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Biodiesel refers to any of various diesel fuels produced from vegetable oil or animal fats. Biodiesel is a transesterified-lipid fuel. It consists of long-chain alkyl esters, primarily ethyl, methyl and propyl esters.

The term “biodiesel” is used to refer to biofuels intended for use in standard diesel engines, and sometimes also refers to vegetable oils or waste oils used as fuels for converted diesel engines. Biodiesel may be used by itself, or it may be blended with petroleum-derived diesel (petrodiesel) in various proportions. In addition to providing fuel for vehicles, biodiesel is also used as an alternative to petroleum-derived heating oil for furnaces.

Biodiesel is generally produced by the chemical reaction of lipids with alcohol. This reaction produces fatty acid esters. In the U.S., the National Biodiesel Board has defined “biodiesel” as a form of mono-alkyl ester. <ref>National Biodiesel Board What is Biodiesel?</ref>

B100 biodiesel


Blending and mixing

In the retail marketplace, almost all biodiesel fuel is blended with petroleum-derived diesel fuel. These commercial blends are designated with a “B” prefix followed by a number to indicate the percentage of biodiesel in the mixture.

B100 through B20 blends

A “B100” fuel designates 100% biodiesel, B20 refers to a mixture of 80% petrodiesel with 20% biodiesel, and so on. In practice, diesel blends containing 20% biodiesel or less can be used with little or no modification for equipment originally designed for petrodiesel. 2 <ref>National Renewable Energy Laboratory “Biodiesel Handling and Use Guide,” Fourth Edition</ref>

Biodiesel may also be used as pure B100, yet engines originally designed for petrodiesel usually require modifications in order to prevent performance and maintenance issues. Some manufacturers will not honor warranty coverage if diesel equipment has been damaged by using biodiesel blends.

B6 through B20 blends

B6 through B20 biodiesel blends are the most commonly used blends; they are covered under ASTM D7467 specifications. 3


There are several methods of blending and mixing biodiesel with petroleum diesel. The volume of diesel to be mixed and other logistical considerations determine which mixing method is used.

Pre-mixing in tanks before delivery

When a distribution plant receives shipments of the two different types of biodiesel via railroad tank-cars, pre-mixing in large storage tanks is the preferred method.

Splash mixing

When a wholesale distributor receives shipments of various types and percentages of diesel fuel via railroad tank-cars and tanker trucks, splash-mixing is often the preferred blending method. As well, splash-mixing is often used for blending in individual vehicle tanks immediately before use.

When splash-mixing is used, the tank is filled with specific proportions of biodiesel and petroleum diesel. The mixture is then self-blended by vibration and shaking of the tank during movements of the vehicle.

In-line mixing

For in-line mixing, biodiesel and petroleum diesel are delivered simultaneously to the tank, and are thus blended in the desired proportion as they enter the tank.

Metered-pump mixing

When petroleum diesel and biodiesel are mixed using a metered pump, a precision pump is set to pull an exact amount of volume from each of two separate storage tanks, and the mixing and blending occurs as the two types of diesel enter the pump together.

Availability and interchangeability

Biodiesel is available worldwide, although it is more commonly used in Europe and the U.S. than elsewhere, due to government regulations and incentives, and public concern about the need to use sustainable energy sources.

Differences in specification between petroleum diesel and biodiesel

Most biodiesel fuel is blended with petrodiesel and used in engines originally designed for petrodiesel. Therefore, many applications require strict specifications for blends of no more than B5 to B20 biodiesel.

Solvent properties regarding gaskets and hoses

Biodiesel is a more active solvent than petroleum diesel. It may degrade gaskets and hoses made of natural rubber, which are typically found only in vehicles manufactured before 1990. More modern gasket materials, such as FKM or FPM, are generally non-reactive to biodiesel.

Also, biodiesel may partially dissolve deposits left in fuel lines by petroleum diesel. Fuel filters may become clogged with particles following a sudden change from petrodiesel to biodiesel fuels. So, it is best to change fuel filters on vehicles and heaters soon after switching from petroleum diesel to biodiesel fuel.

Interchangeability & incentives for use

Since the U.S. Energy Policy Act of 2005 was passed, the interchangeability and distribution of biodiesel fuel has been steadily increasing. The Act provides a biodiesel tax incentive of $1 per gallon for biodiesel derived from any vegetable oil or animal fat, including yellow grease from restaurants.

This tax incentive is available to commercial blenders, and it is also available as an income tax credit for general business. To qualify for the incentive, the biodiesel must meet the standards specified by ASTM D6751 4 as well as the EPA’s requirements according to Section 211 under the Clean Air Act. 5


Vehicular use and manufacturer acceptance

Many different makes and models of trucks have long been equipped with diesel engines, which traditionally were fueled by petrodiesel. In 1982, Ford introduced the Power Stroke ® diesel engine for light trucks, 6. Some of these trucks have been adapted to run on biodiesel, while others have been converted to operate on waste vegetable oil (WVO).

Among manufacturers of passenger vehicles, Mercedes Benz has long produced diesel-powered cars. Beginning in 2005, DaimlerChrysler began producing Jeep Liberty CRD models designed for B5 biodiesel blends. 7

DaimlerChrysler in 2007 indicated its willingness to extend warranty coverage to include engines using B20 biodiesel blends if the quality of biofuels in the U.S. could be standardized. Since then, there has been increasing public and manufacturer acceptance of biodiesel fuels for replacement of petroleum-derived diesel.

Volkswagen has indicated that several of its vehicle models can be fueled with biodiesel blends ranging from B5 to B100 when made from certain vegetable oils such as rapeseed oil, and compatible with the specifications of EN 14214. 8

Still, due to concerns about production quality, Mercedes Benz has not approved diesel fuels containing concentrations of biodiesel greater than B5. 9 As of 2014, at least one U.S. vehicle model, the Chevy Cruze Clean Turbo Diesel, has been designed and rated for use of biodiesel of up to B20. 10

In the U.S., there have been numerous conversion projects involving public fleets, in which existing petrodiesel-burning vehicles have been converted to run using some percentage of biodiesel.

Railway usage

Several biodiesel-powered trains have been operating in the UK using B100 for the past few years. 11 And, perhaps there are a few others operating elsewhere overseas. Yet, in the U.S. there have been only a couple of limited trials of biodiesel trains.

Beginning in 2010, Amtrak tested a biodiesel locomotive for a couple of years 12 and a cog railway in New Hampshire has used biodiesel for its locomotives since 2008. 13 Also, in Washington State there was a B25 train test in 2008, using biodiesel made mostly from canola oil produced in the same region. 14 As well, Disneyland has been running tourist trains on B98 biodiesel produced from its self-generated waste cooking oils. 15

Aircraft use

In 2007, the world’s first biodiesel-powered aircraft was tested in the U.S. The aircraft, a Czech-made L-29, was tested using a variety of biodiesel proportions including B100, without any noticeable loss of performance. 16 Still, in recent years the focus of aircraft biofuels-development has been on algae-derived fuels rather than biodiesel.

Home and industrial heating oil

In addition to fuel for combustion engines, biodiesel can also be used as a fuel for heating. It is used in both residential and commercial furnaces and boilers. Biodiesel for heating is available in several blends. Under ASTM 396 standards, blends containing up to 5% biodiesel are recognized as equivalent to petroleum-based heating oil. And, blends of up to B20 are used in many home furnaces.

Due to solvent effect, some natural rubber parts in older furnaces may be deteriorated by exposure to biodiesel, but otherwise most furnaces can burn biodiesel without any need for conversion.

When switching from petrodiesel to biodiesel for heating furnaces and boilers, users should either replace filters or change fuels gradually so that varnishes may be dissolved slowly in order to avoid clogging. Still, because of biodiesel’s superior solvent ability, furnace surfaces may become cleaner and thus heat more efficiently. 17

Some studies have suggested that the use of B20 biodiesel for home heating could reduce CO2 emissions by several million tons per year. 18 And, legislation has been enacted in some jurisdictions to mandate the use of biodiesel blended with petroleum diesel for home heating.

For cleaning up crude-oil spills

Biodiesel has been proposed as a cost-effective way to aid with shoreline cleanups and dissolve the residues from crude oil spills into marine environments. The methyl ester component of biodiesel appears to be effective in dissolving and dissipating crude petroleum by lowering its viscosity.

As well, biodiesel has greater buoyancy than crude oil, so it aids the removal of crude oil by physically lifting it. Biodiesel is highly biodegradable, so after assisting with crude-oil removal it breaks down fairly quickly. 19

Biodiesel for electrical generators and power plants

Biodiesel-fueled generators are used in a variety of locations. These systems offer the benefit of reduced pollution and emissions, which is especially helpful in residential areas or near schools and hospitals. 20

Historical background

Transesterification of various vegetable oils was first accomplished by scientists E. Duffy and J. Patrick 21 in the 1850s. Yet, the value of transesterified vegetable oil as a fuel for combustion was not fully appreciated for another 40 years.

