Biodiesel and Other Chemicals From Vegetable Oils and Animal Fats

BIODIESEL AND OTHER CHEMICALS FROM
VEGETABLE OILS AND ANIMAL FATS
March 5, 2004
Prepared for:
Agriculture and Agri-Food Canada

Biodiesel and Other Chemicals from Vegetable Oils and Animal FatsMarch 5, 2004
TABLE OF CONTENTS
ACKNOWLEDGEMENTS
EXECUTIVE SUMMARY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . i
1.0
Petroleum diesel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.1
Markets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2
Fuel prices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
2.0
Biodiesel feedstocks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.1
Potential sources . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.2
Current markets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.3
Size of surplus feedstocks (US) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.4
Near term biodiesel supply potential (US) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
2.5
Biodiesel feedstock costs (US) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
2.6
Potential biodiesel feedstock supply in Canada . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
2.7
Industrial mustard: a new biodiesel feedstock . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
3.0
The biodiesel production process . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14

3.1
Transesterification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
3.2
Estimated capital and operating costs for a processing plant (in $US) . . . . . . . . 16
3.3
Community-based biodiesel production cost model (in $US) . . . . . . . . . . . . . . . 18
3.4
Biodiesel companies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
4.0
Biodiesel markets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
4.1
Fuel issues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
4.2
Storage issues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
4.3
Environmental benefits/costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
4.4
Key markets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
5.0
Other fuel additives, alternative fuels, and technologies . . . . . . . . . . . . . . . . . . . . . . . . . 57

5.1
Competing fuel additives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
5.2
Potentially complementary biofuel packages . . . . . . . . . . . . . . . . . . . . . . . . . . 57
5.3
Competing alternative fuels . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
5.4
Competing technologies and systems . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
6.0
Biorefining of oils, fats, and proteins . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75

6.1
Methyl esters used as a platform chemical . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75
6.2
New products from glycerol . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80
6.3
Higher-value products from vegetable meal . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82

7.0
Summary and conclusions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 83
8.0
Recommendations for public policy changes in Canada . . . . . . . . . . . . . . . . . . . . . . . . . 87

8.1
Regulations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 87
8.2
Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 87
8.3
R&D . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 88
8.4
Fiscal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 89
8.5
Standards development . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 89
APPENDIX A
CANOLA FEEDSTOCKS
APPENDIX B
SOYBEAN STATISTICS
APPENDIX C
ASTM BIODIESEL TEST METHODS AND STANDARDS

ACKNOWLEDGEMENTS
This report was developed with the help of the following biodiesel experts who formed a Delphi
discussion group and contributed valuable advice and direction for this part of the project.
However, any errors of omission or commission are strictly the responsibility of the consulting
team. Our thanks to the Delphi members who gave generously of their time.
Delphi Group Members:
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Claude Bourgault, Rothsay

Ajay Dalai, Professor, Chemical Engineering Department, University of
Saskatchewan
Tim Haig, Biox Corporation
Helgi Helgason, Milliagn Biotech
Barry Hertz, Professor, Mechanical Engineering Department, University of
Saskatchewan
Ed Hogan, Natural Resources Canada
Barb Isman, Canola Council of Canada
Martin Reaney, Agriculture and Agri-Food Canada
K. Shaine Tyson, National Renewable Energy Laboratory, US Department of
Energy

EXECUTIVE SUMMARY
This report critically examines several key issues that are central to assessing the future market
potential of biodiesel, including: biodiesel feedstock availability; feedstock and production cost
structures; fuel performance issues; competing products and technologies; potential niche
markets; and possibilities for increasing revenue streams from the production of higher valueadded products.
As of 2001, the diesel fuel market in North America was 245.5 billion litres (United States
222.9 billion litres; Canada 22.6 billion litres). The market has been growing steadily, with
most of the growth occurring in on-highway consumption, which represents 56% of the market
in the US and 43% in Canada. Other significant market segments in Canada include commercial
and institutional use (15%), industrial (14%), agriculture (11%), railways (9%), and marine
(5%).
US diesel fuel prices have ranged between 29.3 cents per litre in 1995 to 39.9 cents per litre in
2003. Canadian refiners are essentially price takers, i.e., Canadian wholesale diesel prices tend
to be based on markets in places like New York, Minneapolis, and Seattle. Differences in retail
prices in the US and Canada are due mainly to differing excise taxes. Prices also vary across
provincial borders due to the cost of transporting fuels to market, the size of the local markets,
and differing provincial fuel taxes.
Feedstock availability and cost are the two major barriers to the commercialization of biodiesel:
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Biodiesel feedstocks such as surplus vegetable oils, animal fats, and recycled
cooking oils can only provide about 3% of the diesel fuel market in North
America.
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There needs to be a detailed study of the regional availability and cost of

various biodiesel feedstock options in Canada as well as an inquiry into
the potential for growing dedicated energy crops (e.g., industrial mustard,
high erucic acid rapeseed, high oleic acid canola, soybean and sunflower
oilseeds, salt-tolerant canola varieties, and choke berries). Other factors,
such as the influence of drought on crop yields and potential impacts of
BSE restrictions on feed markets, also need to be studied.
In 2002, Canadian diesel wholesale prices were 2030 cents per litre compared to
a projected cost of 36 cents per litre for biodiesel made from animal fats and 63
cents per litre for biodiesel made from vegetable oils.
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Feedstock costs account for 75% or more of production costs. With the
possible exception of converting animal fats to biodiesel, few

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improvements in biodiesel production technologies can make a major

improvement in production costs.
Biodiesel has been promoted because of its environmental benefits, particularly its ability to
reduce carbon dioxide (CO2), particulate matter (PM), total hydrocarbons (THC), and carbon
monoxide (CO) emissions. There is still some dispute over nitrous oxide (NOx) emissions, with a
number of studies finding slight increases from the use of biodiesel. However, NOx emissions
from using biodiesel in heating furnaces and boilers have been found to be lower. More research
is required into mitigating the higher NOx emissions from transportation applications (e.g., by
using blends, restricting feedstocks, modifying engines, using catalysts, etc.) and discovering the
cause of the unexpected lower NOx emissions in heating applications. A recent major life cycle
study has also found increased THC emissions from biodiesel use. This is another area that needs
attention.
Biodiesel also has environmental benefits because of its higher energy efficiency. Biodiesel
produces 3.2 units of fuel energy for every unit of fossil fuel consumed in its life cycle, while
petroleum diesel yields only 0.83 units.
At present, there are no commercial-scale biodiesel production facilities in Canada, although
several pilot plants are in operation including: Biox Corporation (Oakville, Ontario); Innovation
Place Bioprocessing Centre (Saskatoon, Saskatchewan); Milligan Biotech (Foam Lake,
Saskatchewan); Ocean Nutrition Canada (Mulgave, Nova Scotia); and Rothsay (Ville Ste.
Catharine, Quebec). Neat biodiesel made from soybean feedstock is also being imported by
railway tank car from Iowa and Nebraska, mixed with conventional diesel (usually as a B20
blend), and then sold to truck and bus fleets operating in urban areas.
The quality and performance of biodiesel fuel is an important issue. In Europe, biodiesel
production capacity is more than double sales due, in part, to concerns over fuel quality; more
than 30% of the biodiesel sold in the EU does not meet EU biodiesel standards. The
development, and enforcement, of American Society for Testing Materials (ASTM) and
Canadian General Standards Board (CGSB) standards in North America will help address
quality issues. There are, however, still a number of knowledge gaps including:
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engine performance and life expectancy under various concentrations of biodiesel

blends in the full range of engine types, Canadian driving conditions, and
chemistry of the accompanying diesel fuel
cold weather gumming problems with biodiesel blends across various
applications (e.g., on-road transportation, locomotive, heating oil)
lubricity attributes of biodiesel, particularly with regard to heavy trucks, to verify
bench scale lubricity test results (i.e., reduced engine wear, improved fuel
economy) and the effectiveness of various competing lubricity additives and
additive blends

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the comparative benefits of biodiesel and SuperCetane as cetane enhancers for

syncrude and tar sands diesel fuels .
Niche markets like government fleets, underground mines, and recreational marine use have
been targeted over the past decade in the US and elsewhere, but these markets tend to be small,
fragmented, and subject to competition from other technologies. Four potential niche markets in
Canada include on-farm use where the agricultural community can have some direct control over
market pull; mass transit in southwestern Ontario where summer smog levels are having serious
health impacts; home heating oil on the east and west coasts where waste fish oil provides a low
cost feedstock; and use as a blend in locomotives, particularly in freight switching yards, and
along the Sarnia - Quebec corridor, where bulk fuel storage facilities can help facilitate fuel
distribution.
Many other products and technologies in the marketplace compete with biodiesel. Perhaps the
most serious challenges come from:
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competing fuel additives, e.g., Sunocos Soy Gold

competing alternative fuels, e.g., compressed natural gas, liquid natural gas, and
propane
competing technologies and systems, e.g., diesel-electric hybrid vehicles; thermal
depolymerization and chemical reforming of organic waste into clean energy; and
new pollution control technologies.1
Finally, biodiesel is a low-value commodity product that requires tax subsidies to be

competitive. Governments should support research aimed at finding higher-value uses for
biodiesel esters that may not require government subsidies. The potential market for highervalue non-fuel biodiesel esters in the US has been estimated to be as high as 40 billion pounds
(US$53 billion). Potential markets include plastics and plasticizers; solvents and paint strippers;
adhesives; surfactants; agrochemicals; industrial chemicals and lubricants. Research should also
be targeted at developing new higher-value markets for glycerol and vegetable meal, which are
both co-products of biodiesel production.
Although ultra low-sulphur diesel (15 ppm) combined with new pollution control equipment (i.e., PM traps
and three-way catalytic NOx adsorbers) will reduce PM and NOx emissions by over 90% and will do much to reduce
the environmental rationale for using biodiesel to reduce smog in urban areas, biodiesel may still offer an important
strategy for reducing CO2 emissions. Biodiesel has a very positive net energy balance (i.e., a 43 to 1 ratio over
petroleum diesel), and compared to ethanol, it has a higher energy content per gallon (~ 120,000 BTUs compared to
80,000 BTUs).

1.0
Petroleum diesel
1.1
Markets
As of 1999, the diesel fuel market in the US was 207.4 billion litres, segmented into the
following markets:2
Off-Highway
Diesel, 4%
Military, 1%
Residential,
11%
Commercial, 6%
Industrial, 4%
Oil Company,
1%
Farm, 6%
Electric Utility,
2%
Railroad, 5%
On-Highway
Diesel, 56%
1.2
Vessel
Bunkering, 4%
Fuel prices3
Diesel fuel prices can be expressed in three ways:
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spot prices
used when there are large volume purchases and immediate transactions
for same-day delivery
pipeline, terminals, barge, or refinery transactions
from January 1997 to July 2001, the California spot prices ranged from
about 27 cents per litre to almost 44 cents per litre.
Tyson, K. Shaine. Biodiesel The Flexible Option. Renewable Biodiesel Fuels: The Flexible Option
Conference. Sacramento, California. September 25, 2001.
3
Nyberg, Michael. California Diesel Fuel Supply Overview. Renewable Biodiesel Fuels: The Flexible
Option Conference. Sacramento, California. September 25, 2001.

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wholesale prices
rack prices at the terminal level
price paid by distributors
during the same period, the California wholesale prices closely followed
the spot prices
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retail prices
price paid on the street for immediate consumption
during the same period, the California retail prices closely followed the
pattern for spot prices and wholesale prices, but were about 20 to 24 cents
per litre higher, ranging from almost $0.47 per litre in January 1997 to a
high of over $0.68 per litre in mid July 2000 and returning to a little over
$0.54 per litre in the first six months of 2001.
For biodiesel to be competitive, it must be able to compete with wholesale diesel prices at
around CAN$0.34 per litre.

2.0
Biodiesel feedstocks
2.1
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Food grade cooking oils (soy, rape, canola, palm, peanut, olive, sunflower, etc.)
Off quality and rancid vegetable oils
Animal fats (lard, tallow, chicken fat, fish oils, etc.)
Used cooking oils from restaurants
Waste oils (sewage and trap greases)
2.2
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Potential sources4
Current markets5
Soy: cooking oils, animal feed, industrial chemicals, exports

Other vegetable oils: cooking oils, salad dressings, industrial chemicals, exports
Edible tallow and lard: cooking oils, exports
Inedible tallow: industrial chemicals, animal feed
Yellow grease: animal feed
Other greases: limited markets
Tyson, K. Shaine. Biodiesel Feedstock Supplies. Biodiesel: Renewable Biodiesel Fuels: The Flexible
Options Conference. Sacramento, California. September 25, 2001. Also see Duffield, J., Shapouri, H., Graboski, M.,
McCormick, R., and Wilson, R. U.S. Biodiesel Development: New Markets for Conventional and Genetically
Modified Agricultural Products. Office of Energy, Economic Research Service, U.S. Department of Agriculture.
September, 1998.
5
Ibid.

2.3
Size of surplus feedstocks (US)
The total production of vegetable oils and fats in the US is about 14 billion kilograms, with the
following breakdown.6
Table 1: Vegetable oils and fats breakdown
Vegetable oils (in billion kilograms)
Animal fats (in billion kilograms)
Soybean - 6.774
Edible tallow - 0.676
Peanuts - 0.128
Inedible tallow - 1.643
Sunflower - 0.394
Lard (choice white grease) and grease - 0.592
Cottonseed - 0.553
Yellow grease (recycled cooking/restaurant grease) - 1.194
Corn - 0.942
Poultry fat - 1.005
Others - 0.294
Total - 9.085
Total - 5.111
The US Department of Energys National Renewable Energy Laboratory (NREL) estimates

potential surplus feedstocks as follows:7
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Soy
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excess inventories 0.5-0.9 billion kg

exports 0.7-1.1 billion kg
Other vegetable oils

excess inventories 0.3 billion kg
dry millers corn oil (potentially)
Pearl, Gary G. Biodiesel Production in the U.S. Presentation at the Australian Renderers Association 6th
International Symposium. July 25-27, 2001.
7
Options Conference. Sacramento, California. September 25, 2001.

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Inedible tallow and yellow grease

excess inventories 1.5 billion kg
exports 1.5 billion kg
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Other greases
no markets, waste disposal costs for 1.7 billion kg.
2.4
Near term biodiesel supply potential (US)
According to the DOE Energy Information Administration (EIA),8 the total diesel market in the
US in 2001 is about 207.4 million litres. The potential biodiesel supply, using surplus feedstocks,
is estimated to be around 3.2% of the total diesel market, or 5.65% of the on-highway diesel
market.
The table below identifies biodiesel supply by type of feedstock. Clearly, all feedstock sources
must be considered in order to meet future biodiesel market demand.
Table 2: Surplus biodiesel supply by feedstock source
Feedstock
Million kg
Million litres
Percent
Soy
2,074
2,354
33
Brown grease
1,727
1,961
28
Inedible tallow and yellow grease
1,519
1,726
25
Corn
548
625
Everything else
310
352
6,256
7,104
100
Total
Some experts believe these figures may be high. For example, John Campbell, Vice President of
Ag Processing Inc., estimates the current US domestic feedstock availability at 492 million litres
of soybean oil and 246-492 million litres from alternative feedstocks, totalling 738984 million
litres or about 8/10ths of 1% of the on-highway diesel fuel market.9
9
See, for example, Campbell, John B. New Markets for Bio-Based Energy and Industrial Feedstocks:
Biodiesel - Will There Be Enough? Paper presented at the Agricultural Outlook Forum. February 25, 2000.

Campbell notes that US biodiesel feedstocks could be increased in the future through:10
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higher soybean acreage

estimated to be up to 10 million acres, yielding 1.9 billion litres
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higher soybean oil yield

estimated at 10% improvement, or the equivalent of 870 million litres
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conversion of idle acres to oilseed crops like canola and sunflower

assuming 10 million acres of idle land in the northern tier and high plains
states were converted to these crops, it would yield another 2.3 billion
litres of biodiesel
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switching from grain crops to oilseed crops

if 20 million acres currently used for wheat and other small grains crops
were switched to oilseed crops, it could produce another 4.5 billion litres
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increasing oil crush capacity

if the 4.85 billion kilograms of soybean oil currently being exported were
crushed domestically for biodiesel fuel, it would yield 5.3 billion litres.
The longer-term, best-case scenario is about 15.1 billion litres, or about 13% of the on-highway
diesel fuel market.
It has been suggested that a more reasonable, or practical, long-term goal for biodiesel
production in the US is about 2% of the transportation fuel market.11 This goal would require
over 2.3 billion litres of biodiesel.
10
Ibid.
11
Ibid.

2.5
Biodiesel feedstock costs (US)
The following feedstock prices (as of August 9, 2001) were used by S. Tyson at a biodiesel
conference in Sacramentao, California:12
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sunflower - 56 cents/kg
corn - 54 cents/kg
soy - 51 cents/kg
inedible tallow - 40 cents/kg
yellow grease - 25 cents/kg
brown grease - 14 cents/kg.
A 57-76 million litre biodiesel plant processing feedstocks at US $0.28 per kilogram can produce
biodiesel at US $0.34 per litre and be competitive with petroleum diesel.
Unfortunately, all vegetable oils exceed 28 cents per kilogram. Feedstock costs can be reduced
by using less expensive off-spec vegetable oils, inedible tallow, and yellow grease, but
processing costs can be higher because conversion yields for some of these feedstocks are lower
and processing losses are higher.13 In addition, a significant increase in demand for lower quality
animal fats and used cooking oils could result in increased feedstock prices.14 Restricting
feedstocks to lower priced sources also places further limits on the capacity of biodiesel to meet
market needs.
Notwithstanding these limitations, yellow grease (i.e., recycled cooking oils) is priced at about
25 cents CAN per kilogram (about 13 cents less than vegetable oils) and is a good starting point
for reducing biodiesel feedstock costs.
Because yellow grease is important to reducing biodiesel feedstock costs, it is useful to
understand, in more detail, the nature of this feedstock supply. A 1997 study conducted in
Chicago, Illinois found that baking and frying oils represent about 0.9 billion kilograms of total
US usage. About 50% is used in the preparation of french fries with the remainder fairly evenly
distributed between the preparation of chicken (15%), baking (15%), doughnuts (10%), and
12
Tyson, K. Shaine. Biodiesel: The Flexible Fuel. Biodiesel: Renewable Biodiesel Fuels: The Flexible
Options Conference. Sacramento, California. September 25, 2001. Prices were as of August 9, 2001. These figures
summarize data reported in public literature.
13
For analyses of tallow and yellow grease use in biodiesel production, see Nelson, R.G., Howell, S.A., and
Weber, J. Potential Feedstock Supply and Costs for Biodiesel Production. Presented at the Sixth National Bioenergy
Conference. Reno, Nevada. October 2-5, 1994.
14
Campbell, John B. New Markets for Bio-Based Energy and Industrial Feedstocks: Biodiesel - Will There
Be Enough? Paper presented at the Agricultural Outlook Forum. February 25, 2000.

fish/shrimp uses (10%). In the City of Chicago and the broader Cook County area, there are over
6,500 used cooking oil establishments 3,133 restaurants, 74 cafeterias, and 3,367 refreshment
places (includes doughnut shops, ice cream places, etc.) according to the 1992 Census. Each
restaurant produces approximately 340 kilograms of waste grease per week, and about 80% of
that amount ends up as tradeable yellow grease after processing. Using only restaurants and
cafeterias in the City of Chicago and Cook County area, the study authors projected the supply
of yellow grease at 45 million kilograms, sufficient to produce about 51 million litres of
biodiesel per year.15 If yellow grease from refreshment places, schools and hospitals and the
projected rise in fast food establishments since 1992 were included in the calculations, the
volume of feedstock supply could probably be increased by a further 50% to 76 million litres per
year.16 The market demand for biodiesel (assuming a B20 blend) was between 208 and 1,325
million litres. Even at the low end of the projection, supply would only meet about 35% of
biodiesel demand.17
2.6
Potential biodiesel feedstock supply in Canada
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Seed oil crops, such as canola, soybean and flax, account for 17% of the land
area devoted to major crops in Canada. In 2001, canola was grown on 3.83
million hectares; soybean - 1.08 million hectares; and flax - 0.67 million
hectares.18
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Canola:
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The ten-year (1994-2003) average annual Canadian canola oil production
was 1.13 million tonnes.19 Saskatchewan (44%), Alberta (30%) and
Manitoba (24%) accounted for most of Canadas production over the past
5 years.20
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The ten-year (1994-2003) average annual ending stocks (i.e., surplus) was
35,000 tonnes.21
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The average yield over the last five years was:
15
Sigmon, M. Demonstration and Economic Analysis of Biodiesel in Fleet Vehicle and Marine
Applications. Final Report of the Urban Consortium Energy Task Force. City of Chicago, Department of
Environment. June 1997.
16
Ibid.
17
Ibid.
18
Wood, S.M., and Layzell, D.B. A Canadian Biomass Inventory: Feedstocks for A Biobased Economy.
Final Report. June 27, 2003.
19
Canola Council of Canada. See appendix ?? For a breakdown by year.
20
Ibid.
21
Ibid.

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0.575 tonnes per acre

25 bushels per acre.
The 14-year average annual price for canola oil was 30 cents/lb. Meal was
8 cents/lb and seed was 16 cents/lb. Prices ranged considerably over the
14 year period. Oil varied from 22 - 38 cents/lb, while meal ranged from 6
- 11 cents and seed ranged from 12 - 20 cents/lb.
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Soybeans:
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The five-year (1998-2002) annual average soybean supply for Canada was
3.17 million tonnes, with an average price per bushel of $7.53.22
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At the present time, Ontario accounts for 76% of the total Canadian
soybean production, while Quebec supplies 17% and Manitoba 6%.
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However, Manitoba is becoming a larger producer of soybeans. Five years
ago, there were only a few hundred acres of soybeans. In 2003, there were
225,000 acres, with estimates for 2004 between 300,000 to 400,000 acres.
Officials at the Manitoba Ministry of Agriculture estimate soybean
acreage in the province could reach 800,000 - 900,000 acres within the
next five years.23
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The Ontario five-year (1998-2002) average annual production was 2.69
million tonnes.24
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Ontarios five-year (1998-2002) average annual usage was 2.56 million
tonnes:
crush - 1,618,949 tonnes
export - 384,700 tonnes
seed - 103,000 tonnes
other (feed, waste, dockage, etc.) - 458,366 tonnes.
carry-out stocks (i.e., surplus) averaged 132,000 tonnes.
<
Ontarios average five-year (1998-2002) price per bushel was $7.65.
<
In summary, the projected potential biodiesel feedstock supplies include:

<
100,000+ tonnes of recycled cooking oils from restaurants25
<
500,000 tonnes per year of rendered oils from animal fats (depending on
market impacts of BSE)26
<
35,000 tonnes per year of canola oil (carry-out stocks)
22
Ontario Soybean Growers Marketing Board. See appendix ?? for a breakdown by year.
23
Cooper, K. Ontario Soybean Commentary, February 13, 2004.
24
See appendix B for details on Ontario production.
25
Provided by a member of the Delphi Group.
26
Provided by a member of the Delphi Group.

