Growth and Direction of the Biodiesel Industry in the United States, The
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.
|Date of creation:||May 2007|
|Date of revision:|
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- Vanwechel, Tamara & Gustafson, Cole R. & Leistritz, F. Larry, 2003.
"Economic Feasibility Of Biodiesel Production In North Dakota,"
2003 Annual meeting, July 27-30, Montreal, Canada
21928, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
- 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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