by Barnaby Meins

Created on: January 11, 2008

With the auto population increasing in America, the demands for alternative fuels, which are renewable, continue to rise. However, the most promising alternative fuel as of the current situation is biomass, where it is fast becoming a major opportunity for investors. In the biomass energy segment, biodiesel is a key area which many are starting to focus on to meet the demand of the American auto industry.

In brief, biodiesel is a biofuel made for diesel-powered machines. Chemically speaking, they are monoalkyl esters of long-chain fatty acids from transesterification of oils derived from renewable lipid feedstocks, such as palm oil, soybeans and jatropha.

-Benefits of biodiesel-
Biodiesel is a clean and renewable fuel to other energy sources like petroleum diesel fuel, which means using it reduces air pollution and relieves fossil fuels reliance. Jatropha nut has been an increasing favourite raw material over others for biodiesel production because the plant can survive in tough conditions and it is inedible. Thus, it will not compete with other crops for valuable fertile land and the production will not be at the deprivation of food supplies. There are developing new technologies, such as, enzymes usage to speed up the production rate, removing the extreme condition requirements.

According to a United Nations official, biofuels like biodiesel is expected to provide for 25% of the world's energy needs (Paul, 2007). Although the use of biodiesel locally is still in its infancy, biodiesel is projected to serve ready markets in Asia, Europe and United States. The European Union has mandated that 2% of petrol-based diesel must be mixed with biodiesel (Seng, 2007). There are plans to augment biodiesel blend to 5% in South Korea and to tighten diesel sulphur standards in Japan (Chan, 2007). Already, biodiesel blends is compulsory in Thailand while India wants to substitute 5% of the diesel consumption with biodiesel (Mukherji and Ramachandran, 2006). As such, the emergent biodiesel market is estimated to be worth US$1 trillion by 2020 (Wong, 2006).
Besides, biodiesel's byproduct, glycerin is used to make plastics, cosmetics and drugs (Seng, 2007). Interestingly, jatropha's medical properties can be utilised for the treatment of infections and body aches (Mukherji and Ramachandran, 2006).

-Uncertainty in biodiesel business-
Rising prices of the biodiesel supplies and decreasing diesel price is shaking investors' confidence. Feedstock's costs comprise 80% of biodiesel production

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