Is Biodiesel Economical?

There has been a significant increase in the amount of biodiesel sold in the United States over the past decade from 500,000 gallons in 1999 to 250 million gallons in 2006, according to the National Biodiesel Board. The trend is driven by increasing concerns over oil dependence and growing awareness of environmental issues, but is biodiesel economical?

The design of diesel engines and the high energy density of diesel fuel translate into more miles per gallon so they have been touted for their fuel efficiency. However, although diesel vehicles stretch mileage, diesel fuel production requires more oil per gallon during manufacturing.

The other drag about diesel fuel is that it's less refined than gasoline. Diesel cars and trucks emit more air pollutants than gasoline vehicles and the emission control technology aimed at cleaning them up comes with a high price tag.

There is a simple solution that takes costs and conscience into consideration: biodiesel. Biodiesel has the inherent mileage spread of diesel but eliminates many of the pollution and resource consumption issues associated with diesel.

Biodiesel is not raw vegetable oil. It is the product of a chemical process that replaces the glycerol (a sugar alcohol) in natural oils, like rapeseed or soybean, with methanol or ethanol. Biodiesel is registered with the EPA as a fuel and fuel additive under the Clean Air Act and meets the American Society for Testing and Materials (ASTM) specifications.

Biodiesel burns clean, offsets petroleum, is produced domestically and is biodegradable. Neat (100%) biodiesel is a renewable fuel and when used in a mix it decreases the use of non-renewable fuel. The trade names given to biodiesel express the volume percentage of biodiesel in a blend. For instance B20 is 20% biodiesel and B100 is 100% biodiesel.

In addition to being a renewable fuel, biodiesel reduces carbon monoxide, nitrogen oxide, sulfur oxide and sulfate emissions. A 1998 US Department of Energy study revealed that agriculture vehicles using biodiesel produced a quarter of the CO2 emissions that petroleum conventional diesel vehicles emitted reducing hazards to both humans and the environment.

Biodiesel can be used alone or in a blend with petroleum-based fuel in existing diesel engines with little or no modification. Most diesel engine companies recognize the ASTM biodiesel standards and have adopted biodiesel in both vehicle use and warranty information.

The relative ease of transitioning from diesel to biodiesel has made it the cost-effective choice for fleet managers. Biodiesel offers mass transit vehicles a way to comply with state and federal regulations on diesel emissions without replacing vehicles, parts or mechanics.

The National Trucking Company has partnered with the Iowa Soybean Association, National Biodiesel Board, U.S. Department of Agriculture and the Renewable Energy Group for a biodiesel study called “Two Million Mile Haul.”

The initiative is road-testing soy biodiesel B20 and comparing it to regular diesel. The observed results so far by participating trucking companies show better vehicle performance, reduced engine wear and reduced maintenance costs, all of which offset the slightly higher cost of biodiesel.

The City of San Francisco uses B20 biodiesel in their fleet including public works vehicles, street sweepers and utility trucks. The city also launched a “Biofuel Recycling Program to collect waste grease and cooking oil from restaurants enabling regional production of biodiesel. In order to entice private fleet managers to switch to biodiesel, San Francisco plans to open new retail pump stations.

Around the nation, large diesel vehicle fleets are turning to biodiesel as a way to meet environmental regulations and reduce pollution without significant expense. School systems around the country, including California, Nevada, West Virginia and New Jersey, have made the switch to biodiesel, many with state and federal grants to offset any price difference between diesel and biodiesel.

The increase in commercial use of biodiesel is creating the supply chain needed for private consumers and bringing prices down. There are just over 100 biodiesel plants operating in the U.S. and about 1,500 biodiesel distributors. Increasing consumer demand and tax incentives for alternative fuel manufacturers means the availability of biodiesel will increase. More demand means the prices will continue to go down.

A comparison of fuels by the Department of Energy shows that biodiesel, including B20, B2-5 and B99-100, is the only fuel that has remained on a steady downward price trend over the last year. Regular gasoline and diesel were both more expensive in spring 2007 than they were in spring 2006.

The price breakdown (national average) as of March 2007:

Gasoline $2.30/gallon

Diesel $2.63/gallon

Biodiesel B20 $2.53/gallon

Biodiesel B99-B100 $3.31/gallon.

The national average price for biodiesel is actually lower than diesel and gaining on gasoline. Of course, the price you’ll pay depends on the region you live in. Biodiesel can be sold and distributed alongside gasoline at the pump but it’s not available at all gas stations just yet, so scarcity is a factor in price.

Biodiesel can be purchased direct from distributors or some biodiesel enthusiasts make their own from readily available ingredients including lye, alcohol and vegetable oil. The process is relatively easy and saves considerable money (self made biodiesel usually costs under $1 per gallon). However, the ingredients must be mixed in the right amounts as an improperly mixed batch can cause engine problems.

Self made biodiesel fuel isn’t recognized by ASTM so it’s not likely to be covered under your car manufacturer’s warranty. Plus, biodiesel that meets industry specifications is less likely to release filter clogging deposits on tank walls and pipes.

So what's the bottom line? If you own a diesel vehicle or manage a fleet, the switch to biodiesel makes environmental and economic sense. Biodiesel is better than diesel both in cost-effectiveness and environmental standards.

The trend in prices between diesel and biodiesel make biodiesel a better choice now and in the foreseeable future. Plus, there are state and federal tax credits available for alternative fuel vehicles and, in some situations, grants.

If you’re thinking about buying a diesel vehicle and using biodiesel fuel, do some careful comparison between diesel engines and improved gasoline vehicles. The Union of Concerned Scientists maintains that a regular gasoline vehicle can outperform diesel in emissions, costs and oil dependence. Diesel engines get more miles per gallon than regular gasoline vehicles but they tend to be more expensive.

Unless you do a considerable amount of driving, biodiesel may not be your best choice or the most responsible. Sounds anti-environment but it has to do with the fact that the most commonly sold biodiesel is B20, which still uses 80% petroleum-based diesel.

This means the embodied energy of petroleum-based fuel production and the environmental hazards of petro-diesel are reduced, not eliminated, with B20. This is changing as demand for diesel and biodiesel continues to increase. Starting this year, diesel producers are required to make low-sulfur diesel fuel, making biodiesel blends even better for the environment.

*Note: The information in this article is general advice and not meant as a substitute for personal guidance from a financial advisor, real estate professional, home improvement contractor or legal counsel. Although the author is a licensed realtor, the advice given in this article does not constitute any client contract or agreement between the author and the user. The author is not responsible for any losses, damages or claims that may result from your decisions.