Biodiesel Processing

This report was extracted from a commercial site and nicely makes the case for the ongoing rapid expansion of processing capacity for the delivery of biodiesel. This is extremely important, because without this capability already in place, no one can build out production capacity.

Most of this is oriented toward various plant oils, but can be processing algae oil just as easily. A bit of their perspective is also very clear. They know that they need a secure feedstock for oil production. This is not provided by oil seeds simply because of direct competition from the food industry on a priority basis.

This also suggests that the processors can readily use algae as a feedstock as one would expect and that they are encouraging its rapid development.

Other recent reports are also appearing to confirm that the by product meal is truly suitable for cattle feed. I do not think that there has been nearly enough time to generate the supporting studies and research. Quite likely the industry is picking up on the buzz and tucking it into news releases.

The business model is currently supporting a distributed processing industry, able to use locally available feed stocks with a great deal of flexibility. It also appears that more and more participants are entering the algae business.

There is already more than enough capacity out there to swiftly shake out this industry.

Within two years, we can expect large scale operations been planned to take full advantage of the steadily improving utility of algae as an oil feed stock. This report suggests that fairly modest production levels are sustainable during the early stages. In any case, this promotes plenty of growers into the business.


More than 40 additional plants have been proposed, over half of which have obtained funding and are in the design/construction phase. The unprecedented growth and significantly elevated interest in the biodiesel market across the entire US is being fueled by three principal drivers:

Economic & National Security

The drivers pushing the growing interest in biodiesel are the rising cost of petroleum diesel, the desire to stimulate rural economic development through value-added agricultural applications, and the desire to reduce our dependence on foreign oil for reasons of trade balance and national security. Other economic drivers that are increasing the cost of petroleum diesel fuel are the mandates from the government that require cleaner fuels that are less pollutant to the atmosphere and produce lower levels of greenhouse gasses.

Environmental & Regulatory

The benefits of biodiesel for pollution reduction and as an oxygenate are significant and well-documented. Biodiesel contains 11% oxygen by weight and reduces the emission of carbon monoxide, unburned hydrocarbons and soot through improved ignition characteristics. In addition, biodiesel is a value-added ag-based product that is easily produced and fully capable of meeting any low-sulfur diesel requirements established by the Environmental Protection Agency.


The measures driving the biodiesel industry consist of usage mandates and incentive programs. The federal government and certain state governments have passed legislative mandates requiring compliance with renewable energy standards and alternative fuel requirements; these mandates, such as the landmark federal EP Act bill passed in 1992, have encouraged public and private sector fleet operators to utilize biodiesel blends and flex-fueled vehicles.

Biodiesel use has now been recognized, and in some cases endorsed, by engine manufactures. John Deere and Daimler Chrysler are now filling their diesel tanks with Biodiesel on their new vehicle production lines. Toyota has announced that it will support initiatives for the use of alternatives fuels in their automobiles. Nationwide, more than 500 operators of major vehicle fleets now use Biodiesel, including the Department of Defense and the National Park Service. Thousands of educational events have increased the public awareness of Biodiesel.

While Biodiesel use has received support from many different quarters, its chief supporter is agriculture. Through its considerable efforts the agricultural industry has been the leading force behind the development of the modern biodiesel industry. Members of this industry have had the strongest collective voice in advocating for biodiesel-related laws, have been involved with the founding and governance of the National Biodiesel Board, and have built more plants with more biodiesel producing capacity than any group of individuals or organizations from any other industry.

Biodiesel fuels, in combination with the introduction of clean, quiet, efficient and powerful modern diesels, is changing consumer attitudes toward diesel powered autos. This essentially opens a new market for diesel engines, which were at one time broadly viewed by the general buying public as far more dirty, noisy and pollution-causing than a similar gasoline engine powered vehicle. With the use of Biodiesel, diesel automakers can now market their vehicles as a "green" alternative to gasoline engines.


The Federal blender´s excise tax credit is the largest program subsidizing the Biodiesel industry. It was created in the 2004 Jobs Bill. It offers a $1.00 per gallon credit for "Agri-Biodiesel" (that derived solely from virgin oils, such as Algae Oil) and $0.50 per gallon for other Biodiesel (that derived from re-cycled oils). Algae Oil qualifies for the highest tax credit rate.

The Federal Renewable Fuel Standard (RFS) was passed in the 2005 Energy Bill. This established a consumption target for renewable fuels of 4 Billion gallons in 2006, rising to 7.5 Billion gallons by 2012. Ethanol is the primary focus of this bill, but Biodiesel also qualifies.

In addition to federal legislation, 36 state legislatures passed 170 pieces of Biodiesel-specific legislation in 2005. Thirty of these were signed into law in 2006 covering such issues as state agency usage, retail mandates, economic incentives, and consumer protection.


As of January 3, 2007 there were 88 operating biodiesel facilities in the US with a combined capacity of 800 million gallons per year. These facilities are widely distributed across the US with a higher concentration in the Midwest. The vast majority of all of the facilities shown in the above figure produce less than 15 million gallons per year.

Although the production capacity in 2007 was over 800 million gallons per year, many of the operational plants this went online in 2007 did not produce at full capacity due to lack of sufficient quantities of feedstock at a cost low enough to produce biodiesel profitably.


The domestic market for biodiesel has barely begun to be tapped. The United States consumed almost 70 billion gallons of distillate fuels in 2006; over 42 billion gallons of petroleum diesel were used in the on-highway sector alone (60%). The commercial and residential heating oil sector accounted for another 10 billion gallons per year.

The US biodiesel industry produced nearly 400 million gallons of biodiesel fuel in 2006. This is slightly over 0.006% of the total US distillate market. Today´s biodiesel industry would have to grow over 175 times its current size to capture the petroleum diesel market or over 100 times to capture only the on-highway portion.

Industry trends reflect a 35% increase in the production of feedstock such as Soy, Canola, Palm, Camelina in 2007. Analyst forecast continued crop increases going forward. The benefit of producing biodiesel fuel from these sources is greatly diminished. Algae oil production is 75% - 250% greater than Soy Beans, Camelina, Rape Seed, Jetropha, or Palm oils for the same lot of land.

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