The Biofuels Corporation has set up on Teesside. Frances Griss examines how the fuel it will produce will help protect the environment.

THE future for motor transport is green and a company on Teesside is forging ahead with plans to produce an environmentally-friendly fuel. Biodiesel has been commonplace on the Continent for several years but is only just beginning to make an impact in the UK.

Refined from vegetable oils, biodiesel has significant benefits over mineral diesel, not least its cleaner emissions and neutral effect on global warming.

When the Government announced that lower duty would be payable on diesel containing a quantity of biodiesel. The Biofuels Corporation decided the time had come to set up a business on Teesside.

With a successful £15m float on the stock market and £30m backing from Barclays, the company expects to be in production by the beginning of the 2005/6 financial year. At the end of that year it is hoped to pay a first dividend to shareholders.

Procurement is under way and Biofuels has signed an exclusive UK agreement to use a modular processing plant built in Austria.

The company says the plant operates more efficiently than that used by other processors, giving it an edge over the competition in a growing market.

The plant will be shipped in 50 container-sized loads to Teesside for assembly. The two main contractors, Energea and Seal Sands Storage Limited, have already started work.

Biofuels says the plant, in Seal Sands Road, Seal Sands, will be the largest and most modern biodiesel plant in Europe.

Biodiesel - chemical name methyl ester - can be manufactured from a range of plant oils, some grown in this country and some imported. Mixed with methanol in a 10:1 solution with the addition of some potassium hydroxide and sulphuric acid, the process produces three products: biodiesel, glycerine and potassium sulphate. All three are valuable commodities.

Biofuels chief executive John Nicholas said the company had pre-sold 30 per cent of its diesel, and 60 per cent of its glycerine and was confident of finding a market for the potassium sulphate in the fertiliser industry.

Nine tenths of the glycerine produced by the Teesside plant will be of pharmaceutical quality.

Mr Nicholas said that there was a larger existing market for biodiesel than was apparent at first sight.

He said: "Although there is a view that it is an undeveloped market, that is not the case. The supermarkets are very keen. Markets that are already using biodiesel include municipal transport, and the forest rangers use a blended product. The larger market is commercial transport. In Germany two thirds goes to commercial transport."

Biofuels is initially building one plant with a capacity of 250,000 tonnes - the equivalent of 280 million litres - a year. Within 18 months, it wants to set up a second similar plant using the same infrastructure.

Three further linked plants are planned on the same site and Mr Nicholas said there were also proposals to build an oilseed rape crusher in the region and his company is in discussions to possibly take some of that product.

That would mean crops being grown, processed and refined within a relatively small geographical area, cutting down on transport mileage.

Although biodiesel in this country is being used in a five per cent mix with mineral diesel, that does not have to be the case. It is perfectly usable as a fuel by itself.

Mr Nicholas said: "I think they will start increasing to larger proportions. As it matures, the market will gain technological support. At the same time we have to say that at the moment the target for the percentage of biodiesel in European countries at the end of 2005 is two per cent. Standard practice is actually five per cent.

"In the US, the standard bio-blend is 20 per cent and it performs very well with a 20 per cent blend. Up until Christmas nearly all the biodiesel sold on the Continent was 100 per cent."

Mr Nicholas and his fellow directors chose Teesside because of its easy access to import raw materials and possibly export the finished product. The area also has a wealth of chemical engineering experience, the right infrastructure and supply companies, and a local authority used to dealing with applications to build chemical plants.

This has put the region in a prime position to benefit from the huge growth in this industry that is expected in the next few years, and which Biofuels' investors are relying on.

Environmental benefits

* Particulate pollution (eg soot) is significantly reduced.

* Carbon monoxide significantly reduced.

* Hydrocarbons significantly reduced.

* No aromatic compounds, which can cause cancer, produced.

* Little or no sulphur involved.

* The fuel-burning process is carbon neutral, which means it releases only carbon dioxide the plant took up while growing and which will be re-absorbed by plants. No extra carbon dioxide is produced, as it is when fossil fuels are burned.

Published: 03/08/2004