EcoNuz

To determine if biofuels are a viable option to displace petroleum based fuels for the transportation industry in the United States, many variables must be taken into account, including environmental impact, production costs, ability of existing infrastructure to use them, available subsidies, legislation, and the cost of oil.

Each biofuel technology has benefits and drawbacks that can alter the total cost to market and net effect on the environment.  Since market conditions can vary by geography, and historical market data for competing petroleum based diesel (PD) is available, the following posts will focus on the economic viability of biodiesel (BD) production in the United States.  Each of the immediately following posts will provide a brief explanation of why the particular aspect is important to the market viability.  Further posts will discuss additional details of BD production using soy beans as a source because there is already market data and information from real world use.

Because of the market price variability of soybeans, and the fact that production output of BD from soybeans is inherently limited by the amount of arable land available, market viability of BD from algae will also be discussed.

In order to displace petroleum based diesel, biodiesel must be sold at a final a cost to consumers that is competitive with existing fuels. There are current biodiesel production methods, such as using soybeans, that can be profitably produced and distributed as an additive at current oil prices. Previous study by the US Department of Energy Aquatic Species Program concluded that algae based biodiesel had the potential for high production capacity, but high production costs meant it would only be cost competitive at higher prices of oil.

The necessary price of oil stated in the ASP research was reached in 2006, and current legislation and newly available cost reduction measures make profitable production of algae based biodiesel feasible today. While having less of a direct impact to the environment than petroleum based diesel frequently motivates the use of biodiesel by end consumers, it has limited impact on the overall market. Legislation and subsidies in the US have a greater impact on production volume than any other factor.

This series discusses some of the factors involved in determining the market viability of biodiesel in the US transportation industry.  It is composed of sections from one of my semester long grad research papers.  As I add sections, I will eventually go back and add the sources.