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Impact of Biodiesel Production on the Glycerol Market

What is glycerol?

Glycerol (also called glycerine) is a short 3-carbon chain with a hydroxyl group on each carbon. The main natural source of glycerol is from the processing of animal and plant fats and oils (triglycerides). Triglycerides consist of three medium to long chain fatty acids linked to the three hydroxyl groups with an ester bond. The diagram below shows a triglyceride with the three carbon backbone of the glycerol part of the molecule circled.

In most industrial application of triglycerides, the fatty acid chains are cut from the triglyceride molecule by breaking the ester bonds. The fatty acids are directly converted into another material such as soap or biodiesel, or separated for later conversion into a wide range of products. The glycerol is usually obtained as a crude solution of glycerol in water with various contaminants. This crude glycerol is purified up to typically 99.5% glycerol before use. The structure of glycerol is:

The key fact from the commercial point of view is that for every tonne of triglyceride you use for industrial purposes you produce about 100kg of glycerol. The value that can be

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generated from glycerol is very important in the overall economics of triglyceride use. It is too large a co-product stream to be economically disposed of. It has to find a market. Glycerol can also be produced from petrochemical sources. Usually from a commodity chemical produced in large quantities called epichlorohydrin:

O Cl H H H

The balance between the price and availability of synthetic glycerol and natural glycerol has historically defined the structure of the markets.

Traditional markets for glycerol

Glycerol has found many different applications, both as a material in its own right, for example as a food ingredient or a plasticiser, and as a chemical building block for other materials. Major applications include: Food and drink: ? Manufacture of mono- and di-glycerides for use as emulsifiers ? Manufacture of polyglycerol esters for shortenings ? Used as filler and sweetener in low-fat food products such as cookies ? Used as a humectant and sweetener in a wide range of products ­ keeps cakes moist Pharmaceuticals : ? Used as a lubricant and humectant in pharmaceutical preparations; such as suppositories, cough syrups and expectorants Personal care: ? Used in a wide range of personal care products as an emollient, humectant, solvent and lubricant; including skin care, hair care, toothpastes, shaving creams and soaps Polymers: ? Producing polyether polyols for polyurethane foams and other flexible foams ? As a plasticiser in cellophane ? Production of alkyd resins for paints and coatings. Explosives.

Price development for glycerol

From the 1970s until the last few years, high purity natural glycerine had a fairly stable price from about $1200 per tonne to $1800 per tonne. This was based on stable markets

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and production. Prices often surged outside these ranges, but sustained high prices made it worthwhile for users to reformulate with alternative materials such as sorbitol and synthetic glycerol, whereas sustained low prices encouraged its use in other applications, pushing out petrochemical materials. This relatively stable market was dramatically altered by the arrival of biodiesel. Here the economics of the process were dominated by government subsidies and mandated use in road fuel. This meant that there was no need to obtain historical prices for glycerol to make the whole product complex work; whereas for the traditional oleochemical industry glycerol value was essential to their business model. Although the oleochemical industry knew that biodiesel would happen, and would be big, in the mid 1990s, they were unable to take any effective action. Increasing quantities of glycerol began to be dumped into a relatively inelastic market, and by 2005 prices were in free fall. The volumes of new glycerol are huge and increasing. Announced plans will add 2.2 MT of glycerol to current production in the USA and EU by 2010. In 2005 the total world demand for glycerol was estimated at 900 kT. The production of glycerol is becoming dominated by new players, including very large agribusiness such as Cargill and Archer Daniels Midland. As recently as 2003 glycerol prices were around $1200 per tonne. Today prices are around $600 per tonne and falling.

Some traditional oleochemical producers have for strategic purposes valued future streams of glycerol at the fuel value (which depends on the purity) at around 450 - 550 per tonne. This includes significant processing costs to raise the purity of the glycerol so that it can be burned. Glycerol is a pretty poor fuel. One producer commented privately that the fall in value of the glycerol stream had halved the profitability of the company. The value of crude glycerol has also dropped. Current prices in the US are quoted at $0 - $70 per tonne. M biodiesel producers attach zero value to the crude glycerol, and at ost least some producers have to pay for transport to a purification unit. Crude glycerol can be assumed to have a negative value on the future.

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Industry actions

A lot of work is underway to exploit the glycerol stream from biodiesel more effectively. People are both trying to add value to the stream to claw back some of the lost profitability, and exploiting the low price to find additional markets. Natural glycerol is already pushing out some petrochemical products from established niches. Propylene glycol is used as a humectant in tobacco and cosmetics, and with natural glycerol now lower in price than propylene glycol, some of these markets will switch. As noted earlier, a traditional route to synthetic glycerol was via epichlorohydrin. The price of glycerol is now so low that Solvay is constructing a plant to convert natural glycerol into epichlorohydrin as this is now expected to be cheaper than the petrochemical route to epichlorohydrin from propylene. There is a huge amount of academic research on converting glycerol to more useful building blocks. Examples include: Glycidol:

O H H O H H

O Cl Which is similar to epichlorohydrin H H H

1, 2 propanediol:

OH HO CH3 Also known as propylene glycol. Has applications in antifreeze, as a

humectant, and as a chemical building block. Current price about $1800 per tonne, with a market growing at >10% p.a. 1, 3 propanediol:

HO OH

This is an important polymer building block. Traditionally produced from petrochemical sources, DuPont and Tate & Lyle are building a plant to produce 1, 3 propanediol by fermentation and chemical processing from sugar. They expect this to be cost competitive. Researchers are now looking for a route from glycerol. Of these examples, 1, 2 propanediol is closest to commercialisation. Archer Daniel Midland is currently constructing a plant to produce it from biodiesel glycerol and Synergy Chemicals has the rights to a new catalytic route which was awarded the 2006 Presidential Green Chemistry Award in the US. This has an expected conversion cost of $770 per tonne including depreciation on plant, and is therefore commercially viable at current 1, 2 propanediol prices and crude glycerol costs.

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It is important to note that the actions being taken by industry assume a continuing very low cost for both crude and refined glycerine. None of these activities make any sense at historic glycerol prices. It is therefore probable that the glycerine side stream from biodiesel production will add nothing to the income from a plant for the foreseeable future.

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