CEH Report

Table of Contents

Abstract

Biodiesel is a renewable fuel made from vegetable oils or animal fats. These esters of natural fatty acids with glycerin (named triglycerides) undergo base-catalyzed transesterification, usually with methanol. The resulting product is a mixture of fatty acid methyl esters (FAME), corresponding to the fatty acid composition of the fats or oils used. Biodiesel fuel is adapted to the diesel engine and may be used in standard diesel engines.

In 2011, world biodiesel capacity, production and consumption had more than doubled from the levels in 2007, at average annual rates of 23%, 21%, and 20%, respectively.

An important development over the last several years has been the shift in global biodiesel supply/demand patterns. In the early 2000s, Europe was the dominant player in the biodiesel industry, accounting for more than 83% of capacity and over 90% of production and consumption. In 2007, the European share of capacity had dropped to about 46%, and North America and Asia accounted for 23% and 19%, respectively. In 2011, Europe accounted for 40% of global capacity, while Asia, North America, and Central and South America had shares of 25%, 17%, and 16%, respectively.

The following pie chart shows world consumption of biodiesel:

The 1997 Kyoto Protocol to the United Nations Framework Convention on Climate Change set a goal of cutting greenhouse gas emissions by at least 5% from their 1990 levels during the commitment period of 2008–2012. Individual, legally binding, country targets to limit or reduce greenhouse gas emissions were set. Emission-cutting investment projects are supplemental to domestic policies such as energy taxes, fuel efficiency standards, etc. Under the Kyoto Protocol, the European Union agreed to reduce greenhouse gas emissions by 8% from 1990 emission levels by 2012. The target had been distributed among the member states through a process of "burden-sharing." This need to meet Kyoto Protocol targets became the backbone of biofuel industry development in the European Union in particular, and around the globe in general.

The Kyoto Protocol helped set the stage for biodiesel development. Currently, many regions and countries have developed their own biodiesel mandates as well as levels of enforcement. Legislation and policies are linked to environmental benefits, but also to other programs such as rural development and job creation.

The market potential for biodiesel is defined by the size of the existing fossil diesel fuel market. There is no major technical limitation on replacing fossil diesel with biodiesel. There is, however, a limitation on feedstock availability—namely, vegetable oils and animal fats—and consequently on the availability of arable farmland for biodiesel production. The availability of feedstock and the overall energy balance for biodiesel compared with other alternative fuels are the biggest issues facing the biodiesel industry.

World biodiesel consumption is expected to grow at an average annual rate of over 5% during 2011–2016.