Global Biodiesel Production: The State of the Art and Impact on Climate Change

Abstract

Biodiesel is a diesel-equivalent alternative fuel derived from biological sources such as edible and nonedible oils, animal fats, and waste cooking oils through processing. In addition to being a transportation fuel, biodiesel is also used in some jurisdictions for electricity generation in engines and turbines. The world's biodiesel supply grew from 3.9 billion liters in 2005 to 18.1 billion liters in 2010 and is expected to exceed 33 billion liters in 2016 and reach 41.4 billion liters in 2025, a 25% increase over 2016 levels. Biodiesel prices have been facing downward pressure due to low global petro-diesel prices, however, blending mandates have largely sheltered the biodiesel market by lending consistency to demand. International prices of biodiesel are expected to increase in nominal terms over the next 10 years driven by the recovery of crude oil markets and prices of biofuel feedstock. It should be mentioned that the majority of countries producing biodiesel feedstock also have a vibrant domestic market and most or all of their supply is used to meet domestic mandate-driven demand. This dual role, as both producer and consumer, partially explains the limited international trade in biodiesel feedstocks. Most of the limited biodiesel trade over the next 10 years is expected to be composed of Argentina's exports to the US. While there is a debate on the sustainability of biodiesel, many studies using lifecycle assessment (LCA) have demonstrated that biodiesel results in 20--80% less greenhouse emissions when compared to petro-diesel. As crude oil becomes more energy intensive to extract and refine, expected efficiency gains in biodiesel feedstock production and refining, the commercialization of second-generation biodiesel using nonfood feedstocks, combined with the growing market share of biodiesel will result in further reduction of harmful climate-impacting emissions by replacing petro-diesel with biodiesel.