PERP Program New Report Alert January 2004 Nexant s hemsystems Process Evaluation/Research Planning program has published a new report, Biodiesel (02/03S2). Introduction The term biodiesel typically refers to any diesel fuel substitute derived from renewable feedstocks such as vegetable oils or animal fats. The majority of biodiesel is composed of the methyl ester of fatty acids obtained from either rapeseed oil, particularly in Europe, or from soybean oil, particularly in the United States. Biodiesel can be made from other feedstocks such as corn oil, cottonseed oil, palm oil, animal fats such as beef tallow, and recycled sources such as restaurant waste frying oils and industrial waste grease. owever, the emphasis for this report will be on biodiesel from the two important sources - rapeseed and soybean oils. The production technology for biodiesel is not new and is not particularly complicated. It is based on process technology employed for many years for the production of oleochemicals. The chemistry for making methyl esters of fatty acids from triglycerides is shown below. R R + 3 3 3R 3 + R Triglyceride (Fat or oil) Methyl Esters Glycerol Q403_00101.0003.4107-2.DX The triglyceride is reacted with methanol in the presence of base, usually sodium or potassium hydroxide, to yield the corresponding methyl esters of whatever fatty acid was contained in the starting triglyceride and co-product glycerol. An often-stated rule of thumb in this industry segment is that every 100 pounds of oil requires 10 pounds of methanol and produces 100 pounds of biodiesel and 10 pounds of glycerol. As in any co-product process, the economics of the overall biodiesel process are very dependent on the credit obtained for co-product glycerol. At the present time, because of the relatively small amount of biodiesel produced around the world, the volume of co-product glycerol made is not significantly affecting the supply/demand balance of the glycerol market. owever, if the biodiesel
- 2 - market continues to grow, the supply of glycerol will eventually start to overwhelm demand and glycerol prices will decline and the costs of biodiesel will increase. This issue is discussed in some detail in the report. The production economics of biodiesel manufacture are not competitive with petroleum derived diesel fuel based on the current price of crude oil. Nevertheless, owing to regulatory driven incentives, use of biodiesel is growing, particularly in Europe. Total biodiesel production in 2003 is expected to be about 2 million metric tons. Biodiesel Properties and Performance Biodiesel has many attractive features. It is a renewable source of energy, non-toxic, and biodegradable. owever, biodiesel has one very large downside. At the current price of oil, biodiesel is much more expensive to produce than petroleum derived diesel fuel. And even the attractive features mentioned above are somewhat mitigated as blends of biodiesel of up to say 20% with petroleum diesel are commonly found in the marketplace. In addition, biodiesel, because of its inherent ester functionality (the molecule can be thought of as already partially oxidized in comparison to straight hydrocarbon functionality of petroleum diesel), has a lower energy content than petroleum diesel - both on a weight basis and a volume basis. This is shown in Table 1. Table 1 Energy ontent of Biodiesel and Petroleum Diesel Btu/lb Btu/gal No. 2 Petroleum Diesel 18,300 129,050 Biodiesel 16,000 118,170 Nevertheless, biodiesel, owing to strong societal pressures to move towards sustainable and environmentally friendly feedstocks for fuels and chemicals, is receiving a boost in Europe and the U.S. by way of government mandated usage levels and/or producer incentives of one sort or the other. Biodiesel s major performance benefits are its good cetane number, low emissions, high flash point, and excellent lubricity. etane Number etane number is a measure a fuel s ignition delay. igher cetane numbers indicate shorter times between fuel injection and fuel ignition. igher cetane numbers are usually associated with smoother running engines and ease of engine start-up in cold climates. Minimum cetane number for on-highway engines in the U.S. is 40. As can be seen in Figure 1, the cetane number for biodiesel
- 3 - made from a variety of natural oils ranges from about 46 to 62, all higher than the standard for petroleum diesel. This improved cetane number performance of biodiesel in relation to petroleum derived diesel indicates that biodiesel would offer improved engine performance. Figure 1 Biodiesel etane Numbers 70 60 50 etane No. 40 30 20 10 0 EPA ighway Diesel ARB Diesel Lard Edible Tallow Inedible Tallow Yellow Grease 1 Yellow Grease 2 anola Soy Source: U.S. DE 03Q4_00101.0003.4107.ppt Emissions Biodiesel has undergone extensive and stringent emissions testing both in the United States and in Europe. For the most part it is generally agreed that biodiesel has reduced emission characteristics in comparison to petroleum diesel in most important emission categories except nitrogen oxides (NX). A survey of the emission test results submitted to the EPA has been tabulated and published by the National Biodiesel Board in the U.S. (Table 2). The table gives the results for 100 percent biodiesel (B100) and a 20 percent blend with petroleum diesel (B20). Flashpoint Biodiesel is a relatively safe fuel to handle due to its high flashpoint. Flashpoint is the temperature at which a fuel will ignite when exposed to a spark. Figure 2 shows the flashpoint of biodiesel in comparison to common petroleum-derived fuels. As can be seen, biodiesel s flash point is significantly higher than any of the conventional fuels.
