As biodiesel production soars, so does crude natural glycerin. With up to 400 million additional gallons of biodiesel production being built or on the drawing board, it’s clearly evident glycerin is becoming a significant issue.
As with most industries, the U.S. glycerin market is representative of the world markets. Europe has been facing excess glycerin production issues for years since its biodiesel production began booming. “Biodiesel has taken off around the world,” says the National Biodiesel Board’s (NBB) Steve Howell. “Glycerin is very much a global market.”
In addition, the growing oleochemical industry in Asia is producing glycerin by the barge-load. Much of it had been exported to the United States, but with rising freight costs, a majority of it is now shipped to China.
European companies are striving to stay ahead of the glycerin explosion. In early 2006, international chemical company Solvay announced plans to build a 10,000 metric-ton-per-year epicholorohydrin plant in France. The plant will manufacture glycerin products to make epoxy resins, paper-reinforcing agents and other products. Other companies are proposing similar projects.
Meanwhile, the U.S. synthetic glycerin market has taken quite a beating. Synthetic glycerin is petroleum-based, where natural glycerin—such as that produced during biodiesel production—is created from fats and oils. Dow Chemical was once the nation’s only producer of synthetic glycerin. It closed its Freeport, Texas, plant in January, citing—in part—the flood of glycerin from biodiesel production. Dow Chemical still operates a glycerin plant in Germany.
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“There is quite a synthetic market that’s been upset,” says Jim Conway, vice president of sales for Kentucky biodiesel producer Griffin Industries. “We are beginning to produce more than the market can bear under the current scheme of things.”
Annual consumption of glycerin in the United States has ranged between 400 million and 450 million pounds for the past three years. Domestic production figures show that approximately 400 million pounds per year was produced heading into the turn of the century.
The U.S. biodiesel industry is expected to produce an estimated 1.4 billion pounds of glycerin valued at $289 million between 2006 and 2015, according to an economic study by John Urbanchuk, director of LECG Inc. According to projections gleaned from NBB estimates, the industry could produce as much as 200 million pounds this year alone. Crude glycerin that once fetched between 20 and 25 cents per pound is now edging closer to 5 cents and lower.
Some companies are trying to hedge against crude glycerin by refining their own. Purada Processing already operates a glycerin refinery at its biodiesel plant in Lakeland, Fla. Cargill built its own refinery collocated with its 37.5 MMgy biodiesel plant in Iowa Falls, Iowa, making it the first company in North America to combine soybean crushing, biodiesel production and United States Pharmaceutical-grade glycerin production at one plant. In early August, Cargill announced a second similar facility for Kansas City, Mo.
While constructing glycerin refineries is a viable option for companies like Cargill and Archer Daniels Midland Co. (ADM), most biodiesel producers have to play with the market presented to them. And with glycerin prices at historical lows, it hasn’t been easy.
“Not every biodiesel plant is big enough to justify the capability to upgrade the crude glycerin,” says Bill Downey, vice president and head of Kline Co.’s petroleum and energy consulting practice. “The right-sized biodiesel suppliers will win with more feasible project economics based on the sale of a by-product that would otherwise be discarded.”
As much as glycerin prices have taken a downturn, anyone involved in the biodiesel industry knows that the issues surrounding glycerin haven’t slowed down progress whatsoever. “Low prices for glycerin aren’t having a negative impact on putting up biodiesel plants,” Howell says. “They are going up fairly quickly. If we would have higher-value uses for glycerin, it would make biodiesel economics that much better.”
Beyond the Economics
After digesting the current market specifics, what potential is there for biodiesel-derived crude glycerin? For one, some experts believe the glycerin markets will stabilize and even rebound once demand for new applications hit the market.
This fall, market research firm Kline & Co. is launching a study, “Global Business Opportunities in Biodiesel Fuels, 2006-2010,” to determine the potential market swings. The study is expected to provide a comprehensive analysis of the global market for biodiesel, including manufacturing cost economics for glycerin.
Beyond the actual production and marketing of glycerin are end-users. Everyone Biodiesel Magazine spoke with for this article agreed that there is no catch-all answer in respect to a new market for biodiesel-production-derived glycerin. “I don’t know of any silver bullets,” Howell says. “If there were, companies like Procter & Gamble and Cognis would already be doing it.”
While some community-based biodiesel producers tout soap-making or aerobic composting as potential solutions, they won’t make a dent at large-scale commercial operations. The most likely uses will be in replacing petroleum-based chemicals and in a variety of newfound applications. While studies on new uses are relatively few and far between, they are certainly picking up steam.
Until the past few years, not even the NBB focused much attention on glycerin. Understandably, that was at a time when crude glycerin prices weren’t nearing rock bottom. “Recently, finding new uses for glycerin has worked its way up the priority list,” Howell says. In fact, the NBB is supporting a Glycerin Innovation Award to encourage researchers and academia to utilize budgets to focus on uses for crude glycerin (see page 44).
Now even Decatur, Ill.-based ADM is throwing its significant weight behind exploring new uses. In mid-July, ADM scientist Paul Bloom told a crowd at a two-day biomass conference in Grand Forks, N.D., that his company plans to develop and produce industrial products like propylene glycol and other “large-volume” chemicals from glycerin (see “The ‘Peak’ Role of Biofuels,” August 2006). In November 2005, ADM announced plans to build a polyols facility that would use glycerin-based feedstocks to produce propylene glycol and ethylene glycol.
An Energy Source
Renewable Energy Group’s Myron Danzer says despite the glycerin market’s fallout, it does have a floor. With any material, the floor is its value as an energy source, and with the crude glycerin market reaching basement levels, feed and fuel trials are becoming a real possibility.
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