<
<
132,000 tonnes per year of soybean (carry-out stocks)

potential use of canola and soybean exports, depending on market price.
2.7
Industrial mustard: a new biodiesel feedstock
10
The Office of Fuels Development at the US NREL is currently developing industrial mustard
hybrids that could produce 23-45 billion litres of oil per year at less than 28 cents a kilogram. At
that level, biodiesel could supply 10-20% of the total diesel market at under $0.34 per litre for
B100.27
The US Department of Energys Office of Fuels Development has selected industrial mustard as
a promising dedicated energy crop for biodiesel production. The R&D goal was to develop a
crop capable of producing 500 million gallons28 of oil a year at a cost of 10 cents a pound (which
would result in B100 at $1.00 per US gallon). The key to economic sustainability was to develop
an application for the meal that would provide a value greater than animal feed. 29
27
See Tyson, K.S., Brown, J., and Moora, M. Industrial Mustard Crops for Biodiesel and Biopesticides. The
Fifth Biomass Conference of the Americas. Orlando, Florida. September 17-21, 2001.
28
At one time, it was thought that industrial mustard hybrids could produce as much as 6-12 billion gallons
of biodiesel per year, enough to supply 10-20% of the total diesel market in the United States. See, for example,
Tyson, K.S., Brown J., and Moora, M. Industrial Mustard Crops for Biodiesel and Biopesticides
http://www.bioproducts-bioenergy.gov/pdfs/bcota/abstracts/19/z347.pdf. Also see Tyson K.S., and Brown, J.
Mustard Hybrids for Low-Cost Biodiesel and Organic Pesticides. American Institute of Chemical Engineers Spring
2002 Annual Meeting: Energy and a Sustainable Planet. However, based on the input from industry reviewers, these
estimates have been downsized to 500 million gallons. Recent comments from S. Tyson.
29
See Tyson, K.S., Brown, J., and Moora, M. Industrial Mustard Crops for Biodiesel and Biopesticides. The
Fifth Biomass Conference of the Americas. Orlando, Florida. September 17-21, 2001.

11
NREL is currently completing a three-year study on the use of industrial mustard as a source of
biodiesel and biopesticides. So far, their research seems promising:30
<
The defatted meal (after the oil is removed) can be used as a pesticide without
further processing.
In vitro breeding can improve the glucosinolate concentration in the meal to
reduce costs.
Specific varieties can be bred to act as fungicides, insecticides, herbicides, or
nemacides.
Oil content varies between 25 and 40%.
Depending on the variety, the oil is 90% monosaturated or more in some cases.
The oil is inedible and unsuitable for high value industrial purposes, so its market
price will not be tied to increases in food crop prices or other markets.
Seed yields of 1.8 tonnes per acre appear to be achievable in rotation with dry
land wheat production without irrigation.
Wheat yields have increased as much as 20% when grown in rotation with
industrial mustard.
The mustard crop can be planted and harvested with existing wheat equipment.
The mustard crop appears to be resistant to many of the pests common to canola.
Application trials with mustard meal have shown it to be highly effective with
fungus, nematodes, cut worms, wire worms, crab grass, and other agricultural
pests.
Mustard meal could be used directly on soils as a substitute for methyl bromide
fumigation.
<
<
<
<
<
<
<
<
<
<
<
The key to making the process economically viable is to:31
<
find a large industrial market for the meal so that it can drive sufficient demand
for the crop to make a national impact on oil supply
<
find a market for the meal that has higher value than animal feed to compensate
the oil crusher for lower oil prices.
NREL and its partner, the University of Idaho, are hoping to increase the glucosinolate content
by a factor of five times or more to make it more effective as an organic pesticide. Since the
glucosinolates have a half life of 48 hours and ultimately break down into soil nutrients, they can
provide a safer, more environmentally benign compound than methyl bromide and other farm
30
31
Ibid.
Tyson, K.S., and Brown, J. Mustard Hybrids for Low-Cost Diesel and Organic Pesticides. American
Institute of Chemical Engineers Spring 2002 National Meeting: Energy and A Sustainable Planet.

12
chemicals.32 NREL hopes the meal can be sold for 42 cents per kilogram or more and displace
10% of pesticide market with mustard meals by 2030.33
Canada has the infrastructure to grow industrial mustard. Canada is already among the top five
mustard seed producers in the world and is the single largest exporter. Canada produces, on
average, about 230,000 tonnes of mustard seed (including yellow, brown, and oriental) for
mostly the condiment and food industry markets. About three-quarters of the production is
exported. Production is concentrated in the prairie provinces, with Saskatchewan accounting for
almost 89%.34
Agriculture and Agri-Food Canada has been actively involved in developing mustard seed
varieties for over 10 years and developed a patent in 1998 for using mustard seed to fight
nematodes. Since then, ultra high glucosinolate levels and high oil yield varieties have been
developed, but much of the information is currently proprietary knowledge.35
High erucic acid rapeseed
Another dedicated energy crop that might have application for biodiesel is high erucic acid
rapeseed.36 In addition to biodiesel applications, erucic acid can be used as a lubricant and antistick agent.
The University of Manitobas Department of Plant Science and CanAmera Foods have been
working since 1978 on high erucic acid rapeseed (HEAR) that is low in glucosinolates. At the
time the partnership was formed, existing rapeseed cultivars were considered too low in erucic
acid for industrial use (30-40%) and too high in glucosinolates for animal feed applications.
Over the past 20 years, CanAmera has invested over $1.4 million in the universitys HEAR
cultivar development program, which has now developed a world standard for HEAR oil levels
at 50% or more.37
32
Ibid.
33
34
Agriculture and Agri-Food Canada. Mustard Seed Industry Fact Sheet. June 5, 2002.
35
Comments made by Martin Reaney, Agriculture Canada, during a Dephi Group conference call organized
by PRA and CANUC, June 12, 2003.
36
The production and processing of high erucic acid rapeseed injects $50 million into the Canadian
economy each year. See NSERC web site http://www.nserc.ca/synergy/articles/01canam_e.htm
37
Ibid.

13
The next step in the universitys cultivar development program is super high erucic acid rapeseed
(SHEAR) that contains more than 66%.38
The Seed Oil Modification Group at the National Research Councils Plant Biotechnology
Institute is also developing new transgenic SHEAR varieties.39
High oleic acid canola, soybean, and sunflower oils
There is also a trend in crop breeding to produce high oleic acid oilseed varieties that have
greater oxidative stability for both food and industrial applications. There are, at present,
commercially available high oleic canola (75%), high oleic safflower (75%), high oleic
sunflower (82%), high oleic soybean (83%) and high oleic olive (75%) varieties.40 Once these
oils are transesterified, they can be either used as biodiesel or used in further chemical
transformations to produce higher value-added products like polyurethane (used in automobile
seat cushions), cosmetics (skin care, hair care, sunscreens, lip balms, eye shadows, conditioning
creams, bar soaps, etc.), and lubricants (engine, transmission, hydraulic, gear and grease).41
Out of the 10 million acres of canola grown in Canada, about 500,000 acres are high oleic
canola.42
Other crops
Salt-tolerant canola varieties and choke berries may also provide potential feedstock sources for
biodiesel.43
38
Ibid.
39
See, for example, Taylor, D.C., Katevic, V., Zou, J., MacKenzie, S.L., and Keller, W. Improvement of Oil
Content and Seed Yield in Field-Tested Transgenic Rapeseed. PBI Bulletin, 2002, Issue 1.
Canada).
40
Corbett, P. Research in the Area of High Oleic Oils. PBI Bulletin, 2002, Issue 1.
41
Ibid.
42
Ibid.
43
Comments by Ed Hogan (Natural Resources Canada) and Martin Reaney (Agriculture and Agri-Food

3.0
14
The biodiesel production process

3.1
Transesterification
Biodiesel, or alkyl esters, can be produced using three basic routes:
<
<
<
base catalyzed transesterification of the oil with alcohol (used with vegetable oils)
direct acid catalyzed esterification of the oil with methanol (used with recycled
greases)
combination of the first two (used with recycled greases).
The basic technology using vegetable oils is as follows:
<
<
<
<
<
The vegetable oil (or animal fat) is first filtered and then pre-processed with alkali
to remove free fatty acids.
It is then mixed with alcohol (usually methanol) and a catalyst (usually sodium or
potassium hydroxide) which causes the oils triglycerides to form esters and
glycerol.
These fractions are then separated and purified into glycerine and biodiesel fuel.
The methanol from the biodiesel stream is recovered and reused.
Nothing is wasted:
Process inputs include: 1% catalyst, 12% alcohol, and 87% oil.
Process outputs include: 1% fertilizer, 4% alcohol (which is reused),
9% glycerine, and 86% methyl ester.
Today most alkyl esters are produced with the base catalyzed reaction because it is the most
economic:44
<
<
<
<
44
low temperature (66N C) and pressure processing (138 kPa)

high conversion (98%) with minimal side reactions and reaction time
direct conversion to methyl ester with no intermediate steps
no exotic materials of construction are used.
Ye, Su. Supply and Demand of Soybeans as Feedstock for Soy Diesel. Minnesota Department of
Agriculture. June 2000.

15
3.1.1 Main products

The main products of the transesterification process are biodiesel and glycerol:
<
Biodiesel can be used as a neat fuel (B100), a blend (B5, B20), or a fuel additive
or lubricity agent (B2 or less).
<
The co-product, glycerol, can be refined into glycerine, which is used for
cosmetics, etc.
<
Vegetable meal is created during the seed crushing process and is used as animal
feed.
BASIC TECHNOLOGY45
Vegetable oils
Recycled Greases
Dilute Acid
Esterification
Methanol + KOH
Methanol
recovery
Transesterification
Crude Glycerin
Glycerin
refining
Glycerin
45
Sulfur +
methanol
Crude biodiesel
Refining
Biodiesel
Tyson, K. Shaine. Biodiesel The Flexible Option. Renewable Biodiesel Fuels: The Flexible Option
Conference. Sacramento, California. September 25, 2001.
16

3.2
Estimated capital and operating costs for a processing plant

(in $US)46
The University of Georgia has recently estimated the capital costs of constructing various
biodiesel plants ranging in size from 1.9 million litres per year to 114 million litres. In addition,
they have also conducted sensitivity analyses that evaluate the projected biodiesel fuel prices per
gallon according to variations in plant size and feedstock cost. Their results are summarized in
the tables below.
Table 3: Estimated capital cost comparison of various plant sizes (in $US)
Plant size
(million litrers/yr)
Capital cost
Feedstock needed
Kilograms
Litres
11
57
114
$1.2 million
$4.4 million
$12.3 million
$19.2 million
1.7 million
2 million
10.2 million
11 million
51 million
57 million
102.1 million
114 million
Source: Frazier, Barnes & Associates, Memphis, Tennessee

Assumes a green field site.
Estimated accuracy +/- 25%
Total includes capital cost for pre-processing feedstock.
Table 4: Production cost sensitivity to feedstock cost by plant size, dollars per litre (in $US)
Plant size
(million litres/yr)
11
57
114
28 cents/kg
$0.66
$0.45
$0.38
$0.37
42 cents/kg
$0.79
$0.57
$0.50
$0.50
56 cents/kg
$0.92
$0.70
$0.63
$0.63
71 cents/kg
$1.04
$0.83
$0.75
$0.75
These data indicate that the most economically efficient plant size is about 57 million litres per
year. At that size, most of the economies of scale have been realized and further increases in
plant size do not lead to lower fuel production costs. Even doubling plant size from 57 to 114
million litres does not appear to lower unit costs. The cost of constructing a 57 million litre plant
is estimated to be about $12.3 million CAN.
46
Data reported by Shumaker, G., McKissick, J., Ferland, C. and Doherty, B. A Study on the Feasibility of
Biodiesel Production in Georgia. Center for Agribusiness and Economic Development, University of Georgia. 2003.
17

The following table breaks down the projected costs of a 57 million litre plant in more detail.
Table 5: Estimated biodiesel capital cost details for a 57 million litre capacity plant (in $US)
Equipment
Buildings
$4,608,000
$1,536,000
Utilities
$921,600
Civil/Mechanical/Electrical
$3,502,080
Land/Prep/Trans access
$245,760
Engineering/Permitting
$245,760
Set-up consulting
$3,840
Contingency (10%)
$1,228,800
Total installed cost
$12,291,840
Source: Frazier, Barnes & Associates

Assumes a turn-key facility placed on a green field site located near transportation access.
According to the authors of the study, the physical plant would require 710 acres for the
building, tank farm, and transportation areas. A buffer zone may also be required depending on
surrounding land use. The plant size would be about 5,000 square feet and about 18.2 metres in
height The plant would house all the processing equipment, a laboratory for quality control, and
offices. The processing area would require about 3,400 square feet The tank farm would require
about 20,000 square feet with tanks totalling 2.5 million litre capacity divided between holding
tanks for feedstock and finished product. The plant would operate continuously and employ eight
people plus six more in management, sales, accounting, and clerical.
Operating costs assuming feedstock costs of 42 cents per kilogram would be about $29.372
million per year. Feedstock costs would comprise about 75% of the total operating costs.
Table 6: Breakeven for biodiesel production for a 57 million litre per year facility with feedstock
cost averaging 42 cents per kilogram (in $US)
Item
Income
Total
Per litre
$23,197,440
$0.41*
$25,873,459
$0.46
Labour
$924,800
$0.017
Variable cost
$867,895
$0.017
$1,705,958
$0.03
Total cost
$29,372,625
$0.50
Profit/Loss
($6,175,183)
($.011)
Feedstock and direct (methanol and catalyst)
Fixed cost
* Includes glycerin and feed fat by-products

18
Assuming feedstock costs average 42 cents per kilogram, feedstock and direct costs (methanol
and catalyst) would account for ~ 90% of the total costs.47 Total costs are 50% higher than the
$0.34 per litre wholesale diesel fuel price that must be reached for biodiesel to become price
competitive with petroleum diesel.
The key to sustainable biodiesel production, therefore, is to reduce feedstock cost, either by
relying more heavily on low cost feedstocks (under 28 cents per kilogram) like yellow grease or
recycled cooking oils, or, in the long term, developing dedicated crops like industrial mustard
that can be grown to produce dedicated feedstock at less than 28 cents per kilogram.
In the alternative, various levels of government could offer 17-20 cents per litre tax support, as is
the case now in Germany. However, the move in North America to low sulphur diesel in 2006
and the introduction of new pollution controls technologies (PM traps and NOx adsorbers)
in 2007 will remove much of the environmental justification for this level of public policy
support.
3.3
Community-based biodiesel production cost model (in $US)
Smaller, community-based biodiesel plants might be economically viable under very specific
conditions.48 For example, in a diversified farming community where soybean and canola
farmers also operate livestock operations and can use the meal for animal feed, it might be
possible for them to retain ownership of the biodiesel processing and eliminate the additional
charges normally paid to other businesses such as feed mills, local feed dealers, and
transportation companies. Under these limited circumstances, biodiesel might be price
competitive with petroleum diesel.
Under the community-based production model:49
<
A 2 million litre biodiesel plant could be constructed and integrated with an

existing feed mill or grain handling facility to minimize investment.
Plant investment costs are projected to be $2.0 million.
Producers retain ownership of their crops and biodiesel products (biodiesel, meal,
and glycerin).
<
<
47
Also reported by Connemann, J., and Fischer, J. Biodiesel in Europe 1998: Biodiesel Processing
Technologies. Paper presented at the International Liquid Biofuels Congress. Curitiba-Parana, Brazil. July 10-22,
1998.
48
Van Dyne, D.L., Weber, J.A., and Braschler, C.H. Macroeconomic Effects of A Community Based
Biodiesel Production System. Department of Agricultural Economics, University of Missouri. 1996.
49
Ibid.

<
<
19
Producers are charged a cost that covers only capital and operating costs.
The biodiesel and meal are used by the farmers on their own farm.50
To reduce capital costs, the usual solvent (hexane) extraction system51 for removing oil from the
meal is replaced with a mechanical extruder/expeller system. The oilseeds pass through the
extruder and are exposed to high temperature (141"C) and high pressure (2,758 kPA) for a short
cooking time (26 seconds). This produces a product that has high digestability, high Omega-3
fatty acids, and has the aypsin inhibitor destroyed. When the oil leaves the extruder, the oil cells
have been ruptured and the oil has been cooked and sterilized. The extruder increases the
throughput of the expeller. In addition, in the case of soybeans, the gums stay within the meal
portion, not the oil. This reduces the need to degum the soybean oil prior to the biodiesel
esterification process, further reducing production costs.52
The following table summarizes the cost of constructing a 1,892,700 litre per year oilseed
crushing and biodiesel plant.
50
For more details see Weber, J.A. The Economic Feasibility of Community Based Biodiesel Plants.
A Masters thesis presented to the faculty of the Graduate School, University of Missouri-Columbia. August 1993.
51
Solvent extraction facilities generally have a through put range between 450 to 2,700 tons per day. This is
the dominant system used for soybean oil crushing in the US.
52
Ibid. This system has been developed by Insta Pro, a division of Triple F, Inc. The company has used a
variety of oilseeds (soybean, canola, sunflower, rapeseed, and cottonseed) with similar success.
20

Table 7: Summary costs for a 2 million litre community-based biodiesel plant in Missouri, 1993
(in $US)
Annual biodiesel production (in litres)
2 million
% of total
Expenditures
Capital costs
Extrusion and pressing
Esterification
$604,954
$1,472,000
Real annual costs

Extrusion and expelling (operates 300 days/yr, 24 hrs/day)
$131,276
2%
Esterification (operates 330 days/yr, 24 hrs/day)
$319,424
6%
$451,980
8%
$4,311,344
79%
$323,677
6%
Total real annual costs

Annual operating costs
Feedstocks @ $263.38/tonne1.; soybeans 97% of feedstock
Oilseed pressing
Electricity @ $0.02 per MJ
Steam
N/A
Labour (assumes plant automation)
$46,240
1%
Repairs
$46,240
1%
$6,049
0%
$5,376
0%
$37,236
1%
Labour
$2,474
0%
Repairs
$29,440
1%
Insurance
$14,720
0%
Materials
$50,633
1%
$106,762
2%
$12,233
0%
$5,488,700
100%
Insurance
Esterification
Electricity
Steam
Sales and administration

Annualized cost of working capital
TOTAL COSTS
Credits
Glycerin @ $0.85/kg
$147,537
Meal @ $310/tonne
$4,560,264
TOTAL CREDITS
$4,707,800
Net cost of production

Transportation costs
Net cost per litre of biodiesel ($/litre)
$780,900
$0.014 per litre
$0.43
Note: $0.43 per litre does not include profit margin. The 10-year average (19811991) price of diesel fuel in the US
was $0.28/litre and ranged from a low of $0.24 in 1986 and 1987 to a high of $0.39 in 1981.
1
The conversion of bushels into tonnes, used bushels of soybeans as a base.

21
Assuming soybeans can be purchased for $263.38 per tonne and the meal co-product can yield
$310 per tonne, biodiesel can be produced for $0.43 per litre, provided no profits are taken by
the community owners.
According to this model, biodiesel can compete on price with petroleum diesel if:
<
<
soybean prices are $246.92 per tonne or less

soybean meal can be sold for $332 per tonne or more.
This analysis also points out the importance of:
<
Feedstocks, which account for 79% of the costs of production.

A $4.70 per tonne increase in the price of soybeans would result in a 4
cent per litre increase in the cost per gallon of biodiesel.
<
The value of the meal co-product represents almost 97% of the co-product credit.
A $7 per tonne increase in the value of 44% soybean meal (with a 10%
residual oil content) would decrease the cost of biodiesel by 5 cents per
litre.
<
The impact of glycerol on the bottom line is more limited, it represents only 3%
of the co-product value.
A 6 cent increase in the price of glycerol would result in a 5 cent reduction
in the cost of biodiesel.
<
The importance of electricity rates on the cost of extruding and expelling.

A $0.003 increase per MJ would increase the cost of biodiesel by 3 cents
per litre.
<
Capital costs (in this system) do not have a major impact, and as a result,
investment tax credits would not significantly alter the price of biodiesel,
although any form of support would move biodiesel one step closer to
commercialization.
A $128,000 increase in capital costs results in a 1.7 cent increase per litre
for biodiesel.
<
Using 100% canola would yield biodiesel at $0.53 per litre.

Assuming canola has a 40% content vs 1820% for soybean.
The price for canola is $239.86 per tonne.
The value of meal is $268 per tonne.

22
<
Using 100% animal fats would yield biodiesel at $0.62 per litre.
Assuming animal fats are purchased at 34 cents per kilogram.
There is no meal co-product.
The fatty acid mixture can be sold for 3 cents less than animal fats.
<
Adjusting the size of the extruder/expeller equipment to match the need (i.e., the
higher oil content of canola would leave the extruder/expeller idle a significant
portion of the time) would yield the following costs per litre:
$0.43 for soybean
$0.49 for canola
$0.47 for animal fats.
<
Feedstock costs must be reduced, and meal co-product values must be improved if
biodiesel is to compete, on price, with petroleum diesel.
<
The major cost components of biodiesel production (feedstock costs and coproduct values) are subject to price volatility.
<
Localized factors like electricity rates, the ability to use existing facilities, and a
large acreage of soybean production (to buffer price swings due to weather) will
have an impact on price competitiveness.
<
It will also be important for local livestock producers to be operating on a

relatively small scale and not be able to buy protein at wholesale prices.
3.4
Biodiesel companies
3.4.1 Canadian biodiesel producers
At present, there are no commercial-scale biodiesel production facilities in Canada, although

several pilot pants are in operation. Neat biodiesel made from soybean feedstock is currently
imported by distributors like Canada Clean Fuels53 (formerly called Big K Fuels) located in
Etobicoke, Ontario.54 The biodiesel comes into the country by railway tank car from Iowa and
53
54
http://bigkfuels.com/profile.html.
Other distributors include: Bio-Diesel Canada Inc. (Etobicoke, Ontario) which claims it
is the largest biodiesel fuel distributor in Canada (see http://www.biodieselcanadainc.com);
Western BioFuels (Vancouver, British Columbia), which claims it is the first commercial
distributor of bulk biodiesel in Western Canada (see http://www,westernbiofuels.com/); and UPI
(Guelph, Ontario) which offers 2%, 5%, and 10% biodiesel blends to the SW Ontario farm

23
Nebraska and is mixed with conventional diesel (usually as a B20 blend) and sold to truck and
bus fleets operating in urban areas. The imported US biodieselmeets ASTM specification D 6751
and is reasonably priced competitive with petroleum diesel, due to a US$1.00 to $1.50 per US
gallon subsidy provided by the US Department of Agricultures Commodity Credit Corporation.
Current domestic producers of biodiesel include:
The following companies are engaged in biodiesel production in North America:
<
Biox Corporation (Oakville, Ontario)

Currently operates a 1 million litre per year pilot plant in Oakville,
Ontario.
A continuous process that is not feedstock specific (i.e., the process can
handle oilseed feedstocks as well as waste cooking greases and animal fats
Claims to be 40% cheaper in capital costs and 50% in operating costs
compared to other biodiesel processes.
Claims to be the only technology capable of converting high fatty acid
feedstocks into biodiesel cost effectively with 1:1 yields.
Plans to commission its first commercial scale plant (60 million litres per
year) in Canada during the spring of 2004, making it the largest biodiesel
plant in the world.
Its business model involves the construction and operation of turn-key
biodiesel facilities.
<
Innovation Place Bioprocessing Centre (Saskatoon, Saskatchewan)

Owned by the Province of Saskatchewan
Pilot plant capable of producing biodiesel in batches of about 30 tonnes
per day
The Centre charges CDN $0.90 to $1.10 per litre
<
Milligan Biotech (Foam Lake, Saskatchewan)

Operates a small pilot plant that produces canola methyl esters for use as a
lubricity additive to reduce engine wear and improve fuel economy.
<
Ocean Nutrition Canada (Mulgave, Nova Scotia)

Uses a chemical process to extract Omega 3 fatty acids from fish oil
The by-product can be used as a biofuel
Ocean Nutrition has been using almost 1 million litres per year of the
waste biodiesel as a boiler fuel without problem since 1999
market (see http://www.upi-inc.com/products.biodiesel).

