What is biodiesel? Biodiesel is a fuel produced from renewable resources such as vegetable oils, tallow and waste oils and fats. It can be used pure or blended with fossil diesel fuel. Blends of two to 30% do not require any modification to the car engine. With 100% pure biodiesel, minor modifications may sometimes be needed. The 00 rapeseed variety (canola) is by far the biggest source of feedstock used for biodiesel production globally . With about 60% monounsaturated oleic fatty acid content and only about 6% saturated fatty acids, it is stable and does not freeze in cold winter temperatures. New varieties (LZ 7632) are reaching even higher levels of up to 87% oleic fatty acid.

The variety of biodiesel feedstock has, however, broadened over time and other vegetable oils used in bigger volumes today are sunflower oil (in southern France and Italy), soybean oil (in the USA) and palm oil (to fuel buses in Kuala Lumpur, Malaysia.) In 1998/1999, high oilseed costs and record low prices for diesel fuel prompted the commercial production of biodiesel from recycled food oils from households and restaurants. McDonalds in Austria, for example, collects some 1,100 tonne of quality recycled frying oil from its 135 restaurants, which is then transesterified into fatty acid methyl ester (FAME) of standardised quality for fuel.

How is biodiesel made? Biodiesel is made by mixing a vegetable oil or fat with an alcohol (usually methanol) in the presence of a catalyst to produce fatty acids (or methyl ester) and glycerine. The process is not new - transesterification has been used in the oleochemical industry for many years to produce methyl ester, which is an intermediate in fatty alcohol production.

Differences will arise from the actual oils or fats fed into the process. With oils and fats with high free fatty acid (FFA) content, say above 8%, it becomes more difficult to properly separate the glycerol and esters, and the FFAs also affect the performance of the catalyst. The more saturated an oil or fat is (such as with tallow or waste frying oils which are hydrogenated), the more solid it is at low temperatures, making it unsuitable as a fuel in cold countries

Why biodiesel? The biodiesel industry stresses various factors which makes the fuel a credible alternative or addition to fossil fuels. Biodiesel is non-toxic, biodegradable and non-flammable, making handling and storage safer. As a fuel, it is much lower in sulphur content than petrochemical diesel. It therefore bums more cleanly and more completely, meaning less pollutants such as hydrocarbons, carbon monoxide and particulates. This gives both, environmental and health benefits. Various studies have concluded that using 1 kg of biodiesel leads to the reduction of some 2.5 kg of CO2 . This represents a significant tool for the EU to meet its CO2 emission reduction target contained in the 1997 Kyoto protocol on global warming and climate change. Particulate emission is reduced by an average of 50%, which is another critical environmental issue in big cities. A US Environmental Protection Agency study has shown that using biodiesel instead of petroleum-based diesel offers an important percentage reduction in cancer risks from particulate matter emission exposure. In addition, biodiesel does not contain aromatic compounds, which include carcinogenic chemicals like benzene and toulene. In addition, biodiesel can reduce dependence on oil imports. The world's petroleum and natural gas resources are concentrated in OPEC countries, which hold 78% of the world's petroleum sources and 39% of its natural gas sources. World demand for fossil fuels also continues to rise and biodiesel offers a way to fill this gap .

Momentum builds for biodiesel Political momentum continues to grow around the world for greater use of "renewable" agricultural resources to produce chemicals and energy even though the greenhouse gas emissions reduction targets that were initially proposed at Kyoto in 1997 are now unlikely to be achieved. In the energy field, in particular, the fact that electric power or motor fuels generated from crops are "CO2 neutral" (do not involve net additions to total CO2emissions) is enough to persuade governments and industry to embrace the technologies involved.