Rudolph Diesel’s designs

Rudolph Diesel, a German engineer and inventor, began experimenting with oil-powered combustion engines in the early 1890s. On August 10th, 1893 he publicly displayed an early form of the engine-type for which is he is now famous. That prototype was fueled by peanut oil. To commemorate the event, August 10th is now known as “International Biodiesel Day.” 22

This prototype diesel engine was capable of running on mineral oil and a variety of vegetable oils. Peanut oil was chosen as a fuel because peanuts were being grown in large quantities in the French colonies in Africa under the patronage of the French Government. Although petroleum-based fuels were the norm during his lifetime, in 1912 speech Diesel predicted the widespread use of vegetable oil-based fuels to replace petroleum in the future. 23

Early development of vegetable oil esterification

Beginning in the 1920s and 1930s, and spurred by petroleum shortages during the war years, vegetable-oil-based diesel fuels were studied by researchers and commercial developers in several countries, including the UK, France, Belgium, Italy, Germany, Portugal, Brazil, Japan, China and Argentina.

High viscosity was the most common technical issue reported with these early forms of biofuels. In comparison with petroleum diesel, the thickness of vegetable-oil diesel often caused poor atomization during the process of spraying fuel into the combustion chamber.

Also, these vegetable-oil fuels tended to leave deposits or “coking” (imperfect combustion) on the surfaces of the injectors, combustion chambers and valves. Developers worked to overcome these issues by pre-heating the oil, blending it with petroleum diesel or ethanol, and using pyrolysis (thermochemical decomposition) to treat or “crack” the oil before combustion.

The first description of a commercial method to produce biodiesel through transesterification of vegetable oils came in 1937. In that year, a French researcher received a patent for transforming vegetable oils into diesel fuel through a process of alcoholysis using ethanol or methanol (more commonly called transesterification) in order to separate fatty acids from the underlying glycerols by replacing them with short-chain alcohols. 24

Technical progress

There has been continuing technical progress in the development of new methods for producing biodiesel and other biofuels. In 1977, a Brazilian researcher patented a large-scale industrial process for producing biodiesel. 25 As of 2010, the same researcher was continuing to work on methods for producing related biofuels such as bioquerosene (bio-kerosene). 26

Additional progress has been made in transesterifying sunflower oil and other vegetable oils to a high standard. By 1983, a process for making standard-quality biodiesel fuel was published internationally. The first known biodiesel plant was opened in November, 1987 and the first large-scale biodiesel plant began operations in 1989 with an annual capacity of 30,000 tons.

During the 1990s, biodiesel production plants were opened throughout Europe, including in Germany, France, Sweden and the Czech Republic. France was the first country reported to mandate the use of biodiesel mixed with petroleum diesel – The mixture was B5 used for passenger vehicles, and B30 for public transportation fleets. As of 1998, 21 countries worldwide had commercial biodiesel projects underway.


Biodiesel is a better lubricant than modern low-sulfur petroleum diesel fuels, and it also has a much higher cetane rating. Cetane rating for diesel fuels is the equivalent of “octane rating” for gasoline. The use of biodiesel generally reduces friction and wear on vehicle fuel systems. 27 As well, biodiesel increases the lifespan of diesel engines with high-pressure injection pumps, fuel injectors or unit injectors which rely on fuel for lubrication in those parts.

At room temperature, biodiesel is a free-flowing liquid. Depending upon the feedstock, its color varies between golden yellow to dark brown. It is very slightly miscible in water. It has a low vapor pressure and a high boiling point. Biodiesel’s flash point is at 130°C/266°. 28 This is significantly higher than the flash point of either petroleum diesel or gasoline.

The density of biodiesel is around 0.88 g/cm³, which is slightly higher than that of petroleum diesel. Biodiesel generally has very little sulfur, so it is frequently added to Ultra-Low Sulfur Diesel fuels (ULSD) to provide lubrication, since sulfur compounds are responsible for most of the lubrication in petroleum diesel.

Fuel efficiency and caloric values

The caloric value of typical biodiesel averages about 37.25 MJ/kg. 29 This is approximately 10% lower than regular No. 2 petroleum diesel. Although variations in biodiesel energy values are more dependent on the feedstock source than the production process, these variations are lower than those for petroleum diesel.

Overall, biodiesel is said to offer better lubrication and more thorough combustion than petrodiesel, which may compensate for the biodiesel’s lower energy values. 30

The thermal efficiency and power output of biodiesel depends mostly on the load conditions when burnt, and the quality of the blend. The quality of the blend varies according to its specific density, viscosity and flash point. For example, thermal efficiency of B100 when compared with B20 varies according to the BTU values of the components of the blends.

Biodiesel standards are specified by the American Society for Testing and Materials (ASTM). This organization has performed extensive studies on the brake thermal efficiency of biodiesel blends under various load conditions using different compression ratios. Trials comparing B40 to petroleum diesel found that B40 provides greater efficiencies than petrodiesel at higher compression ratios.

It was found that as compression ratios are increased, the efficiencies of all fuel types and blends are increased. In summary, these studies found that a B40 blend was most economical with a compression ratio of about 21:1 when compared with other blends. This implies that increased efficiency of biodiesel follows from viscosity, fuel density, and heating value. 31

Combustibility & emissions characteristics

In most cases, fuels systems in modern diesel engines are designed to operate with petroleum diesel, not biodiesel. For example, pressures within direct-injection fuel systems may range from 3,000 psi for common applications up to as much as 30,000 psi for rail locomotive systems. In most cases, conversion from petroleum diesel to biodiesel requires modification of the fuel system.

When compared with modern high-pressure fuel injection systems, traditional inline injection systems are more tolerant of poorer-quality diesel fuels. Yet, higher pressures and closer tolerances of high-pressure fuel systems provides better control over atomization and combustion, therefore offering greater efficiencies and fewer emissions. 32

In comparing emissions from petroleum diesel and biodiesel, one research study of fuel-injection systems examined the characteristics of droplets during the fuel-atomization process. It found that biodiesel produced larger-diameter droplets than those of petrodiesel. These larger droplets were attributed to biodiesel’s higher surface tension and viscosity. Also, it was found that B100 offers the greatest penetration of spray, which was attributed to its high density. 33

Large droplet size can cause inefficiency in combustion, increase emissions, and decrease power output. And, other studies have also noted a brief delay in the injection period of biodiesel. And, biodiesel’s greater viscosity and higher cetane rating also contribute to poor atomization as well as reduced air penetration during the pre-ignition period. 34 However, another study indicated that biodiesel’s ignition-delay period may help reduce nitric oxide (NOX) emissions. 35

In addition to NOX, the combustion of diesel fuels produces other emissions which are also subject to regulation under the Environmental Protection Agency (EPA). In order to comply with regulations, biodiesel fuel systems must operate in such a way as to control the combustion process and mitigate its emissions.

Several recently-developed technologies are helping to control emissions from both petrodiesel and biodiesel engines. The exhaust gas recirculation system (EGR) and diesel particulate filter (DPF) are designed to reduce harmful emissions from diesel engines. 36 The DPF uses potassium and sodium carbonates to aid in the catalytic conversion of combustion ash. And, studies have shown that when using EGRs, biodiesel has an advantage over petroleum diesel for reducing NOX emissions. 37

Compatibility with plastic, metal and rubber

Biodiesel is compatible when used with high-density polyethylene (HDPE) tubing, gaskets and valves, yet it slowly deteriorates parts made of polyvinyl chloride (PVC). 38 And, polystyrene dissolves immediately on contact with biodiesel.

With regard to metals, biodiesel has a corrosive effect on copper-containing metals such as brass. Biodiesel also has a slow adverse effect on tin, zinc, lead and cast iron. However, biodiesel does not affect stainless steels (Standards 304 and 316) and aluminum.

Biodiesel degrades parts made of natural rubbers, which are generally only found in older engines and furnaces. And, some studies have found that biodiesel which has lost its stability through oxidation may degrade fluorinated elastomers (FKM or FPM) which were cured with base-metal oxides and peroxides.

Still, the commonly-used synthetic rubbers used in today’s vehicles, such as FKM-GBL-S and FKM-GF-S, are unaffected by biodiesel under all operating conditions. 39

Technical standards

Biodiesel quality is judged according to any of several technical standards. Biodiesel was first developed in Europe, and the primary European standard is designated as EN 14214. The primary standards used in the U.S. is those published by ASTM International.

EN 14214

EN 14214 is the main European standard, and it is interpreted into various national standards for each country in Europe. There are minor differences between each country’s standards due to climate-related variations.

