BOCA RATON, Fla. – Changing feedstock trends in the biodiesel industry could provide a new opportunity for Canadian canola exports but not at today’s prices, says a biofuel consultant.
In Western Europe, the founding countries of the European Union are rapidly running out of arable land to grow rapeseed, the main feedstock of Europe’s biodiesel industry. Demand for the crop exceeds supply, creating an opportunity for imports of canola oil, a close substitute for rapeseed oil.
But there is another prospect closer to home. In 2005, 64 percent of all biodiesel plants in the United States used soybean oil exclusively. By 2007, that number had fallen to 42 percent, Will Thurmond, president of Emerging Markets Online, a global energy intelligence and consulting firm, told delegates at the 41st convention of the Canola Council of Canada.
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There are also a huge number of idled plants waiting for an alternative source of feedstock. Annual biodiesel production capacity in the United States is 8.5 billion litres. Actual production in 2007 was 1.7 billion litres, so the industry is operating at 20 percent of its capacity.
“What that means is we need more feedstocks,” said Thurmond.
That presents an opportunity for Canadian canola, but it comes with a caveat. Biodiesel producers cannot afford to spend more than 42 cents per pound for their vegetable oil if they want to stay in business. Canola oil from Canada is selling for around 66 cents per lb.
U.S. biodiesel facilities may have to rely instead on the speedy introduction of the second generation of biofuel feedstocks, crops like algae and jatropha.
Jatropha is an industrial oil-bearing shrub that grows predominantly in arid regions. The hardy, drought-resistant plant can be cultivated on marginal land in tropical and subtropical regions of the world without taking arable land out of production.
A number of companies and countries are experimenting with the crop. India has a 2.47 million acre trial under way and China is planning a massive 32 million acre experiment because it would address food supply concerns since jatropha is grown on marginal land and produces an inedible oil.
Archer Daniels Midland Company, Bayer CropScience and Daimler have signed a memorandum of understanding to explore the potential of jatropha-based biodiesel.
Thurmond said the first commercial supplies of the crop should be available in two to three years, with 20 to 22 million acres of commercial production in eight or nine years.
A number of U.S. firms and government agencies are also experimenting with algae-based biodiesel. The economics aren’t there yet, but with the assistance of the National Renewable Energy Laboratory and the U.S. Department of Defence, which is looking for an alternative source of jet fuel, the experiment is progressing rapidly.
“Having these large government organizations that have a serious stake and interest in algae as a biofuel will help to accelerate and get it to the market faster than most people believe,” said Thurmond.
Three years ago it cost $10,000 to produce one gallon of algae oil. By the end of last year that cost had fallen to $100, according to News release
newss from some of the companies operating demonstration plants.
Thurmond said the cost needs to drop below $2 per gallon mark for it to make economic sense.
