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How to Start a Biodiesel Business

Updated April 17, 2017

When it comes to the biodiesel movement, people often think of fast food garbage turned to gas. However, the biodiesel business is more complex than that. Although biodiesel is derived from animal fat and vegetable oil, it must meet specific requirements to be useful. Still, it is apparent that the popularity of this alternative fuel is on the rise and will continues to rise as fuel consumption becomes a larger social issue. When deciding to start a biodiesel business, several factors should be considered. For instance, owners might consider the size of the business, the demographic area, and the specific goals that the business owner has when he sets out.

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  1. Research the industry. The first step in starting any business is becoming familiar with what the business entails. Several websites offer information on different types of biodiesel business, as well as equipment and other tools. Check out Onlinebiodiesel.org or CUBiodiesel.org. Another great resource to read is the book '2008 Biodiesel Business Management for Producers, Making and Selling the Fuel of the Future, Financing, Making a Profit,' by the U.S. Government, published by Progressive Management, 2008.

  2. Make a specific plan. According to Biodiesel Magazine, the major components necessary in a business plan are feedstock procurement, product sales, processing costs and how difficult it is to penetrate the market. Additionally, the business plan should address the type of business entity being created, such as a corporation or limited liability company. Check out a sample biodiesel business plan at TCBiodiesel.com.

  3. Purchase the equipment. Equipment varies depending on the type of biodiesel business. Small businesses can buy ready to use processors from websites like EZBiodiesel.com or FuelMeister.com and most or all of their equipment will come pre-assembled. When purchasing these, consider how many gallons of biodiesel the processor can produce per batch, how long each batch takes to process and whether the process requires extra plumbing, fittings or pumps.

  4. Set up a business space. The business space depends on the size of the business you are creating and the quantity of biodiesel processed. For smaller business, a container trailer is adequate. For larger businesses, a building or warehouse may be necessary. Larger scale processors must ensure that their building has on-site sewage treatment and disposal and adheres to hazardous waste regulations. Check local and state regulations to see specific requirements for a biodiesel operation.

  5. Find a source. Biodiesel is produced by the chemical reaction between vegetable oil or animal fats combined with alcohol and a catalyst. The vegetable oil or animal fats can be obtained for free from restaurants. Simply call or visit restaurants and request that they allow you to pick up their vegetable oil or animal fat, which they normally have to pay to have removed.

  6. Sell the biodiesel. Small scale companies may simply sell biodiesel to local farmers and individuals for use in their farm equipment and vehicles. Simply place ads in the newspaper and online to advertise your fuel. Current biodiesel prices usually range from £1.20 to £2.20 per gallon. Larger scale businesses generally sell their biodiesel directly to gas stations or large trucking companies who can purchase large quantities.

  7. