Is now the best time for biodiesel investments?

There’s no denying that there is now a shift in the buying habits of automobiles. As more countries look for ways to reduce their carbon footprint, their attention turns to the internal combustion engine.

Some nations, such as the UK, are planning an outright ban on the sales of new vehicles with such engines by the end of this decade. However, other countries are taking a different approach and are instead looking at more affordable ways to reduce CO2 emissions.

One such example is to look at alternatives to diesel. Aside from battery-powered technology, the perfect replacement for many of those nations is biodiesel. When it comes to energy investments, now could be the right time to invest in biodiesel.

The following explains more about biodiesel and why it could make sense to invest in it.

What Is biodiesel?

In a nutshell, biodiesel is a fuel comprising from organic sources instead of petroleum. As you probably know, conventional diesel is a fossil fuel. This means there is underground extraction from hydrocarbons comprising from plant fossils and animal matter.

The problem with fossil fuels like petroleum-based diesel is their sources have a high carbon content. When burnt, fossil fuels emit many pollutants into the air, resulting in high levels of greenhouse gases and widening the hole in the atmosphere’s ozone layer.

Biodiesel is a type of diesel fuel made from organic sources that don’t require extraction from deep underground. It comes from various biological sources, and it is also a “cleaner” fuel that releases greenhouse gases at a considerably low and slow rate.

How is it made?

The concept of biodiesel seems good so far. But, one of the big questions people new to this alternative fuel have is, how does it get made?

Biofuels like biodiesel come from organic materials such as plant materials and animal waste.

Biodiesel can also come from other waste sources. For example, companies like GF Commodities collect used cooking oil which can get converted into biodiesel. In contrast, petroleum-based diesel extraction comes from a single source: deep underground.

There are many sources that biodiesel producers can consider. As you can imagine, it gives investors in the biodiesel market several potential investment possibilities. They could invest in the factories that convert the raw sources into biodiesel or their infrastructure.

Does biodiesel investment make sense?

It’s no secret that 2022 offers plenty of investment opportunities. People looking to invest their money in profitable enterprises will also boost their green credentials, or that of their businesses should seriously consider biodiesel as an investment idea.

Recent market research from Argus suggests that demand outstripped supply for biodiesel in 2021. The reason was partially to do with the economic effects of COVID-19, but it’s mainly due to a generally limited supply of biodiesel sources like hydrotreated vegetable oil.

Early investors in biodiesel are among the few people taking advantage of supply chain issues by investing in key areas. Examples include the infrastructure and transportation needed to deliver the raw source materials to processing plants and factories.

Investment can take place in the factories that process those source materials or the distribution of the finished product to filling stations across the country and beyond.

The possibilities are endless for biodiesel investment, and that’s one of the many lures to biodiesel investments. Some of the other reasons for people investing in the biodiesel sector include:

Continued emphasis on lowering CO2 emissions

CO2 emissions is a hot topic these days, both for consumers and the world’s governments. More investors are seeking opportunities where they can demonstrate social responsibility and get seen to help with causes like reducing CO2 emissions.

Investments in biodiesel don’t just help investors yield a significant return. They also help to further the awareness and build on the market size, thereby generating even more future investment opportunities.

Better air quality

Lowering carbon emissions is generally a global goal. Of course, how each nation plans to do that differs from one country to the next. But, one fact that is clear to all countries is how there’s a need to have a continued emphasis on lowering CO2 emissions.

It’s a well-known fact that the engines in today’s modern vehicles must meet strict emissions standards. Vehicle manufacturers have implemented all kinds of technologies to achieve those goals.

Biodiesel helps lower CO2 emissions in two ways. Firstly, the release of greenhouse gases from vehicles is both lower and slower than when using conventional petroleum-based diesel. Secondly, carbon emissions get offset by the biodiesel production processes.

Better engine performance

Today’s turbodiesel engines boast an array of technology that increases fuel efficiency, diminishes greenhouse gas emissions, and improves engine longevity. They manage to accomplish those tasks with standard petroleum-derived diesel.

But did you know that biodiesel goes one step further and helps to improve engine performance?

One fact about biodiesel is that it improves fuel lubricity and raises the cetane number. The improved lubricity reduces friction wear on internal engine components, and cetane numbers indicate the diesel combustion speed and compression needed for ignition.

Increased safety

Last but not least, biodiesel is a safer fuel to use for any vehicle than standard petroleum-derived diesel. One of the downsides to conventional diesel is its easy ignition in specific circumstances.

In its pure, unblended form, it has a higher flashpoint (130 degrees Celsius or 266 degrees Fahrenheit) than regular diesel (52 degrees Celsius or 126 degrees Fahrenheit). That makes this safer to store, handle, and use in a vehicle than standard diesel.

Conclusion

2022 will undoubtedly be the year where there will be significant changes in the sector.

With demand outstripping supply, more entrepreneurs will consider investing and also help improve the environment for everyone to enjoy for many future generations.

As more people realize the potential of biodiesel investments, the market will only get bigger and provide extra opportunities for investors that are late in the game.

Partner Contributor

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