Recent examples include a project for the first dung-fired power station in the UK - using methane generated from farmyard manure to fire its boilers - and the announcement that Shell is taking an equity stake in Canada's Logen Energy Corp to finance the world's first commercial-scale plant to produce ethanol from biomass (straw and stalks). There are already a number of dung-fired power stations in Germany and Denmark and this is seen as the start of a trend giving agricultural cooperatives a wider role in Europe's privatised energy markets. Equally, the Shell initiative is a further example of the growing interest among traditional petroleum oil companies in "alternative" energy. While many of them are sponsoring projects to develop cars and trucks powered by fuel cells, they are also taking steps to ensure that, at least, they are not left behind by the various biofuel initiatives - involving both bioethanol and biodiesel - as they come through. In both Europe and the USA, the legal framework for production and use of biofuels is being prepared step by step. In the US, the Senate approved Energy Bill certainly makes provision for bioethanol production levels that have made corn millers smile. And perhaps the new state law in Minnesota requiring all diesel fuel sold in the state to contain a 2% blend of biodiesel may be more widely adopted. When this law is fully implemented, it is estimated that an extra 120M pounds (55,000 tonne) of soybean oil will be used in Minnesota alone. Meanwhile in Europe, there are two directives currently in the draft stage to encourage the incorporation of biodiesel in all diesel fuel sold .

Of course, for all these initiatives to succeed, further government "pump priming” will be necessary in the form of subsidies or other incentives. Within the EU, this means that each member state must apply for a derogation to excise duty legisation for motor fuels, in order to implement differential duties for biodiesel. So far, Spain has been the latest to apply for this, following an application by the UK in March, and earlier applications by France and Italy. Further afield, as construction has begun on the first bioethanol plant in China, renewed interest in biodiesel is also reported in the Far East. While the Malaysian Palm Oil Board has been pursuing biodiesel research and development since the early 1980s, Cocomunity has recently reported the establishment of a Regional Biofuel Collaborative Research Project involving five countries - India, Indonesia, the Philippines, Thailand and Vietnam - to fast-track progress. Back in the UK, which has lagged behind the first wave of biodiesel efforts in Europe, an incentive on excise duty for biodiesel-based motor fuel may provide the necessary boost . One interesting point is that there are several small projects that plan to make biodiesel from used cooking oils. This surely has the "greenest" credentials of all since it is actually CO2-negative. In the USA, one or two renderers have also begun the production of biodiesel from grease. As we have noted before , used cooking oils can cause immense problems in urban sewerage systems when not disposed of correctly, so recycling them in this way is doubly green since it reduces the land area required for production.

BioDiesel News Around The World UNITED STATES: The US Department of Agriculture has included animal fats and oils and yellow grease in its Bioenergy Programme for 2001-02 . The programme subsidises eligible producers who increase biofuel production using specified raw materials. The US National Biodiesel Board has estimated total US biodiesel production in 2001 at 45-67M litres. The US Senate passed an energy Bill on 25 April that includes provisions to boost biodiesel, a move welcomed bv the US National Biodiesel Board (NBB). The provisions on biodiesel are: Biodiesel excise tax incentive This provides blenders of biodiesel with a one cent reduction in the diesel excise tax for everv percentage of biodiesel made from virgin vegetable oil that is blended with diesel up to 20% of total content. Blenders tax credit – This offers blenders a tax credit of half a cent per percent (up to 20%) for biodiesel made from recycled oils and animal fats. Renewable fuels standard - This standard requires use of 2.3bn gallons (10.35M 4 of biofuels by 2004 and 5bn gallons (22.5M litres by 2012. Removal of a 50% biodiesel limit in the Energy Policv (EP) Act 1992 - The EP Act requires most federal, state and public utilitv companies to have a certain percentage of alternative fuel vehicles in their fleets. In 1998, Congress amended the act to allow covered fleets to receive

credit for using biodiesel but limited fleets to using biodiesel for just 50% of their credits. The 50% limit has now been removed for government fleets Federal fleet use – This requires federal government fleets to use biodiesel and ethanol when they are cost competitive. The Senate bill now goes to a joint House/Senate Conference Committee, which will need to reconcile it with the House of Representatives' Energy Bill passed in 2001, which contained no biodiesel provisions. CHINA: Work has begun on a 600,000 tonne/year biofuel plant in Jilin province which will turn 1.92M tonne of maize into ethanol. The joint venture between China National Petroleum Corporation (CNPC), the Jilin Grain Group and trading group China Resources Corp will supply CNPC with fuel to blend with gasoline. LITHUANIA: Rapsoila company has started constructing a biofuels plant in the Mazeikiai region at a cost of US$4.6M. Production of rapeseed oil methyl ester is expected to begin in January 2003. The plant's planned production capacity is 100,000 tonne/year. AUSTRALIA: The government has announced a US$2.8M two year study to investigate market barriers to the increased use of biofuels. The study will develop a strategy to increase biofuels production to 350M litres/year by 2010.. This target was announced by the government in last year's election campaign.

