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  1. 1. Social Business PlanContestShARE World Seminar 2010 Ternopil Bio-diesel Plant Final Presentation Jointly organized by
  2. 2. Concept Social need Solution using a social business model The project purpose is to pilot an innovative Establish sustainable revolving fund mechanism for community-based approach for the provision of electricity connection and livelihood development electricity through renewable energy sources in off- through production of biodiesel. Attract investment grid areas of Ternopil, Ukraine. in the creation of biodiesel production plant and rape cultivation farming. • Significant deterioration of the socio-economic • Revenue generation conditions - Provide full technological cycle of production: – 28 percent of people still live below the cultivation of oil seed (rape), processing them Geographic poverty line of UAH430 (USD90) per person a month Component into oil and final production of biodieselDemographic of the • Social impact Problems • Lack of employment possibilities, – Avg. (gross) wages: 267.5 USD (2007). 2.3% solution – Dramatic increase in percentage of the community serviced with electricity from unemployment rate renewable energy systems • Comparison with other models • Non-diversified economy --Oelmühle Leer Connemann GmbH & Co, - Use – Low wages, low pensions, poor social aid of biodiesel in Germany increased from 10 due to lack of funds million liters per year in 1992 to 300 million liters Reasons of Why this is • Absence of well-defined rural development policy in 2001. the problem the best – Development initiatives of rural wellbeing –Small, stand-alone renewable energy solution in Ukraine traditionally focus on bolstering technologies meet electricity needs of rural the private sector or the state, while areas more cheaply ;potential to displace costly ignoring organizations that combine for- diesel-powered generation . Main advantages profit activities with social aims . for household scale applications, isSource: UNDP Europe & CIS comparatively low running costs (fuel costs are zero).
  3. 3. Relevance to Social Community Solution relevance Solution acceptance• Benefits to the Local Community • Revitalization of the Community “How will the development of biodiesel bring direct “Biodiesel production offers higher paying jobs, such as opportunities to our oblast for those not involved in engineering, and infrastructure needs such as transportation and cultivating the rape or in the production process?” utilities, will increase, fostering growth of non-farm businesses by Oksana Kost, factory worker at Kozova Dairy providing direct input and attracting labor. “ Michael Carl Bryan, Ethanol Producer Magazine, Contributor “How will us farmers become significant equity participants in the plant? What methods of financing “The plant can be a farmer-owned cooperative, and farmer-owners can will encourage our participation? How can we get participate in the profits through dividend payments. The payments ownership stakes in it?” will provide additional income to the rural investor. The additional Bohdan Omelchyk, local farmer Kosova Region income will be turned over in the local community and region, which should help revitalize a community. ” Alan Robinson , assistant to administrator of Rural Business-Cooperative• Sustainable Development “Won’t biodiesel production affect our natural ecosystem and the quality of our land and food sources?” • Ensuring Sustainable Production “Un-sustainable use of land for the production of bio-fuels can be Iryna Solonenko, Transparency International employee, avoided if efforts are concentrated on raising the yields of existing Ternopil. agricultural land , such as through crop rotation, instead of widespread deforestation. Proper application of crop protection products and “Rape can be difficult to harvest. What steps will be taken fertilizers, can also increase the yield per hectare. to support us from these risks, and what will happen if Dirk Carrez, Public Policy Director – EuropaBio better technologies are developed?” Vitaly Boboshko, local farmer Kosova Region “Cultivation conditions can be maintained by agricultural equipment, and insurance can be used to cover weather risks. New inventions concerning biodiesel fuels will be closely tracked, and cooperating with local scientific organizations in the region will minimize techn. risk.”
