Hello Dan I think you should consider reinviscerating yourself. I don't think much of this report, it takes a very narrow view. Campbell's a lobbyist, he sees things from the point of view of the soy interests, and that means he wears a particular set of blinkers. Look how he considers the capacities of the soy-growing industry as it currently stands. Under "Future Raw Material Availability" he says:
>Additional sources include expanded soybean acreage, >higher oil soybeans, and higher oil soybean substitute crops, greater >domestic crush and imports of foreign oils or their esters. Come on, we all know that's only a fraction of the potential. Soy's a lousy oil crop anyway, he hardly even begins to consider what farmers could actually grow. Of other crops he says: >Sunflower and canola are crops with higher oil content than >soybeans. Depending on yield assumptions either crop could produce >10 gallons per acre more oil than soybeans. Er, sunflowers could produce 54 gal/acre more, and canola 79 gal/acre more. He does consider land not currently being used for farming, as well as some crop substitution, but he has no idea of the potential of local-level micro-niche production. See: http://archive.nnytech.net/index.php?view=17184&list=BIOFUEL Info-Archive at NNYTech It's possible to produce huge amounts of oilseeds without using any farming land at all. He also fails to consider the potential of oilseed-bearing tree crops, which is also huge. Same blinkers with waste oil: two billion gallons a year, or more - some estimates are three billion or even four billion gallons. How can these estimates be out by possibly as much as 100%? A bit telling. And he presumes it's all collected. Judging by what goes on in other industrialized nations, probably about 10% of it is collected. He also doesn't seem to have figured that there's no future in rendering it for livestock feed, the BSE debacle will put paid to that, as it's doing in other parts of the world and starting to do in the US too. Effective waste collection just doesn't happen unless it's fully localised, at point of use, and that's not the case with waste oils anywhere that I know of. In the US much of it ends up in sewers and landfills, and most biodieselers and the SVO folks find it's free for the taking. Biodieselers are a great way to localise the collection of waste oils effectively. An indication of how hypothetical and narrow it all is comes with our knowledge here that millions of gallons of biodiesel are being made in the US that isn't on his radar screen at all, nor on the NBB's - by the much-despised homebrewers. But isn't it the individual effort that best characterises the American Way? It's not dead yet, far from it. Campbell's question "Enough for what?" is a good one, but I wonder if he understands it himself. Once you apply the increased fuel efficiency, the fuel-use reductions, and the decentralization of energy supply that the biodieselers are a part of, and that companies like Ag Processing Inc would perhaps rather not know about, Campbell's projections begin to look a bit meaningless, IMHO. Just the view from Big Soy. What's the use of leaving energy issues such as this in the neither too clean nor too competent hands of the industrial agriculture sector? ADM, Monsanto and Cargill are going to lead the way to a glorious future? Can they be trusted to get anything right, other than feeding and protecting their own destructive greed any way they can? We can do better than that. Best wishes Keith >Well, I am eviscerated. Finally, the National Biodiesel Board wrote >me back and included the following article. Its long, but no >attachments allowed. Essentiall, it undermines my thesis. It is >disheartening. This is written by John Campbell at Ag Processing >before this group was formed. I tried to search for the article, but >could not find it in the archive, so perhaps it has not been posted. >It is, however, relevant in light of allthe postings I have made. >This comes courtesy of the National Biodiesel Board. > >here you go. > >Agricultural Outlook Forum 2000 Presented: Friday, February >25,2000 > > >NEW MARKETS FOR BIO-BASED ENERGY AND INDUSTRIAL FEEDSTOCKS >Biodiesel ö Will There Be Enough? > >John B. Campbell >Vice President > >Ag Processing Inc > > >Introduction: > >Biodiesel is a term that covers a broad array of fuels and fuel >additives derived from various feedstocks each having specific >properties. Biodiesel is commonly defined as a methyl or ethyl ester >derived from vegetable oils, animal fats or various waste fats and >oils. > >A process known as esterification modifies the fat source in the case >of biodiesel. In esterification the fat source is reacted with an >alcohol in the presence of a catalyst. The reaction breaks the fat >tryglyceride into its various individual components and yields a >crude glycerin byproduct. > >The esterification reaction converts the raw fat source into a >material that is highly compatible with modern diesel fuels and >diesel engine technology. In Europe the fat source is primarily >rapeseed oil while the US primary feedstock is soybean oil. > >Market Penetration: > >The question posed by USDA Outlook Conference Organizers, "Will there >be enough?", can not be answered without the answer to another >question. For what? > >Nearly 75 percent of diesel fuel use is for on-road transportation. >Rail, marine and other off-road