BIODIESEL – FUEL FOR THE FUTURE When Rudolf Diesel designed an engine to run on peanut oil in 1894, he was convinced that it Would have a great future and even went on to predict that biofuels would play a significant role in the future. "The use of vegetable oils for engine fuels may seem insignificant today. But such oils may become in the course of time as important as petroleum and the coat tar products of the present time."he stated. Little did he know that it would take so long for the world of technology to catch-up with his vision of motor fuel. Biofuels -BioDiesel and BioEthanol will become a vital part of our energy supply in the near future. Being derivates of renewable resources, they provide the opportunity for us to become less dependent on crude oil. Furthermore, the introduction of biofuels into the motor fuel market, will be the most immediate and most efficient way to meet the obligations of the 'Kyoto Protocol '-which is the United Nations framework convention on climate change -in order to reduce greenhouse gas emissions. For example, The 'EU Biofuels Regulation' intends to raise the market usage of biofuels from 2% in 2005 to a remarkable 5.75% in 2010 in the transport fuel market. This is equivalent to a

market potential of approximately 14 million tons of biofuels by 2010. The construction of large-scale production units will be inevitably necessary. In the US the production is projected to reach 5.6 billion gallons of BioEthanol by 2008 and 1.0 billion gallons of BioDiesel in the same period. BioDiesel is the alternative fuel produced from renewable resources that can be used in any diesel engine. It is usable in pure form or as blend with petro-diesel at any ratio. In principal all oils and fats -vegetable & animal -can be used for BioDiesel production:

• Vegetable oils: canola / rape, soybean, sunflower, palm, coconut, etc. • Used restaurant / cooking oils • Animal fats: lard, tallow • Fatty acids

The benefits of using BioDiesel are

• Bio-degradable • Non-toxic • Essentially free of sulfur and aromatics • Reduction of greenhouse gases and pollution: particulate matter (smoke); CO; CO2;

SO2; NO2, • Improvement of ignition and lubricity • Glycerine as valuable by-product

Lurgi Life Science (LLS) as worldwide market leader in Oleochemical Technologies, is committed to provide the highest quality BioDiesel (methylester) know-how. With more than 20 years of experience in methylester technology the customer can be assured of the latest innovative processes to gain competitive edge in their own efforts to be a major player in the market. LURGI Biodiesel Technology offers the following Benefits:

• Well-proven technology with fully operational references • Multipurpose and continuous process at atmospheric pressure and approx. 60C /

environmentally sound process • Efficient concepts for various feedstocks • Low catalyst and energy consumption • Low operating and maintenance cost m loo % process yield • Clear phase separation by gravity (no centrifuges required) • Open steel structure • Product quality:

• BioDiesel: E DIN 51606 / EN 14214 / ASTM D 6751 • Glycerine (raw): British Standard Specification 2621 • Glycerine (pharmaceutical): European Pharmacopeia 99,5

Europe is the world's largest producer of biodiesel and a recent European Union proposal to make biofuels account for two per cent of all EU gasoline and diesel sales by the end of 2005 could have a major impact on the industry. Europe is the world's main biodiesel fuel pump, supplying some one million tonne of the 1.1M tonne global output . From the industry's beginnings when it was chiefly linked to the need to protect EU oilseed acreage, biodiesel has become an independent business which receives the increasing support of government authorities because of the advantages it offers in terms of the environment

and independence of energy supply.