  4. 4. Business Model Economics • Revenue Sales of one unit of product / – 2,102,270 US service ($) Nature turnover, producing 825,525 US profit and a $426 per ton positive cash flow of 602,575 US. The Variable • Major variable cost: 199,000 US weighted average return on investment is 23.5% cost –176,000 US chemicals ,23,000 US variable from the fourth energy costs. operational year. Fixed cost • Major fixed cost: : 388 750 US -- 158,000 cultivation of rape (5000 Profit ha, tractors, ploughs, sowing) 28,000 energy cost, 202750 seed processing cost. Social impact Through the product / service Through Employees • Details of the social impact brought by the Details of the social impact$426 service/product to the client – Some 5,000 small-scale farmers will • A total of 4 rural regions of Ternopil Oblast have increased incomes through the (45,000 residents) will have improved service delivery development of selected crops and practices in the areas of economic value chains. development, energy efficiency, and waste –Suppliers of raw materials can receiveSource: management. biodiesel as a payment.
  5. 5. Competition Analysis Market Share for Biodiesel Exportation from Ukraine – Russia Region 45% 30% 3% 2% Vynnytsya-based ULA Ltd/INNOTECH Russian Biofuel Landkom KMT Ltd/FITOIL/ Budalp Association International PLC (AIM: LKI) One of largest producers of 6 companies working in Largest Ukrainian producer bio-diesel in Ukraine. Supplies Offers perspective cooperation on wholesale bio-fuel native market of rape oil, has signed an products directly to European grouping and promotion initial cooperationStrength mineral oil deliveries of bio-diesel fuel from Ukraine. of the Russian product on agreement with specialist corporations, mineral oil the international market bio-fuels group Sunfuel traders, gas stations and Ukraine LLC. haulage companies. Bio-diesel fuel Only one plant fully operating production plants b/c lack of subsidies, vague Had 17% price increase over High cost of situated in the Lugansk government policy for bio- the average rapeseed salesWeakness materials, which could (East Ukraine) and still price in 2009, leaving room fuel, and domestic market not only needs modernizing. Only functional b/c lack of for competition domestically partially be transferred fraction sold thus far. equipment adopted for use of and aboard. into the market, have
  6. 6. Price Analysis Price of competitors Income analysis of client $4.3 per Market share liter Price ($) $14.7 % Saving 9% $2.2 per 1.323 liter $1.32 per Education 10% liter 1.47 $0.79 per .735 5% $0.65 per Budget liter liter 2.793 45% Transport 19% 30% 20% 2.205 3% 2% Accomodation 15% 6.174 Food 42%Market prices of bio-diesel are 10-15 % higher than those ofconventional diesel despite of tax exemptions for bio-fuels in many IncomeEuropean countries (Germany, France, Czech), which is explained byhigh labor and energy costs in Europe. Since in Ukraine they are 30-35times less than in Europe, our project will be able to generatecompetitive (5% less than market) prices for such sustainable fuel, asbio-diesel.
  7. 7. 5 Years Business Plan $ Social impact metrics 100 100 Revenues Net profit Social impact 81 80 80 80 57 60 60 60 40 40 27 24 20 40 10 14 20 9 20 -3 20 0 -10 2011 2012 2013 2014 2015 -20 0 50 Investment 4.9 4.8 4.9 5.2 0 -50 -29 Revenues Social impact Revenues Net profit •Profit Before Interest • $ 708 983 initial year • $1 130.00 initial year. • 50% increase per year of client &Taxes - $ 825,525 after growth on farms. 1) portfolioAssumptions • Maintain Net Profit 23.5% increase per four years. Interest year. diversification; 2) dividend Expense - $79 500 . Taxes Margin 30% with payments; additional income to selling price no higher • Increase the sales to Incurred - $201 550. Short- the rural investor. 3) community than that of more than 2 million term/Long-term Interest Rate revitalization. Cooperative base conventional fuels. USD by the third year. %10%. Tax Rate % for creating a suppliers’ network. 50%.
