May 10, 2004

BC feedstocks could yield 125 million litres of biodiesel; use could reduce GHG emissions by 2.4 million tonnes

A new feasibility study on the commercial potential of biodiesel in British Columbia suggests that there are enough feedstocks from recycled and renewable sources within the province to develop a production capacity of up to 125 million litres a year of pure biodiesel (B100). This would represent 4.5% of BC's total diesel usage and 11.4% of the total on-road diesel market. The study estimates that using this entire biodiesel capacity as a substitute for regular diesel would reduce BC's greenhouse gas (GHG) emissions by more than 2.4 million tonnes of CO 2 equivalent a year.

The Biodiesel in British Columbia: Feasibility Study Report, prepared by WISE Energy Co-op, outlines the significant market potential for biodiesel products in BC, including the ability to fuel BC Transit buses and private diesel-fuelled automobiles. Its projections also show that biodiesel technology has the potential to significantly reduce BC's GHG emissions, thus supporting Canada's commitment to the Kyoto Accord and the federal government's Climate Change Action Plan.

"Our study focuses upon alternatives that will allow small- to medium-sized communities to participate in this exciting renewable energy opportunity," said Rick Searle, chair of Eco-Literacy Canada, non-profit organization seeking to further Canada as a leader in environmental sustainability and education.

Biodiesel is a non-toxic, biodegradable, renewable fuel which can readily be used in unmodified diesel engines as well as in various other fuel applications. In fact, the study points out that when Dr Rudolf Diesel developed his diesel engine in 1912, he designed it to run on peanut oil.

Biodiesel is produced by chemically reacting vegetable-based oils (such as soybean or groundnut oil), animal fats, or waste cooking oils with an alcohol (usually methanol), using either sodium or potassium hydroxide as a catalyst. The conversion results in pure biodiesel (referred to as B100), with crude glycerine as an end product.

It can be used either as a substitute for conventional diesel, or as an additive. In both its pure and blended forms, biodiesel reduces the emissions of air toxins, CO2, particulate matter, carbon monoxide, hydrocarbons and black smoke from vehicles.

Compared to regular diesel, pure biodiesel produces a 73% reduction in lifecycle CO2 emissions, a 51% reduction in methane emissions, a 67% reduction in unburned hydrocarbons, a 48% reduction in carbon monoxide, a 47% reduction in particulate matter, a 100% reduction in sulfur oxide emissions, and an 80% reduction in polycyclic aromatic hydrocarbons. Biodiesel's only downside is a 10% increase in nitrogen oxide emissions.

Based on an analysis of BC's biodiesel feedstock volumes and transportation uses, the study concludes that, taking into account all potential feedstock (including agricultural seed crops), BC has a total theoretical production capacity of 125 million litres a year of B100. This is enough to fuel 3,716 BC Transit buses using B100, or 18,580 buses using B20 (a blend of 20% biodiesel with 80% petro-diesel). It could also be used to fuel privately owned diesel vehicles, such as the Volkswagen Jetta or the new Mercedes Smart CDI. The report further projects that blending a 5% biodiesel mixture (B5) with around 2.5 billion litres of low-sulfur petro-diesel would enable provincially-produced biodiesel to be incorporated into BC's entire annual diesel supply.

The feasibility study focuses on the potential to produce biodiesel from recycled bio-oils, rather than from virgin oils derived from agricultural seed crops, since BC has little available agricultural land. This approach provides a means of producing biodiesel in smaller urban communities across the province with more practical economics, and enhanced environmental benefits.

The report examines specific biodiesel feedstocks, namely: recycled yellow and brown greases from restaurants and other foodservice establishments, fish oils from BC's seafood processing industries, and rendered animal fats from the livestock industry.

Yellow grease, from recycled restaurant and food processing fryer oils, is typically the most consistent and economically viable raw feedstock that is available in most communities. It is currently being used by rendering companies for the manufacture of animal feeds. In this application, extensive processing is required to eliminate the risk of contamination in the final feed product. When yellow grease is used as a feedstock for biodiesel production, however, all that is required is filtering and de-watering.