applications consume the >transportation balance. Diesel fuel use in these applications >dwarfs the current and future production capabilities of the >vegetable oil and animal fat industry. Hence, petroleum based >hydrocarbons will continue to be the workhorse for diesel engines as >far as the eye can see. > >Does that mean that there is no place for biodiesel? No. Keep in >mind that ethanol, a fuel that has been in commercial production >since the 1930's, now has a market penetration of just over one >percent of the gasoline pool. That one- percent market penetration >accounts for over 500 million bushels of corn ö or about 5 percent of >the crop. While a drop in the gasoline bucket, ethanol is an >important contributor to the total demand for corn. > >It will be a long time before biodiesel reaches the market >penetration level of ethanol. However, there are niche markets >where the unique properties of biodiesel have their place. These >niches are beginning to open up and will continue to emerge due to >factors I will discuss a little later. > >First lets take a look at the current and potential raw material >availability. > >Raw Material Availability: > >Soybean oil is the mother of all oils in the United States. Soy has >about an 80 percent market share that has held steady for over 20 >years. In addition, soybean acreage has recovered to levels not seen >since 1980. Around 10 million acres of soybeans were lost in the >early 1980's due to depressed returns and the attractiveness of farm >program crops such as wheat, feedgrains, cotton and rice. >Provisions of the 1980 Farm Bill allowed farmers to grow their >program crop base. Soybeans did not have a target price or >deficiency payments at that time so farmers reacted to the government >signals by switching to protected crops. The 1985 farm bill >corrected the "race for base" signal but did not allow planting >flexibility or subsidy neutral income and price supports. By >1990, "triple base" and "0/92" provisions began to encourage market- >based planting decisions. Soybean planting began a slow rise as a >result. The 1996 Freedom to Farm legislation decoupled income >supports from planting decisions and unleashed pent up demand for >soybean crop rotations. Today soybean acres and production are at >historically high levels. Most analysts see some continued increase >in soybean acres but then a leveling off as farmers reach an >agronomic equilibrium. > >Near Term Soybean Oil Availability: > >For purposes of this paper I will assume a near term soybean crop of >around 3 billion bushels, domestic crush of 1.8 billion bushels and >oil yield of 11 pounds per bushel. > >I will also assume that human food use will always prevail in the >demand equation. This is logical from an economic perspective since >there are few substitutes for food and many substitutes for energy >and industrial feedstocks. As evidence one need only look to the >market response of ethanol producers in 1995 when corn prices reached >historically high prices. Ethanol plants, even with tax exemptions >for their product, could not compete with feed markets when corn was >rationed by price. > >Soybean oil carryover has drifted between 1 and 2 billion pounds over >the recent past. For assumption purposes I believe that biodiesel >could only count on being able to pull 1 billion pounds from the >available domestic carryover without raising short-term prices beyond >those that would curtail the biodiesel industry. At a conversion >rate of 7.7 pounds per gallon, about 130 million gallons could be >produced from the expected soybean oil carryover. Other edible >oils have been disregarded for this exercise. They account for >around 2 billion pounds of total consumption and are from sources >such as corn, cotton and sunflower Oils from these feedstocks are >typically higher priced than soy and unlikely to be used for >industrial purposes. > >Assuming a total transportation diesel fuel use of over 40 billion >gallons, 130 million gallons represents just three tenths of percent >of total use. However, 1 billion pounds of soybean oil represents >nearly 7 percent of total domestic soybean oil use of around 15 >billion pounds. > >Near Term Animal Fat and Waste Grease Availability: > >Unlike soybean oil, animal fats and waste greases do not have a large >supply carryover from which to draw. Animal fats and waste greases >are rendered or processed for use primarily in the feed markets as a >cheap sources of energy. They are consumed as they are made >available. Supply is a byproduct of other activities such as animal >slaughter and fast food preparation. Products clear the market at >whatever prices it takes. > >The price discount between these feedstocks and soybean oil can vary >from 25-75 percent. An apples to apples biodiesel price comparison >using different feedstock assumptions is difficult without knowing >the quality of soybean oil and the quality of alternative feedstock >used as a beginning point in the conversion to biodiesel. Generally, >conversion yields are lower and processing losses higher for lower >quality feedstocks with higher free fatty acid contents. > >It is estimated that total raw material availability from these >sources is around 2 billion pounds. At the right price and assuming >no technical barriers, a significant portion of these feedstocks >could be bid away from their current feed uses toward energy and >industrial feedstocks uses. > > >However, a significant demand increase from the fuel side will >quickly drive non-soy feedstock prices up to the price of soybean >oil. This result can be predicted due to the byproduct nature of >the raw materials. There is little domestic supply response as a >result of a demand increase. At some price point users will either >reduce usage and/or switch to soybean oil and vegetable oil >byproducts as substitutes for the animal fat and waste grease >materials. > >For purposes of this paper, and without a complex computer model, I >have assumed that biodiesel could pull .500 to 1.0 billion pounds of >material from the non-soybean oil sectors. This converts to between >65 and 130 million gallons of biodiesel. > >Total Current Domestic Availability: > >130 million gallons from soybean oil >65-130 million gallons from alternative feedstocks >Total equals 195 to 260 million gallons or at maximum, about six >tenths of one percent of transportation diesel fuel use. > >Esterification Capacity: > >It is important to note that the above domestic availability does not >consider the available esterification capacity. There are few >reliable estimates of actual esterification capacity. The literature >evidences 10-15 million gallons of dedicated biodiesel capacity. >However, these numbers are dwarfed by the esterification capacity of >the oleochemical industry. Esterification and transesterification >are processes long used by the oleochemical industry as front-end >processes in the manufacture of soap, detergents, cosmetics and other >products. Again, few reliable estimates are available to document >the surplus or swing capacity of the oleochemical industry to make >biodiesel. One oleochemical company has claimed surplus domestic >capacity of over 40 million gallons. > >If demand were sufficient, this author believes that between 50 and >100 million gallons of capacity could be called on in the immediate >or near future without significant construction of new plants. > >Future Raw Material Availability: > > Future raw material availability for biodiesel production is >significant. Additional sources include expanded soybean acreage, >higher oil soybeans, and higher oil soybean substitute crops, greater >domestic crush and imports of foreign oils or their esters. > >Expanded soybean acreage: > >Soybeans could capture another 10 million acres due to global >increases in demand for protein fed meat such as poultry and pork. >These acres will primarily be drawn from small grains such as wheat >where US comparative advantage is slim or nonexistent. If all the >additional oil were available for fuel, the supply impact would be an >additional 500 million gallons. > >Higher oil soybeans: > >If the soybean oil yield were to increase from 18 percent to 20 >percent ö a level already achievable ö soy oil availability would >increase by 10 percent. At an assumed future domestic crush of 1.8 >billion bushels the additional oil would amount to 1 pound per bushel >or 1.8 billion pounds or 230 million gallons. > >Higher oil crops: > >Sunflower and canola are crops with higher oil content than >soybeans. Depending on yield assumptions either crop could produce >10 gallons per acre more oil than soybeans. Additional oil could >come from switching out of soybeans to these oil crops or from >switching out of other crops to sunflower or canola. Alternative >oilseeds are climatically compatible with the northern tier and high >plains states. These are primarily wheat and other small grains >growing areas. Coincidentally, these are the areas with the highest >concentration of Conservation Reserve Programs (CRP) government idled >ground. Ten to fifteen million acres could be freed up to plant >oil crops simply through release of the government ground. A >conservative 10 million-acre CRP release could yield 600 million >gallons of biodiesel raw material without drawing acres from other >crops. > >Another 20 million acres could switch from lower value small export >grains to higher value domestic oil crops. Switched acres would come >from those currently used to supply the highly competitive and still >distorted export markets for wheat and other small grains. These >acres could yield another 1.2 billion gallons of raw material. > >Expanded Domestic Soybean Crush: > >About 1 billion bushels of soybeans can be exported assuming a crop >of around 3 billion bushels and a domestic crush of 1.8 billion >bushels. If the value of oil began to exceed the value of protein, >crush would expand and additional oil would be available. >Similarly, if protein were to lead the way, crush could expand and >additional oil would be available. The bottom line is that roughly >11 billion pounds of oil leaves the United States in the form of raw >soybeans. At the right oil or protein price levels crush will expand >and additional oil will become available. The biodiesel raw material >equivalent is 1.4 billion gallons. > >Imports: > >Lurking out beyond our shores are hundreds of millions of pounds of >raw materials in the form of animal fats, waste greases, and raw fats >from various sources. At the right price, our virtually open >boarder policy will allow the entire planet to supply US demand for >biodiesel. Obviously, for a domestic biodiesel producer the >prospect of imports is not savory. However, reality is that >commodities will find a home where their value