Biodiesel

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Biodiesel has been in commercial production in Europe since 1991 and in the United States since 1998. It has emerged as a clean and renewable alternate fuel with a number of advantages over conventional mineral diesel:

• renewable fuel, non-toxic and rapidly biodegradable
• produces almost 80 per cent. less lifecycle CO2 emissions than mineral diesel
• helps toward lower particulate exhaust emissions and reduces carcinogenic impact
• improves lubricity, even in blends with low-sulphur diesel
• higher cetane number than mineral diesel, thus ensuring quick engine start-up in cold climates
• can be used without modification to the engine
• in a low percentage blend, it can be supplied using the existing fuel supply infrastructure through standard diesel pump equipment
• its high flashpoint makes it a safer fuel to handle than any conventional fuel

Biodiesel Markets

The European market is the most well developed biodiesel market because of the legislative environment for the use of renewable fuels in road transport. It also has distributor support and consumer acceptance. Germany, France and Italy are the largest consumer markets among the Member States of the EU. An EU directive of 10 per cent. biofuels consumption by 2020 should push demand from 6 million tonnes to nearly 14 million tonnes per annum in Europe. Europe is therefore our main target market.

We believe the rapid development of other geographical markets will continue over the next 18 months, including those in Asia and the USA, which is introducing a mandatory increase in the use of renewable transport fuels aiming for 15 per cent of fuels by 2017.

Based on the legislative targets of various countries, Biofutures expects global biodiesel demand to at least treble by 2010.

Feedstock

Biodiesel can be produced from a variety of feedstocks including vegetable oils such as rapeseed oil, sunflower oil, palm oil, soybean oil, coconut oil, jatropha, tallow and waste cooking oil. In Europe, over 75 per cent. of biodiesel production volume uses rapeseed oil as a feedstock. We intend to use palm oil which has a far higher yield per acre than any other current vegetable oil and which is abundant in its proposed area of operation. However, our plant in Malaysia will be capable of using other feedstocks.

Blending

Biodiesel can be used in a pure form (B100) or blended with mineral diesel in a variety of proportions. B5 (a blend containing 5 per cent. biodiesel and 95 per cent. mineral diesel) is commonly supplied in Europe. We anticipate that as the European renewable fuels targets are raised, the commonly supplied blend ratio is also likely to rise. It is also anticipated that the end market for most of the palm oil biodiesel produced by us in the early stage will be sold into the B5 (distribution to all motorists through high street filling stations) and B5+ (usually for distribution to centrally fuelled fleets) markets.

In some market segments there is a requirement to deliver biodiesel to European standard EN14214. Biofutures intends to produce palm oil biodiesel to EN14214 specification with the exception of the cold filter plugging point (CFPP). For retail blends of B5 biodiesel or below, the CFPP properties of the blend become indistinguishable from those of the petroleum diesel fuel in the blend. Thus the blend meets the required diesel specification. In practice most biodiesel is sold blended with petroleum diesel, typically in B5 and B20 proportions. Such biodiesel blends have been used in a variety of climates, including extreme cold, without cold flow problems.