The potential supply of waste yellow grease from BC's restaurants and food service establishments is estimated at 21.4 million litres a year. This, says the report, is enough to provide B100 biodiesel fuel for 636 BC Transit buses, or a B20 blended fuel for 3,180 buses, yielding a 411,500-tonne annual reduction in greenhouse gas emissions.

The report notes that these estimates do not take account of the logistical and economic challenges involved in diverting available feedstocks towards biodiesel production and diesel fuel substitution. They do, however, indicate the market potential, and the economic and environmental benefits that could be realized within the province.

The study has determined four critical strategic factors deemed the most important in "makng or breaking" a commercial biodiesel project. These include:

the ability to balance feedstock supplies, processing technology, and market penetration in an integrated system which is both reliable and efficient;

the ability to form stable strategic alliances with feedstock suppliers, distributors, end users, and other stakeholders;

the ability to anticipate and deal effectively with competitive pressures; and

the ability to generate a business plan that will allow a project to attract financing, and maintain its financial health.

The report concludes that community-based biodiesel production at a plant scale of four million litres a year could be economically viable if regional sources of low-cost feedstocks are combined with high-value fuel markets, chiefly in the transportation sector.

Given the environmental benefits and the contribution that biodiesel can make to greenhouse gas reduction, government funding may also be considered, to close the gap in meeting financing challenges.

The report directs a number of recommendations to governments. The BC government, it says, should level the playing field for alternative fuels by removing its transportation fuel tax for biodiesel, as it has already done for propane and natural gas. This is an essential move that will encourage the development of viable biodiesel projects in B.C.

Both federal and provincial governments should provide additional incentives for alternative fuel substitution in all major fuel use categories, as well as financial support for the development of community-based alternative fuel programs. Governments should also provide leadership by mandating a minimum 1% biodiesel blend in diesel fuel, and by running a biodiesel blend in government fleets.

Project proponents are encouraged to:

update any time-sensitive information to complete a detailed feasibility study of the proposed project;

seek out a low-priced local feedstock which could support a local plant;

determine the capital and operating costs required to run a plant; and

find local fleet managers who may have the desire and the capability to run their fleets on a biodiesel blend.

If a project appears viable, the study says proponents should prepare a full business plan, secure the required financing, and solidify contractual arrangements with suppliers and customers.

In Canada, biodiesel remains in the early stages of market development. Because of its practicality and environmental benefits, the federal government has established a target production rate of 500 million litres a year by 2010 under Canada's Climate Change Action Plan.

Several bus companies have been testing imported biodiesel: following trials, all 137 transit buses in Brampton, Ontario, are now using a B20 biodiesel blend. Canada's first and only biodiesel service station was opened by Topia Energy in Toronto on March 2, 2004.

The study was funded in part by Western Economic Diversification Canada, which provided nearly $100,000, with support also coming from the BC Ministry of Water, Land and Air Protection, VanCity Savings Credit Union, and the Community Economic Development Technical Assistance program. The consulting firms of JD McDonald and Associates and RA Bailey and Associates served as technical advisors.

WISE Energy is an association of individuals who specialize in renewable energy, business management, project management and information technology. WISE Energy works to promote the transition to a healthy and sustainable environment through the development of community-based renewable energy and conservation projects.

The study report, Biodiesel in British Columbia: Feasibility Study, may be viewed online at www.citygreen.ca/news_biodiesel-report.html. More information is also available from Cory Waters, executive director of City Green, 250/381-9995, Web Site: www.citygreen.ca; Michael Lovecchio at the BC Ministry of Water, Land and Air Protection, 250/356-9844; or Susan Schooley at Western Economic Diversification Canada's Vancouver office, 604/666-1318, E-mail susan.schooley@wd.gc.ca.

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