<
24
A large plant expansion will result in an additional 4-6 million litres/year

of waste by-product.
The company has signed a 10-year deal to sell Wilson Fuels Inc. 5 million
litres per year of the waste biodiesel fuel
Wilson Fuels will mix the fish oil biodiesel with home heating oil in 520% blends to ensure it does not gel in cold weather.
Rothsay (Ville Ste. Catharine, Quebec)

A division of Maple Leaf Foods
Uses a batch process that can accept either seed oil or animal fats
Provided biodiesel for the City of Montreals BIOBUS demonstration
project.
There are also a number of entrepreneurs interested in producing biodiesel including Jeff
Kempson (Kingston, Ontario) who is making small batches of biodiesel in his garage using
recycled cooking oils as a feedstock; and Topia Energy Inc. (Ottawa, Ontario), which is planning
tp building a biodiesel plan in the Sudbury area.
3.4.2 US biodiesel producers
The National Biodiesel Board claims that there are currently 12 dedicated biodiesel
manufacturers in the US with an estimated production capacity of 60 to 80 million gallons per
year. In addition, there is also available excess production capacity in the oleochemical industry,
which uses methyl esters for solvent, surfactant, and adjuvant applications. About 200 million
gallons of biodiesel production capacity could be available under long-term agreements with
existing biodiesel marketing firms.55 Here are a few examples of US companies that are
producing biodiesel or are planning to do so in the near future:
<
Ag Environmental Products (Lenexa, Kansas)

A subsidiary of Ag Processing Inc., the worlds largest cooperative
soybean processing company.
Produces SoyGold, which can be used as a solvent, diesel fuel lubricity
additive, or an alternative to conventional diesel fuel.
<
Archer Daniels Midland (Decatur, Illinois)

A leading biodiesel producer in Europe with two facilities located in
Germany.
55
National Biodiesel Board Fact Sheet: Production Capacity.

25
On April 2, 2002, ADM announced it was launching a biodiesel feasibility

study in the US focused on the Mankato area of Minnesota where it
already has a soybean crushing and vegetable oil refining facility.
<
Best BioFuels LLC (Austin, Texas)

Intends to become a biodiesel producer
Partnered with Smithfield Foods, Inc., which plans to invest $20 million to
build a plant near Milford, Utah to convert swine waste into biomethanol
that will be sent to another plant outside Utah to process soybean oil,
animal fats, and recycled cooking oil into biodiesel.
Smithfield Foods is the largest producer of hogs and the leading processor
and marketer of fresh pork and processed meats in the US.
<
Columbus Foods (Chicago, Illinois)

Producer of biodiesel.
Also marketing methyl esters for applications as adhesive removers,
asphalt clean-up, auto waxes, corrosion preventatives, graffiti removers,
hand cleaners, metal working lubricants, mould release agents, oil spill
clean-up, paint removers, parts cleaning and degreasing, paint and resin
clean-up, pesticide carriers and adjuvants, screen printing ink removers.
<
Griffin Industries (Cold Spring, Kentucky)

The second largest rendering company in the US.
Produces biodiesel from vegetable oils, soybean oil, and recycled
restaurant grease.
<
Ocean Air Environmental Fuels and Glycerine, LLC (Lakeland, Florida)

Previously operated under the name of Nopec Corporation but was bought
out by Ocean Air in September 2000.
Operates a 10 million gallon per year biodiesel plant and a 12 million
pound per year glycerine refinery.
150,000 gallons of storage on site.
Can process vegetable oils, animal fats, and recycled cooking oils.
<
Pacific Biodiesel (Honolulu, Hawaii)

In 1996, built a small biodiesel plant at the Central Maui Landfill to
process restaurant grease.
In 1997, built a similar facility in Nagano, Japan to process waste cooking
oils from 60 restaurants.

26
In 2000, built a plant with the capacity to process 25,000 gallons per day
of grease trap waste and produce 1,500 gallons per day of biodiesel.
<
Peter Cremer North America (Cincinnati, Ohio)

A full line oleochemical manufacturer.
Now offers Nexsol Biodiesel (B100)
<
Proctor & Gamble (Cincinnati, Ohio)

A multi-national oleochemical company.
Various methyl ester products for use as an agricultural adjuvant, metal
working fluid, low-volume solvent, rolling oil.
Various grades of glycerine used as an emulsifier, emollient, plasticizer,
humectant, sweetener, anti-freeze, in surface coatings and paints,
cosmetics, drug and food products.
<
Stepan (Northfield, Illinois)

A major manufacturer of surfactants used in detergents, shampoos,
lotions, toothpaste, and cosmetics.
Also produces solvents, lubricants, and cutting oil ingredients.
Operates worldwide.
<
West Central Soy (Ralston, Iowa)

West Central Soy is the manufacturing division of West Central
Cooperative, a central Iowa agricultural cooperative.
$25 million has been invested in the processing plant, which can process
more than 163,000 tonnes annually
Produces biodiesel, lubricants (e.g., hydraulic oil, fifth wheel grease, chain
bar lubricant), and solvents and cleaners (i.e., graffiti remover, asphalt
release concentrate, herbicide stain remover).
<
Imperial Western Products (Indio, California)

Imperial Western Products has joined forces with Baker Commodities to
convert restaurant waste cooking oils into biodiesel fuel called Biotane.
Has two plants in Southern California: one 6 million gallon and one 8
million gallon.

27
3.4.3 Equipment manufacturers/supplies

The following are examples of biodiesel equipment manufacturers/suppliers.
<
Biodiesel Industries (Santa Barbara, California)

Produces the Modular Production Unit (MPU), which fits within a
standard 8' x 8' x 40' shipping container and fits on a 60' x 70' pad with all
ancillary equipment.
Process heat is supplied by a Caterpillar generator that runs on B100.
Can process a variety of feedstocks including virgin and recycled cooking
oils.
<
Crown Iron Works (Minneapolis, Minnesota)

Has provided oleochemical technologies since the 1920s.
The largest supplier of oilseed extraction and refining plants and
equipment in North America.
A biodiesel equipment manufacturer offering both batch and continuous
methyl ester production technologies and glycerol recovery equipment.
<
Lurgi Life Science GmbH (a subsidiary of Lurgi Ag in Frankfurt, Germany)

A world leader in building turnkey biodiesel plants
Building a 100,000 ton / year plant in Marl, Germany
Also heading a consortium that is building a 37,000 ton / year biodiesel
plant in Malchin, Germany

4.0
28
Biodiesel markets
4.1
Fuel issues56
<
Fuel quality:
Injector deposits and varnishing in combustion chamber occurs with poor
quality fuel that contains glycerin and un-reacted fats/oils. (Glycerin and
un-reacted fats/oils act like sugar.)
These fuel quality issues have been addressed by The American Society
for Testing Materials, which has published test methods and standards
ASTM D 6751 for ensuring fuel quality for pure biodiesel (B100) and a
provisional standard ASTM PS 121 has been established for a 20%
biodiesel blend (B20). The Canadian General Standards Board (CGSB) is
also developing standards in Canada for a B20 blend. Appendix C sets out
more details for ASTM standards for both B100 and B20.
The main standards in Europe include DIN 51606 (Germanys standard)
and CEN Standard EN14214 (EU standard).
<
Warranties:
Warranties vary. Some companies will warranty for B100, some for B20,
some veggie only, and some limited to B5.
In March 2001, Caterpillar released a document stating biodiesel fuel must
meet ASTM PS 121, DIN 51606 (the German standard) or Caterpillars
own biodiesel specification in order to be used in their engines. Some
engines may use biodiesel in any blend while others are restricted to a
maximum of 5%.57 However, any failures due to the use of biodiesel will
not be covered under Caterpillars warranty.
In August 2001, Cummins released their own biodiesel specifications and
reported that biodiesel blends of 5% or less should not cause engine
problems.58
Detroit Diesel will not cover any engine failures attributed to the use of
biodiesel. They strongly recommend that biodiesel blends be restricted to
less than 5%.59
56
Tyson, K. Shaine. Biodiesel: The Flexible Fuel. Biodiesel: The Flexible Option Conference. Sacramento,
California. September 25, 2001.
57
Caterpillar Release Memo: PMP01-01. Preventive Maintenance Products. March 2001.
58
Cummins Position on the Use of Biodiesel Fuel. Cummins Field Announcement, August 30, 2001.
59
Detroit Diesel Corporation September 2002 Lubricating Oil, Fuel and Filters Engine Requirements Guide.

<
29
International Engine Corporation states that use of products such as

biodiesel is at the discretion of the end user. Any engine performance
problem or failure attributed to biodiesel would not be recognized as the
responsibility of International Engine Corporation.60
John Deere states that biodiesel may be used in their engines provided
they meet ASTM PS 121 or DIN 51606 standards.61 However,
performance loss or failures related to the use of biodiesel are not the
responsibility of John Deere.62
Bosch states that no guarantee on FIE is given to any alternative fuel
except for Diesel + 5% FAME.63
Higher cloud point:

Cloud point is the temperature at which waxes first start to crystallize in a
fuel and is an indication of the temperature when fuel filters will become
blocked and affect engine operation.
The cloud point for biodiesel can range from -10C to +20C depending
on the feedstock source. When blended with diesel at a rate of 20%, its
cloud point can range from 3 to 5C higher than diesel.
Cold starts and fuel freezing are big concerns in cold climates, but this can
be managed by using additives, lower blend levels, or biodiesel based on
branched fatty esters that have improved low temperature performance.64
However, no cloud point problems were reported by Canada Clean Fuels
in Toronto region bus and truck fleet trials during the winters of 2001-02
and 2002-03.65 These trials used soybased biodiesel. Another trial of
biodiesel using buses from the City of Montreals transit fleet found cold
weather could be a problem for blends above 5% when animal fats are
used as the feedstock.66 However, this should not pose a problem if the
buses remain running and are stored in heated garages.67
60
Memo released November 2, 2000.
61
John Deere release September 14, 2001.
62
Ibid.
63
Diesel Fuel Quality - Common Position Paper. March 5, 1999.
64
Knothe, G., Matheaus, A. C., and Ryan III, T. W. Cetane Numbers of Branched and Straight-Chain Fatty
Esters Determined in An Ignition Quality Tester. Elsevier, December 24, 2002.
65
Reported in Dunn, R. Table 1 in Biodiesel As A Locomotive Fuel in Canada. Report prepared for the
Transportation Development Centre, Transport Canada. May 2003.
66
67
BIOBUS Newsletter 2 - October 2002.
Biodiesel Demonstration and Assessment with the Socit de Transport de Montral (STM): Final
Report. May 2003, p. 11.

30
<
Lower energy intensity

Cummins testing indicates biodiesel produces 5-7% less energy intensity
per gallon, compared to diesel fuel.68
Based simply on lower energy intensity, measured in MJ/kg, B100
biodiesel has 1 to 10% lower energy content than diesel, depending on the
feedstock source used.69 For a B20 blend, this could translate into a 0.2 to
2% increase in fuel consumption70 However, lower fuel intensity might be
offset by higher lubricity, which could reduce engine wear and improve
fuel consumption.71 It also has a higher viscosity range, which results in
slightly improved injection efficiency.72
<
Some material compatibility issues:

More problems with B100 than B20.
Replace rubber seals and hoses with VitonTM.
Replace copper and brass pipes and fittings with steel.
Fuel pumps may need replacement with B100.
<
Some solvency issues:

Biodiesel dissolves accumulated sediments in fuel systems, which can
plug up fuel filters.
Can remove paint.
4.2
Storage issues73
<
B100 requires heaters in cold climates:

B20 and underground storage pose fewer problems.
Mixing B100 into cold diesel fuel causes problems.
<
Some material compatibility issues:

Need to replace rubber seals and hoses with VitonTM
Need to replace copper and brass pipes and fittings with steel.
68
69
Dunn, R. Table 1 in Biodiesel As A Locomotive Fuel in Canada. Report prepared for the Transportation
Development Centre, Transport Canada. May 2003.
70
Ibid.
71
See other sections of the report that comment on fuel lubricity.
72
73
Ibid.

<
31
Limited storage stability:

Up to six months.
Need to consider antioxidants and biocides.
4.3
<
Environmental benefits/costs74
Biodiesel is non-toxic and biodegradable.
<
Cancer risk reduction:75

Assuming No. 2 diesel risk is equal to 1.
B100 is equal to 0.064
86% reduction in quantity
80% reduction in PM toxicity.
B20 is equal to 0.725
13.7% reduction in quantity
16% reduction in PM toxicity.
CO2 emissions:
-
<
Biodiesel emits 78.5% less CO2 than petroleum diesel over its life cycle.
B20 emits 15.66% less CO2.
Energy efficiency:76
Biodiesel produces 3.2 units of fuel energy for every unit of fossil fuel
consumed in its life cycle.
Petroleum diesel yields 0.83 units.
Smog and air pollution:77

-
74
A B20 blend using soybean-based biodiesel compared to an average base

diesel fuel had the following emissions:
Ibid.
75
The US Environmental Protection Agency (EPA) has announced that long-term exposure to diesel
exhaust will likely cause lung cancer. Use of pure biodiesel (B100) made from soybean oil can reduce targeted
cancer-causing emissions by 80% for Polycyclic Aromatic Hydrocarbons (PAH) and 90% for Nitrated Polycyclic
Aromatic Hydrocarbons (nPAH). The EPA study was based on diesel vehicles built prior to the mid-1990s. Vehicles
built after that date use much cleaner burning technology. See Biodiesel Emissions Reduce Cancer Risks Compared
to Diesel. National Biodiesel Board news release, September 5, 2002.
76
EESI Congressional Briefing: John Sheehan, National Renewable Energy Laboratory. July 31, 2002. Also
see An Overview of Biodiesel and Petroleum Life Cycles. National Renewable Energy Laboratory. May 1998.
77
A Comprehensive Analysis of Biodiesel Impacts on Exhaust Emissions. Draft Technical Report. US

Environmental Protection Agency. October 2002.

32
2.0% increase in NOx (sulphur oxide)78

10.1% decrease in PM (particulate matter)
21.1% decrease in HC (hydrocarbons)
11.0% decrease in CO (carbon monoxide)
no difference in CO2 tailpipe emissions (reductions in CO2
emissions are a result of renewable crop production)
Emission impacts vary according to type of biodiesel (e.g., soybean,
rapeseed, animal fats) and type of conventional diesel fuel used in the
blend.
These emission impacts were based on heavy-duty highway engines, and
the results can not be extrapolated to light-duty diesel vehicles or off-road
equipment.
The highest NOx emissions come from soy feedstocks followed in
declining order by emissions from canola, yellow grease, lard, tallow, and
petroleum diesel (see figure below).
-
78
Notwithstanding the higher NOx emissions, B20 produces emissions within the legal limits with a variety
of engines.

33
Nox FEEDSTOCK DIFFERENCES79
% change NOx g/bhp-hr
16
14
12
10
8
6
4
2
0
soy
<
canola
yellow
grease
lard
edible
tallow
inedible
tallow
However, the addition of DTBP reduces these emissions. There is also research to
suggest that NOx can be reduced to baseline levels by adjusting the injection
timing of the engine and the addition of a platinum catalyst.80
79
Source: 1991 Detroit Diesel Series 60, Colarado School of Mines, 1999. Referenced by Lynch, E.
Biodiesel: An Environmental Perspective. Biodiesel Fuels: The Flexible Option Conference. Sacramento, California.
September 25, 2001.
80
Lopp, D., and Stanley, D.. Soy Diesel Blends: Use in Aviation Turbine Engines. Purdue University.
September 2, 1995.

4.4
34
Key markets81
As discussed above, diesel fuel use for on-road transportation, rail, marine, and other off-road
applications dwarfs the current and future production capabilities of the vegetable oil and animal
fats industries.82 As a result, biodiesel is generally targeted at niche markets, namely:
<
<
<
<
<
<
<
<
<
<
fleet vehicles
mass transit
marine
railroad
on farm
residential and commercial heating oil
mines
environmentally sensitive areas like parks
lubricity additive.
cetane improver.
4.4.1 Government fleet vehicles
The US Energy Policy Act, 1992 regulations requires federal, state, and private alternative fuel
providers to purchase specific percentages of alternative fuel vehicles beginning in the 1996
model year.
81
Ye, Su. Supply and Demand of Soybeans as Feedstock for Soy Diesel. Minnesota Department of
Agriculture. June 2000.
82
For a similar conclusion, see Campbell, John B. New Markets for Bio-Based Energy and Industrial
Feedstocks: Biodiesel - Will There Be Enough? Paper presented at the Agricultural Outlook Forum. February 25,
2000.

35
At present, the following US federal and state fleets are known to be using biodiesel:83
Table 8: Federal and state fleets known to be using biodiesel
<
<
<
<
<
<
<
<
<
State of Ohio
State of New Jersey
State of Michigan
US Post Office
US Department of Agriculture
US Department of the Interior
Florida Department of Transportation
North Carolina Department of Transportation
State of Delaware
<
<
<
<
<
<
New Jersey Transit

Southwest Ohio Transit
State of Alabama
Virginia Department of Transportation
State of Connecticut
US Navy
Booz Allen Hamilton has tried to estimate the market demand resulting from the Alternative
Fuel Transportation program. It established two scenarios: a base case and an aggressive
scenario.
In the base case scenario, it projected the market potential for B20 at approximately 1.3 million
litres in 1999, rising to 12.5 million litres in 2005. This translates to 265,000 to 2,460,000 litres
of B100. At $1.01 per litre, this would yield an annual revenue of $269,000 to $2.5 million in
2005.84
Using an upper bound, aggressive scenario, it estimated B20 use at 15 million litres in 1999,
rising to 140 million litres in 2005. This represents 3 to 28 million litres of B100. At $1.01 per
litre, this represents a revenue of $3.1 to $28 million.85
We do not have diesel fuel consumption by the Canadian federal and provincial government
fleets. Assuming the Canadian government fleet market is 1/10 of the US, the most aggressive
scenario would result in Canadian biodiesel sales to federal and provincial fleets of 14 million
litres. Assuming biodiesel sold at $3.00 US per gallon, the revenue would be only $11.1 US
million per year.86
83
Noyes, G., and Burke, T. Getting Biodiesel Into Your Fleet. Renewable Biodiesel Fuels: The Flexible
84
Booz Allan Hamilton. Market Potential of Biodiesel in Regulated Fleets, Marine Vessels, and
Underground Mining Equipment. Report to the United Soybean Board. November 11, 1998.
85
86
Ibid.
These estimates may even be on the high side. For example, the consumption of diesel fuel by the Ontario
provincial government (Canadas largest province) is known to be only about 1 million litres annually or 264,201
gallons per year.

36
These data do not paint a very optimistic picture. If you recall from our earlier section on
production costs, a 57 million litre, stand-alone, biodiesel plant is required to reach economies of
scale; even an aggressive marketing scenario for biodiesel on-road use by government fleets
would rise within 6 years to 14 million litresnot enough to keep a single 57 million litre
biodiesel plant running at anywhere near capacity.
Although Canadian federal and provincial government fleets, by themselves, do not offer a
market large enough to sustain a biodiesel plant, they can demonstrate leadership by providing a
highly visible public example of biodiesel use. They could also participate by working with the
biodiesel industry in the generation, collection, and distribution of field demonstration data.
4.4.2 Mass transit
Mass transit is seen as a good potential market because it is government funded and less likely
than commercial fleets to face the same competitive pressures to reduce costs. Mass transit buses
are also centrally fuelled, follow routine schedules, and have high public visibilityall factors
conducive to market acceptance.
The American Public Transit Association (APTA) estimates the urban bus market in the US
consumes 2.2 billion litres of petrodiesel annually.87
Approximately 80% of the 58,000 mass transit buses in the US are subjected to the
Environmental Protection Agencys Clean Air Act of 1990.88 The Act requires a reduction in PM
emissions beginning in 1995. A B100 summer blend could reduce PM emissions by 55%, while
a B20 winter blend could reduce PM emissions by 18%.89
A study by Booz Allen Hamilton suggests that a B20 blend is competitive compared to other
alternative fuel options (e.g., compressed natural gas) because of lower life cycle costs. This
comparative advantage would be strongest for small fleet operators with low annual fuel
consumption.90 These findings are supported by a study conducted at the University of Georgia,
which reports the life cycle costs for diesel buses at 19.6 cents per kilometre; biodiesel-powered
buses at 22.2 to 37.8 cents per kilometre depending on blend (B20 vs B100) and biodiesel prices
87
Howell, S.A., and Weber, A. U.S. Biodiesel Overview. National Biodiesel Board. January 1995.
88
Ibid.
89
Tyson, K. Shaine. Biodiesel: The Flexible Fuel. Biodiesel: Renewable Biodiesel Fuels: The Flexible
Option Conference. Sacramento, California. September 25, 2001.
90
Underground Mining Equipment. Report to the United Soybean Board. November 11, 1998. For a comparison of
B20 to low sulphur diesel, see Schumacker, L.G., Weber, J.A., Russell M.D., and Krahl, J.G. An Alternative Fuel
For Urban Buses. National Biodiesel Board Document Database. August 1995.

37
($0.85 per litre vs $1.01 per litre); 29.8 to 33.4 cents per kilometre for CNG; and 58.5 cents per
kilometre for methanol-powered buses.91
One of the largest biodiesel demonstrations in North America was conducted by the Socit de
Transport de Montral (STM) in Montral. The $1.3 million project evaluated the economic and
environmental impacts of using about 500,000 litres of B5 and B20 biodiesel blends in 155 mass
transit buses using vegetable oil (B5), animal fats (B20), and recycled cooking oil (B20) as
feedstock sources. The demonstration, called BIOBUS, was carried out between March 2002 and
March 2003. Partners in the demonstration included the Canadian Renewable Fuels Association,
Fdration des producteurs de cultures commerciales du Qubec (FPCCQ), STM, Rothsay/
Laurenco (member of Maple Leaf Foods Group), Natural Resources Canada, Environment
Canada, Environment Qubec, and Transports Qubec.92
Testing carried out by Environment Canadas Environmental Technology Centre indicated the
use of biodiesel blends have no significant impact on performance of mechanical-injection diesel
engines with respect to power, maximum torque and fuel consumption.93 The study also found
the use of animal-based fat biodiesel in cold weather will be a major challenge, particularly at
concentrations above 5% because of poorer ASTM cloud point and low-temperature
filterability threshold values.94 However, this should not pose a problem if the buses remain
running and are stored in heated garages.95 All three feedstock sources provided lubricity
superior to petrodiesel, even at low concentrations.96
Emissions testing indicated that biodiesel, regardless of concentration or source, can help reduce
smog formation. Unlike other studies, NOx emissions were not increased in comparison to the #2
diesel low sulphur (500 ppm) reference standard and could even reduce them.97 Emissions
reductions were not found to be a simple linear function of biodiesel concentration. In fact, the
B5 animal fat biodiesel blend had the most potential for reducing ozone-forming emissions.98
91
Ahouissoussi, N., and Wetzstein, M. Life-Cycle Costs of Alternative Fuels: Is Biodiesel CostCompetitive for Urban Buses? National Biodiesel Document Database. September 1995.
92
BIOBUS Newsletter Issue 1 - April 2002; Newsletter 2 - October 2002; Newsletter 2 - May 2003.
93
Ibid.
94
BIOBUS Newsletter 2 - October 2002.
95
Report. May, 2003 p. 11.
96
BIOBUS Newsletter Issue 3 - May 2003.
97
Ibid, p. 18.
98
Ibid.

