Monday, September 11, 2006

Opportunities in Biofuels

Liquid Biofuels made from biomass are attracting increasing interest worldwide. Industrial countries see Biofuels as a way of reducing greenhouse gas (GHG) emissions from the transport sector and diversifying energy sources. Developing countries see Biofuels as a way to stimulate rural development, create jobs, and save foreign exchange. Both groups view Biofuels as a means of increasing energy security. These concerns, taken together and highlighted by recent surges in the world oil price, have prompted a wide range of countries to consider Biofuels programs. Canada, Colombia, the European Union (EU), India, Thailand, Indonesia, Malaysia and the United States have adopted new targets, some mandatory, for increasing the contribution of Biofuels to their transport fuel supplies. [i]

Under this new scenario, Biodiesel production plays a new role on the world market. Given the high incentives from EU and the U.S., Biodiesel producers can overcome the wall that petro-diesel has created. Despite the fact that petro-diesel is less costly to produce than Biodiesel, Biodiesel consumption is increasing. Biodiesel consumption is currently driven by tax incentives, government regulation, and environmental concerns.

Biodiesel is defined as the mono-alkyl esters of fatty acids derived from vegetable oils or animal fats. In simple terms, Biodiesel is the product you get when a vegetable oil or animal fat is chemically reacted with an alcohol to produce a new compound that is known as a fatty acid alkyl ester. A catalyst such as sodium or potassium hydroxide is required. Glycerol is produced as a byproduct.[ii]

[i] Potential for Biofuels for Transport in Developing Countries (October 2005) by Masami Kojima and Todd Johnson

[ii] Business Management for Biodiesel (NREL) July-2004