As ethanol offers an alternative to petroleum-based gasoline, biodiesel offers an alternative to diesel. Although much smaller than the ethanol industry in the United States, the biodiesel industry has expanded rapidly over the last decade. Annual capacity grew immensely from 0.5 million gallons in 1999 to 581 million gallons in 2006 (Koplow 2006) and has continued in subsequent years. However, the capacity utilization rate as of 2006 was only between 25 and 50 percent, with an actual production of 150 million gallons in 2005 (Koplow 2006).

Biodiesel is produced by blending vegetable oil or animal fat with an alcohol and catalysts to produce alkyl ester fatty acids. The product can be mixed with traditional petrodiesel or used on its own in diesel vehicles. Rising petrofuel costs have caused biodiesel to become increasingly economically viable. However, the potential for first generation biodiesel which is currently commercialized to become a large-scale solution for replacing fossil fuel use in vehicles appears to be quite limited due to the large land demands required to produce adequate feedstock.

Biodiesel Use

Production Processes and Industry Structure

Policy and Intellectual Property

Limitations and Problems

Biodiesel Base Sources Include:

  • Soybean Oil (by far the most common biodiesel base in the U.S.)
  • Rapeseed Oil (especially in Europe)
  • Sunflower Oil
  • Palm Oil
  • Oils from other seed-producing crops such as mustard, jojoba, flax, coconut, and hemp
  • Jatropha: a perennial plant grown in tropical climates which is able to produce four times as much fuel per hectare as soybeans and can be grown in relatively poor soil and low irrigation conditions; gaining traction in India, Indonesia, and some African countries
  • Animal fats
  • Recycled plant oils after use for cooking

An additional source with major future potential is algae. For more on third generation biofuel, see here.



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