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Biofuels: Boom or Bust for Montana ProducersNovember 9, 2007
Biodiesel MarketByproducts MarketFeedstockSizeProcessProduction/Operation CostsConstruction CostsReturn on InvestmentRisks
Source: CARD, Iowa State University
0
100
200
300
400
500
600
700
800
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
million gallons
Scenario Baseline
One Million Gallon Plant (an example) Oils from restaurants and food processing Tallow from beef packing Oilseed crops▪ Canola▪ Safflower▪ Sunflower▪ Rapeseed▪ Mustard▪ Soybean▪ Camelina
Product Revenue Biodiesel $x.xx / gallon
Glycerin (fuel oil) .00 / lb.▪ 0.75 lbs. per gallon
Meal $120.00/ ton▪ .067 tons per gallon
Subsidy Revenue
Tax credit for small producers 0.10/gal.
Tax credit – State (MT) 0.10/gal.
Processing (assumptions) Feedstock, canola (+ handling & cleaning)▪ $0.151/pound
Crushing and filtering▪ $50 /ton
Methanol▪ $0.14/gallon of biodiesel
Catalyst▪ $0.08/gallon of biodiesel
Processing (assumptions) Neutralizer▪ $0.01/gallon of biodiesel
Natural gas/electricity▪ $0.02/gallon of biodiesel
Cost of plant operation (labor, maintenance, administration▪ $0.15/gallon of biodiesel
Assumptions Annual Production (million gallons)
Capital Cost/Gallon 0.5 $2.00
1.0 2.005.0 1.25
20.0 1.00
Important Fixed Costs
Depreciation (economic) and interest
▪ 10 years / 6 percent ------ $0.15 per gallon of biodiesel
What’s missing . . . Land Buildings Registration, licenses and certification Permits Utility installation Wastewater treatment Rail spur development
Revenue (1 million gallon/year plant)
Biodiesel $ 3,060,000 Glycerin 0 Meal 804,000
Total 3,864,000
Total with subsidies 4,064,000
Processing Costs Total processing 3,910,638
Capital costs Interest and depreciation
150,000
Total Costs 4,060,638 4.06/g
Net income (EBIT) 3,362
Producer
Production cost (net of meal revenue) 3.26
Producer profit 0.00
Small producer tax credit -0.10
State biodiesel production incentive -0.10
Transportation 0.08
Distributor purchase price 3.14
Distributor/Blender
Purchase price 3.14
Excise tax credit -1.00
Refund for taxes paid on biodiesel -0.02
Montana + federal tax 0.53
Freight 0.08
Blender profit 0.05
Retailer purchase price 2.78
Retailer
Purchase price 2.78
Refund for taxes paid on biodiesel -0.01
Retailer markup 0.12
Retail price 2.89
Sensitivity Analysis
0 0.100 0.125 0.150 0.175 0.2002.00 -0.04 -0.54 -1.04 -1.54 -2.032.50 0.46 -0.04 -0.54 -1.04 -1.533.00 0.96 0.46 -0.04 -0.54 -1.033.50 1.46 0.96 0.46 -0.04 -0.534.00 1.96 1.46 0.96 0.46 -0.03
Seed Cost ($/pound)
Biod
iese
l Pric
e ($
/gal
)
Oil supply
Crude oil prices Blending B100
Demand for biodiesel and byproducts
Distribution
Longevity of the Federal Excise Tax Credit
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