is greatest when >borders are open. Any significant run up in domestic prices will >draw imported materials to meet the demand. > >In this sense, imports provide a consumer supply safety net should >spot shortages of domestic demand occur due to weather or other >unforeseen circumstances. > >Conclusions: > >As you can see from the above, current and future raw material >availability far exceeds current and future predicted demand based on >the expected price uncompetitiveness of biodiesel versus diesel. >Without significant tax exemptions or use requirements biodiesel must >slug it out in the alternative fuel market or as a small component of >diesel fuel formulations. I have estimated near term raw material >availability at 195-260 million gallons or about six tenths of one >percent of transportation diesel fuel use. > >My longer range estimates of availability from increased soybean oil >acres, soybean oil content, idle acres, switched acres, increased >domestic soybean crush amount to nearly 4 billion gallons (about 10 >percent of transportation diesel fuel use). > >However, as I said at the outset, biodiesel is a niche fuel or fuel >additive and in this sense does not compete against diesel. In >fact, neat or high blend (20 percent) biodiesel only makes sense in >those markets where alternatives to diesel have been demanded by the >government or consumers. In the non-alternative fuel markets, >lubricity, health and environmental benefits of biodiesel may give it >a place in the diesel fuel formulation. > >Ag Processing Inc and our marketing subsidiary, Ag Environmental >Products LLC see diesel and diesel technology as the only viable >short term solution to increasing transportation efficiency. In >their government sponsored effort to find the 80-mile per gallon car, >auto manufactures have come up with the diesel/electric hybrid. A >new idea? Not really, locomotives have used this concept for 40 >years. The point is that if the United States were ever to get >serious about fuel economy, the medium duty (yes that means pickups >and SUV's) and the light duty fleet would need to be converted to >diesel technology. Ironically, in the rest of the world were fuel is >not so cheap, diesel is a major force in the light and medium duty >market. > >While inherently more efficient and therefore more environmentally >friendly, the US environmental structure is more hostile to diesel >than in other countries. NOx and particulate matter emissions are a >real challenge for diesel given the US EPA and California Air >Resources Board (CARB) direction on air pollution. Over time >however, we believe that biodiesel will have a role to play in >helping diesel through a transition to becoming a cleaner and more >environmentally friendly fuel. For example: ultra low sulfur fuel is >being considered in California. The lubricity problems with low >sulfur fuel could be a fit for biodiesel. On the health front, some >components of diesel particulate matter have been identified as >potential carcinogens. Recent EPA Tier I health effects testing show >very positive results for biodiesel speciated particulate matter >emissions. > >In addition, if the talk about the need to reduce greenhouse gases >ever turn into something real, biodiesel value will increase >substantially due to the closed carbon loop nature of a renewable >fuel source. > >Back to the question. Will there be enough biodiesel? The "For >what?" question can be answered with some already scripted or >conceptual goals. > >The Energy Policy Act set a goal of alternative fuel displacement of >10 percent by 2000 and 30 percent by 2010. We are nowhere close. >However, under the right set of incentives or use requirements the >supplies would be available to at least get to the 10 percent level >by 2010. > >Executive Order 13134 set goal to triple use of biobased products >which could certainly be reached under the material availability >scenario laid out above. > >A proposal has been drafted by the Administration to require an 8 >percent renewable energy portfolio as part of the energy deregulation >policy. Again, with the proper incentives or standards the goal >could also be met in the transportation sector. > >A less ambitious, but probably more practical proposal has been >floated on Capitol Hill to require a two percent renewable content >standard for fuels over time. For diesel, assume a 40 billion >gallon baseline, the renewable standard would require 80 million >gallons of biodiesel. While these numbers seem small compared to >the availability outlined above, it would be an achievable target. >If phased in over time there the goal could be met by domestic >sources without disruption to the agricultural or energy markets. >Two percent of transportation diesel fuel would require over 600 >million pounds of raw material and a probable doubling of production >capacity. > >The University of Missouri-Columbia (FAPRI) has estimated that this >level of increased demand would boost the value of the soybean crop >by $300 million annually (if all the demand was supplied by soybean >oil). Last year Congress provided $475 million in extra assistance >for soybean farmers due to low prices. Maybe now is the time to >consider demand oriented policies rather than unpredictable and >highly political emergency farm legislation. ------------------------ Yahoo! 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