In quest for energy, biofuels gaining ground
For more than 130 years, Darling International has operated in a little-known corner of U.S. industry, breaking down the leftovers of the meat industry for products including cattle feed and cosmetics.
Then last month the Irving, Texas-based rendering giant announced it was entering the biofuels market. Partnered with Valero Energy Corp., Darling was beginning production at a $425 million plant in Louisiana converting animal fat into fuel.
Biofuels "make up between 25 and 30 percent of sales in fats and oils now," said Tom Cook, president of the National Renderers Association. "It's provided a whole new outlet that just adds to the traditional market, which is primarily animal feed."
From soybean farmers to used cooking oil recyclers, recent growth in the biofuels sector has given industries that trade in organic matter an unexpected entree into the energy sector.
Last year biofuels accounted for more than 7 percent of U.S. transportation and heating fuel. From coast to coast, ethanol and biodiesel are being increasingly mixed with traditional petroleum-based products to run cars and trucks.
In 2005, Congress mandated that refineries add greater amounts of biofuel to the fuel stream. So far that has largely benefited the ethanol industry, which turns corn into motor fuel.
But with the federal mandates starting to shift emphasis to other fuels like biodiesel and renewable diesel, that should change in the next decade, said Ben Evans, a spokesman for the National Biodiesel Board.
"Biodiesel is never going to be the only source of fuel. It's never going to overtake petroleum," Evans said. "But right now the transportation fuels market is completely dominated by the petroleum sector.
"We think the market would look a lot better if it was more diversified, like the electricity market, which is very diversified and much more stable."
For now, the bulk of biodiesel comes from a network of smaller producers, Evans said.
Jason Burroughs, owner of Austin-based DieselGreen Fuels, sells between 5,000 and 6,000 gallons of pure biodiesel a month in Austin and Dallas. He uses the recycled cooking oil his company collects from restaurants.
But operations hit a snag recently. The biodiesel plant he had used shut down, forcing him to buy the fuel on the open market and resell it to his customers.
"It's the same net environmental impact. It just doesn't work out as well for us economically," he said.
Whether the industry can expand beyond the government mandates remains an open question. But already those that produce so-called feedstocks like soybean oil and animal fat suppliers are feeling an economic boost.
U.S. animal rendering operations have struggled in recent years, after cattle herds were thinned by drought, Cook said. But demand from the biofuels industry has provided a surprising boost. Prices on products such as tallow are up more than 50 percent since 2007.
Farmers have seen a similar benefit. A 2011 study by Purdue University found high demand from the biofuels sector had led to rising prices on crops such as soybeans and corn.
Concern that rising biofuel demand will lead to a spike in food prices is pushing scientists to look for fuel sources outside the food supply.
Some hope that algae, of which there is near-limitless supply across the world's oceans, can one day fill that void.
But the technology to convert algae into an economically viable fuel has not been developed yet, said Arthur Ragauskas, a chemistry professor at Georgia Tech who works on developing new biofuel technologies.
See more about comments here.