  8. 8. 1st Year 1st Year • Microloans from Ukrainian banks • Investment from Horizon Capital private equity fund manager Fund • Grants: CRDF Global Grants, Euro Resources Small Grants Fund • Agrarian Fund- stability fund from Ministry of Agricultureraising • Use of alternative approaches for collateralizing loans, unlocking under-utilized equity in rural areas: The investment capacity of rural residents is substantial and relatively untapped. Local investors tend to bring ‘patient’ capital of investments with a longer payback timeframe ,the type of funding typically required by emerging technologies and market development, such as bio ethanol. They often view such investment not only as an avenue to increase personal wealth but as a way of supporting their communities. • How to start operation • Obtain license from Ministry of Agrarian Policy. Cultivate rape on 5,000 ha of rented fields. Average yield from winter oil-seed rape in Ukraine is around 3 tons of seed per hectare during a 270 day growing season. The seed is pressed to extract the oil content of about 30% by weight, the remainingHow to cake (rape meal) being used either as high protein content cattle fodder or burnt as an energy source start for the production of electricity. Final output, therefore is 1 ton of biodiesel per hectare. • How to start commercialization • Plan to be sold using direct mail, seminars, promotion programs and advertising in business newspapers. Since biodiesel is a valuable fuel for in-city transportation companies, direct mail to these and other companies would be effective tool in promotion. Ecology, energy, technology related seminars are effective in finding regional representatives, partners, suppliers and buyers of our product. Promotion programs are: discounts to those carrying our trademark and symbolic, support to ecology and renewable energy concerned organizations, participation in regional fairs and events. • Creation of distribution network with Poltavanafto, biggest fuel trader in the region. Company has selling capacity (gas filling stations, delivery services, certification laboratories, etc.) of 5 million tons of fuel per year. Also cooperation with one of the biggest distributor of biodiesel in Germany, Oelmühle Leer Connemann GmbH & Co, to sell products on European market.
  9. 9. Obstacles and Key Success Factors Major obstacles Key success factors (KSF) • Petro-diesel • KSF 1 –Main competitors in Ukraine are the producers of – Market prices of bio-diesel are 10-15 % petro-diesel. As long as the sale of petro-diesel is higher than those of conventional diesel subject to excise and other taxes, our product would despite of tax exemptions for bio-fuels in remain competitive on the Ukrainian market. many European countries • Taxes (Germany, France, Czech), which is –Biggest problem may appear if state imposes the explained by high labor and energy costs above-mentioned taxes for bio-diesel, which in Europe. Because in Ukraine they are however, is highly unlikely, because of the strategic 30-35 times less than in Europe, our importance of alternative fuels for the country. project will be able to generate competitive (5% less than market) prices for such sustainable fuel, as biodiesel. Risks ScalabilityMain sector risk is the unpredictable output of the rape ineach year. The necessary measures are assured in the project • Future Growthbudget to cover this risk. The appropriate cultivation –Glycerol is a by-product, but it needs further cleaning. We areconditions can be maintained by the proposed agricultural not planning to install glycerol processing equipment in the firstequipment, moreover, insurance was also planned to cover 3 years, because this equipment requires additional 40%weather risks. Second risk comes from latest developments in investment and we want to ensure quality and uninterruptedthe bio-diesel processing. A more cost effective production production of biodiesel, as a flagship product. However, aftermethod requiring totally new equipment could make our plant successful implementation of this bio-diesel project, we areobsolete. Therefore new inventions concerning the biodiesel also planning to sell cleaned glycerol, which could generate anfuels should be closely tracked, the cooperation with the local additional 10% turnover.scientific organizations in the region is primarily aimed atminimizing this type of technological risk.
