Friday, September 21, 2007

Growing Pains for Chinese Biodiesel

Chinese biodiesel may be faltering.

China's total output last year was about 60 million gallons. Production for 2007 could increase to 88 million gallons. Trouble is, there are no government mandates for biodiesel production in China. Nor are any mandates or tax incentives in sight. (US producers depend on mandates and subsidies because of unexpectedly high feedstock prices--mainly soy--which keep biodiesel from being price-competitive with petro-diesel.)

Quality is another issue. Chinese biodiesel is typically so poor that it can't be used for motor fuel.

Still, China is investing heavily in the large-scale cultivation of jatropha--a hardy, inedible oilseed crop that is an ideal biodiesel feedstock--and big collection and refining schemes for recycled cooking oil, or restaurant grease, also known as waste or used vegetable oil.

WIth the exception of China, Asian nations are almost exclusively committed to using palm oil as feedstock for biodiesel.

Pure, biodegradable biodiesel, known as B100 in the US, is made by mixing virgin or waste vegetable oil (or tallow) with methanol and a chemical agent such as sodium hydroxide in a process called transesterification. B100 can be blended at any level with petro-diesel for use in unmodified diesel engines. In addition to motor fuel for cars, trucks and boats, biodiesel can be used as a substitute for heating oil and also burned in a generator to produce electricity.