Graham Redman Economics Of Biodiesel

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Biofuels Seminar
Joint Event with EnviroInnovate at the Birmingham City University Technology Innovation Centre
5th November 2008

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Graham Redman Economics Of Biodiesel

  1. 1. Economics of Biofuels Production GRAHAM REDMAN THE ANDERSONS CENTRE November 2008
  2. 2. BIOETHANOL VIABILITY Wheat cost vs petrol cost at pump 50 Wheat Value to make 1l bioethanol 45 Ex Duty/Vat Petrol ppl ppl petrol and wheat equivalent 40 35 30 25 20 15 10 5 0 Aug-05 Aug-07 Aug-91 Aug-93 Aug-95 Aug-97 Aug-99 Aug-01 Aug-03
  3. 3. BIODIESEL VIABILITY OSR Cost Vs Diesel at Pump 100 90 OSR Value to make 1L Biodiesel ppl diesel and OSR equivalent 80 Ex-Duty/VAT Diesel value at pump 70 60 50 40 30 20 10 0 Jul-06 Jul-07 Jul-08 Jul-98 Jul-99 Jul-00 Jul-01 Jul-02 Jul-03 Jul-04 Jul-05
  4. 4. CHANGING VALUE OF RTFCs 80 70 60 50 RTFC ppl 40 30 20 10 0 100 50 60 70 80 20 30 40 90 110 Percentage of RTFO Target achieved
  5. 5. Biodiesel Target Cost of Production Incomes Sale target = forecourt ex-tax = 50p/l Meal c£120 = +24 ppl Glycerine ~ + 1 ppl Duty reduction = + 20 ppl RTFO = + 0 ppl – 65ppl Cost of OSR per l = Processing costs less than 30 ppl pre April 2010 Usually 35-60p
  6. 6. COSTS OF MAKING BIODIESEL • High capital setup (possible RDP assistance) • Purchasing OSR, virgin oil, cooking fat, • Opportunity cost of crushed oil • Risks • Management distraction • Scale of production means rising commitment
  7. 7. ADDING VALUE • Single supplier or even own fleet • Low carbon sales of primary goods • Locally produced fuel? • Ignore the co-products at your peril Or: • Grow combinable crops as before • Benefit from an increase in buyers • Sell to highest bidder
  8. 8. Graham Redman THE ANDERSONS CENTRE 01664 503 200 gredman@theandersonscentre.co.uk

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