  10. 10. Appendix 1: Projected 1st Year MilestonesThe following table lists the first year milestones with dates and budgets. The schedule emphasizes planning implementation. Mostimportant programs are rape-seed cultivation (Stage 1 - Harvesting) and equipment installation. Omitted are inferior purchases likeoffice preparation or stationery purchase. Milestone Start Date End Date Capital expenses 1 Equipment order 1.01.11 676,000 2 Purchase of tools and tractors 1.01.11 158,000 3 Site preparation 1.02.11 1.03.11 110,000 4 Installation of oil processing equipment 1.03.11 1.04.11 30,000 5 Farm preparation 1.03.11 1.04.11 6 Rape-seed stage 1 1.04.11 30.04.11 7 Rape-seed stage 2 1.06.11 1.07.11 8 Rape-seed stage 3 1.07.11 1.08.11 9 Rape-seed stage 4 1.08.11 1.09.11 10 Rape-seed stage 5 1.09.11 1.10.11 11 Rape-seed harvesting 1.10.11 1.11.11 12 Equipment payment 50%, installation 1.06.11 1.10.11 676,000 13 Equipment and maintenance 1.07.11 1.11.11 14 Oil processing 1.04.11 31.12.11 15 Bio-diesel processing 1.12.11 31.12.11 16 Sales of bio-diesel 15.12.11 Total capital expenses in USD 1,650,000•Processing of bio-diesel is possible when sufficient (100 tons) quantity of oil will be pressed. Costs include chemicals, energy,labor force. Sales are possible when minimum railway transporting quantity (60 tons) produced. By that time, we’ll findclients, sign sales agreements and plan delivery for the next 3 months.
  11. 11. Appendix 2: Projected Costs Cost of Goods Sold Energy Costs No. Name Quantity Unit Total USD / required per ton Price quantity year required 1 Energy for production: 100 kWh 0.046 500,000 23,000 electricity, hot water, compressed air 2 Fixed energy costs 0.046 108,700 5,000 Total energy costs 28,000Rape-seedTotal area of farm: 5,000 ha, Productivity: 15,000 tons of rape-seed or 5,000 tons ofbio-diesel per year. Rape meal is a by-product of rape-seed processing. No. Name Quantity per ha Total quantity Price USD / year 1 Fuel 300 kg 150 t 305 45,750 2 Seeds 15 kg 75 t 1,700 127,500 3 Fertilizers 30 kg 150 t 230 34,500 4 Herbicides 20 kg 100 t 230 23,000 Total 230,750 From year 2013 a +3.4% inflation has been built in the sales plans.
  12. 12. Appendix 3: Projected Balance Sheets – Normal ScenarioNORMAL SCENARIO 2011 2012 2013-AssetsCash and Securities 7,690 602,575 1,328,010Accounts Receivable 13,000 170,000 160,000Inventories 34,000 32,000 32,000Total Short-term Assets 54,690 804,575 1,520,010Capital Assets 1,700,000 1,712,000 1,724,000Accumulated Depreciation 50,000 186,360 322,720Total Long-term Assets 1,650,000 1,525,640 1,401,280Total Assets 1,704,690 2,330,215 2,921,290Liabilities and CapitalAccounts Payable 16,000 16,000 16,000Short-term Loans 200,000 0 0Other Short-term Liabilities 0 0 0Total Short-term Liabilities 216,000 16,000 16,000Long-term Liabilities 0 0 0Total Liabilities 216,000 16,000 16,000Paid in Capital 2,000,000 2,000,000 2,000,000Retained Earnings 0 -511,310 314,215Earnings -511,310 825,525 591,075Total Equity 1,488,690 2,314,215 2,905,290Total Liabilities and Capital 1,704,690 2,330,215 2,921,290
  13. 13. Appendix 4: Projected Balance Sheets – Pessimistic ScenarioPESSIMISTIC SCENARIO 2011 2012 2013 -Profit Margin Ratio -639.0% 9.2% 9.2%Total Assets Turnover Ratio 4.9% 63.4% 63.4%Rate of Return on Assets (ROA) -31.5% 5.8% 5.8%Leverage Ratio 1.08 1.15 1.06Rate of Return on Equity -34.0% 6.7% 6.2%Return on Investment Ratio -29.0% 4.9% 4.8%Days Accounts Receivable 26.1 17.0 28.7Days Accounts Payable 11.2 14.4 14.1Days Inventories Held 13.6 15.3 14.1Current Ratio 0.13 0.95 14.32Quick Ratio (Acid Test) 0.06 0.85 13.32Total Debt to Equity Ratio 15.8% 9.9% 1.0% • Please note that in the first two years of the pessimistic scenario, additional loans would be necessary to borrow. However, in the third operational year, all these loans would be paid back.
