the McGyan process will be used in the next plant to be built says of the McGyan process, “The regulations have really not kept up with the technology so we’re sort of dealing with some old thinking around that.” The process is so new, state and federal regulations need to catch up.
The Isanti Ever Cat plant in Minnesota is now selling fuel, which is helping to speed their development. Luetscher says, “So the technology is a proven technology and they are producing ASDM quality biodiesel at that plant.”
The Isanti Ever Cat plant opened Sept. 28 2009 and produces 10,000 gallons of biodiesel per day from a variety of low-cost feedstock materials. Because of favorable costs, waste vegetable oils are currently its primary feedstock, said Clayton McNeff, chief science officer of Ever Cat. McNeff indicated at the opening Ever Cat Fuels would begin offering their premium quality product for $3 per gallon, with the first truckload being loaded out Oct. 6-7. Using waste vegetable oil production as its feedstock, production costs for Ever Cat Fuels were about $1 per gallon. Those numbers are keeping Ever Cat and the McGyan process going.
Mike Youngerberg, director of field services for the Minnesota Soybean Growers Association, said that early state legislation initiating the Minnesota biodiesel industry promoted biodiesel as a multi-feedstock product. He said the new Mcgyan process appears to be an excellent method for processing recycled oil products without competing against the Minnesota soybean industry.
“Getting biodiesel out of these tough-to-recycle ‘waste’ products adds to the total fuel pool here in America. So I see Ever Cat Fuels as a unique new facility with a process technology that simply expands the total fuel industry.”
Meanwhile . . . the technology is moving out to more areas. BioCat, a start-up, will use the McGyan technology and buy or build a biodiesel plant in Illinois perhaps near Freeport. BioCat CEO Ric Larson is a former community banker who helped Ever Cat’s owners finance the Isanti plant. Larson said the time is ripe because dozens of soybean oil-to-fuel plants were shuttered in 2008-10, thanks to the combination of heavy debt, soybean prices that went through the roof during the commodity-price boom and now the loss of the blenders credit. Yet demand is growing, partly because of state government mandates to increase production of renewable fuels.
BioCat expects the get going with existing investments and a $7 million private stock offering. These plants are small, low cost and have very high profit potential when fed low cost feedstock.
If that’s not enough, a demonstration of the new technology was given at the Growth Design announcement event by University of St. Thomas professor of engineering Greg Mowry. He and his students built a self-contained unit, using a small-scale McGyan reactor. It fits on the back of a pickup truck and can produce 7,000 to 10,000 gallons of biodiesel a year. Mowry is looking at the technology for humanitarian uses.
Yet the potential for small units anywhere excess plant or animal fats and oils are available could see sales of pickup truck bed units soar.
As the estimable Al Fin said last week, “One of the many deficiencies of large scale hyper-centralized government is the focus upon central large scale projects and bureaucracies to the neglect of the vast outer reaches of land and population. Bio-energy has the potential to empower local and regional economies, independent of big government.”
As we saw previously in the small geothermal posting, medium sized, small and personal sized projects can have a major impact over relatively short time periods.
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Very useful post .Thank you for sharing this.
What a great resource!
biodiesel fuels are less polluting and more renewable compared to fossil fuels like conventional diesel.”‘
biodiesel should be the stuff that we should put on our engines because it is a renewable fuel `
Biodiesel gonna instead diesel, because of reducing global warming.
Biodiesel is not working good.
i believe that Biodiesel is the wave of the future. the good thing about it is that it is renewable.
Most governments support new energy vehicles(NEVs) now in order to make Earth more environmental.
Nowadays, the government concerns environment more than before. Biodiesel may be eliminated in future i think.