ASTM International Standards

In 2009, the American Society for Testing and Materials (ASTM) specified a set of up-to-date worldwide standards for diesel and biodiesel fuels. The organization published standards for undiluted B100 (D6751-08), diesel for on- and off-road applications (D975-08a), home heating and boiler oil (D396-08b), and biodiesel blends from B6 to B20 (D7467-08 and D6751). 40

These biodiesel standards ensure the regularity of values and processes including: Acid value; removal of catalysts; removal of glycerin; absence of fatty acids; removal of alcohols; low sulfur content; plugging point during cold-filtering; cloud point.

To determine compliance with these standards, a series of industrial laboratory tests are performed. The principal testing is by gas chromatography, and other specialized tests are also conducted. Biodiesel fuel which meets the specified quality standards is fairly non-toxic; the typical lethal dose for 50% of exposed laboratory mice (LD50) is greater than 50 mL/kg of body weight.

ASTM D7467-08 B6 through B20

The ASTM standards for biodiesel in blends of B6 through B20 represent an important benchmark for the acceptance of these fuels for diesel vehicles in the United States. When these specifications are met, vehicle and engine manufacturers can confidently warranty their equipment for consumer use of biodiesel at these concentrations.

Leading automakers such as Chrysler support using B20 in their diesel pickup trucks, particularly for fleet use. And, General Motors approves the use of B5 in all of its vehicles, yet limits the burning of B20 to vehicles manufactured with a range of special-equipment options which are usually only available to fleet vehicles.

The U.S. Federal Trade Commission (FTC) has also mandated certain requirements regarding the distribution of B6 through B20 biodiesel fuels. For example, fuel pumps which dispense these biodiesel blends must display a blue label, and pumps which supply biomass-produced diesel blends must show an orange label. These labels are required in order to comply with provisions of the Energy Independence and Security Act of 2007. 41

The labeling requirements were sparked by concerns regarding engine warranties. Although the FTC had first proposed the idea of categorizing all renewable diesel-type fuels in the same way, the National Biodiesel Board (NBB) pointed out that certain biomass-based fuels would not necessarily meet ASTM biodiesel standards already being followed by vehicle makers.

Some commercial fuel producers convert biomass from animal fats into bioliquids which have some properties of biodiesel, yet also retain some characteristics similar to petroleum diesel. At the same time, biomass-based fuels which do meet ASTM specifications might be used in much greater concentrations than comparable biodiesel fuels, which are usually limited to B20 blends for manufacturers’ standard diesel vehicles.

For these reasons, the FTC mandated the separate label requirements in order to distinguish between biomass-based diesel blends and true B6 through B20 biodiesel blends. 42

Gelling properties at low temperature

If biodiesel fuel is cooled to a certain temperature, some of its molecules clump together and become crystals. Biodiesel begins to appear cloudy when these crystals become bigger than one-quarter the size of visible light’s wavelengths. This is called the “cloud point” (CP). With further cooling of the biodiesel, the crystals grow larger.

As measured by the standard tests mentioned earlier, the “cold filter plugging point” (or CFPP) is the lowest possible temperature at which biodiesel fuel can still pass through a filter with 45-micrometer mesh size. If cooled further, biodiesel will gel and eventually solidify. As mentioned previously, CFPP requirements depend upon the climate region where the biodiesel fuel is to be sold.

The gelling temperature for pure biodiesel (B100) varies widely depending upon the exact mix of esters, which in turn depends on the feedstock from which the biodiesel was produced.

As an example, biodiesel fuel produced from canola seed containing low levels of erucic acid begins to gel at about 14°F (−10 °C). In contrast, biodiesel made from tallow or yellow grease containing animal fat begins to gel at about 61°F (+16 °C).

There are several commercially-available additives which serve to counteract gelling by lowering the CFPP and the temperature at which biodiesel can be poured. Even during winter in northern climates, biodiesel is still viable as a fuel when blended with other fuel oils such as Number 2 low-sulfur diesel and Number 1 diesel-kerosene.

Another method for using biodiesel fuel under cold conditions is by installing a second fuel tank for biodiesel to be used in conjunction with a standard petroleum diesel fuel source. This second tank is insulated, and the biodiesel inside is warmed with a heating coil fed by engine coolant.

Once the already-operating engine has warmed the biodiesel enough to flow properly, the fuel source can be switched over from petrodiesel to biodiesel. Likewise, pre-heating can also be used to fuel diesel engines by using virgin vegetable oil or waste vegetable oil (WVO) instead of diesel.

Contamination with water and other substances

Biodiesel often contains small yet problematic amounts of water. Even though biodiesel is barely miscible with water, still, biodiesel is hygroscopic, which means that it actively attracts water. 43

Biodiesel absorbs water because it contains mono- and diglycerides which remain after the production process. These glycerides act as an emulsifier and hold water in the biodiesel. As well, biodiesel may also contain residual water from condensation in storage tanks.

Water is problematic in biodiesel for several reasons: It creates smoke in the exhaust, and it reduces the heat and therefore the power of combustion. It also corrodes fuel-delivery components and causes pitting within the engine’s combustion chambers.

Water can also deteriorate paper-filter elements. And, in cold climates water freezes into ice crystals which accelerate gelling of the biodiesel fuel.

The presence of water has also been a problem during biodiesel production when using chemical catalysts, since it reduces the efficiency of high-pH agents such as potassium hydroxide. However, some biodiesel production methods, such as the super-critical methanol method, are unaffected by water contamination.

In the past, it was difficult to precisely measure the amount of water in biodiesel using field tests, but that task has now been made easier by the use of water-in-oil sensors.

Centrifuging to remove impurities from biodiesel and waste oils

Contamination from water and particulate matter in biodiesel and waste oils such as waste vegetable oil (WVO) and waste motor oil (WMO) is often removed with centrifuges. Many small producers of biofuels rely on centrifuge units which quickly clean waste vegetable oil, waste motor oil and contaminated biodiesel. These centrifuges efficiently remove water and other contaminants. 44

Availability and pricing of biodiesel

In the United States, in May 2013, monthly biodiesel production reached a record high level of 111 million gallons. 45

In certain countries under government-subsidized conditions, biodiesel costs may be less than petroleum diesel. In the U.S., according to recent U.S. Government pricing reports for January 2014, the average pump price for B20 biodiesel was $3.97 per gallon, and B99-B100 biodiesel was $4.28 per gallon.

In comparison, during the same reporting period the average price for petroleum diesel was $3.89 per gallon, and standard gasoline was $3.34 per gallon. 46

Biodiesel feedstocks & production methods

Many different feedstocks can be used to make biodiesel. Common feedstocks are: Virgin plant oil; waste oil, including waste vegetable oil (WVO) and used cooking oil; animal fats, such as tallow and lard; yellow grease, restaurant grease and other mixtures that include animal fats; algae and halophytes; and sewage.

Biodiesel is produced through transesterification processes. Over time, various methods have been developed for the transesterification reaction, such as the common batch process, various supercritical methods, ultrasonic processes, and microwave processes.

Transesterified biodiesel is mostly composed of a mixture of mono-alkyl esters from long-chain fatty acides. The most common reaction process uses methanol (in the form of sodium methoxide) as the cheapest alcohol source in order to provide methyl esters. This method is called the Fatty Acid Methyl Ester (FAME) process.

The methanol used during biodiesel reaction processes is most often produced using fossil fuels. Yet, there are also some “greener” sources of methanol made from biomass, glycerol or carbon dioxide as feedstock. 47

Likewise, ethanol can be used to produce biodiesel through ethyl esters. This is called the Fatty Acid Ethyl Ester (FAEE) process. By using alcohols with higher molecular weights, the resulting biodiesel product has better cold-flow properties, yet the transesterification reaction is less efficient.

Through whichever method, the base oil is converted into the desired esters by means of a lipid transesterification process. Remaining free fatty acids (also known as FFAs) in the oil are converted into soap and taken out during the process, or else they are later esterified using an acid catalyst, which yields further biodiesel product.

By undergoing esterification, biodiesel becomes much different from ordinary vegetable oil. Once this process is complete, biodiesel possesses combustion properties very similar to petrodiesel and can be used to replace it in most applications.

Glycerol is a byproduct of the transesterification process. As an approximate ratio, along with each ton of biodiesel manufactured about one hundred kilograms of glycerol are also produced.

During the early years of biodiesel production, glycerol was considered a valuable byproduct. Yet, because of the increasing global production of biodiesel the price of crude glycerol has fallen considerably.

Still, there are uses for glycerol, both as a feedstock for glycerin (used primarily in the cosmetic and pharmaceutical industries) as well as being a building block for other oleochemical products. 48

Although the purification of crude glycerol is an energy-intensive process, beyond glycerin it can also be used to make valuable products such as propylene glycol 49, as well as epichlorhydrin, which is a source for epoxy resins. In any event, the use of these byproducts from biodiesel processes provides new sources for chemicals from non-petroleum feedstocks.