38
In general, the demonstration was considered successful, but the recent decision by the Qubec
government not to remove the 16.4 cent per litre tax on biodiesel could negatively impact the
economics of biodiesel purchases and may stop the program from expanding to include the full
1,600-bus fleet.99
Other Canadian biodiesel demonstrations include:
<
The City of Brampton runs all of its 137 transit buses on B20. It is the first
municipality in Canada to commit to using biodiesel.
The City of Vaughan has started a pilot project using biodiesel blends in selected
City and Hydro fleet vehicles with the intention of converting the entire fleet in
the future.
The City of Saskatoon has initiated a BioBus pilot project. Over the next two
years, two transit buses will use a 5% blend of canola biodiesel.
Five Lower Mainland municipalities in BC (Burnaby, Delta, the City of North
Vancouver, Richmond, Vancouver) and the resort municipality of Whistler will
be testing biodiesel in a dozen heavy-duty vehicles, such as garbage trucks.
<
<
<
The demand for biodiesel blends within the Canadian municipal mass transit market will likely
continue to expand and provide an important market.
4.4.3 Marine vessels
The marine market in the US is divided into the following market segments:100
<
Recreational vessels (e.g., pleasure craft) approximately 1 million boats are

diesel powered and use about 360 million litres of diesel fuel.
<
Inland, harbour, and coastal commercial vessels (e.g., fishing vessels, freighters,
ferries, tug boats, barges, etc.) approximately 33,000 are diesel powered and
consume 10.2 billion litres.
<
Ocean-going commercial vessels (e.g., tankers, container ships, passenger liners,

cruise ships, etc.) approximately 180 are diesel powered and consume an
estimated 76 million litres of diesel fuel.
99
Montral Gazette. June 14, 2003.
100
Biodiesel Marine Market Pre-evaluation. Final report to the National Biodiesel Board by Arthur D.
Little. September 7, 1995.

39
<
Government affiliated vessels (military ships, coast guard) approximately 100

military ships and 2,000 coast guard ships are diesel powered and consume about
114 million litres.
<
Research vessels about 80 are diesel powered and consume 151 million litres of
diesel fuel.
The main diesel engine manufacturers for recreational vessels are Yanmar (4060%), Volvo
Penta (1530%), and Perkins (510%). The main engine manufacturers for inland/harbour
commercial vessels are Caterpillar (4045%), Cummin (2530%), and Detroit Diesel (2025%).
Recreational vessels represent the best market opportunity for biodiesel blends.101 Approximately
1 million diesel-powered boats operating in and around the US consume about 360 million litres
of diesel fuel annually. Unlike commercial vessels, annual fuel usage is generally low, and the
higher fuel cost of biodiesel can be more easily offset by the benefits of greater fire safety,
improved exhaust odour, reduced environmental liability for spills, and green image.102
About 8590% of sailboat operators have been shown in biodiesel industry studies to be highly
supportive of biodiesel.103 About 70% of recreational boaters, especially tour and dive boat
operators and government agencies, are willing to pay 10 cents more per litre for B20. This
market niche could be addressed by biodiesel if there was increased manufacturer (i.e., warranty)
support and more convenient distribution involving pre-blended fuels.104
101
A number of marketing efforts have been targeted at this niche area. See, for example, Introducing
Biodiesel in the Great Lakes Recreational Marine Market. A report produced by the Great Lakes Biodiesel Market
Development Program with funding assistance from the Illinois Soybean Marketing Board. June 1999. Teall, R.
Introducing Biodiesel Into The Marine Market - Phase I Florida Keys. National Biodiesel Board Report. October
1995. Von Wedel, R. Technical Handbook for Marine Biodiesel in Recreational Boats. Report prepared for the
NREL, US Department of Energy. April 1999.
102
103
Booz Allen Hamilton. Market Potential of Biodiesel in Regulated Fleets, Marine Vessels, and
Underground Mining. Report to the United Soybean Board. November 11, 1998.
104
Ibid.

40
The higher cost of biodiesel will be a major market barrier for commercial vessels where fuel
costs represent a major portion of total operating costs.105 Commercial boaters are not willing to
pay even a few cents more per gallon for biodiesel.106
Booz Allen Hamilton have projected the potential US market for B20 in the recreational boating
category:107
Table 9: Projected B20 market share of the recreational marine market
Market segment
Diesel consumption
B20 share
B20 consumption
Sailboats
15 million litres
25%
3.8 million litres
Other recreational boaters
500 million litres
5%
25.0 million litres
Public transit ferries
83 million litres
10%
8.3 million litres
Total
37.1 million litres
Even in the large US market, recreational boaters would provide a market for only 7.6 million
litres of B100. In Canada, this would amount to probably only 757,000 litres. Given the
dispersed location of recreational users and the difficulties in distribution, the marine market
provides limited opportunities for biodiesel.
To break into the large, price-sensitive, commercial marine market estimated to be over
7.6 billion litres will require a drastic reduction in biodiesel fuel prices, which tend to be
about twice as high as regular diesel.
105
106
107
Ibid.

41
4.4.4 Railroad use

In 2001, Canadian railways consumed 2.13 billion litres of diesel fuel, or 9.5% of the total diesel
market.108 This significant niche market has the potential to be more important in the Canadian
context than it might be in the US, where it represents only 5% of the total diesel market.109
If Canadian railways used a B20 blend, there would be it would create a market for about 400
million litres of neat biodiesel.
Urban commuter rail operations are likely to be near term market opportunities, including:110
<
the AMT service in Montreal, which operates 15 locomotives and uses 2.56
million litres of diesel fuel annually
<
the GO train service in Toronto, which operates 45 locomotives and uses 21.6
million litres annually
<
the West Coast Express (WCE) in Vancouver, which operates 6 locomotives and
uses 1 million litres per year.
Intercity passenger operations could also be considered for demonstrations including:
<
the VIA Rail Quebec-Windsor Corridor service, which operates 35 locomotives

and consumes 30 million litres of diesel annually.
Freight switching operations could be another opportunity for demonstrating biodiesel because
they typically use older engines where warranty issues are not as critical. As well, the duty cycle
of switching locomotives is such that fuel consumption concerns would also be minimized.111
<
There are 643 switching locomotives in Canada, which consume about 5% of

Canadian railway diesel fuel.
108
Statistics Canada. Quarterly Report on Energy Supply-Demand in Canada 2001-IV, Catalogue no.
57-003-XPB.
109
US Energy Information Administration. Fuel Oil and Kerosene Sales, 2002. See Table 13, Adjusted
Sales of Distillate Fuel Oil by Energy Use in the United States: 1998 - 2002.
110
Dunn, R. Table 1 in Biodiesel As A Locomotive Fuel in Canada. Report prepared for the Transportation
111
Ibid.

42
Freight locomotives in Canada are generally modern and EPA-compliant. Many of these
locomotives are still under warranty. These would not be good candidates for demonstration.112
In general, there are currently a number of barriers to using biodiesel in railway locomotives:113
<
Cost B20 in Canada currently costs about 2 4 cents per litre more than diesel.
The higher biodiesel costs remain, even after the removal of federal and
provincial excise taxes. However, this may improve if diesel costs increase in the
future and biodiesel production costs decline as a result of improved economies of
scale.
<
Higher NOx emisions Research by the Southwest Research Institute using a GM

EMD GP-38 locomotive engine found increased NOx emissions of 5 6%. This is
a concern to the Railway Association of Canada because it has signed a
memorandum of agreement with Environment Canada, promising to cap NOx
emissions at 115 kilotonnes per year through to 2005. Despite fuel savings
initiatives, increased railroad traffic has meant that members of the association
have been very close to exceeding the cap.
<
Few greenhouse gas (GHG) incentives for railway use The life cycle CO2
reduction savings from using biodiesel occur mostly at the production stage of the
life cycle. There appear to be minimal savings on the transportation side due to
the lower energy intensity and potentially higher (slightly) fuel consumption.
There would have to be incentives for railways to use biodiesel as a GHG
reduction strategy. An emissions trading system would have to share GHG credits
with end users, like railways. At the moment, the producers want to claim the
credit for emissions reduction without taking into account the important role that
end users play in creating markets for the fuel producer.114
<
Lack of field testing Most of the current field testing of biodiesel fuel has been
conducted using high-speed diesel engines found in trucks and buses. It is
difficult to extrapolate the emissions profile from high speed diesel engines to
medium speed locomotive engines. There is a need to perform testing on
Canadian freight locomotives, such as the older GM EMD SD-40 locomotive. In
addition, no performance or emissions testing has been conducted on the new
112
Ibid.
113
Ibid.
114
This position does not take into account other environmental and economic benefits including fewer
emissions of carcinogens, improved fuel biodegradability, diversification of energy supply, and rural economic
development.

43
Pratt & Whitney gas turbine engine that is being used in Bombardiers prototype
high-speed JetTrain passenger train. Critical research questions would be the
effect of biodiesel on startability and operations, and whether the biodiesel
would produce smoke and undue carbon erosion of the combuster nozzle and
turbine blades.115
<
US EPA engine certification Canada purchases new locomotive engines that are
EPA-certified compliant at the time of purchase using in-service diesel fuel. In
order to maintain EPA certification when using biodiesel, US EPA-compliance
testing would have to be performed on existing US EPA-compliant locomotives
originally certified with diesel.116
<
No warranty protection At the moment, the two North American locomotive

engine builders are still developing their position on biodiesel use. Extensive
testing and evaluation would have to be conducted to determine engine reliability
and emissions compliance.
<
Security of supply Currently, there is no commercial-scale biodiesel production

in Canada.
4.4.5 On-farm use
On-farm use of biodiesel is another large potential niche market.

In 2001, Canadian agriculture consumed 2.5 billion litres or 11% of the total market for diesel
fuel in Canada.117 The market share represented by Canadian agriculture is significantly larger
than in the US where agricultural consumption represents only 6% of the US diesel fuel
market.118
115
Ibid., p. 11.
116
Ibid., p. 13. This would require an independent testing laboratory like the Engine Systems Development
Centre (located in Lachine, Quebec) to benchmark biodiesel and diesel performance and emissions in medium-speed
diesel locomotive engines used in Canada. Tests would be performed in accordance with the procedures specified in
Part 92 (Control of Air Pollution from Locomotive and Locomotive Engines) of Title 40 of the Code of Federal
Regulations (40 CFR) administered by the US EPA.
117
57-003-XPB.
118
US Energy Information Administration. Fuel Oil and Kerosene Sales, 2002. See Table 13, Adjusted
Sales of Distillate Fuel Oil by Energy Use in the United States: 1998 - 2002.

44
Bob Metz, president of the National Biodiesel Board and a soybean farmer in South Dakota, has
called for all farmers to use a B2 blend in their farm equipment.119 If a B2 blend was used
throughout Canadian agriculture, it would create a market for 50 million litres of neat biodiesel.
Biodiesel blends may offer farmers several benefits that outweigh paying just a few cents more
per gallon than petroleum diesel. According to the US National Biodiesel Board, the benefits for
farmers include:120
<
<
<
<
<
<
exceptional lubricity
longer equipment life
lower maintenance costs and less equipment down time
a cleaner-burning fuel that is friendlier to the user and the environment
showing leadership in promoting use of a renewable fuel
increased biodiesel demand helps improve oilseed prices (and therefore net farm
income).
Examples of distributors that have begun targeting this market segment in the US include:
<
Fauser Oil (Elgin, Iowa), which obtains biodiesel from Ag Processing Inc. and
creates a B2 blend, which it sells at the same price as premium diesel to farmers
in northeastern Iowa.
Houseman Oil (Estherville, Iowa) is selling B2 to farmers in the northwestern part
of Iowa. B2 sells for a few cents more than #2 diesel.121
Logan Agri-Service Inc. sells B10 to famers in west central Illinois for 5 cents
more per gallon than diesel.122
<
<
Other agricultural stakeholders participating in the support of biodiesel include:
<
The Pioneer Hi-Bred International seed company has committed to using

biodiesel blends in its on-road and farm and tractor equipment as of April 1,
2003.123 The policy will affect Pioneers US and Canadian research and supply
management operations and includes more than 300 diesel vehicles and pieces of
farm equipment. Pioneer purchases an average of 200,000 gallons (litres) of diesel
fuel annually.124 It also joined the Biodiesel Alliance, a broad coalition of over
119
National Biodiesel Board news release, October 31, 2002.
120
Fact Sheet on Farmer Use, National Biodiesel Board.
121
National Biodiesel Board news release, August 30, 2001.
122
Ibid.
123
National Biodiesel Board news release, February 27, 2003.
124
Ibid.

45
325 nonprofit organizations, private companies, and government agencies that

support the increased use of biodiesel.125
The farm equipment giant, New Holland North America, has also joined the
Biodiesel Alliance.
<
4.4.6 Residential and commercial heating oil

Based on data from the Energy Information Agency for the year 2000, No. 2 heating oil is
consumed in 7.7 million homes in the US, with about 69% located in the Northeast. US
consumption in 2000 was 6.7 billion gallons, of which 88% or 5.5 billion gallons was consumed
in 11 mid-Atlantic and northeastern states.126
In Canada, commercial and institutional diesel use accounts for 3.3 billion litres, or 15% of the
total diesel market in Canada.127
Brookhaven National Laboratory has tested a number of biodiesel blends in home heating and
commercial boiler equipment. Their results indicate that biodiesel blends can be used with few
or no modifications to equipment or operating practices. The study also found reductions in
smoke and NOx emissions.128 The researchers recommended the following further
investigations:129
<
A B20 blend should be tested over several heating seasons in the field to identify
any potential problems
Laboratory testing should be carried out to determine the effects on non-metallic
materials, e.g., pump seals, valve seats, etc.
The mechanisms behind the reduction in NOx emissions in boilers should be
discovered, and scale-up laws should be established.
<
<
The National Oilheat Research Alliance has evaluated the performance and emissions of a B20
soy diesel blend with low-sulphur (0.05%) highway diesel compared to conventional home
125
Ibid.
126
National Biodiesel Board Fact Sheet web site. See section on heating oil.
127
57-003-XPB.
128
Krishna, C.R. Biodiesel Blends in Space heating Equipment. Report prepared by the Brookhaven
National Laboratory for the National Renewable Energy Laboratory. December 2001.
129
Ibid.

46
heating oil in a range of furnaces and boilers.130 Key observations and findings from the study
include:
<
<
<
<
<
<
NOx emissions are frequently reduced by 20%

good combustion stability, similar to conventional heating oil
SOx emissions are reduced by 83%
a 16% net reduction in CO2
reduced smoke numbers
improvement in fuel oil and combustion odours.
These results indicate that biodiesel blends can be used as a premium home heating fuel.
The researchers indicate that the following additional research is required:131
<
<
<
<
<
combustion testing across a range of blends to optimize performance and cost

tests for cold flow characteristics using above ground outdoor fuel storage tanks
tests with ultra-low sulphur (0.0015%) fuel oil
long-term tests of boiler fouling rates with biodiesel fuels
field tests and demonstrations.
Several field demonstrations are being conducted by public sector organizations. The
Agricultural Research Service of the US Department of Agriculture began using a B5 blend in its
heating oil in the winter of 2000. The Warwick Public School Department in Warwick Rhode
Island began testing biodiesel blends (10%, 15%, 20%) in medium to large boilers starting in
2001/02. They also found a significant reduction in NOx emissions using a B20 blend.132
Biodiesel made from waste fish oil should also be studied further. In Canada, Ocean Nutrition
(Mulgave, Nova Scotia) has signed a 10-year deal with Wilson Fuels Inc. for 5 million litres of
biodiesel per year. Wilson Fuels intends to sell a biodiesel blend for home heating.133
130
Batey, John, E. Final Report. Combustion Testing of A Bio-Diesel Fuel Oil Blend in Residential Oil
Burning Equipment. A report prepared for the Massachusetts Oilheat Council & National Oilheat Research Alliance.
July 2003.
131
Ibid.
132
Cerio, Robert S. Warwick Public Schools BioHeat Project. Slide presentation found on National
Biodiesel Board web site.
133
Fish oil is also being considered as a replacement for diesel fuel in electricity generators. UniSea Inc. in
Alaska has been studying the effects of using a 50/50 blend of fish oil and diesel fuel in a 2.3 megawatt diesel
generator. See Steigers, J. A. Demonstrating the Use of Fish Oil as Fuel in a Large Stationary Diesel Engine.

47
4.4.7 Underground mines

Evidence indicates diesel PM is a potential carcinogen and may pose a special hazard to those
working in confined areas like underground mines.134 A number of researchers have suggested
that biodiesels reduced air emissions profile might open the door to this niche market.
Biodiesel reduces tailpipe emissions of PM, CO2, and CO. Sulphur (SO) emissions are absent.
HC tailpipe emissions are reduced significantly, but their life cycle emissions are increased. NOx
are increased.135
A test conducted by the US Bureau of Mines using a Caterpillar 3304 PCNA equipped with an
exhaust catalyst found that biodiesel reduced the Ames mutagenicity of diesel particulate matter
(DPM) by 50% over conventional diesel fuel. The reduction in mutagenicity appears to be the
result of the lack of aromatics or polycyclic aromatic hydrocarbons (PAHs) in biodiesel fuel.136
In the US, there are over 250 metal and non-metal mines and almost 190 coal mines that use
diesel engines that consume over 2.3 billion litres of diesel fuel.137
Almost 9,000 pieces of diesel equipment are used in the US mining industry. The breakdown by
equipment includes: rubber tired loaders (25%), drills (12%), trucks (11%), haulage (5%),
personal carts (36%), forklifts (2%), bulldozers (2%), load haul dump (3%), and others (4%).138
The relatively small market size for these specialized pieces of equipment means that
development cycles for new technologies are typically quite long. Biodiesel offers mine owners
the possibility of meeting emission reduction goals using biodiesel with existing diesel and after
treatment pollution control technologies (Exhaust Gas Realization [EGR], catalysts, etc.).139
134
See Howell, S., and Weber, J.A. Biodiesel Use in Underground Metal and Nonmetal Mines. National
Biodiesel Board. May 1997.
135
Sheehan, J., Camobreco, V., Duffield, J., Graboski, M., Shapouri, H. An Overview of Biodiesel and
Petroleum Diesel Life Cycles. A Joint Study Sponsored by the US Departments of Agriculture and Energy. May
1998.
136
See Howell, S., and Weber, J.A. Biodiesel Use in Underground Metal and Nonmetal Mines. National
Biodiesel Board. May 1997. This paper provides a useful summary of the advantages of biodiesel for underground
mines and summarizes some of the other benefits like biodegradability, higher flash point, improved lubricity, lower
toxicity, ability to use with existing equipment, etc.
137
Howell, S.A., and Weber, A. U.S. Biodiesel Overview. National Biodiesel Board. January 1995.
138
Biodiesel Fuels for Underground Mines. Report to the National Biodiesel Board by Power Systems
Research. August 31, 1995.
139
Ibid.

48
The acceptance of biodiesel in underground mines depends greatly on economics. Mine owners
basically have two strategies for controlling particulate emissions:
<
use disposable filters (DF) that trap particulates on machines using regular diesel
fuel
use neat biodiesel (or a blend) on machines that employ catalytic converters.
<
A comparative study of the economics of using these two strategies found that the reduction of
PM in either metal or coal mines is about 70% when the entire complement of mine vehicles use
disposable filters. To achieve the same level of emissions reduction would require the use of
B100.140
In the case of the metal mine case study, B100 would have to be priced at $0.40 per litre to break
even with disposable filters, while in coal mines it could break even at $0.48 per litre.141
Factoring lost production in coal mines suggests that biodiesel could even be competitive at
$0.64 per litre. Biodiesel may also be easier to implement because no maintenance or miner
training is required.142
Effective April 25, 1997, the US Department of Labour, Mine Safety and Health Administration
(MSHA) required underground coal mines to use low-sulphur diesel fuel only and provide
adequate ventilation to exhaust contaminants.143 On April 9, 1998, MSHA also proposed a rule
requiring mine operators to install and maintain high-efficiency filtration systems on all heavy
duty equipment used in underground coal mines. The filtration system must remove 95% of
diesel PM emissions. These emission reductions cannot be achieved, even using B100.144
Although biodiesel could target light duty underground mining equipment, this equipment is by
definition not used frequently and does not consume much fuel. It is unlikely that mine operators
would go to the bother of installing a separate fuel storage system for so little benefit.145
140
Fruin, J.E., and Tiffany, D.G. Economic Analysis of Biodiesel Usage in Underground Mines. Bioenergy
98 Expanding Bioenergy Partnerships. 1998.
141
Ibid.
142
Ibid.
143
Booz Allen Hamilton. Market Potential of Biodiesel in Regulated Fleets, Marine Vessels, and
Underground Mining. Report to the United Soybean Board. November 11, 1998.
144
145
Ibid.
See Fruin, J.E., and Tiffany, D.G. Economic Analysis of Biodiesel Usage in Underground Mines.
Bioenergy 98 Expanding Bioenergy Partnerships. 1998. Booz Allen Hamilton. Market Potential of Biodiesel in
Regulated Fleets, Marine Vessels, and Underground Mining. Report to the United Soybean Board November 11,
1998.

49
The conclusion seems to be that underground mining does not offer much hope for biodiesel. It
is too expensive and cannot meet the performance targets for heavy equipment set out by the
MSHA.
A Canadian study conducted in 1997 at the INCO metal mine in Sudbury found 21% lower total
carbon emissions when a diesel-powered scooptram equipped with diesel oxide catalysts used a
blend of 58% soy-based biodiesel and low-sulphur No. 2 diesel, compared to low-sulphur No. 2
diesel used alone. The results, however, were lower than the researchers initially expected
(30% 50%). One of the main barriers to adoption will be costs. At 1997 price levels, biodiesel
fuel ranged from $3.00 to $3.50 US per gallon compared to $1.00 US per gallon for low-sulphur
No. 2 diesel. At a 50% blend, the cost would be between $2.00 to $2.25 US per gallon. Biodiesel
fuel costs would have to be significantly lower for it to be a viable particulate emissions control
option for underground metal mines in Canada.146
4.4.8 Parks and other environmentally sensitive areas
The release of air pollution and toxic exhaust emissions and fuel spills can have a significant
impact on forests and marine life. Because biodiesel is biodegradable and non-toxic, and has
fewer toxic emissions, US federal and state agencies consider it an important component of an
overall strategy for protecting parks and other environmentally sensitive areas.
A survey conducted for the National Biodiesel Board in the mid 1990s found that over 5,000
pieces of diesel-powered equipment are used in US federal and state parks and environmentally
sensitive areas. A diverse range of diesel-powered equipment is used, including medium to
heavy-duty trucks, a wide range of marine vessels, fire control equipment, locomotives, utility
tractors and mowers, road construction and maintenance equipment, stationary generators, and
air compressors. Caterpillar and Cummin were the most frequently cited suppliers of diesel
equipment.147
Based on the results of the survey, the total diesel demand was estimated at 379 million litres per
year. Assuming biodiesel was used as both a blend (e.g., B20) and in neat form (B100), the study
projected the near-term market for biodiesel in the US to be about the equivalent of 11.4 million
litres of B100, excluding the use of biodiesel by the US Coast Guard. If the Coast Guard moved
to B20, it could add an additional demand for 49.2 million litres of biodiesel.148
146
Evaluation of Biodiesel Fuel and a Diesel Oxidation Catalyst in an Underground Metal Mine. Diesel
Emissions Evaluation Program. Natural Resources Canada. Project Summary.
147
Peeples, James E. Biodiesel Parks and Environmentally Sensitive Areas: Market Pre-Evaluation Study.
Report to the National Biodiesel Board. February 1996.
148
Ibid.