European production is concentrated in countries where detaxation is provided. Germany is the leading producer, with an output of 400,000 tonne. France produces around 350,000 tonne and Italy more than 200,000 tonne. The three largest biodiesel producers are, Arthur Daniels Midland in Germany; Novaol in Italy France and Germany; and Diester in France, which produce about 250,000 tonne/year each. Large plants exist in Livorno, Italy; in Rouen, France; and in Hamburg, Germany. Investments are planned in Poland and the Czech Republic has also completed a programme to set up 16 small biodiesel plants. Industrial scale production of biodiesel in Europe began in 1992 and capacities almost doubled between 1996 and 2001. Today, EU installed capacity stands at around 1.6M tonne/year and biodiesel is attracting more and more investors. This is particularly true for Germany, where the biodiesel market has been boosted by high gas oil prices and increased levels of carbon tax. If planned projects are finalised, German production will increase to one million tonne by 2003, mostly in former east Germany, pushing EU production capacities close to 2-2.5M tonne in the medium term.

EU regulatory framework The EU biodiesel industry developed chiefly as a result of the 1992 EU Common Agricultural Policy (CAP) reform, which capped oilseed growing areas on the continent. This encouraged the European Commission to draft a first regulation on setaside land for non-food uses and to co-finance the first esterification plants in Europe. Various EU programmes and regulations have also supported the development of biodiesel. An EU Directive, for example, has enabled EU member countries to detax biodiesel production up to a given quota, considering these as "pilot projects".

Specific national legislation include:

• France and Italy - biodiesel (pure or blends) are de-taxed within a quota (320,000 tonne and 300,000 tonne respectively).

• Germany - unblended biodiesel is free of tax and there are no quantity limitations.

• UK - the April 2002 government budget has stated that biodiesel will have an excise tax rate 20p lower than ultra low sulphur diesel. This is awaiting royal assent, expected in June or July, 2002

• Austria and Sweden have developed similar specific biodiesel legislation

A recent EU proposal on the compulsory use of biofuels in transport could also have a radical impact on the biofuel industry. The proposal in November 2001 by the European Commission Directorate General for Transport and Energy (DG TREN) says at least two per cent of a member state's fuel consumption should be in the form of biofuels from 2005. The percentage will rise annually by 0.75% to reach 5.75% by 2010. The proposal applies to pure or blended biofuels and a reduced rate of excise duty would be allowed, with total exemption for public transport and public authorities. The proposal is coupled with a draft EU directive allowing member states to de-tax biofuels. Both proposals are going through the machinery of the EU Parliament and Council and it may take some time before they are adopted.

The most controversial issue is compulsory usage. Some kind of compromise may be expected with more flexibility to take into account different national situations and possible indicative targets, similar to the EU directive on electricity from renewable resources. The two proposed directives are a milestone towards a solid development of a biofuel market.

Partners in industry The main customers of biodiesel are mineral oil companies, retailers/distributors of petroleum products, public or private transport fleets and drivers of personal cars. Biodiesel has needed both the support of vehicle manufacturers and petrol companies to develop. Petrol companies prefer to consider biodiesel as an additive for existing fuels and biodiesel's excellent lubricity properties which is increasingly needed for low sulphur mineral diesel - makes it an excellent additive. Today, some petroleum companies like TotalFinaElf and AGIP are among biodiesel's biggest customers. Some 450,000 tonne/year comprising all French biodiesel production and half of Italian production are sold to petroleum companies. With vehicle manufacturers, the first warranties were issued only for tractors or combines, such as by Same, Steyr, John Deere, Massey-Ferguson, Lindner and Mercedes-Benz. This was because the original intention was to produce biodiesel from agricultural products for agricultural machinery in a kind of closed loop. The focus then extended to other diesel-driven vehicles such as buses in public transport fleets, taxi fleets, the marine sector and personal cars. Car manufacturers now offer a variety of warranties for personal cars. Mercedes-Benz and Volkswagen approved use of rapeseed oil methyl esters as fuel in a series of vehicles in 1994