Rapeseed and soybean oil feedstocks

In the U.S., virgin plant oils are the most-common feedstocks for biodiesel production. Rapeseed and soybean oils are the leading sources, with soybean oil representing about half of all U.S. biodiesel production. 50

Other virgin plant oil sources

Other virgin plant oil feedstocks include sunflower, palm, coconut, hemp, pennycress, jatropha, mustard, jojoba and pongamia, among others.

The primary factors used to determine whether a given plant oil is suitable as biodiesel feedstock include its flash point, viscosity and flow characteristics at low temperatures, energy content, and its combustion products and emissions.

As well, the cost of the plant oil is an important factor. Cost is based on yield as well as the resources required to grow the oil-bearing plant, then harvest and process it.

Another factor affecting the cost of biodiesel is whether the feedstock oil plant may be used for both food and biodiesel production. There is a complex marketplace effect on the prices of oil-bearing plants which may be used for both food and biodiesel production.

In contrast, some plant oils, such as jatropha and tung oil, are non-edible or toxic and therefore have only industrial uses such as for biofuel.

Biodiesel production from waste vegetable oil (WVO)

Waste vegetable oil (WVO) may be collected, filtered, centrifuged and burned directly as a fuel source for combustion engines and heating furnaces which have been converted for biodiesel use. Or, waste vegetable oil can be processed into biodiesel fuel. 51

Nevertheless, with the availability of high-quality centrifuges many individual alternative-fuel users choose to simply collect and clean batches of waste vegetable oil, then use it directly to fuel their diesel vehicles converted to operate on WVO, instead of first producing biodiesel from that waste oil.

For individuals who wish to produce biodiesel instead of simply burning WVO, the following is a home-method for collecting, filtering and reacting waste vegetable oil into biodiesel. Before beginning this process, be sure to confirm that home-production of biodiesel is legal in a particular community.

Also, it’s important to take appropriate safety precautions at all times during this process. This includes keeping all materials and supplies beyond the reach of children and pets. As well, home-biodiesel producers should work with appropriate safety equipment in a well-ventilated area.

Chemical-resistant goggles, gloves and aprons are necessary. An appropriate work area will include a source for running water, an eye-wash station, at least one fire extinguisher, supplies for cleaning up spills, and a telephone in case of emergency.

The first step in producing biodiesel at home is to collect waste vegetable oil (WVO), usually in the form of used cooking oil gathered from restaurants and industrial food-processing sources which rely on fryers. The collected WVO should be filtered to remove large particles.

Chunks or particles of fryer residue may contain water, which causes problems during the biodiesel reaction process. Also, the liquid should be allowed to settle after filtering, so smaller particles will move to the bottom of the container. Particles may interfere with the heating phase during the biodiesel process. After settling, the filtered waste vegetable oil is transferred into the reaction tank.

In the reaction tank, the WVO must be heated to about 120 or 130°. Also, the waste vegetable oil must be circulated during the heating process, in order to reduce the chance of overheating near the heating element.

Heating and circulation may take between one to four hours, depending on the quantity of oil being treated, the air temperature, the overall oil temperature, the amount of insulation around the tank, and the power of the heating element.

For each liter of waste vegetable oil, the biodiesel reaction process requires the use of 200 ml. of methanol and 3.5 grams of lye, as well as suitable glass or non-reactive containers and blending apparatus.

The first step is to place the methanol into a glass container. Next, activate the blender so that the methanol is being stirred. Next, add the 3.5 grams of lye for each 200 milliliters of methanol. This process should be conducted in a dry environment, since the lye can absorb water from the air. Keep the lye container sealed tightly between uses.

The reaction between lye and methanol creates sodium methoxide. This should be used for reaction with the waste vegetable oil fairly quickly, since sodium methoxide degrades in the presence of moisture and air.

With mixing, the methanol should completely dissolve the lye within a few minutes. Once the lye is dissolved, proceed quickly to the following step. Concurrently with the above procedure, the waste vegetable oil should be heated in a separate container to 130°F (or 55°C). Carefully add the hot WVO to the lye-dissolved-in-methanol mixture. Mix for between 20 to 30 minutes to complete the reaction process.

During the reaction process, biodiesel and glycerin are formed, and separate into two distinct layers in the container. The mix will result in about 90% biodiesel and 10% glycerin. As the mix cools and settles, it will separate into two layers. Since the biodiesel has lower density than the glycerin, the biodiesel will float on top.

The biodiesel top layer can be carefully removed using a pump or baster, leaving the lower glycerin behind. The biodiesel should be stored appropriately, and the glycerin can either be poured on a compost heap to enrich the decomposition, or it can be used to make soap.

Given the availability of centrifuges, many individual users choose to simply convert and operate their vehicles using waste vegetable oil (WVO) instead of biodiesel.

Biodiesel production from animal fats: Tallow, lard, yellow grease, chicken fat, fish oil, and other animal feedstocks

Biodiesel fuel can be produced from animals fats using a process similar to that described above for waste vegetable oil. Although biodiesel based on animal fat is sometimes perceived as being of lower quality than biodiesel from waste vegetable oil, this is not necessarily true. 52

Biodiesel produced from either plant oils or animal fats contains the same combustible chemicals, yet the proportions vary in each type. Both types are biodegradable, renewable energy sources, so they are better choices than petroleum-based diesel fuel.

All biodiesel fuels may be sluggish in cold-weather conditions regardless of feedstock. And, animal fat-based biodiesel has a higher cloud point and freezing temperature than plant oil-based biodiesel. Still, extensive tests have shown that B5 blends containing animal fat-based biodiesel do not negatively affect cold-weather performance.

Although animal fat-based biodiesel had a bad reputation in the early years of the biodiesel industry due to poor refinery practices, nowadays biodiesel from animal fats is of excellent quality if it complies with the applicable ASTM and/or EN specifications.

For example, biodiesel made from animal fats typically offers a higher cetane number. As indicated in an earlier section of this article, biodiesel’s cetane number indicates the ignition quality of a diesel fuel.

Biodiesel produced from soy oil averages between 45 and 53, and petroleum diesel averages between 41 and 53. In comparison, the cetane rating of animal fat-based biodiesel averages between 55 and 61. Beyond improving combustion, a higher cetane number usually indicates reduced emissions of NOx and particulates. As well, biodiesel made from animal fats also offers better lubricity and protection for moving engine parts.

Animal fat-based biodiesel offers an advantage in oxidative stability when compared with plant oil-based biodiesel. Biodiesel in general may form sediments while being stored. Yet, the high percentage of saturated fats in animal-sourced biodiesel offers better oxidative stability, which reduces the amount of sedimentation.

As further evidence of the comparative advantages of biodiesel produced from animal fats instead of plant oils, some studies have shown that animal fat-based biodiesel reduces greenhouse gas emissions because it is based entirely on byproducts, whereas much biodiesel is produced from virgin plant oils. 53

And, while meat production in the U.S. continues to grow at a slow yet steady pace, currently less than 10% of the available waste animal fat and tallow are used for making biodiesel. So, biodiesel production based on animal fats offers continuing opportunity for growth.

Algae and halophytes

Algae (singular ‘alga’) are a large, diverse group of small plant-like organisms that live in aquatic environments. Algae include many forms, from single cells to giant, multicellular kelps. The usual definition of algae includes the fact that most forms rely on chlorophyll for photosynthesis as their source of energy.

Algae are of great interest as a feedstock for biodiesel and other biofuels because they grow rapidly and they lack the typical hard, woody structure that characterizes most land-based plants. So, algae can be grown, harvested and processed with less-intensive inputs than land-based oil-bearing plants.

Algae can be grown in both freshwater and marine environments, so they do not require land as a resource. Algae can also be grown using sewage. 54 As well, coastal marine plants such as halophytes (“salt-loving” plants) can be grown in salty areas without requiring land.

Studies have shown that the per-acre yields of algae and halophytes can equal or exceed the yields from land-based biodiesel sources such as soybeans and other oil-bearing plants. 55

Sewage sludge

Sewage sludge also shows commercial promise as a source for biodiesel. 56

Quantity of feedstocks, yields and production levels

Many advocates have suggested that waste vegetable oil (WVO) is the best overall source of feedstock for biodiesel production.

Still, the available supply of waste vegetable oil is significantly less than the quantity of petroleum-based biodiesel currently being used for combustion engines and home heating worldwide. So, whether converted into biodiesel or burned as-is, WVO is only a partial solution for global energy needs.

As mentioned earlier, animal fats are a growing source of feedstock for biodiesel production. Animal fats are byproducts of meat processing and cooking. Although it would be uneconomical to raise animals (or gather fish) solely for their fat content, still, the byproducts add significant value to livestock and fishing industries.

