BIOFUELS

www.icis.com20 | ICIS Chemical Business | December 13, 2010-January 2, 2011

Check out our website for the latest news, information and prices on chemicals and commodities at icis.com/pricing

SOURCE: ICIS

GLOBAL BIODIESEL PRICES ON THE UPSWING$/gal

DNOSAJJMAMFJ2010

D

A new breed of fats- and oils-based renewable diesel is now increasing its presence in the global biofuels market as major players started up new production facilities this year.

In November, Finland-based Neste Oil started the world’s larg-est renewable diesel plant in Sin-gapore, with a total capacity of 800,000 short tons/year (725,760 tonnes/year). Compared with tra-ditional biodiesel production, where vegetable oils and animal fats are esterified, Neste Oil’s NExBTL biofuel is produced by hydrotreating the feedstock. By-products of the process include small volumes of biogasoline, bi-ogas and water.

“NExBTL is a premium-quality product with more complex pro-duction technology, which is also more expensive than esteri-fication of traditional biodiesel,” said Neste Oil president and CEO Matti Lievonen. “When it comes to product quality, NExBTL re-newable diesel outperforms tra-ditional biodiesel. The perform-ance and ease of use are also equal to that of petroleum diesel or even better.”

The Singapore plant will pri-marily use palm oil as feedstock. However, Neste Oil’s NExBTL bi-ofuel technology can also use rapeseed oil and waste animal fat sourced from the food industry.

“The technology is flexible

so that, in the future, the raw material base could also include jatropha, algae, wood residue, and so on. Neste Oil has an inten-sive research and development program focusing on new raw materials,” Lievonen said.

The company is currently building a similar-sized facility in Rotterdam, the Netherlands, which is expected to start in the first half of 2011. Neste Oil also has two renewable diesel plants with a combined capacity of 380,000 tons/year already operat-ing in Porvoo, Finland.

The Singapore and Porvoo faci lities can consume as much as 1.4m tonnes/year of fats and oils feedstock when the plants operate at full capacity, noted Lievonen. The main markets for the Singapore renewable diesel products are Europe and North

America, because of the biofuel mandates currently in place for the regions, he added.

DYNAMIC FUELS ENTRY This year, the US biofuels market saw its first commercial-scale advanced renewable diesel in Geismar, Louisiana, produced by Dynamic Fuels, a joint venture between food major Tyson Foods and process technology company Syntroleum.

Dynamic Fuels’ 75m gal/year (284m liter/year) isoparaffinic diesel plant, which started in Oc-tober, also uses catalytic hydrot-reating of non-food grade animal fats and greases supplied by Tyson Foods. The plant is de-signed to process 550m lb/year (250,000 tonnes/year) of feed-stock, said Syntroleum vice presi-dent Ron Stinebaugh.

Unlike traditional biodiesel, the company’s renewable diesel technology does not require feed-stock with low, free fatty acids, thereby resulting in lower operat-ing costs despite the plant’s high-er capital costs, said Stinebaugh.

“Also related to lower operat-ing costs, the renewable diesel pro cess is much more suited to large-scale production and econ-omies of scale than transesterifi-cation,” he added.

Another benefit of isoparaffinic fuels is its feedstock flexibility.

Biodiesel properties vary depend-ing on the feedstock used, where-as isoparaffinic fuels are the same regardless of feedstock, said Stinebaugh. “It should also be pointed out that the last reaction step in the process, hydroisomeri-zation, can be operated to pro-duce fuels with very low freeze points suitable for arctic diesel or jet fuel use. The ability to produce highly isomerized distillate for jet fuel is another advantage to our process.”

In late December, Neste Oil an-nounced that its NExBTL fuel would be used by German airline Luft hansa for a six-month trial run in scheduled commercial flights between Frankfurt and Hamburg airports, starting April 2011. The aircraft on the route will use a blend of 50% NExBTL jet fuel and 50% fossil-based jet fuel in one engine, while the other engine will use conventional jet fuel.