and 1995 respectively. PSA Peugeot-Citroen has been a fervent supporter of biodiesel for many vears and the internal PSA fleet of 700 diesel cars runs with a 30% biodiesel mix. Today there are 400,000 cars in Austria, Sweden and Germany running on pure biodiesel. In Germany biodiesel is available at around 1,000 roadside pumps of the "Free Fuel Traders" and 2.5M cars have the potential to run on biodiesel. In France, 10-15M cars run on diesel EN590, which has 2% biodiesel in it. Manufacturers such as Mercedes-Benz, Peugeot and Volkswagen have now also issued warranties for the new generation of modem high-pressure fuel injection systems such as the common-rail systems. The key factor in building customer confidence and promoting biodiesel is quality. Various national standards exist and, based on the power of the German car industry, the gold standard is Germany's DIN51606. The most recent development is the completion of a draft standard for biodiesel by CEN, the organisation which draws up voluntary standards for Europe. The final standard (EN14214) is expected by the end of the year. Economics Total world consumption of diesel amounts to around 750M tonne/year and biodiesel can, at best, grow to take some 8% of this market because of the availability of feedstock. Biodiesel producers can market their product either as an additive to fossil fuel (as in France) or by finding niches where biodiesel's distinctive benefits are stressed. Environmentally-driven regulations such as limitations on certain emissions, regulations for minimum biodegradability and laws for zero-toxicity to water life can also help biodiesel carve out specific market segments in which only this fuel can fulfil the rules. Various countries have already issued a range of regulations in this area.

MAJOR BIODIESEL PRODUCERS IN EUROPE 2002

COUNTRY

COMPANY

SITE

CAPACITY (ton/year)

Austria Belgium Czech Denmark France

RME Bruck STEEG & others * Biodiesel Raffinerie BASF (ex Sisas) Milo Oloumuc & others Emmelev Cognis/Diester Robbe/Diester Dico-SaipoVDiester ICI Novaol

Bruck Mureck Zistersdorf Feiuy Olmotz Otterup Boussens Compiegne Rouen Verdun

25,000 14,000 12,000

60,000

30,000 30,000

30,000

30,000 60,000

150,000 100,000

Germany Ireland Italy Slovakia Sweden Total Production

Connemann/ADM Oelmuhle Hbg/ADM BioDiesel/Cargill VNR HaGeVA Petrotec Hallertauer/Agrana ADIB-APV Vogtlaender Saria Bio-Industrie Bioenergie West (NEW) • BD Rhein-Main GmbH • Biodiesel GmbH • Rheinische BioEster • Fugema/RHG • Biodiesel lndustrie • Maschinenringe SH • Jenamethyl Biodiesel Bakelite Estereco Novaol Fox Petroli Defilu ltalbi Oil Comlube Paima-Thumys Ecobrinsle

Leer Hamburg Wittenberge Ochsenfurt Niederpollnitz Borken-Burlo Mainburg Henningsleben Grossfriesen Malchin Marl Wiesbaden Schwarzheide Neuss Malchin Magdeburg Brunsbuttel Jena Belfast Solbiate Citta di Castello Livorno Ancona Milano Bari Brescia Brastislava Knislinge

115,000 150,000 60,000 75,000 40,000 20,000 8,000 4,000 2,000

12,000 100,000 40,000

100,000 100,000 40,000 70,000

100,000 100,000

2,000

70,000 20,000

110,000 60,000 20,000 60,000 30,000

60,000

8,000

2,115,000

Costs of production Eighty per cent of the cost of producing biodiesel is determined by the world price of vegetable oils. The sales price of biodiesel is closely linked to the price of mineral oils and to the level of local detaxation applied. The profit margin determined by these two unrelated commodities makes this business relatively, risky and volatile, only affordable with a long-term approach. A clever blend of the cheapest feedstocks available is another key factor for a low-cost biodiesel. Because the availability and supply pattern of various raw materials may vary in volume and price, and blends have to be varied for climatic conditions, it is a tremendous commercial advantage if production recipes can be changed quieklvl even on a daily basis. In a modern plant, the cheapest blend of the day can be selected by a quick switch of recipes, which are stored and installed automatically, thus improving the profitability of a biodiesel plant significantly. Yield from the transesterification process which produces biodiesel is another key factor. It is therefore crucial to transfer any potential molecule into a fatty acid methyl ester (FAME). This includes all the triglycerides and all free fatty acids (FFAs). A modern and profitable process technology today is able to achieve a 100% yield without any expensive losses. The issue of glycerine is also a crucial one. Glycerine is around 10% of a fat/oil molecule and is a very important by-product of biodiesel production. Current world demand for glycerine is around 950,000 tonne and such a niche market is very sensitive to oversupply. An excess of glycerine can result in a price collapse.