50
Assuming that the Canadian market for biodiesel in parks and environmentally sensitive areas is
about 1/10th the US market, this niche market could provide a projected demand for about 1.1
million litres of biodiesel, excluding fuels used by the Canadian Coast Guard. This is a small
market that is relatively fragmented by types and uses of diesel equipment, making efforts to
communicate and organize change difficult, though not impossible.149
Capturing this market niche will be a challenge given the higher price of biodiesel fuel and the
prospect that Canada, like the US, could head into another economic downturn and create a
fiscal environment not conducive to accepting higher fuel costs. In addition, any attempts to use
biodiesel in its neat form (B100) will face additional challenges because recent tests indicate that
power levels are lowered by about 10% and fuel consumption is increased by about 13%.150
4.4.9 Lubricity additives
In general, diesel fuel additives are used to create premium fuels. Additive packages can
contain any of the following:
<
<
<
<
detergents (to keep fuel injectors clean and prevent engine deposits that make
engines lose power and run poorly)
cetane improvers (to improve cold starts and reduce white smoke)
corrosion inhibitors (to prevent corrosion in engines as well as pipelines) and
lubricity additives (to reduce friction, improve gas mileage, and reduce engine
wear).
Lubricity additives are particularly important for low sulphur diesel fuel (less than 500 ppm)
because the hydrotreatment process lowers the natural fuel lubricity by removing nitrogen and
oxygen compounds. When low-sulphur diesel fuel was first introduced in 1994, there were high
wear failures in diesel engines and fuel pumps. For example, both Bosch (VW) and Stanadyne
(GM) have reported rotary injection pump failures caused from reduced lubricity in low sulphur
fuels. Refiners have responded to the problem by using various lubricity additives.151
149
At present, over 650 pieces of equipment in 19 US national parks are using biodiesel blends to power on
and off road equipment as well as power stand-by generators. See Bullard, K. Environmental Leadership in the
National Parks. Biodiesel Fuels: The Flexible Option Conference. Sacramento, California. September 25, 2001.
150
Howell, S., Sharp, C., and Tyson, K. Shaine. Exhaust Emissions and Performance of Diesel Engines with
Biodiesel Fuels. Renewable Biodiesel Fuels: The Flexible Option Conference. Sacramento, California. September
25, 2001.
151
Reported by Hertz, P. Barry. Biodiesel Fuel Lubricity Additives for Increasing Engine Life and
Efficiency. Presentation to the Association of Professional Engineers and Geoscientists of Saskatchewan. Saskatoon,
Saskatchewan. May 3, 2003.

51
Commercial grades of No. 1 diesel and No. 2 diesel now both contain additives. Yet even though
No. 2 diesel has greater lubricity than No. 1 diesel, many of the No. 2 diesel fuels sold in North
America do not meet minimum lubricity requirements recommended by engine manufacturers.152
Lubricity problems are particularly acute in the winter months when No. 1 diesel is used, or a
blend of No. 1 and No. 2 is used to combat gelling.153
Moreover, according to Paramins worldwide survey of winter diesel fuel quality, the lubricity of
Canadian winter diesel for the years 19961998 was consistently among the worst in the
world.154 In fact, lubricity testing by the University of Saskatchewan in 1999 using the MROCLE bench scale test found that only 4 of 9 Saskatoon winter and summer diesel fuels passed
minimum lubricity requirements.155
The proposed 2006 Canada and US diesel fuel standards will require still further sulphur level
reductions to less than 15 ppm. This is expected to cause even further lubricity problems.
Lubricity Studies at the University of Saskatchewan
As early as 1995, research at the University of Saskatchewan demonstrated that an Isuzu 1.8 litre
IDI diesel powered automobile operating under Saskatchewan winter conditions using a 10%
blend of canola methyl ester in No. 1 diesel resulted in:156
<
<
<
<
<
improved cold weather starting and reduced white smoke

an audible reduction in engine noise
lower production of black smoke under load
a reduction in engine wear
a reduction in oil sediments.
152
Van Gerpen, Jon H. and Chang, David Y.Z. Evaluation of the Lubricity of Soybean Oil-Based Additives
in Diesel Fuel. Study prepared for the United Soybean Board. February 25, 1998.
153
Ibid.
154
Reported by Hertz, P. Barry. Biodiesel Fuel Lubricity Additives for Increasing Engine Life and
Efficiency. Presentation to the Association of Professional Engineers and Geoscientists of Saskatchewan. Saskatoon,
155
Munson, Jason W., and Hertz, P. Barry. Seasonal Diesel Fuel and Fuel Additive Lubricity Survey Using
the Munson ROCLE Bench Test. SAE Technical Paper 1999-01-3588. October 1999.
156
Hertz, P. Barry. Winter Engine Wear Comparisons With A Canola Bio-Diesel Fuel Blend. A study
prepared for the Saskatchewan Canola Development Commission. May 1995.

52
Further investigation using an Isuzu IDI diesel-powered 1985 Chevette during the summer of
1995 using 5 and 10% blends of canola methyl ester in No. 2 diesel also indicated reduced
engine wear.157
Subsequent field research using canola at different treatment rates (10%, 5%, 2%, 1%, 0.5%,
0.2% and 0.1%), various fuel types (No. 1 diesel, No. 2 diesel), and a range of diesel engine
makes (Dodge/Cummins, Volvo/VW, Ford/Mazda, VW) and sizes (1.9L, 2.0L, 2.4L, 5.9L)
consistently found reduced engine wear and improved fuel economy. The most recent field tests
using a 1998 VW Beetle TDI found that:
<
<
<
Canola-based additives are capable of decreasing engine wear by up to half

(double engine life) with a treatment rate of less than 1%
Fuel economy is improved by 213% using a treatment rate of less than 1%
Canola additives work effectively with both unadditivized and commercially
additivized low sulphur diesel fuel.158
Additional bench scale tests conducted by the University of Saskatchewan also demonstrated
that 1% biodiesel blends made from a variety of vegetable oils, including soy, canola, sunflower,
rapeseed, linseed (flax), and mustard all raised the lubricity of an unadditized, low sulphur
reference diesel fuel above the M-ROCLE lubricity pass/fail number. Two of the most promising
lubricity additives were canola methyl esters and a canola oil derivative. Both were able to raise
the lubricity of the unadditivized diesel fuel to acceptable levels using only 1/10th of 1%.159
Vegetable oil-based lubricity additives also compare favourably economically with
commercially available non-biobased lubricity additives. A University of Saskatchewan study
comparing a canola oil derivative to seven other non-biobased additives found the canola oilderived additive to be the most cost-effective at the 0.1% treatment rate (additional cost of 0.07
cents per litre) and the second most cost-effective at the 1% rate (additional cost of 0.68 cents
per litre).160
157
Hertz, P. Barry. Summer 95 Engine Wear Investigations Using Canola Methyl Ester and No. 2 Diesel
Fuels. A study prepared for Canodev Research Inc. April 1996.
158
Hertz, P. Barry. Biodiesel Fuel Lubricity Additives for Increasing Engine Life and Efficiency.
Presentation to the Association of Professional Engineers and Geoscientists of Saskatchewan. Saskatoon,
159
Munson, Jason W., Hertz, P. Barry , Dalai, Ajay K., and Reaney, M. Lubricity Survey of Low-Level
Biodiesel Fuel Additives Using The Munson ROCLE Bench Test. SAE Technical Paper 1999-01-3590. October
1999.
160
Munson, Jason W., and Hertz, P. Barry. Seasonal Diesel Fuel and Fuel Additive Lubricity Survey Using
the Munson ROCLE Bench Test. SAE Technical Paper 1999-01-3588. October 1999.

53
If a 2% biodiesel lubricity additive was added to all diesel fuels in Canada, it would create a
market for 450 million litres of biodiesel, or about twice the current volume of ethanol sold in
Canada.
Lubricity Studies at Iowa State University
Lubricity tests conducted at Iowa State University using two widely used lubricity test methods
(the Scuffing Load Ball on Cylinder and the High Frequency Reciprocating Rig test) also found
that a blend of 1% methyl soyate (soy diesel) was sufficient to bring a commercial No. 1 diesel
fuel with no additives (either for corrosion resistance or lubricity) up to meet lubricity
recommendations of engine manufacturers. A specially prepared soybean oil-based additive
(a polyhydroxy esterified co-polymer produced by International Lubricants Inc.) was effective at
1/18th the treatment rate of methyl soyate.161
Lubricity studies by Stanadyne Automotive Corporation
Stanadyne Automotive Corporation has tested No. 1 and No. 2 US low-sulphur diesel fuels
(500 ppm) that are representative of the market after 1993 and found the following results:162
Table 10: HFRR Scar (microns)
Percent biodiesel
No. 2 diesel
No. 1 diesel
0.0
536
671
0.4
481
649
1.0
321
500
2.0
322
355
20.0
314
318
100.0
314
314
161
Van Gerpen, Jon H. and Chang, David Y.Z. Evaluation of the Lubricity of Soybean Oil-Based Additives
in Diesel Fuel. Study prepared for the United Soybean Board. February 25, 1998. This paper was later presented at
the 1999 ASAE Annual International Meeting in Toronto, Ontario, July 18-21, 1999.
162
Reported in National Biodiesel Board Fact Sheet: Lubricity Benefits.

54
A 1% biodiesel blend for No. 2 and a 2% blend for No. 1 diesel was all that was required to
reduce scarring to the 460-micron maximum using the High Frequency Reciprocating Rig
(HFRR) test. Based on their testing, Stanadyne reports that:
...we have tested biodiesel at Stanadyne and results indicate that the inclusion of
2% biodiesel into any conventional diesel fuel will be sufficient to address the
lubricity concerns that we have with these existing diesel fuels. From our
standpoint, inclusion of biodiesel is desirable for two reasons. First it would
eliminate the inherent variability associated with the use of other additives and
whether sufficient additive was used to make the fuel fully lubricious. Second, we
consider biodiesel a fuel or fuel component - not an additive...Thus if more
biodiesel is added than required to increase lubricity, there will not be adverse
consequences that might be seen if other lubricity additives are dosed at too high
a rate.163
Some concerns about biodiesel lubricity claims
There are a number of concerns about the lubricity claims of biodiesel:
<
Conflicting evidence Lubricity tests conducted at the Southwest Research

Institute in San Antonio Texas in 1994 using the Scuffing Ball on Cylinder
Lubricity Evaluator (BOCLE) found that biodiesel blends at levels below 5% had
essentially no effect on lubricity.164 In a more recent City of Montreal field study,
transit buses using biodiesel blends did not result in improved fuel
consumption.165
<
Need for field tests using heavy trucks Most of the lubricity tests have been
conducted using either lab bench testing or field tests using small diesel vehicles.
A representative from the Canadian Trucking Association has recommended that
lubricity claims (reduced engine wear, improved fuel consumption) about using
small amounts of canola and/or soy methyl esters should be verified using onroad transportation trucks. Other performance factors, such as engine power,
163
Ibid.
164
Reported by Howell, S. and Schumacher, L. Biodiesel Lubricity - Field Test Extension. Fiscal Year 1994
Final Report to the National Biodiesel Board. October 31, 1994.
165
Report. May 2003.

<
<
55
should also be studied to determine whether there are any downside issues to
using biodiesel esters as an additive.166
There is no ASTM standard for lubricity, although the industry is close to
adopting one.167 The Society of Automotive Engineers (SAE) has developed a
standard using the High Frequency Reciprocating Rig test. The Fuel Injection
Equipment (FIE) manufacturers have adopted the use of HFRR (ISO 12156-2:
1998) and recommended that all diesel fuel meet a limit of 460-micron maximum
Wear Scar Diameter.168
Premium diesel fuels generally include a lubricity additive.
4.4.10
Cetane improvers
The cetane number measures the interval between the beginning of injection and the autoignition
of the fuel. The higher the number, the shorter the interval. Fuels that have a low cetane number
cause hard starting, rough operation, noise (clattering), and exhaust smoke.
The ASTM standard D975 for diesel fuel sets the minimum cetane number at 40, and engine
manufacturers use this standard when they design engines. In practice, diesel fuel refiners
slightly exceed the cetane number of 40; a recent survey reports average cetane numbers in the
43 to 44 range.169
The North American market for cetane improvers in 1997 was estimated to be about 50 million
pounds annually split almost equally among California, Alberta/Canada, and the rest of the US.
It is driven in California by emissions reduction legislation, which requires an increase in cetane
numbers by as much as 15 over the norm (40). In Alberta, it is driven by Syncrude and Tar Sands
stocks which struggle to meet the ASTM D975 standard of a minimum cetane of 40. It is driven
in the rest of the US because refiners maximize aromatic stocks in diesel fuels because they are
limited in gasolines, especially reformulated gasolines.170
166
Comments by Stephen Laskowski, Director, Policy Development, Canadian Trucking Association.
167
According to a National Biodiesel Board Fact Sheet: Lubricity Benefits, The two most popular bench
test methods for lubricity are the Ball on Cyclinder Lubricity Evaluator (BOCLE), and the High Frequency
Reciprocating Rig test (HFRR). The BOCLE is commonly used to evaluate the lubricity of fuels or fuel blends but
does a poor job of characterizing the lubricity of fuels containing lubricity additives, while the HFRR is commonly
used for both the neat fuels and with fuels containing small amounts of lubricity enhancing additives.
168
Reported in National Biodiesel Board Fact Sheet: Lubricity Benefits.
169
Bennick, C. Would You Benefit From An Additive? Equipment Today, March 2002.
170
CMC Consulting Inc. Fuel Additives Derived From Soybean Oil: Final Report. National Biodiesel
Board. August 1, 1997.

56
Diesel engine manufacturers have suggested cetane levels should be increased to 50 to reduce
diesel emissions. This would increase the potential market to 340 million pounds/year. Cetane
levels might also have to be increased 55 to 60 to meet the EPAs proposed 2004 NOx limit of
2.5 g/bhp-hr. This could further increase the market to 650 million pounds per year if it was
mandated.171
The estimated cost of making refinery changes to increase the cetane number by 10 is 8-10 times
more expensive than using cetane improvers.172
Biodiesel has to compete with four major cetane improver suppliers: Ethyl, Octel America,
ARCO Chemical, and AKZO.173 These companies typically use nitrates and peroxides in 0.1 to
0.5% concentration levels to boost cetane numbers by 5 to 10.174
By comparison, a review of biodiesel cetane numbers using soybean and rapeseed feedstocks
ranged from:175
<
<
45.0 to 67.0 for soy biodiesel

48.0 to 64.7 for rapeseed biodiesel.
The variations appear to be due to differences in fatty acid composition. The longer the fatty acid
carbon chains and the more saturated the molecules, the higher the cetane number.176
171
Ibid.
172
Ibid.
173
Ibid.
174
Ibid.
175
Van Gerpen, J. Cetane Number Testing of Biodiesel. September 1, 1996.
176
Ibid. Also see Knothe, G., Matheaus, A. C., and Ryan III, T. W. Cetane Numbers of Branched and
Straight-Chain Fatty Esters Determined in An Ignition Quality Tester. Elsevier, December 24, 2002.

5.0
57
Other fuel additives, alternative fuels, and technologies
Many other fuel additives, alternative fuels, and technologies offer the consumer environmental
benefits. Some of these alternatives may compete with biodiesel, while others may be
complementary.
5.1
Competing fuel additives
Gold Diesel
If biodiesel is used as a fuel additive (B2% or less) to increase lubricity, it will have to compete
with other fuel additive packages already on the market.177 One example is Sunocos Gold
Diesel.
Sunoco has developed a premium low sulphur diesel additive package called Gold Diesel, which
has a higher cetane rating than #2 LSD resulting in quicker starts, smoother engine running, and
less smoke and emissions. Black smoke is reduced 13% on average, and HC/CO/NOx / and PM
are reduced by 422%. The additive package includes detergents (to maximize engine power and
fuel economy), a lubricity additive, a water de-hazer and de-icer (to prevent freeze-ups), and
corrosion inhibitors and stabilizers. The small increased costs (1.3 cent at wholesale and 2.6
cents at retail) address the needs of trucking companies that operate on thin profit margins and
want to control their fuel costs. In short, Gold Diesel offers good environmental benefits and
improved engine performance at a small increase in cost and without government subsidies.178
5.2
Potentially complementary biofuel packages
A number of fuel additives and alternative fuels offer environmental benefits, including
SuperCetane, oxy-diesel, water emulsion, and F-T diesel. These additives/fuels could compete in
the marketplace with biodiesel, or alternatively, biodiesel could be blended with these
additives/fuels to form an enhanced biofuels package.
177
Caution: additive claims in the US do not require proof, except in California, and many tests are
conducted on bench-top equipment that does not correlate to EPA-certified emissions testing procedures.
Communication from Shaine Tyson, NREL.
178
Information obtained from Sunoco.

58
5.2.1 CETC SuperCetane179

Scientists at CANMET Energy Technology Centre (CETC), Natural Resources Canada, have
proven at lab scale a process for converting yellow grease and/or tallow to a low sulphur, high
cetane premium diesel blending stock, which was originally called AGTANE (AGricultural
ceTANE) or BIOZOIL (in French-speaking countries).180 The licence agreement with the
technology developer promoting AGTANE has been terminated, and CETC controls the rights.
The product is now called SuperCetane.
The CETC SuperCetane Technology is not a biodiesel, but rather a collection of long-chain
paraffins. It has a number of economic advantages:181
<
It does not require more algae and/or bacteria-killing additives than regular
diesels and has a storage life equal to or superior than currently commercialized
diesel fuels.
<
It does not require the use of special storage materials.
<
It can be used in conventional diesel engines without modification.
<
It has a cetane value of about 100 before blending. The cetane number measures
the quality of fuel ignition and combustion.
<
It works well with traditional cetane improvers.
<
It allows diesel blenders/traders to buy and profitably resell lower cetane nonresponsive diesel stock, i.e., stock that does not respond well when traditional
cetane additives are used.
<
It has excellent physical and chemical characteristics, e.g., high flashpoint and
good lubricity, which make it an ideal blending stock.
<
Fleet testing using mail delivery vans have found increases in fuel economy.182
<
It has a low sulphur content (~ 15 plus or minus 5 ppm).
179
See http://www.canren.gc.ca/tech_appl/index.asp?CaId=2&PgId=1083 for a description of the

hydrotreating process that uses conventional petroleum refinery hardware under proprietary operating conditions to
produce a cetane-enhancing product.
180
See Spataru, Alex. Is There A Future for Yellow Grease As A Fuel Additive? Render Magazine,
February 2001.
181
182
Ibid.
A six-month test program using a fleet of Canada Post delivery vans operating in Vancouver found an
8% improvement in fuel economy savings. See http://www.canren.gc.ca/tech_appl/index.asp?CaId=2&PgId=1083

59
<
It can be distributed through existing refined petroleum products distribution

channels.
<
SuperCetane and the waxy residue from the hydrotreating process can be sources
of renewable n-paraffins for refinery and petrochemical applications.183
<
Its yield is not affected by the free fatty acid (FFA) content in yellow grease.
CANMET has developed a semi-pilot plant for producing large volumes of SuperCetane for fuel
testing and process optimization. It has also recently completed an engineering and economic
feasibility study for the construction and operation of two (400 and 800 barrels/day) commercial
plants to convert vegetable oils and yellow grease to a cetane enhancer and a highly paraffinic
lubricant basestock (wax). For a 400 b/d plant costing US$5.6 million, the payout time (defined
as capital cost divided by net income) was estimated to be 4.6 years using a feedstock costing
about US$0.018/lb. In the case of the 800 b/d plant, (US$8.5 million), the payout time is reduced
to 2.7 years (32 months), due to the economy of scale.184
CANMET still needs to validate the technology using a field-proven pilot plant.185
Natural Resources Canada believes that biodiesel and SuperCetane are complementary rather
than competitive fuels. Testing is now under way in which SuperCetane will be mixed with a
blend of 80% diesel / 20% biodiesel to see if NOx emissions from biodiesel blends can be
reduced. It is possible that these two fuels (SuperCetane and biodiesel) could be marked as part
of a biofuels package that would offer improved fuel quality through better lubricity, higher
cetane, lower GHG emissions, etc.186
In a second test program, SuperCetane will be added to an oil sands-derived diesel fuel to
improve the cetane level. Emissions and fuel consumption will be measured using a Caterpillar
3401E diesel engine. The effects of SuperCetane will be compared with conventional cetane
improvers (nitrate and peroxide) as well as Fischer-Tropsch (F-T) diesel and several oxygenates.
183
http://www.canren.gc.ca/tech_appl/index.asp?CaId=2&PgId=1083
184
Ibid.
185
Spataru, Alex. Is There A Future for Yellow Grease As A Fuel Additive? Render Magazine,
February 2001.
186
Communication from Ed Hogan, Natural Resources Canada.

60
5.2.2 Oxy-diesel
Oxy-diesel involves a 7.7% blend of ethanol with No. 2 diesel fuel using a 1% co-solvent to
keep the ethanol and diesel in phase. This option also results in environmental benefits. PM and
CO are reduced by 2030%, and NOx emissions are reduced by 310%. In short, Oxy-diesel
offers very good smog reduction benefits, using the existing ethanol infrastructure, and may not
require further government subsidies.187
As part of a commercialization effort, supporters are preparing an Ethanol-Blended Diesel Fuel
Handbook, Uniform Safety and Handling Procedures, and A Greenhouse Gas Impact
Analysis.
Like biodiesel, oxy-diesel faces similar commercialization issues like OEM engine warranty
acceptance and the need to establish ASTM standards. Technical issues include concerns about
flash point, flammability, and water tolerance. On the other hand, oxy-diesel is generally less
expensive, offers greater emissions benefits than B20, and is more easily available because of the
greater maturity of the ethanol industry.188
5.2.3 Water-diesel emulsions
This involves a blend of 20% water, 3% emulsifier, and 77% diesel fuel. It is still in the research
and demonstration stage. Emission reductions are dramatic. NOx reduction ranges from 1030%
with 20+% being typical. PM reductions are in the 50% range. Smoke reduction ranges from
5090%. However, there is a loss of power/mileage in the 10% range, which can be minimized if
the fuel is used by urban municipal fleets with stop and go service.189
187
Information obtained from Sunoco. Also see the presentation by James Peeples of AAE Technologies
Inc called E-Diesel: New Market Opportunity for Ethanol. Delivered at the Renewable Diesel Workshop sponsored
by the NREL (DOE). Sacramento, California. September 25, 2001. AAE Technologies, Inc. has been selling oxydiesel (O2DieselTM) since the second quarter of 2000, and has an exclusive marketing agreement with Octel Starreon
for US and Canada. AAEs data, based on testing and research conducted by the Colorado School of Mines in 2000
indicates slightly different findings. NOx reductions range from 25% (lower than figures provided by Sunoco),
while PM emissions are reduced by 3440% (higher than figures provided by Sunoco). CO reduction figures are the
same.
188
James Peeples of AAE Technologies Inc. E-Diesel: New Market Opportunity for Ethanol. Delivered at
the Renewable Diesel Workshop sponsored by the NREL (DOE). Sacramento, California. September 25, 2001. Also
see McCormick, R.L., and Parish, R. Advanced Petroleum Based Fuels Program. Milestone Report: Technical
Barriers to the Use of Ethanol in Diesel Fuel. National Renewable Energy Report, November 2001.
189
Information obtained from Sunoco.

