Why Biodiesel May Not Be the Miracle Fuel You Think

With more retailers being incented to offer biodiesel, and regular diesel becoming nearly extinct for owners of diesel-fueled cars, it is important to ask whether biodiesel actually helps or harms diesel-fueled vehicles. And are the environment benefits as great as we’re led to believe?

Aug 12, 2014 at 9:58AM

This article was written by Oilprice.com -- the leading provider of energy news in the world. 

Nine years ago, U.S. President George W. Bush passed the Renewable Fuel Standard (RFS) with the goal of lessening America's dependence on foreign oil supplies and reducing greenhouse gas emissions.

The RFS mandated that a certain percentage of transportation fuel sold in the U.S. contain ethanol, which is mostly produced from corn. Two years later, the standard was expanded to include biodiesel, derived from vegetable oils such as rapeseed or palm oils.

With more retailers being incented to offer biodiesel, and regular diesel becoming nearly extinct for owners of diesel-fueled cars, it is important to ask whether biodiesel actually helps or harms diesel-fueled vehicles. And are the environment benefits as great as we're led to believe?

The U.S. and Europe have both implemented government programs to mandate the increased use of biofuels. In Europe, the Renewable Energy Directive requires that 10 percent of transportation fuels come from renewable sources by 2020. In the States, the Environmental Protection Agency (EPA) sets a biofuel mandate each year that mandates the proportion of biofuel that must be blended with regular gasoline.

Several U.S. states have implemented laws to encourage the use of biodiesel. Illinois has one of the most generous incentive programs, exempting biodiesel blends of B10 or higher from the 6.25 percent state excise tax. President Barack Obama's home state is the leading producer and consumer of biodiesel, with B20 biodiesel now the standard diesel fuel sold at pumps.

However, an article published by The Diesel Driver notes that, despite EPA mandates to create more biodiesel, and state incentives to sell it, the inconsistency of biodiesel and the varying strength of its blends are causing problems.

The article notes that most U.S. modern diesel cars are designed to use B5 biodiesel, and as a result, "using blends with as much as 20 percent biodiesel have caused problems ranging from check engine warnings to reduced fuel economy and outright engine failure."

Using high-percentage biodiesel in your diesel vehicle could, in fact, invalidate the warranty. Mercedes-Benz, one of five manufacturers of diesel-vehicles sold in the U.S., tells potential owners, "Any damages caused by the use of such non-approved fuels will not be covered by the Mercedes-Benz Limited Warranty."

Further, while engines that run on biodiesel do cause less air pollution than those fueled by regular diesel, their performance is actually worse, according to a fact sheet published by Penn State's College of Agricultural Sciences, which says biodiesel has lower fuel economy than regular diesel, and reduces engine power and torque. Biodiesel can also leave deposits and cause clogging, especially in cold weather.

As for their environmental footprint, advocates for plant-based fuels argue that they are carbon neutral because they only release existing carbon dioxide, compared to fossil fuels, which add greenhouse gases.

But biodiesel loses ground when the total environmental costs of producing the fuel are taken into account. Nitrogen fertilizers applied to soils that grow crops to make biodiesel and ethanol emit nitrous oxide, a potent and long-lasting greenhouse gas. Carbon dioxide is released from soil when land is plowed for planting crops. There is also evidence that links biodiesel to higher tailpipe emissions of nitrous and nitrogen oxides.

Then, of course, there is the argument that land grown for plant-based fuels uses valuable farmland and water supplies that could be used for food production -- possibly causing crop shortages and driving up food prices. The European Parliament has recognized this potential downside and last year voted for a cap on "traditional biofuels" (those that could be used to produce food). EU legislators called instead for a switchover to making biofuels from alternative sources like seaweed and organic waste.

In sum, while using biodiesel and ethanol is definitely better than relying on hydrocarbon-based fuels, the environmental benefits may in fact be smaller than anticipated, or even negligible, when entire lifecycle emissions are taken into account.

Combine that with the constraints forced upon diesel car owners in states where the only fuel available is biodiesel, along with the potentially harmful impacts on engines, and there are valid reasons to question whether the promise of these 'cleaner' fuels measures up to the reality.