An increasing number of multi-feedstock facilities in the U.S. are producing biodiesel based on mixtures containing animal fats. Some facilities rely solely on chicken fat from large poultry producers. 57

As well, some biodiesel producers use byproduct fish oil as feedstock. 58 In fact, fish can be a rich feedstock for biodiesel, since at least one facility has reported biodiesel yields of 13 tons from 81 tons of fish waste byproduct, beyond the primary yield of 130 tons of marketable processed fish. 59

Current research into the newest sources and methods for biodiesel

Because of concerns about deforestation, and the debate about whether plants which bear edible crops should be devoted to producing food for human consumption or fuel such biodiesel, some researchers have proposed that biofuels should be produced only from non-food sources such as algae or non-edible plants. 60

Algal biodiesel

Algae grown in the marine coastal areas of the sea could provide biodiesel that would not displace land-based food crops. There are currently many research projects focused on developing cost-effective ways to grow algae for biofuel use. 61 In fact, some species of algae yield exceptionally high levels of oil, sometimes as great as 50% of algal volume. 62


Pongamia, also known by its scientific name Millettia pinnata, is an oilseed-bearing tree which grows rapidly even under fairly harsh conditions. Pongamia is non-edible, and can be grown in non-arable conditions, so it is not considered a competitor for land on which food crops are grown. The tree appears to be an excellent candidate for biodiesel production because it has an exceptionally high oil yield, approximately 40% of the seed weight. 63

Jatropha and other poisonous plants

Jatropha is a poisonous shrub which produces oil-bearing seeds considered an excellent feedstock for biodiesel production. The plant grows on marginal land, so it is not expected to compete with food crops. Certain proprietary varieties of jatropha produce exceptional yields, and much preliminary development is now underway. 64

Biodiesel in the future

Beyond using plant crops and algae as biodiesel feedstocks, there are a range of visionary research projects underway worldwide to discover better biofuel sources for the future. For example, in Ghana, Africa researchers are developing the world’s first biodiesel production plant to be fed by human fecal sludge. 65 And, the Spanish company Ecofasa is working to develop biodiesel made from household and garbage. 66

As well, even though such feedstocks are not expected to solve the world’s energy needs, encouraging early research has shown that waste materials including used coffee grounds can be used to produce biodiesel at a cost of about $1 per gallon, as demonstrated at the University of Nevada. 67

Likewise, other exotic feedstocks can be used to produce good biodiesel. Studies have shown that biodiesel can be produced from alligator fat. Alligator fat is left as a byproduct of meat and skin industries in the U.S., and is currently being disposed of in landfills at the rate of about 15 million pounds per year. 68

These early efforts hold much future promise for reducing the world’s dependence on petroleum-based diesel and other fossil fuels, and may help consumers move toward a future in which the energy needs for combustion engines are fulfilled largely by renewable feedstocks such as waste vegetable oil (WVO) and biodiesel.

Efficiency, economic arguments and economic impact of biodiesel

Soybeans and rapeseed are the United States’ top two biodiesel feedstocks. Beyond these and other virgin-oil biodiesel feedstocks, waste vegetable oil (WVO) and animal fats also contribute significant amounts of value to economies in the U.S. and elsewhere worldwide.


According to at least one study, a typical U.S. farming operation burns ordinary fuel at a rate of nearly 9 gallons per acre of land in order to produce a crop.

Yet, rapeseed crops produce virgin oil at an average rate of about 110 gallons per acre. And, the highest-yielding rapeseed crops can produce as much as 145 gallons per acre. So, the input-to-output return ratio is substantial.

Plant photosynthesis has an efficiency rate of approximately 3 to 6% of the total radiation received. If the total mass of a given crop is used for energy production, then the calculated energy efficiency yield is around 1%. 69

Although photosynthesis is less efficient than solar energy, the cost of solar cells is much higher, perhaps $250 per square meter. In comparison, the cost of land for oil-plant growth, or aquatic area for algae growth, is significantly less. So, biodiesel production and processing is ultimately more efficient and cost-effective than photovoltaic energy.

Economic arguments

In the U.S. and elsewhere, there is a continuing debate about the economic costs and effects of using virgin-oil sources for biodiesel instead of food production.

Until or unless algae-based biofuel production methods can become far more efficient, a full transition from petrodiesel and other petroleum-based fuels toward biofuels would require large land areas. And, re-purposing significant tracts of land from food-growing to fuel-production use worldwide may be a source of food insecurity or civil unrest. 70

In tropical countries like Malaysia and Indonesia, there is relatively large-scale cultivation of palm trees to provide palm-oil feedstock for biodiesel to be used in Europe. The resulting destruction of rainforest has created a continuing outcry from environmentalists. 71

Using non-food feedstocks such as jatropha for biodiesel is less controversial, especially when marginal or less-arable land is employed. 72 For these reasons, and given the fact that oceans cover a large portion of the planet, algae may hold the greatest hope for large-scale biodiesel feedstock production in the future.

When oil-bearing plants such as soybeans, oil-palm trees and canola are used as virgin biodiesel feedstock, a significant portion of the eventual fuel value is derived from solar energy captured by the oil-bearing plants during photosynthesis.

For example, studies conducted in Germany have shown yield/cost ratios for biodiesel production is about 1.78 under typical conditions. Stated differently, for every 0.561 gigajoule (GJ) of energy input into growing the feedstock plant crop, 1 GJ of biodiesel energy can be produced. As indicated above, the economic gains result from the contribution of solar energy. 73

The gains are slightly greater when the byproducts of agricultural processes (such as straw and harvest waste) and biodiesel processes (spent oilcake and glycerin) can be used as inputs for other processes.

Economic impact

In the U.S. various economic studies have focused on the economic impact of biodiesel production and use. For example, a study sponsored by the National Biodiesel Board (NBB) found that as of 2013 the U.S. biodiesel industry supported approximately 62,000 American jobs and provided more than $2.6 billion in household income. 74

Environmental effects and benefits

When compared against petroleum diesel, biodiesel is noted for its beneficial environmental effects, including reducing greenhouse gases and deforestation. According to an EPA analysis, biodiesel produced from soy oil reduces greenhouse gases by about 57% compared with petrodiesel, while biodiesel from waste vegetable oil (WVO) and yellow grease leads to a reduction of 86%. 75

Still, some organizations have raised concerns about deforestation of tropic areas in order to grow oil-bearing plants that yield virgin oil for biodiesel production. 76

Energy security through biodiesel

In the U.S., energy security is the main driver behind the Government’s push to develop biodiesel and other biofuels. Increased availability of biodiesel is expected to reduce reliance on foreign oil sources, as well as retain more of the economic value from locally-available resources.

This rationale has long been held by U.S. Government leaders, and was made especially clear in a foundational White House “Energy Security For The 21st Century” white paper published in 2008. 77 Likewise, European leaders are seeking energy security through locally-available alternatives to foreign energy sources, as indicated during recent conferences and white papers. 78

Global biodiesel governmental policies

The world’s leading nations all have governmental policies and programs designed to encourage and increase the production and use of biodiesel and other biofuels. In particular, governments of countries with limited fossil fuel resources are especially interested in promoting energy independence while reducing dependence on foreign oil-producing nations.

As well, leading nations wish to increase the use of renewable, sustainable energy sources such as biodiesel in order to reduce the global carbon footprint. In order to promote the production of biodiesel and other biofuels, most of these nations use a combination of research funding, tax incentives and rebates, and official policy statements.


Since 2013 Canada has mandated that diesel and heating oil contain at least 2% biodiesel; as well, the provinces have their own specific legislation regarding incentives for biodiesel production and use. 79 The EcoENERGY Biofuels Program subsidizes biodiesel and other biofuels with a per-liter production incentive. The incentive is targeted to be reduced to CAN$0.06 by the year 2016. 80

European Union

Historically, Europe has been the first and largest producer of biodiesel. Germany and France are the leading producing countries. Each country in the European Union offers specific incentives and tax credits for the production and use of biodiesel and other biofuels.

In Germany, for example, diesel used in transport industries is mandated to contain at least 4.4% biodiesel content until at least 2014, and beyond the country’s internal consumption, German exports of biodiesel reached 430 million gallons, up 20% over the previous year’s export total. 81

United States

As of April 3, 2014 legislators restored and made retroactive the federal tax incentives for biodiesel and certain other biofuels. 82 The tax credit gives biodiesel blenders who register with the IRS an incentive of $1 per gallon of B100 biodiesel, or agribiodiesel, or renewable diesel blended with petroleum diesel.

Only those blenders who have produced and sold or used the biodiesel mixture as a fuel in their own business or trade are eligible for this credit. The biodiesel must be registered, and it must meet the standards of ASTM D6751 and ASTM D975 or D396. The credit does not apply to any fuel made from co-processing with any non-biomass feedstock. 83

In addition to federal incentives, almost all individual states offer their own incentives to producers and users of biodiesel fuels. The following are only a basic summary of biodiesel incentives offered by states. Since legislation and incentive programs change periodically, readers are encouraged to contact the appropriate state authorities for current details and availabilities.