5.3
61
Competing alternative fuels
A number of alternative fuels offer environmental benefits that could compete with biodiesel in
the marketplace.
5.3.1 Compressed natural gas (CNG)
CNG is made from pipeline natural gas, which is composed of 90% methane. For vehicular use,
the natural gas is compressed to high pressure (20,68424,821 kPa) and stored in high-strength
cylinders. The compression of the gas occurs on-site where the vehicles are fuelled.
More than 85,000 natural gas vehicles are in operation today, including one out of every five
transit buses in the US. CNG vehicles can come as two types of systems: one that operates
exclusively on natural gas and another that operates as a dual-fuel vehicle, which can use both
natural gas and gasoline. CNG systems are used in a variety of vehicles including compacts,
trucks, vans, and buses.190
The development of natural gas engines for the heavy-duty market began in the late 1980s with
transit buses. Caterpillar, Cummins, Detroit Diesel Company, John Deere, Mack, and PSA/Cat
have all developed natural gas engines. The main reason for interest in natural gas engines is
their ability to reduce PM and NOx. This is clearly demonstrated in the table below, which
compares the PM and NOx emissions of natural gas to other alternative fuels like
methanol/ethanol, B20, DME, A-21, and F-T diesel fuels.
190
Clean Alternative Fuels: Compressed Natural Gas. US Environmental Protection Agency Fact Sheet.
March 2002.

62
Table 11: Comparison of air emissions

Fuel engine technology
Nox emissions
PM emissions
baseline
baseline
- Lean burn
- Stoiciometric
- Dual fuel
-50 to -60%
-60 to -85%
-15%
-70%
-70%
-50%
Methanol/ethanol
-50 to -70%
-60%
B20
+8 to -5%
-10 to -20%
DME
-25%
-50%
A-21
-40%
-10 to -15%
-8 to -15%
-30%
Diesel
1
Natural gas (LNG/CNG )
F-T diesel
1
Note: Clean Alternative Fuels: Compressed Natural Gas. US Environmental Protection Agency Fact Sheet. March 2002
reports reductions in CO emissions of 9097%; reduction in NOx emissions of 3560%; potential reductions in non-methane
HC emissions of 5075%; fewer toxic and carcinogenic pollutants and little to no PM produced and no evaporative
emissions.
Source: Booz Allan Hamilton. Market Potential of Biodiesel in Regulated Fleets, Marine Vessels, and Underground Mining
Equipment. Report to the United Soybean Board. November 11, 1998.
However, the main challenge for CNG (and liquid natural gas and liquid petroleum gas) is high
life cycle costs. Fuel price costs may be lower, but their life cycle costs are higher because of
higher capital costs. For example, CNG buses have significantly higher capital costs (up to
20%); higher infrastructure costs (expensive fast fill stations, modifications to HVAC systems
and electrical wiring for indoor vehicle storage); greater safety hazard (methane gas may cause
an explosion); lower operating range (about 30% less than diesel)191; higher operating costs
(refill station may require a stationary engineer, higher cost of replacement parts, longer
downtime waiting for parts replacement); higher training costs (specialized training required for
mechanics); and concerns about fuel quality (poor fuel quality can lead to catastrophic engine
failure).192
191
CNG, LNG, LPG, A-21, DME, and F-T diesel all have lower energy density and achieve fewer miles per
equivalent gallon. Biodiesel on the other hand is very similar to diesel (35,873 kJs per litre for diesel vs 34,796 kJs
per litre for biodiesel. As a result, there is no fuel economy penalty, no additional vehicle weight, and no loss in
passenger carrying capacity to make up for additional fuel load needs. See Booz Allan Hamilton. Market Potential of
Biodiesel in Regulated Fleets, Marine Vessels, and Underground Mining Equipment. Report to the United Soybean
Board. November 11, 1998, page III-118 for more details.
192
Howard, L. Biodiesel vs Other Alternative Fuels. Report by Manager of Quality Assurance, BiState
Development Agency. National Biodiesel Board Document Database. March 15, 1994. Ahouissoussi, N., and
Wetzstein, M. A Comparative Cost Analysis of Biodiesel, Compressed Natural Gas, Methanol, and Diesel for
Transit Bus Systems. National Biodiesel Board Document Database, January 1994. Booz Allen Hamilton. Technical
and Economic Assessment of Biodiesel for Vehicular Use. National Biodiesel Board Document Database. April 14,
1994.

63
Similar results have been found using CNG-equipped taxi cabs. On a cents per kilometre basis,
the fuel costs for a fleet of 10 CNG-powered Crown Victoria taxi cabs were found to run 30%
lower (3.46 cents vs 5.08 cents) than a fleet of 10 Crown Victoria cabs running on conventional
gasoline. However, the CNG-equipped Crown Victoria taxi cabs cost $2,662 more. For a vehicle
operating 80,000 kilometres per year, a taxi cab owner would expect to achieve $1,664 in fuels
savings per year and reach a life cycle break-even point within 16 months. For most drivers who
put only 24,000 kilometres on their car, it would take more than five years to break even.193
5.3.2 Liquid natural gas (LNG)
Today there are more than 1,000 vehicles on US roads using LNG.194 LNG is produced by
chilling natural gas to minus 127"C and storing it in thermally insulated cylinders at low pressure
(1381034 kPa). LNG is purer than CNG because it contains 9099+% methane.
LNG is used only for heavy duty fleet applications running very routinized operations. Heavy
duty trucks and buses running on LNG can cost $38,400 to $64,000 more than conventional
diesel-powered vehicles. LNG fuel storage and dispensing can cost $19,200 to $28,160 per
vehicle. Potentially flammable methane vapours can vent from the cylinders if left idle. Because
of the fuels ultra low temperature, it can cause frostbite if it comes into contact with skin. As a
result, LNG vehicles should be frequently driven, stored outdoors, and serviced only by trained
professionals.195
5.3.3 Liquid petroleum gas (LPG) or propane
Liquid propane currently fuels over 350,000 vehicles on US roads today, including taxi cabs,
school buses, and police cars. There are over 5,000 refuelling stations across the US, making it
the most widely used alternative fuel.196
LPG is a by-product of natural gas and petroleum refining. It is comprised mostly of propane and
smaller amounts of butane. Propane can be converted to liquid under moderate pressure so that it
can be more easily transported and stored in vehicle fuel tanks. LPG systems can also come in
two versions: LPG only and LPG/gasoline dual fuel systems.197
193
See Barwood Cab Fleet Study Summary. US Department of Energy, Office of Energy Efficiency and
Renewable Energy. May 1999.
194
Clean Alternative Fuels: Liquid Natural Gas. US Environmental Protection Agency Fact Sheet.
March 2002.
195
Ibid.
196
Clean Alternative Fuels: Propane. US Environmental Protection Agency Fact Sheet. March 2002.
197
Ibid.

64
Propane vehicles typically cost $3,840 to $5,120 more for light duty vehicles and $5,120 to
$6,400 more for medium duty delivery trucks. Propane and gasoline fuels prices are comparable,
but the lower energy content of propane means it can travel fewer miles and requires a slightly
larger fuel tank to travel the same distance.198
If propane is stored indoors, proper ventilation and leak detection sensors are needed to increase
fire safety.199
5.3.4 Methanol
Methanol can be produced from biomass and coal, but natural gas is the most economical
feedstock. Methanol is used as the chemical feedstock for products like methyl tertiary butyl
ether (MTBE), formaldehyde, acetic acid, and various solvents. Neat methanol (M100) is used in
heavy duty vehicles, while M85 is used in light duty, flex-fuel vehicles. Methanol must be
shipped by barge, rail, or truck to retail stations because methane is too corrosive to ship by
pipeline.200
More than 15,000 M85 flex fuel vehicles are in operation, mostly in California and New York.201
Several auto manufacturers are also developing methanol-powered fuel cell vehicles because its
simple chemical structure simplifies the overall fuel cell design.202
Although methanol costs less than gasoline on a per gallon basis, it has a lower energy content.
On a gallon equivalent basis, methanol costs slightly higher than gasoline. In general, light
powered methanol vehicles also cost about $384 to $640 more per vehicle than their gasoline
counterparts.203
198
Ibid.
199
Ibid.
200
201
Clean Alternative Fuels: Methanol. US Environmental Protection Agency Fact Sheet. March 2002.
202
Ibid.
203
Ibid.

65
5.3.5 Dimethyl ester (DME)

DME is currently used as a propellent in aerosol sprays for personal products. Amoco Corp.,
Haldor Topsoe, and Navistar have been promoting it as a substitute for diesel. DME has a high
cetane rating (5560) and can be used in diesel engines to achieve ULEV standards without the
use of catalytic converters. DME can be processed from coal or biomass material, like corn
stalks, but natural gas is the most economical feedstock. Its price is expected to be slightly less
than methanol but well above natural gas.204
5.3.6 A-21
A-21 can be used with both spark-ignition and compression-ignition (diesel) engines and is
being marketed by Advanced Fuels Limited Liability Company. A-21 consists of a blend of
petroleum, water and additives, Naptha, and a light petroleum distillate. When combined with
30% or less water, it can be used in existing diesel engines without significant modification.205
5.3.7 Fischer-Tropsch (F-T) diesel
Fischer-Tropsch is a technology that converts process gas derived from coal, natural gas, or
biomass feedstocks into a synthetic petroleum substitute. F-T fuel contains no sulphur or
aromatics. Initial testing by the South West Research Institute indicated that it can be used in
unmodified diesel engines and achieve a 30% reduction in PM and an 8% reduction in NOx. Like
biodiesel, F-T fuel is also compatible with the existing diesel infrastructure. F-T fuels can be
transported in the same ships and pipelines as crude oil. Some experts believe that F-T will
eventually be competitive with regular diesel. In the meantime, F-T fuel is being considered as
an additive or blending component with petroleum diesel.206
Several oil companies are researching large-scale production of F-T fuels. At least four major
companies have announced plans to build pilot plants in Indonesia, Africa, South America, and
the US. The California Energy Commission believes that F-T fuels will eventually account for
23 million barrels per day, or about 23% of world refinery output by 2005. Sasol, a world
leader in Fischer-Tropsch technology, has a South African facility that produces 150,000 barrels
204
205
Ibid.
206
Ibid.

66
per day from domestic low grade coal. It has powered all South African vehicles from buses to
trucks to taxi cabs.207
F-T fuels currently cost about 10% more than conventional diesel and have a lower energy
content (lower fuel economy).208
5.3.8 Hydrogen
Hydrogen can be produced by reforming methanol, natural or other hydrocarbon fuels, gasifying
biomass, or splitting water molecules through electrolysis. Hydrogen can be burned in internal
combustion engines or fed into fuel cells to create electricity. Unlike biodiesel, which can use the
existing distribution system, hydrogen has no pipeline system and the cost to create that system
is considerable.209
DaimlerChrysler has begun to deploy 30 fuel cell-powered city transit buses around the world,
and beginning in 2003, they intend to market 60 small fuel-celled vehicles. They believe that
volume production is at least 10 years away due to cost, complexity, and fuel infrastructure
issues. The biggest uncertainty is not the fuel cell per se, but how the fuel will be distributed.
There are four options: pressurized or liquified hydrogen stored on-board; methanol on-board
reforming; gasoline on-board reforming; or use of other materials for generating on-board
hydrogen like sodium borohydride.210
207
Clean Alternative Fuels: Fischer-Tropsch. US Environmental Protection Agency Fact Sheet. March
2002. Also see Peterson, R. GTLs From Alaska North Slope and Cook Inlet. Renewable Biodiesel Fuels: The
Flexible Option Conference. Sacramento, California. September 25, 2001. Petersen claims Shell has announced six
plants to be constructed in Egypt, Trinidad, Indonesia, Iran, Australia, and Argentina. Sasol is looking at four plants
to be located in Qatar, Nigeria, Malaysia, and Iran. Mossgas is looking at several plants in Iran, Norway, and South
Africa. The total projected capacity would be 600,000+ billion barrels per day with a possible potential world market
of 16 million barrels per day.
208
Clean Alternative Fuels: Fischer-Tropsch. US Environmental Protection Agency Fact Sheet. March
2002.
209
210
Esper, G.A. DaimlerChrysler presentation at the US Department of Energy California Ethanol

Workshop. April 14, 2003.

67
5.3.9 Hythane
Hythane is a blend of hydrogen and natural gas, typically 5% hydrogen and 95% natural gas by
weight. The addition of hydrogen to natural gas helps combustion and reduces emissions. It is
considered an interim fuel until a hydrogen distribution system can be created.211
5.4
Competing technologies and systems
A number of other technologies and systems could compete with biodiesel, either as a solution
for reducing pollution in the transportation sector (e.g., diesel-electric hybrid vehicles; lowsulphur diesel regulations combined with improved pollution controls) or as a potential option
for handling organic waste disposal in the rendering industry (e.g., thermal depolymerization and
chemical reforming). There are also alternative technologies for producing bio-oils
(e.g., pyrolysis), which may compete with the transesterification of oils and fats into biodiesel.
This section reviews one of these pyrolysis technologies (i.e., Ensyn Technologies Rapid
Thermal Processing (RTP)) in depth, and discusses possibilities for integrating this technology
with biodiesel production into a larger biorefinery system.
5.4.1 Diesel-electric hybrid vehicles
In this new type of engine system, a diesel engine is coupled with a large battery system.
A generator driven by the combustion engine charges the battery pack. Electric motors in the
wheels provide all the power in a series design. In a parallel design system, the combustion
engine both drives the wheels and charges the battery pack. The battery pack provides extra
power during acceleration. During braking, the battery pack is recharged by using the electric
motors in the wheels as generators. A bus trial in Brazil measured a 90% drop in PM, a decrease
in CO of 6070%, and a reduction in NOx of 2530%. Trials in Oregon with hybrid dieselelectric buses recorded a 60% improvement in fuel efficiency. The life cycle costs of dieselelectric buses were more expensive than conventional buses but less expensive than natural gaspowered buses.212
211
212
Personal communication with Ewen Coxworth. Also see Coxworth, E. The Role of Renewable Liquid
Transportation Fuels in Canadas Climate Action Plan. A discussion paper for the Saskatchewan Environmental
Society and the Climate Action Network. April 2003.

68
5.4.2 AGTANE/BIOZOIL
Scientists at the CANMET Energy Technology Centre (part of Natural Resources Canada) have
proven at lab scale a process for converting yellow grease and/or tallow to a low sulphur, high
cetane premium diesel blending stock called AGTANE (AGricultural ceTANE) or BIOZOIL (in
French-speaking countries).213
213
See Spataru, Alex. Is There A Future for Yellow Grease As A Fuel Additive? Render Magazine,
February 2001.

69
AGTANE is not a biodiesel, but rather a collection of long-chain paraffins. It has a number of
economic advantages:214
<
It does not require more algae and/or bacteria-killing additives than regular
diesels and has a storage life equal to or superior than currently commercialized
diesel fuels.
<
It does not require the use of special storage materials.
<
It can be used in conventional diesel engines without modification.
<
It has a cetane value of about 100, before blending. The cetane number measures
the quality of fuel ignition and combustion.
<
It works well with traditional cetane improvers.
<
It allows diesel blenders/traders to buy and profitably resell lower cetane nonresponsive diesel stock, i.e., stock that does not respond well when traditional
cetane additives are used.
<
It has excellent physical and chemical characteristics, e.g., high flash point and
good lubricity, which make it an ideal blending stock.
<
It has a low sulphur content (~ 15 plus or minus 5 ppm).
<
It can be distributed through existing refined petroleum products distribution

channels.
<
AGTANEs yield is not affected by the free fatty acid (FFA) content in yellow
grease.
<
The process yields a low sulphur, heavy oil by-product that is readily marketable
and can be used as a source material for hydrogen production.
AGTANE is expected to be economically viable for mass production plants (>1.2 million litres
per year). One economic model (referred to as the renderer-only model) projected the total costs
of production (including yellow grease feedstocks at $0.23 per kilogram) at $0.46 per litre of
AGTANE. Revenues were expected to be $0.53 per litre of AGTANE: $0.44 per litre for
AGTANE and $0.09 per litre for the heavy cut by-product. This would yield a gross profit of
$0.07 per litre of AGTANE.215
214
Ibid.
215
Ibid.

70
CANMET still needs to validate the technology using a small, field-proven pilot plant.216
Although the hydrotreating process used to make AGTANE from yellow grease could
technically be applied to the processing of vegetable oils, it does not appear to provide an
economic breakthrough compared to the costs of production using traditional transesterification
methods. Even using low cost yellow grease at 23 cents per kilogram, and assuming a conversion
rate of 77%, the feedstock costs for the hydrotreating process represent 58% of AGTANE
production costs, or about $0.26 per litre of AGTANE. The use of edible canola and soybean
oils, which sell for about 96 cents per kilogram217, would push the costs of production well past
the break-even price, even if one assumed a 100% conversion rate.
5.4.3 Pyrolysis
Ensyn Technologies Inc., located in Ottawa, has a core technology called Rapid Thermal
Processing (RTP) that converts wood (or other biomass) into bio-oil, which can then be further
biorefined into value-added chemicals and fuels. Other co-products include carbon, in the form
of charcoal, and a combustible gas. The same technology can be used to upgrade heavy oil and
bitumen in the petroleum industry.
RTP is a fast thermal conversion process (pyrolysis) characterized by moderate temperatures
and atmospheric pressures and very short processing times. The process involves feeding wood
or other biomass into a heated vessel where it comes into contact with steam and hot sand. The
hot sand instantly flashes the biomass into vapour and, when cooled, condensed and recovered,
produces a liquid product (bio-oil). The process does not involve combustion because air input is
minimized.
Ensyn believes it is the only bio-oil company in the world that is operating commercially and the
only commercial technology capable of producing large quantities of bio-fuel. Ensyns current
capacity is 18.9 million litres of bio-oil per year.
The charcoal and combustible gas can be used as fuels without further processing, but it is more
economical to first recover natural resins from the bio-oil. After this recovery, the quality of the
bio-oil is improved and can be used in petroleum-fired combusters, boilers, and engines. The
bio-fuel has been used commercially for industrial heat since the early 1990s and can be used in
industrial boilers to produce green energy that is CO2-neutral and has almost no sulphur. It can
also be blended with conventional diesel fuels for use in transportation fuels, and it can be used
in modified turbine and diesel engines for power generation. Initiatives under way in these areas
are confidential.
216
Ibid.
217
Assuming canola and soybean oil sell for $750 per tonne.

71
Ensyn is working with petroleum companies in North America and Europe to accelerate the
technical development and commercialization of green transportation fuels and with leading
engine and turbine manufacturers to commercialize the use of bio-fuel for diesel engines and
stationary power generation.
Product and process development is carried out by Ensyn Technologies Inc. in Ottawa, while
commercial refining of biomass is done by Ensyn Renewables Inc. The commercial refining of
heavy oil and bitumen is done by Ensyn Energy Inc. (Boston).
Ensyn claims their research and development lab in Ottawa is a world-class analytical, testing
and product development facility. Their fully-equipped RTP pilot facilities and laboratories can
produce, optimize and analyze a host of value-added fuels and chemicals produced from biomass
and petroleum feedstocks. The lab includes both bench-scale and pilot-scale reactors, with a
commercial plant located close by in Greely, Ontario.
In 1989, Ensyn granted its first commercial licence to Red Arrow Food Products Company Ltd.
(Wisconsin) for product applications (flavourings) in the food industry. Red Arrow uses charcoal
products to provide industrial heat and electricity. A biomass refining plant was built in 2001
that produces natural resins from bio-oils. A sixth commercial biomass plant is expected to be
operational in 2003.
The following is a brief history of key joint ventures and alliances:
<
In November 1999, Ensyn received $433,704 from the federal governments

Climate Change Action Fund (CCAF) to develop and commercialize a process to
convert char into a high-value activated carbon that can be used as a filter in
applications like waste water treatment. Ensyn also received another $156,250 to
deploy a micro-emulsion technology to mix cellulosic-derived bio-oil with diesel
fuel in a 10% blend.
<
In August 2000, Ensyn and Louisiana-Pacific received $1.8 million from the US
Department of Energy to develop bark-based adhesives for use in the production
of structural building materials including oriented-strand board (OSB) and
plywood.
<
In November 2000, Gulf Canada Resources acquired an interest in Ensyn and a

licence to use the RTP technology to upgrade heavy oil or bitumen in Canada.
<
In April 2001, Ensyn received a $98,000 green economic development grant from
the British Columbia government to test the commercial viability of producing
natural resins from wood waste. ACM Chemicals (Woodchem Ltd.) is
formulating the resin into commercial OSB resins.

72
<
In January 2002, Ensyn announced a strategic partnership with Enbridge Inc. to

facilitate the development of Ensyns heavy oil upgrade technology. The alliance
will help Ensyn build a 1,000 barrel per day demonstration plant at Enbridges
Hardisty terminal in Alberta. The partially upgraded oil would reduce diluent
requirements and help increase existing pipeline capacity to carry heavy oil and
bitumen from the oil sands to major markets in the US. Ensyn also formed a joint
venture with ITS Engineered Systems in Houston to manufacture and supply
Ensyns RTP technology for heavy oil and bitumen upgrading.
<
In February 2002, Ensyn announced the commissioning of the worlds largest

commercial RTP biomass pyrolysis plant (181 tonnes per day).
<
In March 2002, Ensyn announced that Dr. Ron Robinson had joined the Ensyn
Board of Directors. Dr. Robinson was President of Texacos Technology Division
from 1996 to 2001 and is currently Department Head of the Petroleum
Engineering Program at Texas A&M University.
<
In April 2003, Ensyn announced that it had received $3.4 million from the
Ontario government to build a new $9 million state-of-the-art biorefinery in
Renfew, Ontario. The facility will take wood residues from local industry,
municipal landfills, and saw mills and produce a bio-oil from which they will
extract and develop adhesives, polymers, carbon filtration products, and food
flavouring compounds. The remaining fuel (after the higher value-added products
are extracted) will be used to generate green electricity.
Although Ensyn may appear to offer a competitive process (pyrolysis) that uses competing
feedstocks (oil, forestry, and municipal wastes) to produce a competing product (bio-oil), there
may be some interesting synergies between their process and the transesterification production of
biodiesel. As the biodiesel industry expands, it may be possible, for example, for Ensyns
technology to convert surplus oilseed meal into higher-value chemicals, fuels, and electricity.218
5.4.4 Thermal depolymerization and chemical reforming
(TDP)
Changing World Technologies, Inc. (CWT) recently announced the first commercially
successful application of thermal depolymerization and chemical reforming of organic waste into
clean energy.219 The process breaks down long chains of organic polymers into their smallest
218
Personal communication with Dave Broulard of Ensyn Technologies. For more details, see Ensyns web
site at http://www.ensyn.com/index.htm
219
April 8, 2003 press release by Changing World Technologies, Inc.

