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

1. Economics of Biofuels
Production
GRAHAM REDMAN
THE ANDERSONS CENTRE
November 2008

2. BIOETHANOL VIABILITY
Wheat cost vs petrol cost at pump
50
Wheat Value to make 1l bioethanol
45
Ex Duty/Vat Petrol ppl
ppl petrol and wheat equivalent
40
35
30
25
20
15
10
5
0
Aug-05
Aug-07
Aug-91
Aug-93
Aug-95
Aug-97
Aug-99
Aug-01
Aug-03

3. BIODIESEL VIABILITY
OSR Cost Vs Diesel at Pump
100
90
OSR Value to make 1L Biodiesel
ppl diesel and OSR equivalent
80
Ex-Duty/VAT Diesel value at pump
70
60
50
40
30
20
10
0
Jul-06
Jul-07
Jul-08
Jul-98
Jul-99
Jul-00
Jul-01
Jul-02
Jul-03
Jul-04
Jul-05

4. CHANGING VALUE OF RTFCs
80
70
60
50
RTFC ppl
40
30
20
10
0
100
50
60
70
80
20
30
40
90
110
Percentage of RTFO Target achieved

5. Biodiesel Target Cost of Production
Incomes
Sale target = forecourt ex-tax = 50p/l
Meal c£120 = +24 ppl
Glycerine ~ + 1 ppl
Duty reduction = + 20 ppl
RTFO = + 0 ppl
– 65ppl
Cost of OSR per l =
Processing costs less than 30 ppl pre April 2010
Usually 35-60p

6. COSTS OF MAKING BIODIESEL
• High capital setup (possible RDP assistance)
• Purchasing OSR, virgin oil, cooking fat,
• Opportunity cost of crushed oil
• Risks
• Management distraction
• Scale of production means rising
commitment

7. ADDING VALUE
• Single supplier or even own fleet
• Low carbon sales of primary goods
• Locally produced fuel?
• Ignore the co-products at your peril
Or:
• Grow combinable crops as before
• Benefit from an increase in buyers
• Sell to highest bidder

8. Graham Redman
THE ANDERSONS CENTRE
01664 503 200
gredman@theandersonscentre.co.uk