The development of biodiesel production in the EU in the recent years has led to 100,000 tonne of extra glycerine supply which has been absorbed bv growing market demand but further large biodiesel production might be critical.

Impact on oilseed processing The oilseed crushing industry has understood that biodiesel can provide a key to stimulating future vegetable oil consumption growth and a better long-term market balance. This is true but, realistically, the biodiesel industry business cannot swallow huge amounts of surplus oils and fat production without blinking. Biodiesel is not a panacea for vegetable oils oversupply. Eventually, the development of biodiesel could contribute to stimulating vegetable oils demand onlv provided that such development is done gradually and within a longterm perspective. The medium-term potential for biodiesel development , even within the EU where a mature biodiesel industry is already installed, remains a limited one. Market perspectives for 2005 will not exceed 2.5 million ton of production in the EU.

BioDiesel Outlook in the UK The UK produces a minimal amount of biodiesel but with new legislation and over half a million new diesel cars expected to take to its roads this year, a large potential is waiting in the wings. waste oils and fats in animal feed. The dutv change is awaiting royal assent and is expected to come into force in June or July. The EU proposal has implications for the whole of Europe, as used or waste oils and fats could end up being banned from animal feed, creating an opportunity for biodiesel producers to use that as a feedstock . "All the big companies - like Shell, Cargill, ICI and Croda - are looking at the UK biodiesel situation closely," says Clery. "They know the position very well and if they move, it mill be a major change for the industry. If they don't move, then it will be a small-scale kind of operation which is of little relevance in terms of cleaner air or an alternative fuel-supply." The UK uses 15M tonne/year of diesel and the aim of BABFO is to boost biodiesel consumption from a minimum of 2% of that, rising to 10%. Clerv says the breakeven point for producing biodiesel without duty help is around US$37/barrel. But given the volatility of the petroleum market and sheer economics, the 20p/litre duty cut is not enough to produce biodiesel on a large scale of at least half a million tonne/year, he says. "It needs to he 35-40p and there needs to be a clear-cut commitment to keep the duty in position for at least seven years." BABFO continues to negotiate with the government on this front. It has around 90 members encompassing plant breeders, seed merchants, farmers, cooperatives, seed crushers and processors, collectors and processors of waste oils and fats for recycling, fuel companies, environmentalists and fuel users. Clery says one of the dangers is the possibility of substandard biodiesel being produced and tarnishing the image of the fuel generally. "It has happened in Europe." The standard to follow must be the CEN biodiesel standard EN14214 - agreed by all technical groups involved in the industry EUwide and expected to be passed late this year. The sale of