73
units and reforms them into new combinations of solid, liquid, and gaseous alternative fuels and
specialty chemicals.
The process entails five steps:
<
<
<
<
<
pulping and slurrying the organic matter (e.g., turkey offal) with water
heating the slurry under pressure (4,137 kPa) to the desired temperature (260"C)
flashing the slurry to a lower pressure to separate the mixture
heating the slurry again (coking) to drive off water and produce light
hydrocarbons (residence time about 15 minutes)
separating the end product.
A full-scale industrial plant has been constructed in Carthage, Missouri adjacent to one of
ConAgra Foods Butterball Turkey plants. The US EPA provided $6.4 million to help fund the
$25.6 million facility. It is expected to digest more than 181 tonnes of turkey processing waste
per day (including fats, bones, feathers, greases, and oils). The plant will produce 9.1 tonnes of
gas per day (which will be used to provide process heat for the plant), 79,000 litres of clean
water (which can be reused or released into the municipal sewage system), 600 barrels of oil
(equivalent to number 2 heating oil), and 10 tonnes of minerals (which can be used as
fertilizer).220
The process is very energy efficient (16 kJs are used to process 106 kJs of energy products) and
produces no uncontrollable emissions or secondary hazardous waste streams.221
Demonstration plants using other feedstocks are also being considered, including a chicken offal
and manure plant in Alabama, crop residues and grease in Nevada, turkey waste and manure in
Colorado, and pork and cheese waste in Italy.222
220
Lemley, B. (2003) Anything Into Oil. Discover, 24 (5).
221
April 8, 2003 press release by Changing World Technologies, Inc.
222
Lemley, B. (2003) Anything Into Oil. Discover, 24 (5).

74
5.4.5 Low-sulphur diesel regulations combined with

improved pollution control technologies
Much of the current environmental rationale used to justify the use of biodiesel, e.g., lower PM
and hydrocarbon tailpipe emissions, will disappear when the US and Canada moves to ultra-low
sulphur diesel in 2006 and new pollution control technologies in 2007 for on-road vehicles.223 It
has been proposed that sulphur levels for non-road engines will be reduced to 500 ppm starting
in 2007, moving to 15 ppm in 2010.224
The performance benefits of treating fuel and pollution control technologies as an integrated
system is dramatic. Low sulphur content (i.e., 15 ppm) in diesel fuels, when combined with the
synergistic use of catalyzed diesel particulate filters (CDPFs) and three-way catalytic NOx
adsorbers, can reduce PM and NOx emissions by over 90% as well as virtually eliminate
hydrocarbon and CO emissions.225
These pollution control devices could also be retrofitted to current fleet vehicles and extended to
off-road vehicles.226
The average increased cost to the consumer is expected to be 1.01.4 cents per litre for low
sulphur diesel and about $1,280 to $2,048 per new on-road vehicle227 and an increase of 2 cents
per litre and 12% of the capital cost for non-road diesel engines.228
Although biodiesel is a low sulphur fuel, its high cost (about 23 times the cost of regular diesel)
and its limited feedstock availability (capable of supplying only about 34% of the diesel fuel
market in the US and Canada) would rule it out as a commodity fuel.
223
Regulations requiring low sulphur fuel are implemented first because sulphur emissions (even in small
amounts) have been found to significantly reduce the effectiveness of pollution control devices. See Proposed-Heavy
Duty Engine and Vehicle Standards and Highway Diesel Fuel Sulphur Control Requirements. US Environmental
Protection Agency. May 2000.
224
Summary of EPAs Proposed Program for Low Emission Nonroad Diesel Engines and Fuel. US
Environmental Protection Agency. April 2003.
225
Draft Regulatory Impact Analysis: Control of Emissions From Nonroad Diesel Engines. US
Environmental Protection Agency. April, 2003.
226
Ibid.
227
Proposed-Heavy Duty Engine and Vehicle Standards and Highway Diesel Fuel Sulphur Control
Requirements. US Environmental Protection Agency. May 2000.
228
Summary of EPAs Proposed Program for Low Emission Nonroad Diesel Engines and Fuel. US

75
The downside of moving to low sulphur diesel is the potential loss of lubricity caused by
hydrotreating the fuel to remove the sulphur content.
More likely, biodiesel could find a niche as a lubricity fuel additive for ultra low sulphur fuel (15
ppm). Evidence suggests that small amounts (12% or less) of biodiesel can significantly
improve fuel lubricity for low sulphur diesel (500 ppm). More direct testing using the proposed
ultra low sulphur diesel (15 ppm) would be necessary to confirm its effectiveness.229
The degree to which the removal of sulphur will affect fuel lubricity depends on the blendstock
and the process used to manufacture the fuel.230 We know that Canadian diesel fuels, especially
winter diesel fuels, are among the poorest in the world when it comes to fuel lubricity.231
229
Draft Regulatory Impact Analysis: Control of Emissions From Nonroad Diesel Engines. US
230
231
Ibid.
See the discussion in Munson, Jason W., and Hertz, P. Barry. Seasonal Diesel Fuel and Fuel Additive
Lubricity Survey Using the Munson ROCLE Bench Test. SAE Technical Paper 1999-01-3588. October 1999

6.0
76
Biorefining of oils, fats, and proteins

6.1
Methyl esters used as a platform chemical
The basic business philosophy, borrowed from the petro chemical industry, would be to run a
biodiesel plant at full capacity and sell as much of the production output as possible into highervalue markets to maximize revenues, while selling the residual methyl esters into the lowervalue diesel fuel market.232 In fact, this approach is currently used by oleochemical companies.
The potential market for non-fuel biodiesel esters in the US has been estimated to be as high as
18.1 billion kilograms ($68 billion).233
The market segments are as follows:
<
<
<
<
<
<
<
plastics and plasticizers - 5.1 billion kilograms

solvents and paint strippers - 2.7 billion kilograms
adhesives - 3.4 billion kilograms
surfactants - 2.7 billion kilograms
agrochemicals - 0.5 billion kilograms
industrial chemicals - 2.2 billion kilograms
lubricants - 1.6 billion kilograms.
Using low-growth (2% market capture) and high-growth (5% market capture) scenarios, the
potential market for biodiesel esters could range between 408 million kilograms ($1.28 billion)
and 907 million kilograms ($3.39 billion) per year in the non-fuel market.234
6.1.1 Companies selling value added co-products from
methyl esters
In addition to oleochemical companies,235 a growing list of firms in the US have begun selling
higher value-added products from methyl esters:
232
Ahmed, I., Clements, L. Davis, and Van Dyne, Donald L. Non-Fuel Industrial Uses of Soybean OilBased Esters. Final report to the National Biodiesel Board. January 1997.
NREL.
233
Ibid.
234
Ibid.
235
Of which there are, perhaps, as many as 100 in North America. Communication from Shaine Tyson,

77
<
Ag Environmental Products L.L.C. produces a range of solvents that have low

volatile organic compound (VOC) emissions and high flash characteristics and
can be used as a substitute for dLimonene, naphtha, mineral spirits, and other
petroleum-based solvents. Their products can be used for a variety of applications
including: petroleum degreasing, precision cleaning processes, animal fat
degreasing, asphalt equipment cleaning, concrete form release, mould release,
metal cutting, adhesive removal, ink removal, and moisture barrier and rust
prevention.
<
Stepan produces methyl esters that can be used as solvents, lubricants, degreasers,
and carrier oils in agricultural applications. Steposol SB-D is a soybean oil methyl
ester that can be used as a waterless hand cleaner, adhesive remover, floor
scrubber, mould release agent, lacquer thinner, hood/grill oven cleaner, and ink
remover. Steposol SC is a blend of soy and corn esters that can be used as a
varnish remover, graffiti remover, concrete cleaner, grease trap cleaner, brake
cleaner, carbon remover, parts washer solvent, and adhesive remover.
<
Ocean Air Environmental Fuels and Glycerine LLC currently sells about 1% of
its biodiesel production into the solvent market and about 5% of its production
into the agricultural adjuvants market (used in agricultural sprays for distributing
pesticides and fertilizers).
<
Best BioFuels LLC produces biodiesel, as well as specialty products like

metalworking solvents, lubricity additives, glycerol, non-petroleum-based drilling
muds, biodegradable and cleaning materials.
<
West Central Soy produces biodiesel, lubricants, solvents, and cleaners.
The following sections summarize some of the potential markets for methyl esters or their
derivatives and provide references to some example patents.236
6.1.2 Plasticizers and plastics
<
236
Fatty acid esters are mentioned in the following patents:

Tires - US Patents 4,616,685 and 4,737535
Elastomer Stabilizers - US Patent 5,276,258
Transfer Sheets - US Patent 4,275,106
Biodegradation Promoter - US Patent 4,931,488
The information is taken from Ahmed, I., Clements, L. Davis, and Van Dyne, Donald L. Non-Fuel
Industrial Uses of Soybean Oil-Based Esters. Final report to the National Biodiesel Board. January 1997.

78
Mold Release Agent - US Patent 4,130,698.
<
However, use of methyl esters may not be promising because polyhydric alcohols
(ethylene glycol, polyethylene glycol, etc.) and sorbitan esters are more stable.
<
Fatty acid esters have found limited use as monomers in plastics production.
Because the applications involve specific chemical functionalities, they are not
compatible with biodiesel production. However, several interesting varieties of
fatty acids as well as unconverted vegetable oils could play significant roles in
this market.237
6.1.3 Solvents
<
237
Fatty acid esters are mentioned in the following patents:

Temporary Metal Corrosion Protectant - US Patent 4,752,336
Micro-Emulsion Liquid Detergent - US Patents 4,919,839 and 5,415812
Oil Well Drilling Mud - heavily patented by Henkel Corporation.
Examples include US Patents 5,106,516 and 4,802,998. Other mud
compounding companies include Bariod and Lubrizol.
Paint Stripping - no fatty acids mentioned in the patent literature between
1976 and 1996. However, there were 8 patents for N-methyl-2-pyrrolidone
and 2 for d-limonene both natural ingredients.
Metals Cleaning - no patents between 1976 and 1996 but biodiesel has
potential advantages over cold cleaning solvents (e.g., kerosene, naptha,
mineral spirits, Stoddard solvent), chlorinated hydrocarbons, etc. because
of its lack of toxicity and dermatological hazard and biodegradability.
It may be possible to also introduce a second phase of vapour degreasing
using alcohols such as isopropanol and butanol, which could replace
methylene chloride, trichloroethylene, perchloroethylene and 1,1,1trichloroethane, which are scheduled for removal from general use.
Adhesive Removers - no patents between 1976 and 1996 but may also
present opportunities.
Communication from Shaine Tyson, NREL

79
6.1.4 Adhesives
<
Fatty acid esters are referenced in the following patents:

A Reactant in Adhesive Making - US Patent 5,373,050
Release Coating for Pressure Sensitive Adhesives - US Patents 5,284,690
and 5,413,815
Slip Agent - US Patent 5,198,292.
<
May not be a promising area because it is too specialized.

6.1.5 Surfactants
<

Water in Oil Emulsions for Cosmetics and Medicines - US Patent
4,714,566
Freeze-Thaw Stable Cookware Lubricant - US Patents 4,073,411 and
4,073,412
Adjuvant for Pesticides and Herbicides - US Patent 5,178,795
Fabric Treatments - lubricity for synthetic fabrics (US Patents 4,051,299
and 4,438,001); smoothing agent for natural fibres (US Patents 4,122,018;
4,201,680; 4,297,407; 4,446,034; and 4,469,606); soap pretreatment (US
Patents 4,877,556 and 4,775,492); fabric softeners (US Patents 4,092,253;
4,129,506; 4,776,965; 4,814,095; and 4,851,140). Probably not an
opportunity area for biodiesel producers because most of the patents are
held by oleochemical companies like Bayer, Ciba-Geigy, ColgatePalmolive, Lever Brothers, Proctor & Gamble, and Henkel.
Conditioning Agents in Mineral and Ore Processing - froth flotation
(US Patents 4,253,944 and 4,305,815) used in coal cleaning process;
removal of silicaceous materials from phosphate ores (US Patents
4,234,414 and 4,301,004).
Slurry-Forming Surfactants - dispersants for keeping solid particles in
solution (US Patent 4,312,675).
Pipeline Friction Reducers - no patents between 1976 and 1996 but
drilling muds suggest they may provide drag reduction. Williams Pipeline
Company has expertise and could be a partner.
Specialty Product Applications - wax sealants for the encapsulation of
fertilizers like sulphur coated urea (US Patent 5,423,897); surface
modifying agents in extender formulation (US Patent 5,486,233).
Enhanced Oil Recovery - surfactant flooding (US Patent 4,825,951). Use
of biodiesel for oil spill clean-up from sand and rocks suggests that this
could be exploited for enhanced oil recovery. The Department of

80
Petroleum Engineering at the University of Texas - Austin has laboratory

expertise.
6.1.6 Agrochemicals
<

-
Formulations To Enhance Chemical Activity - insecticides (US Patent

4,861,762); herbicides (US Patents 4,629,493; 4,975,110; 5,098,467;
5,098,468; and 4,626,274).
Adjuvants - US Patents 5,559,078; 4,966,728; and 5,238,604.
Product Enhancement Applications - drying agents for corn (US Patent
5,049,192) and grapes; oiling agents for leathers and skins (US Patent
4,903,362); enhancement of the aroma and flavour of tobacco (US Patent
5,103,843).
6.1.7 Industrial chemicals
<
Fatty acid ester derivatives include:

Printing Inks - Nippon Zeon Company (US Patents 4,252,701; 4,256,619;
4,268,427; and 4,339,367); Topez Companys lithographic ink (US Patent
5,173,113); binder to hold pigments in halftone gravure printing (US
Patent 5,556,454) and ink jet printing (US Patents 5,006,170 and
5,122,187); gloss for offset printing inks (US Patent 5,324,350);
plasticizers in hot melt inks used in ink jet printing (US Patent 5,531,819);
cleaning solution for the thermal head used on thermal transfer printers
(US Patent 5,547,917). The ink applications are very specific, segmented
and dispersed, making it difficult for biodiesel esters to make a
breakthrough.
Pharmaceutical Applications - time release delivery of medications; antifungal preparation (US Patent 4,915,940); transdermal delivery of
buprenorphrine (US Patent 5,026,556); delivery of drugs to the mucous
membranes of the mouth (US Patent 4,572,832); carrier for medications
(US Patent 5,405,617).
Cosmetics - emollients in skin and hair care products (US Patent
4,740,367); make-up removers (US Patent 5,179,128); skin moisturizers
(US Patent 4,165,385); shower gels (US Patent 5,393,450); antiperspirant
(US Patent 4,278,655); hair conditioning shampoo (US Patent 4,676,978);
pearlescing agents in shampoos (US Patent 4,654,207).

81
Magnetic Recording Media - lubricants in magnetic tape media (21

patents by Fuji Photo Film Company, TDK Corporation, Hitachi Maxwell,
Sony, IBM, 3M).

82
6.1.8 Lubricants
<
Fatty acid derivatives are widely used as lubricants:

Automatic Transmission Fluid (US Patent 3,933,659)
Specialty Motor Oil for Diesel Engines (US Patents 4,176,072 and
4,820,431)
High Temperature Lubricants (US Patent 4,519,927)
Motor Oil Base Stock (US Patents 5,229,023; 5,413,726; and 5,567,345)
Motor Oil Additives (US Patents 4,244,829; 4,960,530; and 4,243,540)
High Pressure Lubricant (US Patent 4,053,427)
Viscosity Improver (US Patent 5,534,175)
Metal Working Oils (US Patents 4,445,813; 4,636,323; 4,212,750; and
4,978,465)
Pour Point Depressant for Lubricating Oils (US Patent 5,338,471).
6.2
New products from glycerol
Glycerol is currently used in cosmetics238 and soaps (16%), pharmaceuticals239 (10%), esters
(11%), polyglycerols (12%), food and drink240 (8%), cellulose films (3%), tobacco241 (3%), and
paper242 (1%).243
Glycerol may have other promising applications:244
<
Replacement for synthetic polyols, e.g., ethoxylates used in making surfactants.
238
Including use in toothpaste, skin creames and lotions, pre-shaving lotions, deodorants, make-up, lipstick
and mascara.
239
Glycerol is one of the most widely used ingredients in drugs and pharmaceuticals including use in
capsules, suppositories, ear infection remedies, anaesthetics, cough remedies, lozenges, gargles, and a vehicle for
antibiotics and antiseptics.
240
Used in soft drinks, candies, cakes, casings for meat and cheese, and dry pet food.
241
Glycerol is used to keep tobacco moist, add flavour to chewing and pipe tobacco, and manufacture
cigarette filter tips.
242
Used in grease-proof paper, food wrappers, and inks.
243
Heming, M.P.D. Glycerine Market Report. CTVO-net Workshop on Valorization of By-Products:

Glycerol. January 21, 1999. Also see Uses of Methyl Esters. National Biodiesel Board Fact Sheet.
244
1999.
Summary of Discussion, CTVO-net Workshop on Valorization of By-Products: Glycerol. January 21,

83
<
The production of glycerol carbonate, which in turn can be used to produce

glycidol, an important intermediate in the production of cosmetics and
pharmaceuticals and the synthesizing of surfactants using very pure
monoglycerides.245
<
Microbial conversion of glycerol to produce 1,3-propanediol.246

1,3-propanediol may find applications as textile polymers, biodegradable
plastics, elastomeric fibres, engine lubricants, fast drying and more UVresistant coatings, detergent stabilizer, anti-freeze component, jet printing
ink, humectant in cosmetics, solvent, and flavour enhancer.247
<
Lab and pilot-scale studies in Europe suggest that epoxidized methyl esters made
from either rape or high oleic sunflower oils can be synthesized into ether
alcohols using glycerol as a reactant. The co-products from this process are now
being investigated for applications as lubricants and detergents.248
<
Glycerol can be converted to syngas and hydrogen by reforming with steam in the
presence of a Ni-based catalyst at low temperature conditions. The syngas can
easily be converted to gasoline and diesel fuel with proven technology. The
hydrogen can be used in fuel cells to produce electricity.249
<
Recycled glycerol can be used to create conjugated linoleic acid.250
245
Mouloungui, Z. Network of Valorization of Glycerol: Synthesis Processes For The Production of

Glycerol Carbonate, Glycidol and pure "-Monoglycerides. CTVO-net Workshop on Valorization of By-Products:
Glycerol. January 21, 1999. The production process described by Mouloungui is ecologically friendly because the
reactions take place without a solvent, the catalysts are reusable, and a polyvalent reactor which does not require
further purification, is used.
246
See Wittlich, P. and Dieter-Vorlop, K. Microbial Conversion of Glycerol Towards 1,3-Propanediol.

CTVO-net Workshop on Valorization of By-Products: Glycerol. January 21, 1999. Cameron, Douglas C., and
Koutsky, James A. The Conversion of Glycerol from SoyDiesel Production to 1,3 Propanediol. Final Report to the
National Biodiesel Development Board. 1994.
247
Ibid.
248
Pages, X. Opening Epoxidized Oils with Glycerol. CTVO-net Workshop on Valorization of ByProducts: Glycerol. January 21, 1999.
249
250
Noted by a Delphi panel member.
Martin Reaney of Agriculture and Agri-Food Canada has discovered that the alkali transesterification
catalysts (containing crude glycerol and alkali) from biodiesel production can be recycled and used to react with a
linoleate rich triglyceride to produce conjugated linoleic acid (CLA), a very desirable nutraceutical. See US Patents
6,409,649; 6,414,171; and 6,420,577. This new process has helped to improve the economics of biodiesel
production. The process is being developed by Bioriginal Food and Sciences Corporation in Saskatoon,
Saskatchewan. Reported in An Assessment of the Opportunities and Challenges of A Bio-Based Economy for

6.3
84
Higher-value products from vegetable meal
A 5% biodiesel market share (1 billion kg) would yield approximately 100,000 tonnes of
glycerol and 900,000 tonnes of meal. It is clear that the economics of biodiesel production
depends, to a significant degree, on developing higher-value markets for meal co-products. One
of the downside risks from increased biodiesel production, particularly using low-oil yield crops
like soybeans,251 is that the increased meal production could flood the feed market, drive down
prices, and undermine the profitability of biodiesel production.
Traditional plant breeding and biotechnology can be used to increase the oil yield and thereby
minimize the potential for the over-production of meal.252
Transgenic methods can also be used to increase the value of meal and open up new markets by
reducing sinapine and phytate content in canola meal. Sinapine is a phenolic compound that
reduces the palatability and digestibility of canola feed. High phytate levels in canola meal have
limited value for some markets like aquaculture.253
In another approach, Professor H.L. Classen from the Animal and Poultry Science Department,
University of Saskatchewan, has developed a method to extract a protein concentrate from
canola meal. A company called MCN has been formed to commercially develop the new
process, which could be used to develop a protein concentrate for the aquaculture market.254
Ensyn Technology Inc.s RTP may also be capable of extracting higher-value added chemicals
from oilseed meal.255
Agriculture and Food Research in Canada. A report prepared by the Canadian Agricultural New Uses Council for
the Canadian Agri-Food Research Council and BIOCAP Canada. June 2003. p. 69.
251
Soybean oil yields are about 20% compared to canola at 40%.
252
Duffield, J., Shapouri, H., Graboski, M., McCormick, R., and Wilson, R. U.S. Biodiesel Development:
New Markets for Conventional and Genetically Modified Agricultural Products. Office of Energy, Economic
Research Service, U.S. Department of Agriculture. September 1998.
253
Selvaraj, G. Adding Value to Canola by Reducing Sinapine in the Meal. PBI Bulletin issue 2, pp. 2-3.
Plant Biotechnology Institute, NRC. Georges, F. Improving Canola-Development of Low Phytate Canola. PBI
Bulletin issue 2, pp. 3-4. Plant Biotechnology Institute, NRC.
254
Reported in An Assessment of the Opportunities and Challenges of A Bio-Based Economy for

Agriculture and Food Research in Canada. A report prepared by the Canadian Agricultural New Uses Council for
the Canadian Agri-Food Research Council and BIOCAP Canada. June 2003. See p. 68.
255
See the earlier section in this report on pyrolysis for more details about Ensyn and the RTP process.

7.0
85
Summary and conclusions
The cost of producing biodiesel in the US given current average feedstock costs of about $0.15
per pound is about $1.56 per gallon.256 To break even, a 15-million-gallon biodiesel plant would
have to reduce its feedstock costs to about US10 cents per pound.257 This should be compared
with the wholesale price of petroleum diesel to determine its competitive position.
Wholesale Diesel Prices (WDP) can be estimated using the following formula:
WDP = Crude Oil Price per Barrel / 42 Gallons + Processing ($0.05/gal)

+ Transportation ($0.02) + Profit ($0.05)
Using this formula, the WDP would be as follows:
<
<
<
$20 / barrel - $60 cents / gallon

$30 / barrel - $83 cents / gallon
$40 / barrel - $1.07 cents / gallon.
For biodiesel to be competitive, the WDP must approach $40 per barrel, and biodiesel feedstock
prices must approach 10 cents per pound in order for biodiesel to be produced at around $1.00
per barrel and be able to compete with petroleum diesel on price without government tax
support.
In addition, biodiesel must also be capable of supplying a significant percentage of the diesel
market to interested refiners and distributors. At present, the US and Canada only have enough
surplus vegetable and animal fat surplus feedstocks to supply about 3% of the diesel fuel market.
As a result, attention must be turned to developing a dedicated biodiesel crop (e.g., industrial
mustard) that could supply feedstocks at under 10 cents per pound and deliver additional
256
Shumaker, G., et al. A Study on the Feasibility of Biodiesel Production in Georgia. Center for
Agribusiness and Economic Development, University of Georgia. 2003.
257
Ibid.
86

supplies to the diesel market.258 Unless these conditions are met, biodiesel will have to rely on
generous public policy support in the way of tax incentives and other support systems.
Another alternative is to promote biodiesel as a lubricity additive (B2) or low-level blended fuel
(e.g.. B5 to B20) to boost cetane levels in Canadian diesel fuels. The table below examines the
competitiveness of these two biodiesel products with petroleum diesel.259
Table 12: Added cost to retail price of diesel fuel when blended with either 2% or 20% biodiesel
Retail diesel prices per gallon
$0.60
$0.75
$0.90
$1.05
$1.20
$1.35
$1.50
Added cost in cents per gallon - B2 biodiesel

Biodiesel (100%) cost per gallon
Now* ($1.50)
0.018
0.015
0.012
0.009
0.006
0.003
Future** ($1.25)
0.013
0.01
0.007
0.004
0.001
-0.01
Added cost in cents per gallon - B20 biodiesel

Now ($1.50)
0.18
0.15
0.12
0.09
0.06
0.03
Future ($1.25)
0.13
0.1
0.07
0.04
0.01
-0.02
-0.05
* Equivalent to about 15 cents / lb feedstock price.

