By Sam Lines
The sharp rise in world biodiesel production has created a glut of glycerol, which is a by-product of the transesterification process. Glycerol has many commercial and industrial uses, and is generally considered a relatively valuable product, but the current glut has caused the bottom to fall out of the market. In order to both improve the economics of the biodiesel production process and put this waste stream to good use, new markets must be found. There are several ways in which this might happen, but biodiesel producers need to make this a priority if they are to reap the benefits of this unused resource.
An Exploding Market?
Biodiesel is a fast growing product in both the United States and Europe as government policies seek to spur the development of renewable transportation fuels. In the US alone since 2004, biodiesel production has grown from 75 million gallons per year to 650 million gallons per year in 2008 (Biodiesel 2020, 2008). While the production of biodiesel is beginning to have an effect on the liquid fuels market, it has already had an enormous effect on the market for another good, glycerol.
When bio-crude goes through the transesterification process to become biodiesel, glycerol is a by-product of the chemical reaction, and in no insignificant amount. This transesterification process yields 100kg of glycerol for every metric tonne of biodiesel produced, a 10% yield (Glycerol Challenge, 2009). Total world biodiesel production in 2008 was estimated to be roughly 12.24 million metric tonnes, and this number is rapidly growing (Biodiesel 2020, 2008). This means that 1.224 million metric tonnes of crude glycerol was produced from the biodiesel conversion processes alone. The total world market for refined glycerol was estimated to be roughly 900,000 metric tonnes in 2005 (Impact of Biodiesel Production on the Glycerol Market, 2006). It is apparent that we are already facing a global glut of glycerol, a glut which is certain to worsen before it can improve.
Compare this market effect to the market for one of the major by-products of the distillation of ethanol from corn, dried distillers grains and solvents (DDGS). DDGS are commonly used in animal feeds around the world, and have select additional uses. With the recent ramping up in corn-based ethanol production throughout the world, mostly occurring in the U.S., DDGS stocks have risen sharply. However, looking at overall potential U.S. demand for DDGS, there seems to still be some room for market growth in this area, which will continue to keep the economics of ethanol more attractive until it hits this ceiling and DDGS prices begin to fall. The table attached hereto shows the global markets for both glycerol and DDGS (Christiansen, 2009). These estimates are a simplification, as the true markets are more nuanced, but they depict the overall trend accurately. The crude glycerol market is tapped out at the moment, but not necessarily for the reasons that we might initially suppose.
This market glut has had a mixed effect on prices of glycerol worldwide depending upon whether one looks at the crude or refined product. Glycerol taken from the biodiesel production process is about 80% pure, whereas refined glycerol is at 99.5% purity, after undergoing a highly energy intensive refining process. With the rapid rise in the availability of crude glycerol worldwide due to biodiesel production, there has been a refining bottleneck, as current refineries have hit the limits of their capacity. As such, the prices for refined glycerol have not varied inversely with biodiesel production, as might be expected. Instead, prices halved between 2003 and 2006, while growing 69% between July 2007 and July 2008 as a result of other exogenous factors (Soyatech, 2008). Prices for crude glycerol, on the other hand, have fallen through the floor, dropping close to zero and even negative as producers are forced to pay to have it taken away from their plants and incinerated (Impact of Biodiesel Production on the Glycerol Market, 2006). This may only be a short term trend, however. Glycerol is not a waste product, and in fact has been a staple chemical compound in the world economy for many years. There is reason to believe that as refining capacity catches up to the supply of the crude product, and new uses for glycerol are found, its price may rebound, potentially improving the economics of biodiesel production.
Glycerol is used for a variety of purposes across many different industries. The following is a list of current uses of glycerol:
- Food – glycerol is used as an artificial sweetener, especially in low-fat foods, since it is better for blood pressure than sugar. It is also used as a thickening agent and an ester in shortenings and margarine. It also can be used as a substitute ingredient in animal feed.
- Basic Materials – Glycerol be used as a substitute for petroleum-based polypropelene, a textile, and in both rigid and flexible industrial foams. It is also used as a building block for many different kinds of industrial chemicals.
- Pharmaceuticals – Used as an additive in cough syrup, toothpaste, skin care, hair care soap and many others.
- Explosives – The compound nitroglycerin, made with glycerol, is commonly used in all types of explosives.
- Other – Used as an ingredient in antifreeze, hydraulic fluids, plasticizers (List assembled from many different sources)
While glycerol appears to be quite a versatile substance, one that might be able to withstand slack demand in any one or two categories, it is unclear whether any of these markets possess the necessary elasticity to soak up the extra supply due to biodiesel production. The falling price of crude glycerol could cause some glycerol-based products to substitute for other similar products derived from other sources, but this market shift is not guaranteed to happen, and its magnitude is impossible to predict. But the bottoming of the glycerol market has led to increasing focus on finding these substitutes.
For instance, researchers at the University of Arkansas’ Center of Excellence for Poultry Science have initiated studies that substitute glycerol in chicken feed. The study showed that up to 5% substitution of glycerol in chicken feed showed no negative effects on growth (Combating the Glycerin Glut, 2006). Given the immense volume of the global poultry feed market, not to mention the entire animal feed market, this is a huge potential growth area for refined glycerol. While this will not necessarily provide direct benefits to a biodiesel producer, since this application depends upon a low price of crude and refined glycerol, this does provide larger economic benefits to society.
An even greater upside to the bottoming of glycerol prices has been exploration into its use as an energy feedstock. Scientists at Hiroshima University successfully distilled ethanol from glycerol produced from biodiesel transesterification with the use of a catalyst called Enterobacter aerogenes HU-101 (Ito, 2005). While this science is still in its infancy, it holds a lot of promise in being able to convert glycerol into useful energy. This could potentially feed into the idea of a sustainable refinery which utilizes all of the products and by-products of the biodiesel conversion process, refining and producing them all on site. This example and the animal feed example above are only a couple representations of the progress that is being made as companies seek new processes to utilize this waste stream.
The above evidence suggest that there is still potential for the economics of the biodiesel conversion process to improve if more markets can be found for crude and refined glycerol. This is a valuable and versatile feedstock with many different uses, not only for high-value uses, but also potentially as an energy feedstock once the science catches up. It is important that biodiesel producers focus as much on their by-products are their core products if they seek to maximize the value and efficiency of the conversion process. Glycerol production is only going to increase, so it behooves us to find something useful to do with it.
Biodiesel 2020: A Global Market Survey, 2. E. (2008). Biodiesel 2020.
Emerging Markets Online. Christiansen, R. C. (2009, March). DDGS: Supplying Demand. Ethanol Producer Magazine . Combating the Glycerin Glut. (2006). Retrieved from http://www.biodieselmagazine.com/article.jsp?article_id=1123&q=&page=2.
Glycerol Challenge. (2009). Retrieved from http://www.theglycerolchallenge.org/.
(2006). Impact of Biodiesel Production on the Glycerol Market. Miller Klein Associates.
Ito, T. e. (2005). Hydrogen and Ethanol production from glycerol-containing wastes discharged after biodiesel manufacturing process. Journal of Bioscience and Bioengineering .
Soyatech. (2008). Retrieved from http://www.soyatech.com/print_news.php?id=10355.
Wikipedia. (2009). Retrieved from http://en.wikipedia.org/wiki/Biodiesel.