Fuel Production:

Biodiesel

Global biodiesel sales totaled nearly 6 billion gallons in 2011, and are estimated to reach 6.5 billion gallons in 2012. Global revenues from sales of biodiesel are expected to grow from $16.9 billion to $18.9 billion during this time.

Biodiesel can be used instead of, or blended with, petroleum diesel, most commonly in diesel engines or as heating oil in blends of 5% to 20% biodiesel (B5–B20). Biodiesel is produced by the transesterification of vegetable oil or animals fats, a mature chemical conversion process forming biodiesel as the main product and glycerin as a byproduct.

Global biodiesel sales totaled nearly 6 billion gallons in 2011, and are estimated to reach 6.5 billion gallons in 2012. Global revenues from sales of biodiesel are expected to grow from $16.9 billion to $18.9 billion during this time. In 2011, annual capacity additions to biodiesel refineries amounted to 340 million gallons per year (MGY), representing $981.8 million in capital investment. New capacity additions in 2012 are estimated to total 532 MGY, resulting in an estimated $1.5 billion of additional capital investment in biodiesel refineries. The European Union currently leads biodiesel production globally, but the European Commission’s recent proposal to phase out support for food-based biofuels would likely hamper further biodiesel market growth across the region, as well as in countries currently exporting biodiesel to the European Union. While the United States, Brazil, Argentina, and China have expanded production capacity in recent years, limited market pull is likely to result in only modest growth globally in 2012.

Revenue from U.S. sales of biodiesel reached $2.9 billion in 2011, and is expected to grow to $3.2 billion in 2012. The lapse of a $1 per gallon biodiesel producer’s credit at the end of 2009 led to a precipitous decline in biodiesel production during 2010, and to the closing of 52 of the nation’s 190 biodiesel plants. Due in part to the extension of the producer’s tax credit and to the Renewable Fuel Standard (RFS) mandates for biomass-based diesel, production rebounded in 2011, exceeding 1 billion gallons, and has continued to grow steadily. Under the RFS, the 2012 U.S. biodiesel market is expected to grow by 200 to 300 MGY, assuming adequate access to feedstock (typically soybean oil in the United States). However, expansion of production capacity for renewable diesel (see Synthetic Diesel and Gasoline) – a higher-performance fuel than conventional biodiesel – poses a potential threat by competing for feedstock and funding.

Economic Impact

gross domestic product

The Biodiesel subsegment contributed $3.7 billion in increased U.S. GDP in 2011.

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