PEP Review 2000-9
Impact Of Biodiesel Growth: A Strategic Assessment
Published: May 2003
In late 2001 the European Commission announced an 'action plan' to increase biodiesel production and consumption dramatically, from less than 1 million tonnes in 2000 to something like 7 million tonnes in 2010. This is huge development for chemical producers. Just to put it in perspective, the 2010 EU market for biodiesel will be half as large in tonnage as current global consumption of polystyrene, around 13 million tonnes per year. This report profiles the market development, the process costs for making biodiesel and the major associated impacts. These are four main areas: agricultural land use, emissions and energy consumption, rapeseed and glycerine markets and tax revenues. Our findings are that:
- Costs and tax revenues: Biodiesel costs significantly more to produce than petroleum diesel, so its market development will depend primarily on government subsidies. By 2010, EU governments could offer as much as €2.5 billion per year in tax breaks to biodiesel.
- Land use: The land required to grow rapeseed for biodiesel has already outstripped production from EU 'set-aside' land. To satisfy biodiesel demand in 2010, all current EU oilseed land (plus another 15% of acreage in addition) would need to be devoted to biodiesel markets.
- Environment and energy: Eight comparison studies conducted in the US, Europe and Australia show that biodiesel is clearly lower than petroleum diesel in greenhouse gas emissions and non-renewable energy consumption. It is higher in NOx emissions. The verdict on particulate emissions is mixed - some say biodiesel is lower, some say petroleum diesel is lower.
- Market impacts: biodiesel will come to dominate global rapeseed markets, with market share climbing from 5% in 2000 to 40-60% by 2010. Glycerine markets will be swamped by byproduct output, which will more than double worldwide production potential.