We are coming very close to publishing our new multi-client on the detergent alkylate business. This includes linear alkylbenzene (LAB) and branched alkylbenzene. We hope to ship the report to subscribers by the end of this month. It certainly is an interesting time to make long term forecasts. The rapid rise of fats and oils prices due to their new linkage to energy prices through biodiesel has caught us by surprise. And how conservative Dr. Y. Basiron at the Malaysian Palm Oil Council was in February or March 2006 when he presciently suggested that Palm could rise from $350 to $500 as a result of energy linkage. The knock-on effect to coconut and palm kernel oils has impacted plans to start up 1.1 million tons of new oleo alcohol capacity in the 2006-2008 timeframe. With high lauric oil prices, the oleo alcohols are now looking less competitive against LAB. On the other hand, every day we read more and more about the ecological problems of biofuels and hard as it is to believe, we have to also consider that the ones now in use could one day be abandoned! If this is the case, then fats and oils prices could correct and oleo alcohols would become advantaged once again. Not an easy situation for a forecaster. The foregone conclusions of last year are in jeopardy today.
I have been following biodiesel for many years. We began tracking it as part of our 1992 study on glycerine and watched it as it has matured. Presentations at the various AOCS meetings have helped us keep abreast and HBI (Montmorency,F) continues to publish useful work on glycerine and biodiesel effects. This summer we worked on projects for biodiesel producers looking to access the by-product markets.
Biofuel contrarians like Prof. Pimentel or U.of California and others have started with a small voice. The discovery of the impact of burning the peat in rainforest clearing and fate of orangutans were not enough to slow the growing biofuel machine. It became sexy to politicians. Farmers were going to benefit. Perhaps farm subsidy practices would change in the US. A new energy economy looked likely to develop.
But the oversights have begun to come back to haunt the business. In the Spring, the news of a Conoco -Tyson Foods deal to make a refinery based biofuel and qualify for $1/gallon rebate seemed outrageous and out-of -bounds because those rebates were supposed to be for the little guy. But no such fine print existed. And over the year, the biodiesel blending credit has become abused as the poorly constructed legal framework left loopholes that parcel tankers could float through. It turns out that the German biodiesel market has been flooded by US exports because it is possible to import methyl esters in the US, blend them with as little as 1% diesel and qualify for the $1/gallon credit while selling the product in the established European market. The change in attitude towards biofuels has grown in September. The Financial Times reported on September 10 on a working brief for the Round Table for Sustainable Development which documents many of the problems associated with biofuels. It is located here:
http://www.rsc.org/images/biofuels_tcm18-99586.pdf
or, here:
http://media.ft.com/cms/fb8b5078-5fdb-11dc-b0fe-0000779fd2ac.pdf
More biofuels news in September included a disturbing description of events in Colombia where the military has confiscated lands to develop palm oil plantations. Biofuels Watch has a compelling first-hand report here:
http://www.biofuelwatch.org.uk/docs/colobiaenergyconferencereport.pdf
The arguments are deep and emotional at this point. A blog at Gristmill includes comments by one of the authors, Ron Steenblik of the OECD report.
http://gristmill.grist.org/story/2007/9/10/16458/2103
I certainly have to commend the wonderful intentions of the biodiesel community to provide a sustainable solution to the energy problems facing society. Certainly the production of biodiesel from recycled frying fats or purposed oils from set aside land is commendable. Virgin oils use becomes a business proposition that exists on government subsidies and supported by large lobbies. One hope is that the cultivation of Jatropha will provide a technical oils feedstock that will be less destructive. What I have read on this material is encouraging. Successful development is desperately needed.
I remain pessimistic about it all. I am discouraged by the impact the disclosures of environmental harm from unintended consequences will have on the youngsters that continue to believe in the possibility of change and hope that they will adjust and correct the path forward...