PROS… AND CONS?Both Neste Oil and Dynamic Fuels point out that their fuel can be a drop-in to petroleum diesel, as they already meet various standard specifications for diesel fuel oils. Their renewable fuels can also be dis-tributed through the existing die-sel fuel infrastructure.

“Since our renewable diesel has superior qualities to biodie-

BIODIESEL DORIS DE GUZMAN NEW YORK

Green diesel supply expandsTraditional biodiesel faces competition as non-esterified fats and oils-based diesel supply increases

Neste Oil’s Singapore plant is the world’s largest renewable diesel structure, with a capacity of 800,000 tons/year

ICB_131210_020-021 20 8/12/10 18:46:08

BIOFUELS

December 13, 2010-January 2, 2011 | ICIS Chemical Business | 21www.icis.com

BIOFUELS IN BRIEF

2011 ETHANOL BLENDING TARGET LOWEREDThe US Environmental

Protection Agency (EPA) has

lowered its 2011 blending tar-

get volume for cellulosic-based

ethanol to 6.6m gallons (25m

liters) from the 250m gal target

set in the Energy Independence

and Security Act (EISA) of 2007

and down from a July projection

of 17.1m gal. The reduction

was driven by estima ted produc-

tion lag for cellulosic ethanol.

The US Renewable Fuels

Association said the EPA’s anal-

ysis reflected difficulties cellu-

losic producers had in obtaining

revenues to commercialize the

product. The EPA maintained its

2011 EISA target blending lev-

els for biodiesel and advanced

biofuels at 800m gal and

1.35bn gal, respectively.

China feverFEATURE P38

sel, we expect that our fuel will attract premium pricing or will be preferred over traditional biodie-sel when priced the same,” said Syntroleum’s Stinebaugh. He did not disclose what premium its fuel could command.

Neither did Neste Oil reveal the current price for its NExBTL fuel, but industry sources indicate the product would be competitive with petroleum diesel when the crude oil price is $140/bbl.

Compared with traditional bio-diesel, renewable diesel offers sig-nificant advantages, said And rew Soare, research associate at US market research provider Lux Re-search. “Renewable diesel has about 10% more energy than bio-diesel per unit volume. This, cou-pled with its ability to drop into existing fuel lines unlike biodie-sel, allows renewable diesel to sell for more per gallon. Unfortunate-ly, we don’t have specific num-bers on prices or exact costs of these different fuels,” said Soare.

As of December 2, ICIS as-sessed biodiesel B100 prices at $4.04–4.65/gal FOB (free on board), Midwest, a record-high this year compared with the record lows of $2.85–2.95/gal seen in May and June. Rising glo-bal fats and oils prices are driving the price rise for the biofuel.

In Europe, the biodiesel indus-try is said to be experiencing oversupply, and market partici-pants noted that the Neste Oil plant in Rotterdam is likely to ex-acerbate the situation next year. Other industry observers said the new renewable diesel plants in

Singapore, Europe and even the US could even potentially exac-erbate rising fats and oils prices because of the additional burden in feedstock demand.

Only Neste Oil and Dynamic Fuels are currently producing green diesel at scale, and com-bined they represent about 97% of total green diesel capacity, ac-cording to Lux Research. Renew-able diesel currently holds 1.8% of the global biofuel capacity in the ground, behind ethanol with 69% and biodiesel at 28%.

“Global renewable diesel capa-city totals about 665m gal/year today, and this will grow to 2.8bn gal/year in 2015 – a 33% annual growth. We will see green diesel replacing traditional bio diesel throughout the world, as green die-sel will integrate more easily into supply chains,” noted Soare. Additional reporting by Serena

Seng in Singapore, Sarah

Trinder in London and Judith

Taylor in Houston

“We will see green diesel replacingdemand fortraditional biodiesel”ANDREW SOARE Research associate, Lux Research

ICB_131210_020-021 21 8/12/10 18:46:21