** Equivalent to about 11 cents / lb feedstock price.
<
Both B2 and B20 are price competitive above $1.25 per gallon with feedstock
costs of 15 cents per pound.
<
If feedstock costs can be reduced to 10 cents per pound, B2 and B20 would
actually begin to reduce the costs of diesel fuel once it reached $1.35 per gallon.
<
Note that in California, retail diesel prices exceeded $1.35 per gallon for at least
two years (running from July 1999 to July 2001).
<
Producing a dedicated crop like industrial mustard at less than 10 cents per pound
and focusing on B2 and B5 blends are two key strategies to developing a
sustainable industry that does not require tax incentives.
258
The situation is similar in Europe. The European capacity (potential) to produce biodiesel is estimated to
be 10-15% of the total EU diesel fuel market, based on the use of rapeseed, sunflower, animal fats, and used cooking
oils. See Connemann, J., and Fischer, J. Biodiesel in Europe 1998: Biodiesel Processing Technologies. Paper
presented at the International Liquid Biofuels Congress, Curitiba-Parana, Brazil, July 10-22, 1998.
259
Shumaker, G., et al. A Study on the Feasibility of Biodiesel Production in Georgia. Center for
Agribusiness and Economic Development, University of Georgia. 2003.

<
87
However, in the short term, tax support will be required to develop the industry.
The Delphi Group felt that in the short term (one to five years), low cost oils including waste
frying oil, tallows, waste restaurant oil, off-grade canola oil, vegetable oil soap stock, and tall oil
(from pulp and paper processing) will become the core source for biodiesel production and
account for 15% of the market.260 They can be converted to biodiesel efficiently and costeffectively using existing technology. Since these feedstocks are in relatively short supply, they
will likely be used in small amounts in diesel, fuel and they should be able to compete on price
(with excise federal/provincial tax exemptions).
With the exception of off-grade canola oil, the remaining oils will cause low-temperature flow
problems. They will not be suitable for use in winter fuels at concentrations above 10%.
However, a B5 blend using animal fats has been shown to work well during the winter in
Montral in a mass transit demonstration, and it produces significant reductions in smog
emissions.261
These low-cost oils (with the exception of tall oil) already form the backbone of several
industries involved in the production of animal feed and chemicals. Prices will likely rise as
these industries react to the competition for raw material supplies. However, the mad cow scare
in Canada may depress some of the traditional markets for animal fats and keep prices low.
In the medium to long term, dedicated crops will have to be developed for biodiesel production
that are less expensive to grow than current varieties and that produce greater oil yields.
Biorefineries that produce other value-added products (in addition to biodiesel) may also have to
be developed to offset costs by increasing revenues. It is expected that the biodiesel produced
from these biorefineries would be more price competitive with diesel fuel and could penetrate
515% of the market (assuming that dedicated feedstocks become available).
260
It has been estimated that Canada could easily produce approximately 600 million litres of biodiesel
annually from surplus canola, soy, tallow, and tall oil. This would account for about 3.2% of the 19 billion litres of
diesel fuel consumed in Canada in 1995. Personal communication from Dr. Martin Reaney, Agriculture and AgriFood Canada, to Dr. Chandra B. Prakash, GCSI - Global Change Strategies International, Inc. Referenced in
Prakash, Chandra B. A Critical Review of Biodiesel As A Transportation Fuel in Canada. A report prepared for the
Transportation Systems Branch, Air Pollution Prevention Directorate, Environment Canada, March 25, 1998.
261
May 2003.
Biodiesel Demonstration and Assessment with the Societe de transport de Montral (STM): Final Report.

88
Without some form of renewable fuel standard, most members of the Delphi Group believe the
considerably higher price of biodiesel fuel262 will limit it to niche markets where environmental,
health, and safety benefits could justify higher prices.
There was also broad consensus among panel members that biodiesel should not be positioned as
an alternative to fossil fuels since the cost of biodiesel is too high. Rather, it should be viewed
either as a potential lubricity additive when low sulphur diesel fuel is mandated in 2006 or as a
cetane enhancer for lower quality diesel fuels made from syncrude and tar sands feedstocks.
262
In 2002, Canadian diesel wholesale prices were 20-30 cents per litre vs a projected cost of 36 cents per
litre for biodiesel made from animal fats and 63 cents per litre for biodiesel made from vegetable oils. See Levelton
Engineering Ltd. and (S&T)2. Assessment of Biodiesel and Ethanol Diesel Blends, Greenhouse Gas Emissions,
Exhaust Emissions, and Policy Issues. Report to Natural Resources Canada.

8.0
89
Recommendations for public policy changes in Canada
We asked our Delphi Group what public policies (e.g., regulatory, tax, fiscal, R&D) could
contribute to making biodiesel production technically and economically viable in Canada. In
general, panel members expressed the belief that environmental benefits derived from using
biodiesel, and its utility as a strategy for meeting Kyoto commitments, could justify the use of
government tax and R&D support, much like the case with ethanol. They also pointed to the
support biodiesel has received in both Europe and the US.
Some of the suggestions for government policy support were as follows:
8.1
Regulations
Assuming adequate feedstock supplies, a renewable fuel standard could be ramped up, starting
with, say, 2% and rising to 5% within eight years.263 This could ameliorate any sudden price
shocks to food/feed markets. Policies that eliminate solvent extracted oil from the food market
could free up oil for the biodiesel fuel market and improve industry efficiency.
8.2
Taxes
One panel member suggested that a half-cent tax exemption for every 1% of blended fuel would
be sufficient to generate demand.264 Another approach could be to charge an environmental levy
on conventional diesel fuel at a half cent per litre and exempt blended fuels meeting the
renewable fuel standard. It was also pointed out that biodiesel has a higher energy content than
either ethanol or conventional gasoline and could justify higher tax support.
263
It should be noted that the EU has recently backed away from a similar portfolio standard, and a
renewable portfolio standard has not yet passed in the US.
264
This would result in a 50 cent per litre tax support system (which compares with an average 17 cents per
litre federal/provincial ethanol excise tax exemption) less than Germany, for example, where the exemption is the
equivalent of 66 cents per litre. The cost to Canadian tax payers would range from $230 million (at 2%) to $600
million (at 5%).

8.3
90
R&D265
<
In the short term, improve agronomics and crop breeding to produce highly
productive food/nonfood oilseed crops with low nitrogen and phosphorous
fertilizer inputs. In the longer term, develop crops with higher yielding oils.266
These biofuel crops would significantly improve the economics of production.
Advances in hybrid technology, fall seeding, disease resistance, and stress
tolerance will also improve the Life Cycle Analysis (LCA) of these fuel crops and
provide stronger rationale for public policy support.
<
Assist processors to identify low cost feedstocks such as used oil, oil from
green/heat damaged seeds, etc.
<
Examine the benefits of continuous versus batch processing267 (note that high
gravity batch fermentation processing was more economically viable in the case
of ethanol processing).
<
Investigate cold weather impacts (appropriate to the Canadian context) on

biodiesel blends e.g., some refiners are concerned that blends above 5% may
void engine warranties. A major biodiesel demonstration in Montral has
provided much needed information. More demonstrations in other areas would be
beneficial.
<
Identify new market opportunities for glycerol and oilseed meal.
<
Improve the quality of biodiesel fuel. Use traditional breeding and plant
biotechnology to alter the composition of fatty acid chains to improve the cetane
number, cold flow properties, and oxidative stability.268
265
For a more complete discussion of R&D opportunities, see An Assessment of the Opportunities and
Challenges of A Bio-Based Economy for Agriculture and Food Research in Canada. A report prepared by the
Canadian Agricultural New Uses Council for the Canadian Agri-Food Research Council and BIOCAP Canada. June
2003.
266
Canola breeding programs, for example, may be able to increase oil yield from 40 to 50% within the next
few years.
267
Dr. John W. Goodrum and Daniel P. Geller at the Biological and Agricultural Engineering Department,
University of Georgia, have developed a small-scale continuous flow reactor.
268
For example, improving the cetane number has been found to improve ignition quality, reduce particulate
and NOx emissions, and improve cold-start ability. High levels of stearic acid have been found to increase the cetane
number, although at the expense of cold flow properties. This fatty acid composition would make an ideal summer
diesel. A high oleic acid content combined with low levels of palmitic, linolenic, and stearic acid would produce a

8.4
<
91
Fiscal
Provide venture capital assistance to small processors.

8.5
Standards development
<
Quality Standards for Biodiesel adopt the European standard for biodiesel fuel
to ensure a quality product and provide engine manufacturers with greater
confidence.
<
Quality Standards for Diesel Canadian winter diesel fuels have poor friction
characteristics compared to fuels from other parts of the world. High friction
results in lower fuel economy and decreased engine life. Canadian winter diesel
also has lower cetane characteristics, which contributes to reduced engine
efficiency and increased emissions. Canada could tax substandard fuel and create
an incentive for refiners to use biodiesel for its lubricity and cetane benefits.
<
Encouragement of LCA, particularly with respect to fuel manufacture. Ethanol,

for example, could be used by refiners as an octane enhancer in gasoline, and
paraffinic molecules derived from bio-oils could be used as cetane improvers.
Tax incentives could be constructed to encourage LCA.
diesel fuel with good overall performance including a boost in cetane number, improved oxidative stability (lower
iodine value), and improved cold flow properties. For a more detailed discussion, see Duffield, J., Shapouri, H.,
Graboski, M., McCormick, R., and Wilson, R. U.S. Biodiesel Development: New Markets for Conventional and
Genetically Modified Agricultural Products. Office of Energy, Economic Research Service, U.S. Department of
Agriculture. September 1998.
APPENDIX A
CANOLA FEEDSTOCKS

Table 1: Average canola prices (CDN$)

Per tonne
Oil
Meal
Per pound
Seed
Oil
Meal
Seed
1990
537.35
155.75
303.72
0.24
0.07
0.14
1991
553.36
133.32
287.72
0.25
0.06
0.13
1992
534.96
127.53
274.85
0.24
0.06
0.12
1993
585.46
168.06
321.72
0.27
0.08
0.15
1994
750.42
178.70
392.10
0.34
0.08
0.18
1995
836.64
148.48
419.59
0.38
0.07
0.19
1996
770.61
205.19
432.33
0.35
0.09
0.20
1997
725.58
244.46
440.25
0.33
0.11
0.20
1998
819.22
178.58
419.99
0.37
0.08
0.19
1999
754.27
142.10
372.43
0.34
0.06
0.17
2000
568.84
156.27
287.82
0.26
0.07
0.13
2001
486.46
205.05
289.91
0.22
0.09
0.13
2002
633.10
222.80
356.96
0.29
0.10
0.16
2003
813.70
214.63
415.39
0.37
0.10
0.19
14-year average
669.28
177.21
358.20
0.30
0.08
0.16
Notes: Crude degummed oil. FOB plants. April 2000 to present FOB Vancouver.
Source: Cereals & Oilseeds Review - Statistics Canada. Published on Canola Council of Canada web site.
Table 2: Average yield (bu./acre), 1999 2003

ON
MB
SK
AB
BC
TOTAL
1999
34.3
30.6
26.7
29.0
27.5
28.2
2000
37.8
28.4
25.8
26.1
30.4
26.5
2001
39.4
26.6
20.2
27.3
25.0
23.7
2002
32.5
29.3
19.7
21.4
20.0
22.9
2003
36.0
30.7
20.9
28.8
24.3
25.4
Average
36.0
29.1
22.7
26.5
25.4
25.3
Source: Field Crop Reporting Series, Statistics Canada (December 31, 2003). Published on Canola
Council of Canada web site.

Table 3: Average yield (tonnes/acre), 1999 2003

ON
MB
SK
AB
BC
TOTAL
1999
0.768
0.687
0.607
0.647
0.607
0.647
2000
0.849
0.647
0.566
0.607
0.687
0.607
2001
0.890
0.607
0.445
0.607
0.566
0.526
2002
0.728
0.647
0.445
0.485
0.445
0.526
2003
0.809
0.687
0.485
0.647
0.566
0.567
Average
0.809
0.655
0.510
0.599
0.547
0.575
Table 4: Five-year average annual production yields (1999 2003)

Harvested
(000 acres)
Production
(000 tonnes)
Yield
(tonnes/acre)
Yield bu/acre
ON
52
42
0.647
36.0
MB
2,258
1,499
0.607
29.1
SK
5,296
2,778
0.526
22.7
AB
3,258
1,928
0.526
26.5
BC
69
40
0.567
25.4
2,187
1,257
0.575
25.3
TOTAL
Source: Field Crop Reporting Series, Statistics Canada (December 31, 2003). Published on
Canola Council of Canada web site.

Table 5: Canola production (000's tonnes)

ON
MB
SK
AB
BC
TOTAL
1999
54
1,708
3,976
2,971
62
8,798
2000
39
1,488
3,425
2,155
45
7,205
2001
31
1,134
2,155
1,724
43
5,017
2002
44
1,429
1,656
794
16
4,178
2003
41
1,735
2,676
1,996
36
6,669
Average
42
1,499
2,778
1,928
40
6,373
23.52
43.58
30.25
% of total

Table 6: Harvested acreage (000's acres)

ON
MB
SK
AB
BC
TOTAL
1999
70
2,460
6,570
4,520
100
13,749
2000
45
2,310
5,860
3,700
80
12,007
2001
35
1,880
4,700
2,670
60
9,353
2002
60
2,150
3,700
2,100
35
8,059
2003
50
2,490
5,650
3,300
70
11,587
Average
52
2,258
5,296
3,258
69
10,951
0.47
20.62
48.36
29.75
0.63
% of total
Source: Field Crop Reporting Series, Statistics Canada (December 31, 2003).
Table 7: Oil production 1999 2003 (thousand tonnes)

Stocks
Production
Imports
Total
supply
Exports
Domestic
utilization
Total
demand
Ending
stocks
1993/1994
35
913
954
414
511
925
29
1994/1995
29
1,063
13
1,105
423
665
1,088
17
1995/1996
17
1,153
13
1,183
550
644
1,154
29
1996/1997
29
1,137
52
1,218
695
338
1,175
43
1997/1998
43
1,364
76
1,483
882
397
1,434
49
1998/1999
49
1,283
10
1,342
778
438
1,314
28
1999/2000
28
1,243
102
1,373
628
428
1,325
48
2000/2001
48
1,266
56
1,370
825
428
1,322
48
2001/2002
48
971
34
1,053
582
384
1,053
29
2002/2003
29
926
28
983
514
342
983
31
10-year average
36
1,132
39
1,206
629
458
1,177
35
2003/2004 (forecast)
31
1,331
28
1,390
900
450
1,390
40
Source: Cereals & Oilseeds Review and COPA Newsletter - Statistics Canada. Published on Canola Council of Canada web site.
APPENDIX B
SOYBEAN STATISTICS

Table 1: Canadian soybean supply and distribution

Crop year*
2002/03**
2003/04**
5-year average
(1998-2002)
1998/99
1999/00
2000/01
2001/02
2,420,600
2,479,880
2,620,670
2,584,500
2,529,280
2,460,000
2,526,986
188,000
242,000
252,000
180,000
172,000
160,000
206,800
2,737,000
2,781,000
2,703,000
1,635,000
2,335,100
2,500,000
2,438,220
253,825
454,834
430,966
982,435
500,000
600,000
524,412
3,178,825
3,477,834
3,385,966
2,797,435
3,007,100
3,260,000
3,169,432
1,516,300
1,714,300
1,648,300
1,663,900
1,675,000
1,700,000
1,643,560
867,405
946,360
746,241
471,492
650,000
850,000
736,300
98,000
105,000
120,000
100,000
90,000
90,000
102,600
455,120
460,174
691,425
390,043
452,100
440,000
489,772
2,936,825
3,225,834
3,205,966
2,625,435
2,867,100
3,080,000
2,972,232
242,000
252,000
180,000
172,000
160,000
180,000
201,200
$7.58
$7.17
$7.07
$7.31
$8.50
$7.00 $8.00
$7.53
Soybean supply
Acres harvested
Beginning stocks
Production
Imports
Total supply
Soybean usage
Crush
Exports
Seed
Other***
Total usage
Carry-out stocks
Average price ($/bushel)
Notes:
Figures are in tonnes.

*Crop year is September 1 to August 31
**Forecast/estimate
***Other - Other domestic usage, feed, waste, dockage, etc.
Source: Statistics Canada, Agriculture & Agri-Food Canada and Ontario Soybean Growers

Table 2: Canadian soybean supply and distribution

Crop year*
2002/03**
2003/04**
5-year average
(1998-2002)
1998/99
1999/00
2000/01
2001/02
2,100,000
2,123,000
2,235,000
2,250,000
2,064,000
1,750,000
2,204,600
130,000
120,000
150,000
140,000
120,000
90,000
123,000
2,343,300
2,340,500
2,311,500
1,279,100
1,905,100
1,858,000
2,133,680
236,690
423,770
419,500
982,435
500,000
600,000
439,355
2,709,990
2,884,270
2,881,000
2,401,535
2,525,100
2,548,000
2,696,035
1,516,300
1,714,300
1,648,300
1,663,900
1,675,000
1,700,000
1,618,949
326,672
408,685
337,582
300,000
400,000
450,000
384,700
95,000
120,000
110,000
85,000
85,000
80,000
103,000
652,018
491,285
645,118
232,635
275,100
223,000
458,366
2,589,990
2,734,270
2,741,000
2,281,535
2,435,100
2,453,000
2,564,035
120,000
150,000
140,000
120,000
90,000
95,000
132,000
$7.58
$7.17
$7.07
$7.31
$8.00 $8.80
$7.50 $8.30
$7.65
Soybean supply
Acres harvested
Beginning stocks
Production
Imports
Total supply
Soybean usage
Crush
Exports
Seed
Other***
Total usage
Carry-out stocks
Average price ($/bushel)
Notes: Figures are in tonnes.

*Crop year is September 1 to August 31
**Forecast/estimate
***Other - Other domestic usage, feed, waste, dockage, etc.
Source: Statistics Canada, Cereal & Oilseeds Review and Ontario Soybean Growers
APPENDIX C
ASTM BIODIESEL TEST METHODS AND STANDARDS

ASTM D 6751 Biodiesel Fuel (B100) Blend Stock for Distillate Fuels
Property
Test Method
Limits
Flash Point, C
D 93
130.0 min
D 2709
0.050 max
Kinematic Viscosity, 40C, mm /sec
D 445
1.9 - 6.0
Sulfated Ash, % mass
D 874
0.020 max
Sulfur, % mass
D 5453
0.05 max
Water and Sediment, % vol

2
Copper Strip Corrosion
D 130
No. 3 max
Cetane Number
D 613
47 min
Cloud Point, C
D 2500
Report
Carbon Residue, 100% sample% mass
D 4530
0.050 max
Acid Number, mg KOH/gm
D 664
0.80 max
Free Glycerin, % mass
D 6584
0.020 max
Total Glycerin, % mass
D 6584
0.240 max
Phosphors Content, % mass
D 4951
0.001 max
Distillation, % recovered, C
D 1160
360 max
Property
Test Method
Limits
Flash Point, C
D 93
100.0 min
D 2709
0.050 max
Kinematic Viscosity, 40C, mm
D 445
1.9 - 6.0
Sulfated Ash, % mass
D 874
0.020 max
Sulfur, % mass
D 5453
0.0015 max
ASTM PS 121 Biodiesel B20 Blend Stock
Water and Sediment, % vol

2
Copper Strip Corrosion
D 130
No. 3 max
Cetane Number
D 613
46 min
Cloud Point, C
D 2500
Report
Carbon Residue, 100% sample, % mass
D 4530
0.050 max
Carbon Residue, Ramsbottom, % mass
D 524
0.090 max
Acid Number, mg KOH/gm
D 664
0.80 max
Free Glycerin, % mass
D 6584
0.020 max
Total Glycerin, % mass
D 6584
0.240 max
Source: Dunn, R. Table 1 in Biodiesel As A Locomotive Fuel in Canada. Report prepared for the Transportation

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BIODIESEL AND OTHER CHEMICALS FROM

VEGETABLE OILS AND ANIMAL FATS

Agriculture and Agri-Food Canada

The biodiesel production process . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14

Other fuel additives, alternative fuels, and technologies . . . . . . . . . . . . . . . . . . . . . . . . . 57

Biorefining of oils, fats, and proteins . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75

Agriculture and Agri-Food Canada

Summary and conclusions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 83

Recommendations for public policy changes in Canada . . . . . . . . . . . . . . . . . . . . . . . . . 87

ASTM BIODIESEL TEST METHODS AND STANDARDS

Agriculture and Agri-Food Canada

Claude Bourgault, Rothsay

Agriculture and Agri-Food Canada

There needs to be a detailed study of the regional availability and cost of

Agriculture and Agri-Food Canada

improvements in biodiesel production technologies can make a major

engine performance and life expectancy under various concentrations of biodiesel

Agriculture and Agri-Food Canada

the comparative benefits of biodiesel and SuperCetane as cetane enhancers for

competing fuel additives, e.g., Sunocos Soy Gold

Finally, biodiesel is a low-value commodity product that requires tax subsidies to be

Agriculture and Agri-Food Canada

Diesel fuel prices can be expressed in three ways:

Agriculture and Agri-Food Canada

Agriculture and Agri-Food Canada

Soy: cooking oils, animal feed, industrial chemicals, exports

Agriculture and Agri-Food Canada

Size of surplus feedstocks (US)

Animal fats (in billion kilograms)

Edible tallow - 0.676

Inedible tallow - 1.643

Lard (choice white grease) and grease - 0.592

Yellow grease (recycled cooking/restaurant grease) - 1.194

Poultry fat - 1.005

The US Department of Energys National Renewable Energy Laboratory (NREL) estimates

excess inventories 0.5-0.9 billion kg

Other vegetable oils

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Inedible tallow and yellow grease

Near term biodiesel supply potential (US)

Inedible tallow and yellow grease

Agriculture and Agri-Food Canada

higher soybean acreage

higher soybean oil yield

conversion of idle acres to oilseed crops like canola and sunflower

switching from grain crops to oilseed crops

increasing oil crush capacity

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Biodiesel feedstock costs (US)

Agriculture and Agri-Food Canada

Potential biodiesel feedstock supply in Canada

Canola Council of Canada. See appendix ?? For a breakdown by year.

Agriculture and Agri-Food Canada

0.575 tonnes per acre

In summary, the projected potential biodiesel feedstock supplies include:

Cooper, K. Ontario Soybean Commentary, February 13, 2004.

See appendix B for details on Ontario production.

Provided by a member of the Delphi Group.

Provided by a member of the Delphi Group.