Alabama (Current as of May 2014)

Alabama offers grants of as much as $2500 to cover the cost of converting existing fuel tanks be used for storing biodiesel of at least B20 for use in schools, colleges and local government fleets. Firms which invest in developing biodiesel production facilities may receive a tax credit of as much as 5% of the project costs per year for as long as twenty years; the size of the project must be at least $500,000. Alabama also offers “green fleets” incentives.

Arizona (Current as of May 2014)

Arizona provides bidding incentives for state contracts for heavy equipment which uses biodiesel, as well as favoring alternative fuel vehicles (AFV) in other bidding processes. In addition, certain major school districts must ensure that 50% of their fleets operate on biodiesel or other alternative fuels. As well, federal fleets in high-population-density areas must be at least 90% powered by alternative fuels.

Arkansas (Current as of May 2014)

Arkansas offers grants to biodiesel producers, biodiesel feedstock processors, and fuel distributors. Producers may receive $0.20 per each gallon of biodiesel produced, to a maximum value of $2 million. Feedstock processors may receive as much as 50% of the project value, up to a total $3 million. Biodiesel distributors may receive as much as $300,000, up to half the project cost.

In addition, any person or company that converts a motor vehicle to run on biodiesel must advise the Arkansas Department of Finance and Administration within ten days after the conversion. All state-operated diesel-powered vehicles are required to use at least B2 blended fuel.

California (Current as of May 2014)

California offers grants for replacing old school buses with biodiesel-fueled buses; both private and public schools are eligible. Grants are available to school districts for vocational training focused on employment in biodiesel and other renewable-energy industries. The Department of General Services (DGS) encourages the lease or acquisition of state-operated vehicles using biodiesel and other alternative fuels.

The Propel Fuels program provides rebates to fleet buyers of more than 500 gallons of biodiesel per month; the rebate is $0.03 per gallon for less than 1000 gallons per month, and $0.05 for more than 1000 gallons per month.

Alternative-fuel vehicle conversions or retrofits are allowed only by using equipment or kits approved by the Air Resources Board (ARB) for compliance with emissions standards.

Colorado (Current as of May 2014)

Colorado offers research grants to educational institutions for biodiesel and other biofuels projects; these programs will continue until at least January 1, 2015.

The Division of Oil and Public Safety is mandated to make the process of obtaining permits for underground and aboveground storage tanks for biodiesel and other renewable fuels more efficient and affordable than the comparable process for petroleum-based fuels.

The Department of Personnel and Administration (DPA) requires that all Colorado-owned diesel vehicles must be fueled with B20 biodiesel, subject to price and availability requirements.

Connecticut (Current as of May 2014)

Connecticut offers research grants to educational and agricultural institutions to promote the development of biodiesel and other biofuels from agricultural products, algae, and waste grease. Connecticut’s Clean School Bus Program provides grants for retrofitting buses to burn biodiesel and other renewable fuels.

Delaware (Current as of May 2014)

Delaware provides exemption from all fuel taxes for federal and Delaware state vehicles, including those of volunteer fire and rescue organizations, which operate using biodiesel or other alternative fuels. State agencies are mandated to develop procedures for switching to biodiesel blends in all state-operated vehicles.

District of Columbia (Current as of May 2014)

In the District of Columbia, vehicles powered by clean fuels such as biodiesel are exempted from day-of-week and time-of-week travel restrictions, as long as they are part of a fleet of at least ten vehicles. This exemption does not necessarily allow unrestricted access to High Occupancy Vehicle (HOV) lanes.

Florida (Current as of May 2014)

Florida offers an income-tax credit of 75% for all operation, capital investment, research, development and maintenance costs associated with investments in producing, storing and distributing pure or blended biodiesel (B10 to B100), with annual limits up to $1 million per taxpayer or $10 million for combined taxpayers. Costs of retrofitting gasoline stations to accommodate biodiesel from B10 to B100 are also included.

The above biodiesel tax credits are for costs incurred from July 1, 2012 through June 30, 2016. If not entirely used in one year, these credits may be carried forward until December 31, 2018. Also, as of January 1, 2014 these credits are transferable – The entity with the tax credit may transfer it in whole or in part to any other entity or taxpayer, without any need to transfer the ownership interest which underlies the credit.

Biodiesel produced by any secondary school is exempt from diesel fuel taxes; annual production must be less than 1000 gallons, and is for use only by the school, its students or employees.

Permitting agencies are mandated to expedite the permit process for projects focused on producing biodiesel and other biofuels. All state agencies are mandated to use biodiesel or ethanol blended fuels when available.

Georgia (Current as of May 2014)

Georgia offers an income-tax credit to persons who buy or lease a new vehicle dedicated to run on biodiesel or other alternative fuel; the amount is 10% of the cost of the vehicle, to a maximum of $2500; if unused during the year of purchase, this credit may be carried forward for up to 5 years.

Businesses that manufacture products for biodiesel vehicles may receive a yearly tax credit for up to 5 years; the credit is based on the number of new full-time jobs created and the county (economic-employment zone) in which the business is located.

All state-purchased diesel must be blended with biodiesel when available.

Hawaii (Current as of May 2014)

Hawaii mandates that alternative fuels such as biodiesel must account for 15% of highway fuel use by 2015, 20% by 2020, and 30% by 2030. Effective until July 1, 2020 certain land-use exemptions are granted for agricultural activities to produce biodiesel and other biofuels.

In state and county diesel fuel-procurement contracts, price preference of $0.05 is given per gallon of B100; for biodiesel blends less than B100, the preference applies to the biodiesel portion of the blend. Distributors of biodiesel charge buyers a retail fuel tax at only 33% the tax rate for petroleum diesel.

15.3.12 Idaho (Current as of May 2014)

For biodiesel producers who make no more than 5000 gallons of biodiesel fuel per year for personal use, Idaho exempts such producers from the typical state motor-fuel distributor licensing requirement.

Illinois (Current as of May 2014)

The Illinois Alternative Fuels Rebate Program offers a rebate for 80% (to a maximum $4000) of the incremental cost of purchasing a vehicle powered by biodiesel (minimum B20) or other alternative fuels; or, a rebate of as much as $4000 for the cost of converting a conventional-fuel vehicle to biodiesel (minimum B20) by using a federally-certified conversion kit, as well as the incremental cost of buying biodiesel fuel for that vehicle.

Note that this program applies only to vehicles purchased from an Illinois-based company, unless it’s a specialty vehicle not sold within the state. Note also that the fuel-cost rebate is for 80% of the incremental cost of B20 or higher blends beyond the cost of petroleum diesel.

Also, there is a biodiesel sales tax exemption applied to 80% of the sale of biodiesel fuel blends (B1 to B10) made from July 1, 2003 to December 31, 2018. Taxes do not apply to the sales of biodiesel blends over B10. Note that taxes will be applied to 100% of all biodiesel sales beginning on January 1, 2019.

Illinois offers grants for building or expanding biodiesel production facilities with capacity of a minimum 5 million gallons per year; the grant is up to $4 million or 10% of the building costs, whichever one is less.

Indiana (Current as of May 2014)

The Indiana Office of Energy Development (OED) administers grants of $25,000 to $150,000 for energy-conservation, including biodiesel vehicle fleet projects undertaken by schools, businesses, local governments and non-profits. Indiana’s 21st Century Research & Technology Fund offers loans and grants for biodiesel and alternative-fuel technology development.

The Clean Diesel Across Northern Indiana Program offers grants of $25,000 to $200,000 for projects that reduce emissions, such as biodiesel, by converting or retrofitting vehicles to use alternative fuels; private and public fleet operators are eligible.

Indiana provides biodiesel producers with a credit of $1 per gallon, up to $5 million for each single producer spread over all tax years. Blenders of biodiesel are eligible for a credit of 2 cents per gallon of blended biodiesel produced in Indiana, up to $3 million total for all tax years.

State agencies or government bodies that purchase at least B20 biodiesel can receive a 10% price preference. And, biodiesel of at least B20 grade used for personal, non-commercial use by the person who produced the biodiesel blend is exempt from the $0.16 per gallon fuel license tax.

Iowa (Current as of May 2014)

Iowa retailer sellers whose total sales are at least 50% biodiesel, with a grade of at least B5, can receive a state income tax credit of $0.045 per gallon of biodiesel; this credit will expire on December 31, 2017. Biodiesel retailers may receive grants for as much as 70% of the cost of installing or upgrading biodiesel infrastructure, up to $50,000.

Facilities that blend or dispense B2 to B98 biodiesel may receive as much as 50% of upgrade costs, up to $50,000; facilities that handle B99 or B100 biodiesel may likewise receive $50,000 of the total project cost, up to as much as $100,000. Biodiesel producers may receive a state sales tax refund of $0.02 per gallon during 2014, after which the incentive expires.