Do you know this energy tax "loophole"?
You already know record oil and natural gas production is changing the lives of millions of Americans. But what you probably haven't heard is that the IRS is encouraging investors to support our growing energy renaissance, offering you a tax loophole to invest in some of America's greatest energy companies. Take advantage of this profitable opportunity by grabbing your brand-new special report, "The IRS Is Daring You to Make This Investment Now!," and you'll learn about the simple strategy to take advantage of a little-known IRS rule. Don't miss out on advice that could help you cut taxes for decades to come. Click here to learn more.

 

By Andrew Topf of Oilprice.com

Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

1 Key Step to Get Rich

Our mission at The Motley Fool is to help the world invest better. Whether that’s helping people overcome their fear of stocks all the way to offering clear and successful guidance on complicated-sounding options trades, we can help.

Feb 1, 2016 at 4:54PM

To be perfectly clear, this is not a get-rich action that my Foolish colleagues and I came up with. But we wouldn't argue with the approach.

A 2015 Business Insider article titled, "11 websites to bookmark if you want to get rich" rated The Motley Fool as the #1 place online to get smarter about investing.

"The Motley Fool aims to build a strong investment community, which it does by providing a variety of resources: the website, books, a newspaper column, a radio [show], and [newsletters]," wrote (the clearly insightful and talented) money reporter Kathleen Elkins. "This site has something for every type of investor, from basic lessons for beginners to investing commentary on mutual funds, stock sectors, and value for the more advanced."

Our mission at The Motley Fool is to help the world invest better, so it's nice to receive that kind of recognition. It lets us know we're doing our job.

Whether that's helping the entirely uninitiated overcome their fear of stocks all the way to offering clear and successful guidance on complicated-sounding options trades, we want to provide our readers with a boost to the next step on their journey to financial independence.

Articles and beyond

As Business Insider wrote, there are a number of resources available from the Fool for investors of all levels and styles.

In addition to the dozens of free articles we publish every day on our website, I want to highlight two must-see spots in your tour of fool.com.

For the beginning investor

Investing can seem like a Big Deal to those who have yet to buy their first stock. Many investment professionals try to infuse the conversation with jargon in order to deter individual investors from tackling it on their own (and to justify their often sky-high fees).

But the individual investor can beat the market. The real secret to investing is that it doesn't take tons of money, endless hours, or super-secret formulas that only experts possess.

That's why we created a best-selling guide that walks investors-to-be through everything they need to know to get started. And because we're so dedicated to our mission, we've made that available for free.

If you're just starting out (or want to help out someone who is), go to www.fool.com/beginners, drop in your email address, and you'll be able to instantly access the quick-read guide ... for free.

For the listener

Whether it's on the stationary exercise bike or during my daily commute, I spend a lot of time going nowhere. But I've found a way to make that time benefit me.

The Motley Fool offers five podcasts that I refer to as "binge-worthy financial information."

Motley Fool Money features a team of our analysts discussing the week's top business and investing stories, interviews, and an inside look at the stocks on our radar. It's also featured on several dozen radio stations across the country.

The hosts of Motley Fool Answers challenge the conventional wisdom on life's biggest financial issues to reveal what you really need to know to make smart money moves.

David Gardner, co-founder of The Motley Fool, is among the most respected and trusted sources on investing. And he's the host of Rule Breaker Investing, in which he shares his insights into today's most innovative and disruptive companies ... and how to profit from them.

Market Foolery is our daily look at stocks in the news, as well as the top business and investing stories.

And Industry Focus offers a deeper dive into a specific industry and the stories making headlines. Healthcare, technology, energy, consumer goods, and other industries take turns in the spotlight.

They're all informative, entertaining, and eminently listenable ... and I don't say that simply because the hosts all sit within a Nerf-gun shot of my desk. Rule Breaker Investing and Answers contain timeless advice, so you might want to go back to the beginning with those. The other three take their cues from the market, so you'll want to listen to the most recent first. All are available at www.fool.com/podcasts.

But wait, there's more

The book and the podcasts – both free ... both awesome – also come with an ongoing benefit. If you download the book, or if you enter your email address in the magical box at the podcasts page, you'll get ongoing market coverage sent straight to your inbox.

Investor Insights is valuable and enjoyable coverage of everything from macroeconomic events to investing strategies to our analyst's travels around the world to find the next big thing. Also free.

Get the book. Listen to a podcast. Sign up for Investor Insights. I'm not saying that any of those things will make you rich ... but Business Insider seems to think so.


Compare Brokers