A recent study by the University of Georgia shows the state annually produces about 55 million gallons of oilseeds and animal fats from which biodiesel could be made.

The study — conducted by economists from the university’s Center for Agribusiness and Economic Development - found that Georgia could supply a moderate-sized biodiesel plant, providing an economic impact of $8 million and contributing $800,0000 in state taxes each year.

Georgia faces two issues that may provide a unique opportunity for rural economic growth, states the study. The first issue is that major urban areas of the state have air quality problems, with a major pollution source being exhaust emissions from cars and trucks. The use of alternative fuels such as biodiesel can significantly reduce certain exhaust emissions, thus reducing pollution and improving air quality.

The second issue, say the economists, is depressed crop farm incomes due to low market prices for the many oilseeds produced. Prices for soybeans, cottonseed and crush-quality peanuts have been at very low levels for the past four years. These low prices have reduced farm incomes. In addition, the disposal of animal fat by-products and spent vegetable oils may become increasingly difficult in the future.

The opportunity for economic growth, says the study, resides in the processing of these oilseeds and other suitable Georgia-produced feedstocks into biodiesel. The new fuel can be used by vehicles, and it can provide another market for Georgia-produced oilseeds while creating a value-added market for animal fats and spent oils.

The study lists the following benefits of using biodiesel as a blended fuel in diesel engines: biodiesel has a lower flash point than petroleum diesel and thus helps to prevent damaging fires; biodiesel burns cleaner than petroleum diesel and thus reduces particulate matter which will lower emissions of nitrogen, carbon monoxide and unburned hydrocarbons; the odor of burned biodiesel fuel is considered by many to be less offensive than petroleum diesel; there are only limited or no needed modifications to current engines to use biodiesel; there would be no need to change the transportation and storage systems to handle biodiesel; biodiesel acts similarly to petroleum for engine performance and mileage; and biodiesel dissipates engine heat better than petroleum diesel.

The study further states that there would be a healthy demand in Georgia for biodiesel. According to the Petroleum Marketing Monthly — published by the Energy Information Administration — 4.64 million gallons of diesel were sold per day in Georgia in 2000. This included all diesels, low and high sulfur, auto and farm, amounting to about 3.89 percent of the national annual demand.

The technology of converting vegetable oils and animal fats into biodiesel is well established, with the "methyl ester process" being the most economical and widely used.

Major feedstocks for the methyl ester process currently are available in Georgia, according to the study, including soybean oil, cottonseed oil, peanut oil, spent restaurant fats and rendered poultry fats. Other feedstocks suitable for the conversion process but not currently readily available in the state include canola oil, beef tallow and rendered pork fat.

It appears that there is an adequate supply of oils and fats available in or near Georgia to produce biodiesel. Two existing firms crush peanuts and cotton seed, producing an estimated 9.6 million gallons of vegetable oil per year. A farmer oilseed cooperative — currently being constructed in Georgia — could produce another 13 million gallons, primarily from soybeans and canola. A large soybean crushing facility in the southeastern part of South Carolina also could be a supplier, producing about 17 million gallons per year.

With poultry being the leading agricultural commodity in the state, it’s estimated that 7.2 billion pounds of birds are slaughtered in Georgia, producing a high volume of broiler fat. Another potential feedstock is spent fats or yellow grease from the food service industry.

It appears, says the study, that only a limited supply of viable feedstocks exist in Georgia for a large-scale biodiesel operation. One of the problems is the high concentration of the state’s poultry industry, demanding similar feedstock for poultry feed. Another problem is the other uses for recycled oil and beef tallow existing in the Southeast with soap, lubricant, cosmetics and further processing of poultry.

The Center for Agribusiness and Economic Development hired a consulting firm specializing in vegetable oil processing to assess the capital cost of various sized biodiesel production facilities. Four different sizes of plants were evaluated, with the capital cost ranging from $950,000 to $15 million depending on the capacity of the operation. The feedstock needed to run at full capacity ranged from 3.75 million pounds at the smallest level of production up to 225 million pounds.

The study concludes that the most appropriate size facility for Georgia is one that would produce about 15 million gallons of biodiesel per year with a capital cost of about $9.6 million.

Direct output of the 15-million gallon plant is estimated at $17.4 million annually. The leads to indirect sales in the Georgia economy of $16.9 million. In total, the economic impact of sales of the plant will be $34.3 million. Fourteen jobs will be created at the plant, with the plant’s operation leading to another 119 jobs statewide. State and local non-education tax revenues will increase by $2 million per year.

A 15-million gallon biodiesel plant, estimates the study, would require about 27 percent of the vegetable and animal fats currently available within Georgia. Lacking government mandates or subsidies, a feedstock cost of above 10 cents per pound or less - given current diesel prices - would be needed for biodiesel to be competitive.

e-mail: phollis@primediabusiness.com