Kansas (Current as of May 2014)

Kansas offers an income-tax credit of 40% of incremental fuel cost of vehicle conversion cost for vehicles that run on biodiesel, as follows: A tax credit of up to $2400 for vehicles with less than 10,000 lbs.; tax credit of up to $4000 for vehicles weighing between 10,000 to 26,000 lbs.; credit of up to $40,000 for vehicles weighing more than 26,000 lbs. Or, a tax credit of 5% of the cost of a biodiesel-fueled vehicle is available for buying an OEM biodiesel-fueled vehicle. From 2013 forward, this credit is only available to companies with a corporate income-tax liability.

There is a 40% income-tax credit for the cost of installing biodiesel fueling infrastructure, up to $100,000 per fuel station. This credit is available to companies with corporate income-tax liability, and may be carried over for three years. Biodiesel producers are eligible to receive an incentive of $0.30 per gallon sold; this incentive expires on July 1, 2016.

Kentucky (Current as of May 2014)

In Kentucky, grants are available through the County Agricultural Investment Program (CAIP) to be used for on-farm biodiesel projects, including funds for infrastructure, equipment and supplies. Biodiesel producers and blenders can receive income-tax credit of $1 per gallon of B100; the total statewide tax-credit cap is $10 million.

Biodiesel production facilities are eligible for tax incentives to build, upgrade or retrofit facilities. The incentive consists of either: A refund of as much as 100% of the state sales tax paid on property to build the facility, or a credit of as much as 100% of the company’s income tax, or as much as 4% of the wage assessment of the employees’ jobs that were created by the project.

Louisiana (Current as of May 2014)

Louisiana provides a “Green Jobs Tax Credit” for biodiesel and other biofuel infrastructure projects for 10% to 25% of the project costs up to $1 million. The payroll portion of such a project for Louisiana residents may include an extra 10% tax credit.

Some types of equipment and property used to produce or blend biodiesel are exempted from Louisiana sales tax. And, B100 fuel used by a registered manufacturer is exempt from sales tax until June 30, 2015.

Louisiana’s legislature is encouraging restaurants throughout the state to make available their waste oils, fats and grease to biodiesel producers, as well as asking restaurants to store these biodiesel feedstocks in ways to facilitate their use in biodiesel production.

Maine (Current as of May 2014)

Maine commercial biodiesel producers are eligible for a $0.05-per-gallon income-tax credit; for biodiesel blends, the credit applies to the portion of biodiesel in the mixture. The credit may be carried forward for up to ten taxation years.

A person who produces biodiesel for personal or family use receives exemption from Maine’s fuel tax. The sales tax rate for commercially-produced biodiesel is $0.312 per gallon for B2 to B90, and $0.287 for B90 to B100.

Maryland (Current as of May 2014)

Maryland offers incentives for biodiesel producers as follows: From biodiesel produced from soybean oil in a facility which began operating after January 1, 2004 the incentive is $0.20 per gallon; for biodiesel from other feedstocks, or from soybean oil in a facility which began operating before 2004, the incentive is $0.05 per gallon. Total credits are limited to 5 million gallons per year, and of that amount at least 2 million gallons must be from soybean oil.

At least half of all the State’s diesel-powered vehicles must use at least B5 biodiesel or other biofuel.

Massachusetts (Current as of May 2014)

Massachusetts has mandated that all diesel fuel must contain at least 2% biodiesel by 2010, 3% by 2011, 4% by 2012, and 5% by 2013. Providers of fuel to the Massachusetts Department of Transportation are required to offer biodiesel or other alternative fuels. All state agencies are required to use minimum B15 in all diesel engines.

Michigan (Current as of May 2014)

Michigan offers tax exemption to industrial properties used for making biodiesel. Refiners, retailers and distributors of biodiesel must be licensed and are required to ensure that their fuel is visibly free of sediments, undissolved water, or suspended particles.

Minnesota (Current as of May 2014)

Minnesota has mandated for 2014 that during the months from April through September, diesel fuel must be at least B10, and during the remainder of the year it must be at least B5. Regarding the use of biodiesel in state vehicles, and with usage statistics from the year 2005 as a baseline, state agencies must migrate 25% of diesel usage over to biodiesel by 2015. When possible state agencies must buy vehicles powered by alternative fuels, including B20 or higher blends.

The NextGen Energy Board offers funding for research and grants for developing biodiesel and other biofuels from agricultural and forest products; this program is active through at least 2014.

Mississippi (Current as of May 2014)

In 2013 Mississippi began offering zero-interest loans to schools districts and local governments to buy buses and other vehicles powered by biodiesel and other alternative fuels, convert buses and other vehicles to biodiesel, and install fueling infrastructure.

The Department of Agriculture and Commerce offers incentive payments to biodiesel producers of $0.20 per gallon for a total of up to 30 million gallons per producer per year for up to ten years, with a maximum annual payment to any single producer of $6 million per year. This program ends on June 30, 2015.

All biodiesel must be labeled. B5 blends must be labeled as “may contain up to 5% biodiesel,” while B6 through B20 must specify the percentage, and over B20 blends must specify the percentage and give a warning to “consult vehicle manufacturer…”

Montana (Current as of May 2014)

In Montana, individuals and businesses can receive an income-tax credit of as much as 50% of labor and equipment costs for converting vehicles to run on biodiesel; the maximum credit is $500 for converting vehicles of 10,000 lbs. GVWR or less, and $1000 for vehicles of GVWR of 10,000 lbs. or more. This credit is only available in the year when the vehicle was converted, and it is not available to sellers of alternative fuels that convert their own vehicles.

For biodiesel produced in Montana, individuals and business can receive a tax credit of as much as 15% of the cost of equipment for blending or storing biodiesel offered for sale; biodiesel must account for at least 2% of the company/individual’s total diesel sales. Likewise, there is a tax credit of as much as 15% of the costs of building and equipping facilities used for biodiesel production. The facility must be operating before January 1, 2015.

Producers of biodiesel from waste vegetable oil (WVO) feedstock are exempted from Montana’s fuel tax.

Nebraska (Current as of May 2014)

Nebraska offers investors in biodiesel production projects a tax credit of 30% of the amount of investment in a project majority-owned by Nebraskans, between January 2008 and January 2015, up to a maximum $250,000; this credit is only for B100.

The Transportation Services Bureau and Department of Roads is mandated to use B2 in applicable state vehicles when possible.

Nevada (Current as of May 2014)

In Nevada, a portion of any penalty assessed for an air-pollution violation must be dedicated to the local county school board fund, for projects such as retrofitting school buses to run on biodiesel or other alternative fuels.

State fleets of 50 or more vehicles must acquire at least some biodiesel or other alternative fuel vehicles; this requirement may be met by converting existing vehicles.

New Hampshire (Current as of May 2014)

New Hampshire recommends that its Department of Transportation buy biodiesel of at least B5 and up to B20 grade. Anyone who distills, refines, blends or buys biodiesel for which the road tax has not been paid must pay an annual licensing fee of $25. Anyone who blends or purchases more than 10,000 gallons of biodiesel in a month must post a bond with the Department.

New Jersey (Current as of May 2014)

New Jersey mandates the use of biodiesel and other biofuels for state agencies when costs and availabilities are reasonable. All buses bought by the New Jersey Transit Corporation must be outfitted with controls to reduce emissions, or fueled by biodiesel or other biofuels.

New Mexico (Current as of May 2014)

New Mexico offers blenders a tax credit of up to 30% of the cost of buying and installing equipment to produce biodiesel blends of at least B2, with a limit of $50,000 for each facility. Biodiesel distributed for government or tribal use is exempt from state tax.

Individuals and companies that use biodiesel from 99% vegetable oil or animal fat, including waste vegetable oil (WVO), are eligible for a tax deduction so long as it is used in a federally-certified fueling or conversion system.

All diesel used by the state and public schools must be at least B5. The same requirement had been applied to consumer diesel use, but this requirement for private consumers has been suspended until April 30, 2014 due to biodiesel price and supply issues.

New York (Current as of May 2014)

New York biodiesel producers can receive a tax credit of $0.15 per gallon of B100 after the particular production facility has produced and made available for sale at least 40,000 gallons of fuel per year. The maximum credit is $2.5 million per year per taxpayer for not more than 4 consecutive taxation years, and the credit expires at the end of 2019.

Fuel franchise dealers are encouraged to offer biodiesel of at least B2 grade, and may be subject to fines if they fail to do so. New light-duty state vehicles must be biodiesel or other alternative-fuel vehicles. State agencies that use medium- and heavy-duty vehicles are mandated to reduce petroleum diesel consumption.

As an alternative to purchasing new alternative-fuel vehicles (AFVs), agencies may substitute the use of 450 gallons of B100 biodiesel for the acquisition of each AFV; this requirement may also be met by purchasing 2,250 gallons of B20 or 9,000 gallons of B5.