  14. 14. Appendix 5: Break-Even Analysis Break-Even Analysis• According to the normal scenario, we can regard 2013 as the reference year for the normal production: – Total sales 2,130,680 USD – Production quantity: 5,000 tons• Unit sales price: 426 USD / ton• Total costs are 538,060 USD• Variable costs can include chemicals and energy (see Appendix 2), since farm cultivation costs are fixed costs. These variable costs are: 176,000 USD chemicals and 23,000 USD variable energy costs, 199,000 USD in total. – Labor is not regarded as a variable cost, as co-op.• Thereby the unit variable cost: 39.8 USD / ton• Fixed costs are 339,060 USD• As a result, the break-even quantity of the bio-diesel production is 878 tons / year.• The gross margin / sales ratio is above 80%, that’s why the break-even quantity is so low, due to the exceptional conditions of the project.
  15. 15. Exit Scenarios Appendix 6: Exit ScenariosExit may take place in several possible ways:• Normal Exit: The project starts generating profit in the second year of operations and positive cash flow appears in same year. Once spent, money can be fully recovered by investors. This creates very good chances for the co- op shareholders to sell their participation at a very good price for other investors.• Project Failure: The total cost of the initial equipment is 1,540,000 USD (including already owned farm equipment which would be volunteered by co-op farmers), with an annual depreciation of approximately 154,000 USD. The market value of the assets differs type by type. – Agricultural machinery of farmers can be sold at least for 70% of book value, oil processing equipment for 90-110% of book value (it’s already delivered, installed and buyer can start exploiting it), while market price of biodiesel production equipment is under question. • Selling price of the equipment may vary from 20% (valued only such general parts as pumps, reservoirs, pipes, etc) to 110% (we found buyer, who is interested to start the production on the existing facilities). The sale of other current assets, such as final and by-products (bio-diesel, rape meal, rape-oil, and rape-seeds), chemicals/herbicides/fertilizers are possible at full market price in one month maximum.• As a summary, we estimate that the investors could collect 30-100% of their initial investments, if they suddenly decide to sell everything.• The two project initiators require 10% of the initial investment at the end of the third year of the project and 10% of net profits thereafter. If the exit of investors was made due to unexpected causes (irrelevant from the project results) before the end of 2013, the 10% share will be still required. The only reason to cancel the share transfer can be a cumulated result below the pessimistic scenario. The payment of 10% of the net profits starting from the fourth operational year cannot be ceased.
  16. 16. Appendix 7: Market Segmentation – Additional Revenue PotentialMarket segmentationRape meal is a by-product of oil extraction and is valued for high protein content. We are planning also to sell rape-seeds inorder to stabilize cash position in the periods when production of bio-diesel would be insufficient: at the end of season,between production cycles. Primary target customers for these two types of products are agricultural enterprises of Ternopilregion and exporters. The demand in this market segment can be regarded practically as unlimited. Potential Customers Growth 2011 2012 2013 2014 2015 In-city 15% 2,200 2,530 2,910 3,347 3,849 Farm 50% 500 750 1,125 1,688 2,532 Other 10% 3,600 3,960 4,356 4,792 5,271 Total 16,62% 6,300 7,240 8,391 9,827 11,652
  17. 17. Appendix 8: Plant Location• The project is planned to serve Ternopil and neighboring regions (see map). Total project’s area is approximately 30,000 square km, of which the total arable land is 18,000 square km, that includes 3,000 square km (300,000 ha) for rape cultivation.• Physical location of the processing plant is 30 km from Ternopil City, near a railroad station and an elevator with total storage and processing capacity of 10,000,000 tons of grain per year. Cultivation of rape-seed requires 5,000 ha of arable land and will take place on the co-op fields of local agricultural enterprises.
