The Math Behind Soy Biodiesel

John Davis

The recent story of a biodiesel plant under construction near Evansville, Wisconsin that halted construction because of the high price of its feedstock, soybeans (see my November 13th, 2007 story on the issue), has prompted the local newspaper to question how economical making biodiesel really is.

This article in the Janesville (WI) Gazette breaks down how you can actually still make a buck turning about $10 of feedstock into about $3.50 of biodiesel:

Aren’t you crushing an expensive product into a cheaper one?

npp-logo1.jpgThat’s a common misconception, said Jamie Derr, owner of Sun Prairie’s Great Lakes Biofuels. But most of a bushel of beans goes to the same place it always has: the feed bunk on a dairy farm.

Here’s how one bushel of soybeans breaks down:

— One bushel weighs 66 pounds, and costs $10.29 in Chicago this week.

— Ground at a commercial solvent crush plant—like the one proposed for Evansville—that bushel makes 44 pounds of soybean meal, a high protein animal feed. That’s about $6.16 worth of feed.

— That same bushel produces 11 pounds of soy oil, about 1.4 gallons. That much oil sells for $4.73, or about $3.38 per gallon. One gallon of oil makes about one gallon of biodiesel.

— The rest is soy hulls, which are sometimes used as filler in animal feed, and waste product. Some beans are lost in the crushing process.

The article goes on to point out that consumers have shown a willingness to buy the green fuel. They just want the price to be less than or at least comparable to what they’ll pay for petroleum diesel at the pump.