The International Energy Agency’s 2006 analysis concludes that biodiesels are not price competitive with conventional diesels if all subsidies to crops and production are excluded; if the biodiesel source is animal fat, however, the derived biodiesel would be competitive at crude oil prices below $50-55/barrel.2 By 2030, assum­ing various process improvements and economies of scale, biodiesel from vegetable oils were also predicted to be competitive at crude oil prices below $50-55/barrel; European biodiesel would continue to be more expensive than U. S. biodiesel, with feedstock costs being the largest contributor (figure 6.4). This continues a tradition of cost assessments that commenced in the 1990s. Rapeseed oil-derived biodiesel was estimated to require a total subsidy of between 10% and 186% of the price of conventional diesel in 1992, the variation reflecting the price of the seeds sown to grow the crop; this was equivalent to the cost of biodiesel being between 11% and 286% of the refinery gate cost of conventional diesel — the contemporary price for seeds would have resulted in biodiesel being 243% of the conventional diesel

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cost.4 These calculations required both coproducts (glycerol and rapeseed meal) to be income generators; in addition, the spring-sown crop (although with lower yields per unit of land) had lower production costs.

An evaluation of costs from U. S. soybean and sunflower in 2005 concluded that soybean biodiesel would have production costs 2.8-fold that of conventional diesel (using 2003 price data), whereas sunflower-derived biodiesel was more than five­fold more expensive to produce than petroleum diesel fuel.49 Sunflower seeds were accepted to have a higher oil content (25.5%) than soybeans (18%) but to also have a lower crop productivity (1500 versus 2700 kg/hectare); in both cases, oil extraction was calculated to be highly energy intensive.

The production costs for biodiesels also depend on the production route. With waste cooking oil as the feedstock, although an alkali-catalyzed process using virgin vegetable oil had the lowest fixed capital cost, an acid-catalyzed process using the waste oil was more economically feasible overall, providing a lower total manufac­turing cost, a more attractive after-tax rate of return, and a lower biodiesel breakeven price; in addition, plant capacity was found to be a significant factor affecting the economic viability of biodiesel manufacture.50 51 The U. S. Department of Agricul­ture’s Agricultural Research Service has developed a computer model to estimate the capital and operating costs of a moderately sized industrial biodiesel production facility (annual production capacity, 10 million gallons):52

• Facility construction costs were calculated to be $11.3 million.

• The largest contributors to the equipment cost (accounting for nearly one — third of expenditures) were storage tanks to contain a 25-day capacity of feedstock and product.

• At a value of $0.52/kg for feedstock soybean oil, a biodiesel production cost of $0.53/l ($2.00/gallon) was predicted.

• The single greatest contributor to this value was the cost of the oil feed­stock, which accounted for 88% of total estimated production costs. An analysis of the dependence of production costs on the cost of the feedstock indicated a direct linear relationship between the two.

• Process economics included the recovery of coproduct glycerol generated during biodiesel production, and its sale into the commercial glycerol mar­ket, which reduced production costs by approximately 6%.

Waste cooking oils, restaurant grease, and animal fats are inexpensive feedstocks; they represent 30% of total U. S. fats and oil production but are currently devoted mostly to industrial uses and animal feed, and because the free fatty acids may represent more than 40% of the material, the production process may be complex.53 Nevertheless, such unconventional feedstocks may become increasingly important because soybean oil prices reached a peak not seen since 1984: an article posted online in Biodiesel Magazine traced the rapid inflation in soybean oil from early 2006.54 This surge in the price of biodiesel feedstock has occurred despite the stocks of soybean oil being at near-record levels — and in only three individual months between January 2006 and March 2007 did soybean oil use exceed production (figure 6.5). With its main feedstock being increasingly expensive, U. S. biodiesel is

not competitive on price with diesel fuels or heating oil; tax incentives may be neces­sary to overcome these production price issues.54

Confounding these feedstock problems, the great expansion of biodiesel produc­tion both in Europe and the United States has caused such a glut of glycerol-containing waste (or coproduct) that, in the absence of glycerol valorization mechanisms in place and on site, disposing of this glycerol is proving an increasingly expensive disposal cost outlay. Because of the enormous potential of this renewable source of a potentially valuable chemical intermediate, however, biodiesel waste glycerol is best considered an example (rather premature) of “biocommodity engineering” and is discussed at length in chapter 8 (section 8.3.3) when the broader topic of replacing petrochemicals by biobased products is considered.