diesel cars in the UK suggests good potential if some car manufacturers can be persuaded to introduce biodiesel warranties. According to the Financial Times, more than half of all new orders being placed for company cars are for diesel vehicles and there has been a 50% jump in diesel car sales to company and private motorists. Citroen diesel car sales, for example, rose by 101% last year and a further 57% in the first quarter of this year. The extra incentives in this year's Budget and existing company car tax and vehicle excise rules mean well over 500,000 new diesel cars are expected to take to Britain's roads this year, the newspaper says. As for biodiesel from used cooking oils, Clery says this is more a niche market. "It's not a panacea and there's a limited supply of usable waste oils." According to the European Recycled Vegetable Oil Producers Association, around 80,000 tonne/year of used cooking oil is collected and processed.in the UK. "Over 95% of that is blended into animal feeds," says association president Keith Sanders. Of the remaining 5%, only 1% (800 tonne) is presently used in biodiesel production and the remaining 4% is used in other technical applications. The preferred biodiesel raw material feedstock is liquid oil and Sanders says this only accounts for about 10% of used cooking oil (UCO) currently produced. "Three or four companies have expressed an interest in buying used cooking oils for biodiesel production in the UK but none have shown interest in solid used cooking oil." One proposed company has also shown interest in raw material slightly contaminated with the stearic/hydrogenated fraction, which makes up the majority of used cooking oils. This would produce more waste product for them and that would be reflected in the price they would pay for it. Sanders says the danger is that if used cooking oils are banned in animal feed, the price of them will fall too far and the some 120 waste oil collectors and 17 processors in the UK will either go out of business or would need to be subsidised by the government or the restaurants/food outlets which need to be rid of the waste oils. A large-sized restaurant can produce around 500 litres of waste oil a week and if it has to pay to get rid of this, it may just put it down the drain, Sanders says. "It's illegal and you'll be fined if you get caught but some people mill still do it." The EU proposal laying down the health rules concerning animal by-products not intended for human consumption needs to be approved by the European Commission (EC), the Council of the EU and the European Parliament. It originally banned catering waste (which includes used cooking oils) in feed for farm animals but, after its second reading in March 2002, MEPs (members of the European Parliament ) raised an amendment to allow catering waste to be used in animal feed for up to four years, when produced under strict control. Member nations which apply for such a derogation would be responsible for monitoring these standards.

The Council and the EC now have to go through a conciliation process or the whole directive mill need to be rewritten. The conciliation process lasts eight weeks and was due to start in June, at the time of going to press. For Europe, the issue mill also be what to do with the some 430,000 tonne/year of used cooking oils it produces if the ban is passed. A small fraction of that goes into biodiesel produced in Germany and Austria. But what will happen to the rest if it cannot go into animal feed? Sanders says all EU countries, with the exception of Belgium, can currently include UCO in animal feed legally. However, the UK and the Netherlands are the only countries where production of UCO is strictly controlled under an audited scheme. Therefore, confidence in the product is waning in other member states. It is likely that only the UK will ask for a derogation to the legislation if it is passed so producers and processors in other member states are trying to find technical markets wherever they can, he says. General quality used cooking oils (higher in saturated hydrogenated/solid fractions) is already being "hawked" around looking for a home, he says. 'We receive material from France, Germany and Holland, who are finding it difficult to place the product. "The fact that they are having to explore markets outside their own borders is testimony to the fact that they cannot absorb their material within them." The proposed EU ban could also have a spinoff effect on meat imports from the USA, worth potentially some US$300M/year. The USA produces 1.4M tonne of yellow grease (waste or used oils and fats) a year. If Europe rejects waste oils and fats in animal feed, will it continue to accept meat from animals fed with the same product?

Creating a viable loop The leafy, green village of Cuddington in Cheshire seems an unlikely setting for a biodiesel producer. But it is from the pilot plant next to his home that Stephen Whittaker's Ebony Solutions has been selling biodiesel for the past three years. The former Shell employee formed his company in 1989 and produces around 10 tonne/week of the fuel. He also expects to have a 250 tonne/week plant in Manchester operational by August or September which will produce biodiesel and blend it if necessary. 'We have all the equipment for that plant and are ready to go," Whittaker says. Whittaker's 'e-diesel' is made from waste cooking oil and is an ester, but not methyl ester. The fuel secured the European diesel standard BS EN590 in February this year. Among Ebony's customers who are either trialing or using the fuel regularly are 15 local authorities, local hauliers, the Humberside police force and Morrisons Supermarket, the UK's 5th largest supermarket chain, with 113 stores. Robinson's Brewery in Stockport, Cheshire is also a new customer.

