Given the potential impacts of biodiesel production on the edible oils market, Section 3 and 4 assess the potential implications in some detail.
The utilization of biodiesel is not new, since it has been used as a substitute for mineral diesel since early 20th century, but in small quantities. What is new is that from 2005 onwards biodiesel production and use has increased significantly, spearheaded by the EU (mostly in Germany and France), currently responsible for about 80% of the world production. Despite this European dominance, biodiesel production is expected to stabilize in the coming years in the EU, with substantial growth expected in South America (Brazil, Argentina and Colombia) and Asia, as explained in this study.
One of the most serious obstacles to the expansion of the biodiesel industry is the cost of the raw material which can easily represents 60 to over 80% of the total costs, though there are considerable geographical variations depending on the feedstock and local conditions. Therefore, availability of feedstock, cheaply and in large scale, is fundamental to the expansion of this industry. There are two major factors to take into consideration when dealing with feedstocks for biodiesel production. Firstly, is the source, and secondly is composition. In the first case it is important to know if the oil is derived from food on non-food crops; the second consideration is to know the composition of the oil and how appropriate it is as a feedstock (e.g., see Karman, Rowland & Smith, 2008).
Despite the considerable potential of biodiesel, given the growing demand for edible oils and the high cost of the feedstock, this potential may be rather limited in the future unless biodiesel can be extracted from other raw material. Other important constraint is its sustainability, as the extension of land required for biodiesel production is considerable larger than in the case of bioethanol. The extent to which biodiesel may become eventually a global commodity remains uncertain, but it is highly unlikely that it will reach the same level as bioethanol.