Outlook for Biodiesel Remains Bright

By Manning Feraci | April 15, 2008
Over the past few years, U.S. biodiesel production has increased from 25 million gallons in 2004 to nearly 500 million gallons last year. Consumers have embraced the fuel, and policymakers have recognized the important role it plays in the larger national strategy to enhance energy independence, reduce greenhouse gas emissions and create new "green" jobs.

Yet it is no secret that the industry is facing daunting short-term challenges. A perfect storm of events-increasing food oil demand in Asia, rising production costs, market speculation and the weak dollar, just to name a few-have all contributed to record increases in feedstock costs. Despite the challenges these temporary market conditions present, the long-term future for the U.S. biodiesel industry remains bright, and no one should doubt either the viability of the industry or its ability to meet future demand for fuel.

Biofuels are currently playing, and will continue to play, a critical role in meeting global fuel demand. In fact, a prominent commodity strategist for Merrill Lynch recently noted that oil and gas prices would be approximately 15 percent higher absent biofuel production. By any objective estimate, global fuel demand is expected to increase in the coming years.

Given these realities, it is unlikely that either the public or private sectors will abandon biofuels and opt to meet growing fuel demand solely with petroleum. This is especially the case when you consider that biodiesel yields 3.5 units of energy for every unit of energy used to produce the fuel.

Similarly, there is recognition that biofuels must play an integral role in America's effort to both reduce reliance on foreign oil and address climate change issues. This was reflected in the expanded renewable fuels standard enacted in last year's Energy Bill. This landmark legislation specifically requires the use of at least 500 million gallons of biomass-based diesel, which includes biodiesel, in 2009. The requirement increases to a minimum of 1 billion gallons by 2012. This provides a minimum floor for domestic biodiesel use that will ensure biodiesel's long-term role as part of the nation's fuel supply. The fact that biodiesel reduces lifecycle carbon dioxide emissions by 78 percent means that biodiesel will meet the aggressive greenhouse gas emission reductions required in the RFS.

The U.S. biodiesel industry has both the production capacity and feedstock available to meet market demand and the use requirements established in the RFS. Historically, soybean oil has provided up to 80 percent of the feedstock used to produce U.S. biodiesel. As the industry continues to grow, new feedstock sources are being developed, which include animal fats, restaurant grease, corn oil from fractionation used in ethanol production, and ongoing research on algae and jatropha. Additionally, major seed companies have announced new technologies that will increase oilseed yields on current acreage by as much as 360 MMgy.

By any objective measure, the long-term future of the U.S. biodiesel industry remains bright. Increasing global demand for energy, the renewable targets provided in the RFS, and the availability of feedstock and ample production capacity will ensure that the biodiesel industry will remain a significant component of America's overall energy strategy.

NBB grants $1.2 million to Danforth Center
As the demand for a plentiful supply of feedstock oil for biodiesel increases, The Donald Danforth Plant Science Center and the National Biodiesel Board have teamed up on a research project designed to enhance the oil production in soybeans. Thanks to support from U.S. Department of Transportation, the NBB has granted the center more than $1.2 million to fund a three-year project that would increase America's supply of renewable oil used in the production of biodiesel.

"This grant program can benefit the greater availability of feedstock for biodiesel," said Danforth Center President Roger N. Beachy. "We greatly appreciate the support of Sen. Kit Bond and his staff in facilitating the relationship between the Danforth Center and the National Biodiesel Board in an effort to increase the oil feedstock for biodiesel production."

Bond said, "Increasing the efficiency of renewable biofuels from plants is vital to America's drive for energy independence and is critical to improving our environment. Making biofuels more efficient puts America one step closer to a stable home-grown energy supply, and I applaud the partnership of the Danforth Center and the National Biodiesel Board for its leadership and vision."

Danforth Center Principal Investigator Jan Jaworski will lead the research project which will be focused on increasing the oil produced in soybean seeds by altering specific biochemical pathways embedded within the soybean plant. "We will undertake a new approach to enhancing the production of soy oil with a goal of increasing the percentage of oil produced in each seed by more than 20 percent," Jaworski said. "While this approach is new, we are confident our results will lead to increased oil production without reducing the amount of protein in the seeds. Proteins are an important source of food and feed."

NBB Chief Executive Officer Joe Jobe said, "We are proud to support the Danforth Center as researchers there look for ways to get more bang for the buck from each soybean seed. Increasing the oil feedstock supply is vital to the rapidly expanding biodiesel industry. Soybean oil is one of the primary feedstock sources used in the production of biodiesel, and we hope this research will increase the soy oil supply. Plus, whatever advances are made on soybeans will have a high likelihood of being transferred to other oilseed crops-other biodiesel sources."

Founded in 1998, the Donald Danforth Plant Science Center is a not-for-profit research institute with a focus on enhancing the nutritional content of plants to improve human health, increase agricultural production to create a sustainable food supply, and build scientific capacity to generate economic growth in its area. Visit www.danforthcenter.org for additional information.

Manning Feraci
NBB Vice President of Federal Affairs
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