  18. 18. Appendix 9: Plant FacilitiesPlant has the following facilities: garage for agricultural machinery with a total surface of 1,000 square meters, an administrative building of 100 square meters, the plant building for the biodiesel production of 1,000 square meters. Territory of the plant is fenced; available for storage and other equipment in 5,000 square meters.Plant is situated with good highway and railroad access which is critical for bio-fuel plants. Locally grown feedstock be most economically brought in by truck. In the event of local shortages the plant may need to source feedstock from greater distances where rail is more cost-effective. In many cases, bio-diesel will likely be shipped a considerable distance and rail access will be important for this purpose.Plant located in region with an abundant source of clean water which is essential for ethanol plants which consume approximately 3-4 liters of water for every liter of ethanol produced.Cost of bio-diesel production: 1,318,000 USD Exhibit 2. Bio-diesel Plant
  19. 19. Appendix 10: What is Bio-Fuel?• Type of Renewable Energy (derived from the Sun).• Bio-fuels are liquid fuels made from esters, alcohols, ethers, and other biomass chemicals (Source: US Dept. of Energy).• Common bio-fuels include: ethanol and bio-diesel.• Ethanol is made from starches / sugars.• Bio-diesel is an ester made from vegetable oils, animal fats or other types of biomass.
  20. 20. Bio-diesel (bio-petroleum diesel)• B100 = 100% bio-diesel / B20 = 20% / B5 = 5% / B2 = 2%• Production process: Transesterification (of oil)• Main crops used for producing bio-diesel:• Rapeseed (Europe)• Soybean (US)• Jatropha (Africa, India)• Castor Bean (Africa, China, S. America)• Palm Oil (Tropical areas)• More• Other oil-enriched crops: Coconut, Brazil nuts, Jojoba, Peanuts, Cotton seed, Sunflower, and many more.
  21. 21. Bio-diesel Final Product Biodiesel 100% Glycerin
  22. 22. Appendix 11: Why Ukraine for Bio-diesel Production? Perfect Agricultural & Export Conditions Government and International Support• Ukraine possesses a huge capacity for • Subsidies have been introduced for the development of bio-fuel market and rich farmers, who grow oilseed rape and other resource base. Large agricultural areas oilseed crops. may be used for growing crops, which are • Arrival of European investors backing bio- necessary for bio-fuel production without diesel refineries, such as Austria’s considerable decrease in production BioDiesel Vienna, is starting to provide a volumes for other agricultural products boost to get biodiesel production in (CRAMON-TAUBADEL, 2004). Ukraine onto its feet.• Each year, the area of land under oilseed • European countries are the leading rape and oilseed crops increases. consumers of bio-diesel but demand is• The prospects for producing bio-diesel high, driving European biodiesel could secure Ukraine lucrative export companies to launch larger production earnings for ethanol fuel additives to facilities of their own in Ukraine. Europe in the short-term. • EU regulations require that petrol sold at• Bio-diesel, as oilseed rape, for technical the pump consists of more than 5 percent purposes are not subject to import duty, bio-diesel additives. This regulation alone when they are exported from Ukraine. drives as much as 5 million tons of bio- Therefore, any Ukrainian producer of the diesel imports into the EU each year. bio-diesel directly competes with EU bio- diesel producers.
