In the past, the raw materials used to produce Biodiesel have been considered as low value commodities. A change in demand, has seen the cost of raw materials used in the production of Biodiesel skyrocket. Used cooking Oil (UCO) once fetched $300 per ton, and now sells for $900-$1,000 a ton. Edible tallow that is approacing a 300% increase from $400/t to current $1000-$1,100/t. Palm Oil is selling for $1,200/tonne, and Canola $1,600-$1,800/t.
When raw materials cost more than $1/litre, then add production, transport and labor costs; it is easy to understand the why producers are finding it difficult to produce a litre of fuel that retails for $1.50. Profitability and viability are fundmental, or there will not be any Australian Biodiesel Producers. In short, as the price of diesel and commodities escalate; so will the cost of Biodiesel in Australia.
Where will it end; there doesn't appear to be an end in sight. If prices correct, it will be small declines, but currently - the trend remains upward with oil hitting an all-time high of $127/bbl.
The demand for energy is increasing at such a rate that second class oils are now being used as first class oils, and attracting comparable prices. The high base cost of these oils means that Biodiesel producers are hard pressed to produced a competitive biofuel.
Cost of raw materials is cited as having forced the two largest Australian companies (Australian Biodiesel Group and Australian Renewable Fuels) to cease production until there is some light at the end of the tunnel. This is being repeated in facilities across Asia with a number of Malaysian plants ceasing production. So where is the light at the end of the tunnel? Advancement in 2nd generation Bio-feedstocks will alter the spiraling costs of Biofuels, and eliminate the competition between Food & Fuel.
The University of Queensland ARC Centre of Excellence for Integrative Legume Research (CILR) in partnership with Pacific Renewable Energy have established a joint venture as a part of Queensland Government SmartState fund. The venture, under the direction of CILR director Professor Peter Gresshoff and PRE co-founder, George Muirhead, a founder and former executive officer of Australian Biodiesel Group, will establish a 12ha of Pongamia plantation near Caboolture.
According to Muirhead, "We think there's great potential to commercialise when we've got the elite genotype. We would focus on areas considered degraded land and that's potentially a vast area."Want to know more, Listen to the 2SER interview with Morris Lyda to better understand the issues related to pricing of Biodiesel. http://www.aqob.com.au/download.php?file=morris_lyda_biodiesel_update.mp3
Article By: by Ruby Vincent, "A Question of Balance" a 2SER (107.3) program dealing with issues related to general community's ability to do things to improve our environment and STILL maintain an enjoyable standard of living. http://www.aqob.com.au/index.php