"One of the first companies to trial our product over 18 months a was leading distribution company, Grocery Logistics," says Whittaker. "It still runs a number of its vehicles on e-diesel and intends to use the fuel across its distribution fleet of 50 when the fuel duty reduction comes into force." NTG Civil

Engineering in Manchester has used 100 tonne of biodiesel in its fleet of 40 vehicles in the past 18 months. Haulage company, Van Blanc in Hyde, has bought more than 40 tonne and uses biodiesel as part of its regular fuel supply. And the Humberside police force took delivery in April of 10 tonne of biodiesel and will trial it over the next six months. Morrisons Supermarket's - which manages its own commercial transport fleet - requires 300 tonne/week of diesel and will test Ebony's e-diesel from its Northwich depot, which houses half its total fleet. Whittaker says how much e-diesel Ebony will supply to Morrisons will depend on how much waste oils it gets from Morrison's stores. 'We're particularly keen to establish relationships with companies who can actually supply the waste oil required to produce our fuel," says Whittaker. 'That's why we're already in discussions with some of the country's leading retailers and food manufacturers. "At the moment, we're not short of sales. It's the opposite. We're short of waste oils at the right price." Food manufacturer Sharwood's supplies Ebony with 5-10 tonne/week of used oils and fats. "We don't use more than that at the moment but once the new plant is operational, we will get what we can from food outlets and buy the rest from the waste oil collectors and processors." Ebony sells its biodiesel for 75p a litre for on-road use and 30p a litre for off-road use but says the price will be comparable to fossil diesel once the duty cut comes into force. Fossil diesel currently sells for around 74-76p/litre in the UK. Whittaker says the biodiesel industry in the UK could grow to 5% of the diesel market or 800,000 tonne in five year's if the ban on waste oil in animal feeds comes into force. "We, personally, are not banking on the directive to survive."

But a ban could bring waste oils down to £60-£80/tonne from levels of around £160/tonne. Whittaker believes there would still be enough volumes to enable everyone in the chain to survive. He also hopes it will be possible to encourage fast food outlets and restaurants to use Certain oils which could be more easily processed into biodiesel , creating a viable loop.

ASDA waste oils and fats to be recycled into fuel Envirodiesel was born out a partnership between a consultancy firm looking at potential recycling businesses and Central Bottling International, a UK plant equipment manufacturer for the food and drinks industry. "We were looking at niche recycling possibilities, particularly those arising from new legislation," says director Jayne Myatt. The EU proposal to ban waste oils in animal feed offered this potential. However, the economics still did not stand up and business was put on hold. Myatt says the UK Chancellor's decision to set the duty on biodiesel at 20p/litre less than for ultra low sulphur diesel changed that. "It will allow us to sell biodiesel at the same price or slightly cheaper than diesel at pumps. Currently, we're having to sell biodiesel at considerably more than the price of diesel." Envirodiesel has been running for about a year now, operating a one-tonne capacity pilot plant in Rossinglon, near Doncaster with a staff of half a dozen. It plans a 5,000-10,000 tonne/year full-scale plant, probably at the same site. The pilot plant has tested a variety of waste oils and fats, either from collectors/processors or direct from food factories, and aims to produce pure biodiesel to the CEN standard EN14214, which can also be blended. Myatt says the waste oils range in price from £100-£150/tonne for unprocessed, unaltered products to £150-£190 for processed waste oils. Oils from food factories - such as fish frying, potato processing and snack food plants - can be expensive. Envirodiesel is aiming to take ASDA supermarket's 130,000 litres (130 tonne)/year of waste oils and fats from its canteens, restaurants and rotisseries and turn it into an almost equal amount of biodiesel for the supermarket to use in its fleet of 700 Scania vehicles. The chain has 245 stores and is interested in a 5% biodiesel blend. Myatt says Envirodiesel's focus will be on fleet suppliers, bus companies, local authorities, 'green clubs' of private individuals and public services like fire and police services where it will be guaranteed a certain amount of tonnage for supply. She believes that even if the EU ban on waste oils in animal feeds is not passed, there will be enough companies who do not want to see the product in animal feed, creating a market demand for biodiesel. From the recycling point of view, she says it makes better sense to collect waste oils from the local area and this kind of market would therefore be confined to relatively small, local operations.