North Carolina (Current as of May 2014)

In North Carolina, the Clean Fuel Advanced Technology program offers grants for reducing emissions in target counties, including biodiesel retrofitting of vehicles; the funding cycle is from 2013 through 2016. Retail sale, storage and use of biodiesel and other biofuels are exempt from sales tax.

Also, anyone who produces biodiesel for their own personal use is exempt from the motor fuel excise tax. As well, fuel blenders or suppliers of biodiesel are exempt from the usual state bond requirements.

Properties used for biodiesel production or storage may receive a tax credit amounting to 35% of the property’s cost. The credit must be claimed in 5 equal annual instalments beginning when the property enters service, which must be before January 1, 2016.

All diesel-powered school buses must be capable of using B20 or higher grade, and a minimum 2% of all fuel purchased by school districts must be at least B20, to the extent of availability and compatibility.

North Dakota (Current as of May 2014)

North Dakota offers biodiesel blenders and producers an income-tax credit of $0.05 per gallon of minimum B5 grade. The credit may be carried forward for as many as 5 tax years. Retailers may receive corporate tax credit for 10% of the costs related to adapting a facility to sell at least B2. The credit for blenders may be claimed for as many as 5 years, and is limited to $50,000 for all tax years. The credit for producers is limited to a total of $250,000 for all tax years.

Through July 31, 2015 the Bank of North Dakota provides loan guarantees for facilities to produce agriculturally-derived biodiesel. The loan guarantee is for up to 30% of the total loan up to $25 million. After the above cut-off date, the loan guarantee may not exceed $10 million.

Ohio (Current as of May 2014)

Ohio offers grants to retrofit school buses to operate on biodiesel. Ohio also provides loans and grants to cover as much as 80% of the cost of buying and installing facilities offering at least B20. This program also covers up to 80% of the incremental expense of buying and using biodiesel for businesses, nonprofits, schools and local governments.

Tampering with vehicle emissions-control systems is only allowed for the purpose of converting a vehicle to run on biodiesel or other biofuel.

Oklahoma (Current as of May 2014)

Oklahoma offers a tax exemption for the production of biodiesel or other biofuels from an individual’s own feedstocks grown on the individual’s property and used in his/her own vehicle.

Oklahoma also provides a private loan program offering a 3% interest rate to cover the cost of converting fleets to biodiesel, and for incremental costs of buying OEM vehicles that run on biodiesel or other biofuels; the loan has a six year repayment term.

Oregon (Current as of May 2014)

Oregon offers a fuel tax exemption for biodiesel blends of at least B20 produced from used cooking oil. Low-interest loans are available for projects involving biodiesel production, feedstock production, infrastructure, or biodiesel-powered fleets. All diesel sold must be at least B5; between October and February 28, biodiesel may contain anti-gelling additives.

Pennsylvania (Current as of May 2014)

Pennsylvania offers incentive grants for biodiesel projects and research of up to $1,000,000; the program is current through 2014. One year after in-state biodiesel production reaches forty million gallons, all diesel sold in the state must be at least B2; one year after in-state production reaches 100 million gallons, all diesel must be at least B5, and then B10 one year after 200 million gallons, then B20 after the 400 million gallon level is achieved.

Rhode Island (Current as of May 2014)

Rhode Island exempts biodiesel from the $0.30 state fuel tax; regarding blends, only the biodiesel portion is exempted. A minimum 75% of state-owned vehicles must be powered by biodiesel or other alternative fuels.

South Carolina (Current as of May 2014)

South Carolina offers an income-tax credit to taxpayers who buy, build or install commercial facilities for distributing or storing biodiesel and other biofuels. The credit covers up to 25% of storage tanks, pumps and related equipment; the credit must be taken in 3 annual installments starting in the first tax year when the facility began service.

Commercial facilities for producing biodiesel are eligible for a tax credit of as much as 25% of the cost of building, renovating and equipping the production facility. The full credit must be taken in 7 equal annual installments starting in the tax year when the facility begins service.

State-owned fuel facilities must offer at least B5 at all pumps. When feasible, all agencies and school districts must use biodiesel or other alternative fuels.

South Dakota (Current as of May 2014)

South Dakota offers biodiesel blenders a tax credit per-gallon for the amount that the tax rate for special fuels exceeds the rate for the biodiesel blend; the purpose is to offset any liability that might result from blending biodiesel with petroleum diesel. Department of Transportation vehicles must use at least B2 so long as it is available and feasible.

Fuel-dealer franchises are not allowed to restrict franchisees from selling biodiesel or advertising its sale.

Tennessee (Current as of May 2014)

Tennessee Department of Transportation works with private businesses to install biodiesel fueling facilities to dispense at least B20. Fuel distributor contracts executed after 2010 are not allowed to restrict the distributor’s ability to blend biodiesel with petroleum diesel.

Biodiesel available from wholesale suppliers must be at least B99, and blends sold to retail consumers must not be more than B20. Retail blends of more than B5 must be labeled at the pump.

Texas (Current as of May 2014)

Texas has an Alternative Fueling Facilities Program which offers grants of 50% of eligible costs for building or acquiring facilities to store or distribute biodiesel and other biofuels, up to $500,000. The biodiesel portion of blended fuels is exempt from state fuel tax. Biodiesel blends must be clearly labeled at the pump.

State fleets with more than 15 vehicles must buy or lease only vehicles which use at least B20 biodiesel or other alternative fuels.

Utah (Current as of May 2014)

Utah requires that by August 30, 2018 at least half of all new state vehicles must be fueled by biodiesel or other alternative fuels.

Vermont (Current as of May 2014)

Vermont businesses which qualify as being exclusively focused on alternative-energy technologies such as biodiesel are eligible for as many as 3 of the following 5 tax credits: R&D income-tax credit, payroll tax credit, export tax credit, and small business investment tax credit.

Vermont has a pilot program to retrofit certain school buses for biodiesel, waste vegetable oil (WVO) or virgin vegetable oil; this program is set to expire on September 1, 2015. After 2010, state-operated heavy-duty vehicles must use B5.

Virginia (Current as of May 2014)

Biodiesel producers in Virginia can receive a tax credit of $0.01 per gallon of biodiesel; this is available for up to 2 million gallons per year. This credit is limited to $5000 and only during the first 3 years of biodiesel production.

Grants of up to $250,000 or 25% of capital investment are available for projects to develop biodiesel and other biofuels using Virginia’s agricultural and forestry products as feedstocks.

Businesses focused on biodiesel or other alternative-fuel vehicle component manufacturing or conversions, or biodiesel production, can receive a job-creation tax credit of as much as $700 per full-time employee; the credit is allowed for the tax year in which the job is created and in each of 2 successive years if the job is continued. This credit is effective through December 31, 2014.

Individuals who transport waste kitchen grease, waste vegetable oil (WVO) or yellow grease to be converted to biodiesel are exempted from the ordinary Department of Health registration; this exemption applies only if the person carries waste vegetable oil or grease in a container of less than 275 gallons at a time and has not more than 1,320 gallons of such grease in his/her possession at any given time, excluding any amounts held in vehicles’ fuel tanks.

Virginia agencies are required to use at least B2 biodiesel if available and feasible.

Washington (Current as of May 2014)

Washington vehicles and equipment that uses biodiesel of B20 or higher grade are exempt from fuel sales taxes until July 1, 2015. Also, a business tax reduction for the sale of biodiesel is available until July 1, 2015. At least 2% of all biodiesel sold must be biodiesel. The state’s underground tank storage laws apply to all biodiesel blends except B100.

Buildings, land and equipment used to produce biodiesel or feedstocks are exempt from state and local property taxes for 6 years after the date when the facility becomes operational; this exemption must be applied for before December 31, 2015.

Waste vegetable oil (WVO) for personal use, particularly used cooking oil and yellow grease from restaurants and commercial food processors, is exempt from sales tax.

Effective June 1, 2018 local agencies must use 100% biodiesel or other biofuels or electricity for all public vehicles, to the extent practical.

West Virginia (Current as of May 2014)

In West Virginia, school districts that use biodiesel buses can receive a 7.5% reimbursement to offset the cost of operation and maintenance; this reimbursement will decrease by 2.5% per year beginning in the 2014-2015 school year.

Wisconsin (Current as of May 2014)

Wisconsin offers a tax credit for 25% of the cost of installing or retrofitting fuel pumps for biodiesel of at least B20 grade; the maximum credit is $5000 per tax year, and the credit must be claimed within 4 years. The program expires as of December 31, 2017.

Individuals who produce biodiesel for personal use are exempted from fuel tax and other requirements for the first 1000 gallons produced each year.

The Department of Public Instruction offers financial aid to cover the incremental costs for school districts that use biodiesel. Also, state agencies are mandated to reduce the use of petroleum diesel by 25% by the year 2015.

Wyoming (Current as of May 2014)

Wyoming has no state incentives regarding biodiesel at this time.


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