Biodiesel Production Costs

The world biodiesel production was rapidly expanded with shocking increment of 5,000% from years 2001 to 2006 (Szulczyk and McCarl 2010). These figures are likely to increase further, due to active support from many countries (the European Union, the United States, Brazil, China, India, and some Southeast Asian countries such as Malaysia and Indonesia) which accelerate the biofuel production. Efforts have been done to further catalyze the growth of biodiesel market in these countries: (1) implementation of 2% (B2), 5% (B5), or 20% (B20) blend of biodiesel in con­ventional diesel fuel, without any engine modification, and (2) substantial support from government such as consumption incentives (fuel tax reduction) and produc­tion incentives (tax incentives and loan guarantees) (The World Bank 2008).

However, there are also negative forces that hinder the expansion of the biodiesel industry:

1. Food-grade biodiesel is still far more expensive than conventional petroleum — derived diesel (biodiesel costs 1.5 to 3 times more than fossil diesel in developed countries).

2. Demand for biodiesel will fade if government subsidies are suspended.

3. Issues on using fertile lands for energy crops and biofuels production reduces the land space available for food crops, contributing to an increase in prices of staple foods and making them more scarce.

4. Water pollution and wastage of large amount of water for biodiesel post-treatment. The main capital cost for biodiesel production including (Kiss et al. 2010):

1. 7% equipment and investment (depreciation charge and maintenance).

2. 75% of feedstock (vegetable oil).

3. 2% of utilities (electrical energy and steam consumption).

4. 12% catalyst and chemicals (methanol, catalyst, and chemical for washing process).

5. 3% labor cost.

6. The rest 1% of costs as site (transport, distribution, and selling costs) or country specific (taxes, governmental subsidies, and credits) and management costs (administration, general expenses) was assumed to be subsidies by government and does not influence the overall production costs.

Note that in all the cases cited above, oil feedstock cost comprises a very sub­stantial portion of overall operating cost and it is the main obstacle in commercial­ization of biodiesel. The competitiveness of biodiesel relies on the price of the biomass feedstock and costs associated with the conversion technology. This high­lights the need for the development of new technologies allowing the use of lower value feedstock for transesterification process.

To select a potential feedstock with reasonable value, it must be (Moser 2009):

1. Highly available at the lowest price possible with desired characteristic includ­ing high oil content

2. Favorable fatty acid composition (saturated or unsaturated)

3. Low agriculture inputs (water, fertilizers, soils, and pesticides)

4. Controllable growth and harvesting season

5. Consistent seeds maturity rates and potential market for agricultural by-products

In general, biodiesel feedstock can be divided into four main categories which are (1) edible vegetable oil, (2) nonedible vegetable oil, (3) waste or recycled oil, and (4) animal fats (Lim and Lee 2010). The most common feedstock employed in biodiesel production is edible and inedible oil from oleaginous plants grown in dif­ferent regions. Table 10.1 showed the profile of common feedstock that used for biodiesel production.

Other than selecting a suitable raw material for economically feasible produc­tion, catalyst and chemical is another important criterion that should take into account for transformation of traditional technology. The potential catalyst for industrial biodiesel production process should include these characteristics: (1) high FFAs and water content tolerance, (2) catalyst poisoning and leaching resistant,

Table 10.1 Profile of common biodiesel feedstock



Oil yields (wt%)

Oil yields (kg/ha)

Price of crude (USD/tonnes)


Soybean oil




Rapeseed oil




Sunflower oil




Palm oil





Jatropha oil




Microalgae oil




Waste and recycle

Waste cooking oil


(3) ability to catalyze transesterification and esterification, (4) stable, high activity in water and leach proof, (5) low activation, (6) high selectivity and conversion rate, (7) enhancing the number and type of active sites (both Lewis acid-base sites and Bronsted acid-base sites have the ability to catalyze the oil transesterification reac­tion; catalyst activity is closely related to the acid/base strength), (8) good textural properties of the catalyst also impact the catalyst’s activity, such as specific surface area, pore size, pore volume, to minimize mass transfer limitations, and (9) high reusability (Di Serio et al. 2007). A catalyst with all these criteria shall create a new process for high-grade biodiesel with competitive price to petrodiesel. Even though high feedstock oil prices have lately tended to reduce biodiesel production, development of heterogenized technology for low-grade feedstock may contribute to long-term expansion in the biodiesel industry.

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