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Growth and Direction of the Biodiesel Industry in the United States, The


  • Nick D. Paulson
  • Roger G. Ginder


The biodiesel industry in the United States has realized significant growth over the past decade through large increases in annual production and production capacity and a transition from smaller batch plants to larger-scale continuous producers. The larger, continuous-flow plants provide operating cost advantages over the smaller batch plants through their ability to capture co-products and reuse certain components in the production process. This paper uses a simple capital budgeting model developed by the authors along with production data supplied by industry sources to estimate production costs, return-on-investment levels, and break-even conditions for two common plant sizes (30 and 60 million gallon annual capacities) over a range of biodiesel and feedstock price levels. The analysis shows that the larger plant realizes returns to scale in both labor and capital costs, enabling the larger plant to pay up to $0.015 more per pound for the feedstock to achieve equivalent return levels as the smaller plant under the same conditions. The paper contributes to the growing literature on the biodiesel industry by using the most current conversion rates for the production technology and current price levels to estimate biodiesel production costs and potential plant performance, providing a useful follow-up to previous studies.

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  • Nick D. Paulson & Roger G. Ginder, 2007. "Growth and Direction of the Biodiesel Industry in the United States, The," Center for Agricultural and Rural Development (CARD) Publications 07-wp448, Center for Agricultural and Rural Development (CARD) at Iowa State University.
  • Handle: RePEc:ias:cpaper:07-wp448

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    References listed on IDEAS

    1. Vanwechel, Tamara & Gustafson, Cole R. & Leistritz, F. Larry, 2002. "Economic Feasibility Of Biodiesel Production In North Dakota," Agribusiness & Applied Economics Report 23565, North Dakota State University, Department of Agribusiness and Applied Economics.
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    Cited by:

    1. Budžaki, Sandra & Miljić, Goran & Sundaram, Smitha & Tišma, Marina & Hessel, Volker, 2018. "Cost analysis of enzymatic biodiesel production in small-scaled packed-bed reactors," Applied Energy, Elsevier, vol. 210(C), pages 268-278.
    2. Jeremy Porter & Philip Mason & Frank Howell, 2013. "Metropolitan Influence and Land Use Competition in Potential Biomass Crop Production: A Spatial Demographic Analysis," Population Research and Policy Review, Springer;Southern Demographic Association (SDA), vol. 32(2), pages 285-310, April.
    3. Mindy L. Baker & Dermot J. Hayes & Bruce A. Babcock, 2008. "Crop-Based Biofuel Production under Acreage Constraints and Uncertainty," Center for Agricultural and Rural Development (CARD) Publications 08-wp460, Center for Agricultural and Rural Development (CARD) at Iowa State University.
    4. Mindy L. Mallory & Dermot J. Hayes & Bruce A. Babcock, 2011. "Crop-Based Biofuel Production with Acreage Competition and Uncertainty," Land Economics, University of Wisconsin Press, vol. 87(4), pages 610-627.
    5. Rishibha Dixit & Surendra Singh & Manoj Kumar Enamala & Alok Patel, 2022. "Effect of Various Growth Medium on the Physiology and De Novo Lipogenesis of a Freshwater Microalga Scenedesmus rotundus -MG910488 under Autotrophic Condition," Clean Technol., MDPI, vol. 4(3), pages 1-19, August.
    6. Van Thang Duong & Yan Li & Ekaterina Nowak & Peer M. Schenk, 2012. "Microalgae Isolation and Selection for Prospective Biodiesel Production," Energies, MDPI, vol. 5(6), pages 1-15, June.
    7. Outlaw, Joe L. & Burnquist, Heloisa Lee & Ribera, Luis A., 2007. "Bioenergy--Agricultural Issues and Outlook," 2007 NAAMIC Workshop IV: Contemporary Drivers of Integration 163901, North American Agrifood Market Integration Consortium (NAAMIC).
    8. Babcock, Bruce A. & Carriquiry, Miguel A., 2017. "Nested biofuels mandates: impacts of policy product differentiation on commodity markets," 2017 Annual Meeting, July 30-August 1, Chicago, Illinois 258562, Agricultural and Applied Economics Association.
    9. Carriquiry, Miguel A. & Du, Xiaodong & Timilsina, Govinda R., 2011. "Second generation biofuels: Economics and policies," Energy Policy, Elsevier, vol. 39(7), pages 4222-4234, July.

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    biodiesel; biofuels; feedstock; production costs; return on investment.;
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