  23. 23. Appendix 12: Growing Market for Exportation World Production of Bio-diesel 2005 - 2010 US – 38% 18% Source: 75% Biodiesel 2020 30% Global Market Survey, Oct. 2006 2005 2010Western Europe (D, FR, IT, UK, etc.) – main Western Europe (D, FR, IT, UK) – main producersproducers and consumers – 75% of world and consumers – 38% of worldEastern Europe & N. America – 2nd largest Asia – will become the 2nd largest market (China,markets India – consumption & production)Asia – although significant market yet, relatively Eastern Europe & N. America – 3rd largestsmall markets, with US as the single largest consumer – 18% of world
  24. 24. Projections:2006 – 5B L/yr2010 – 12B L/yr2020 – 25B L/yr
  25. 25. The EU Bio-diesel Market Total European Biodiesel Market: Unit Shipment and Revenue Forecasts (Europe), 1997-2007 Revenues ($ Million) Units (Million Tonnes) 3000 5 Source: European Biodiesel Board, 2006 4.5 2500 4 3.5 2000 Units (Million Tonnes) Revenues ($ Million) 3 1500 2.5 2 1000 1.5 1 500 0.5 0 0 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 YearIn order to achieve the ambitious goals of bio-fuel use set by the European Union (5.75% in 2010 and10% in 2020) in a sustainable and competitive way, the available biomass in Europe will need toincrease. Cultivating energy crops on set-aside and non-cultivated land will contribute, but this won’tbe sufficient to fulfill all the demand, and the EU is looking to Eastern Europe and Ukraine to helpfulfill their bio-fuel production goals.
  26. 26. Appendix 13: Product AdvantagesIn ecologically sensitive segments and at equal pricing, Bio-diesel will have a competitive advantageagainst regular Diesel. Advantages of our Bio-diesel are based on it’s quality and costs. To illustrateproduct quality, we compare major indicators of bio-diesel manufactured with our technology (columnUtilized technology) and industry standards. Obviously, manufactured product meets the highestindustry standards and can be supplied at the lowest possible costs. ASTM № Parameter EN 14214 Utilized technology D-6751 Methyl ester content, % 1 - >96,5 97 (m/m) 2 Density (at 15°С), kg/cm - 860-900 885 3 Viscosity (at 40°С), mm2/s 1,9-6,0 3,5-5,0 4,67 4 Flashpoint, °С >130 >120 130
  27. 27. Bio-Diesel – A better fuel vs. Diesel Features Benefits Higher cetane  More mileage Greater lubricity  Greater horsepower Superior detergency  Less smoke Higher flash point  Smoother running engines  Quicker starts  Longer engine life  Reduced maintenance
  28. 28. Key Advantages of Bio-diesel• Bio-diesel is the only alternative fuel that runs in any conventional, unmodified diesel engine. It can be stored exactly like petroleum diesel.• Bio-diesel can be used alone or mixed in any ratio with petroleum diesel.• Use of bio-diesel can extend the life of diesel engines because it is more lubricating than petroleum diesel fuel, while fuel consumption, auto ignition, power output, and engine torque are relatively unaffected.• Bio-diesel is safe to handle and transport because it is as biodegradable as sugar (pure bio-diesel degrades 85% to 88% in water within 28 days), 10 times less toxic than table salt (lethal dose is greater than 17.4 g/kg body weight, while for salt (NaCL) it is 1.8 g/Kg), and has a high flashpoint of about 200°C compared to petroleum diesel fuel, which has a flash point of 70°C.• Bio-diesel is a proven fuel with over 20 years of use in Europe, 30 million successful US road miles.• Combustion of bio-diesel provides over a 75- 90% reduction in environmental pollution, 90% reduction in cancer risks.• Eligible for CDM (Clean Development Mechanism - Kyoto Treaty).
  29. 29. Appendix 14: Sourcing• Major planned source of raw material is rape-seed. To ensure stability of supply, we plan to cultivate on 5,000 ha of co-op fields.• Average yield from winter oil-seed rape in Ukraine is around 3 tons of seed per hectare during a 270 day growing season. The seed is pressed to extract the oil content of about 30% by weight, the remaining cake (rape meal) being used either as high protein content cattle fodder or burnt as an energy source for the production of electricity. Final output, therefore is 1 ton of biodiesel per hectare.• The energy cost of producing the crop is about 15% of the yield - the same as fossil oil. The main difference is that the energy is renewable and come from the eco-friendly crop itself.
  30. 30. Appendix 15: Ternopil Co-Op’s Production From the Farmer to the Fuel Tank Oilseed Meal FarmingEnergy Crop R&D Crushing Crop Oil Biodiesel Bio-diesel Production Market Glycerin