- 4 - Table 2 Average Biodiesel Emissions ompared to onventional Diesel Emission Type B100 B20 Regulated Total Unburned ydrocarbons -67% -20% arbon Monoxide -48% -12% Particulate Matter -47% -12% NX +10% +2% Non-Regulated Sulfates -100% -20% 1 PA (Polycyclic Aromatic ydrocarbons) 2-80% -13% npa (nitrated PA s) 2-90% -50% 3 zone potential of speciated -50% -10% 1 Estimated from B100 result 2 Average reduction across all compounds measured 3 2-nitroflourine results were within test method variability Figure 2 Fuel Flashpoint omparison 350 300 300 Flash Point ( F) 250 200 150 100 50 0-50 -100 Gasoline Jet Fuel Diesel Bunker Fuel Biodiesel Source: Biodiesel Standards Task Force, ASTM 03Q4_00101.0003.4107.ppt
- 5 - Lubricity The lubricating properties of diesel fuel are a key property for the long term performance of diesel fuel injection equipment. Poor lubricity can result in excessive wear and premature failure of critical engine components. With mandated reductions in sulfur levels, lubricity of conventional diesel fuels is increasingly becoming a concern. The deep hydrotreating that will be required to meet the new EPA 2006 specification of 15 ppm maximum sulfur will further reduce the lubricity of diesel. Many refiners are using lubricity improver additives to restore the lubricating properties of the diesel fuel. Many pump tests and bench tests have been developed to measure the lubricity of diesel fuels. The most widely used method is called the igh Frequency Reciprocating Rig or FRR. It has been shown that biodiesel has exceptional lubricating properties. The addition of biodiesel, even in small amounts, provides excellent lubricity. Biodiesel has been tested at varying levels with diesel number 2 and number 1, each containing sulfur levels of less than 500 ppm. This report examines the performance, environmental benefits, regulatory drivers, production economics and market status for biodiesel. The burgeoning biodiesel industry impacts the oleochemicals, glycerine, and petroleum diesel markets as well and reviews of these three areas are also provided to put the biodiesel business in proper context. = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = opyright by Nexant, Inc. 2004. All Rights Reserved. Nexant, Inc. (www.nexant.com) is a leading management consultancy to the global energy, chemical, and related industries. For over 38 years, Nexant/hemSystems has helped clients increase business value through assistance in all aspects of business strategy, including business intelligence, project feasibility and implementation, operational improvement, portfolio planning, and growth through M&A activities. Nexant s chemicals and petroleum group has its main offices in White Plains (New York) and London (UK), and satellite offices worldwide. These reports are for the exclusive use of the purchasing company or its subsidiaries, from Nexant, Inc., 44 South Broadway, 5 th Floor, White Plains, New York 10601-4425 U.S.A. For further information about these reports contact Dr. Jeffrey S. Plotkin, Global Director, PERP Program, phone: 1-914-609-0315; fax: 1-914-609-0399; e-mail: jplotkin@nexant.com; or eidi Junker oleman, phone: 1-914-609-0381, e-mail address: hcoleman@nexant.com, Website: http://www.nexant.com.