07/14/2006
Source: LOHAS Weekly Newsletter
Author: Clean Edge
Soaring crude oil prices and continued unrest in
the Middle East have thrust biodiesel fuel into the limelight for its
cleaner burn and homegrown production, gaining it praise from both
environmentalists and governments looking to reduce dependence on foreign
oil. Although biodiesel is not a new invention, its promise as a viable fuel
source is, and a new study by Kline & Company is set to examine the global
market potential for this emerging alternative fuel.
"Biodiesel has been around since the early 1900s, but it has
traditionally been much more expensive than conventional fuel," says Geeta
Agashe, director of the petroleum and energy practice for Kline's research
division. "With crude oil prices now hitting the roof and tax credits
applicable at least until 2008, biodiesel is beginning to look a lot more
attractive."
"Technology has made biodiesel production more economical and feasible on
a mass scale, and for consumers, diesel vehicles can use up to 20% biodiesel
right now with no changes in vehicle design," she adds. "So as the price of
crude goes up and the price of biodiesel comes down, the question becomes
one of critical mass: At what price point is the incentive to make the
switch?"
Kline's study, GLOBAL BUSINESS OPPORTUNITIES IN BIODIESEL FUELS, 2006-
2016, aims to explore this question, with a comprehensive analysis of the
global market for biodiesel, including supply and demand, forecasts for
feedstock and additives, manufacturing cost economics, price forecasts, and
economic viability assessments. In addition to offering important market
insights for producers of feedstock, additives, and manufacturing
technologies, the study will also examine the potential demand for
off-highway applications, an area in which the U.S. government has shown a
keen interest.
Prior to the recent price hikes for crude oil, legislation had been the
major driver in the push to expand the use of biodiesel in both Europe and
in North America. EU Directive 2003/30 mandates that at least 2% of all
diesel consumed in Europe must be bio-based by 2008, and by 2010, this
number must grow to 5.75%. U.S. legislators are also pushing for a 2%
mandate, and biodiesel suppliers are reacting by adding production capacity,
which has grown by 200% in the U.S. over the last year alone, according to
the National Biodiesel Board.
"The growing interest in alternative fuels is spurring investment in
production of both biodiesel and the raw materials used to produce it,"
Agashe says. "This industry is very flexible and can ramp up production
based on demand. Our study aims to determine exactly what that demand will
be and where the raw material supply will come from."
Because Brazil has come to the forefront as a major supplier of soy and
other biodiesel feedstocks, Agashe says Kline's study will examine the
Brazilian marketplace, where there has already been a significant move
toward biodiesel.
Big agribusiness firms are now going to Brazil and buying farms and food
crops, specifically to produce feedstock for biodiesel, says Agashe. One of
the biggest is Cosan, which she says, "has become like the Google of the
Brazilian stock exchange, running higher and higher, based purely on the
promise of biodiesel as the next big thing."
This concept -- food producers stepping into the fuel game -- brings with
it a whole new set of players that may challenge traditional petroleum
giants like Chevron and ExxonMobil.
"The rising demand for biodiesel is pushing petroleum refiners to decide
whether to begin offering it in their product mix, or take their chances
that this may be just a passing fad," says Bill Downey, vice president and
head of Kline's Petroleum & Energy consulting practice. "Some oil majors
like Chevron and BP have been proactive, using environmental friendliness as
a marketing tactic for their biodiesel offerings. But others have not been
so quick to respond, and this could present a significant challenge to their
business and supply chain strategies down the road."
GLOBAL BUSINESS OPPORTUNITIES IN BIODIESEL FUELS, 2006-2016 will examine both the opportunities and threats facing conventional suppliers, as well as additive suppliers, who need to understand the changes required to meet the demands of biodiesel fuels. It will also include profiles of the major feedstock, additive, and finished product suppliers, as well as leading consumers in both the private and public sector.
For the complete article on CleanEdge.com
click here.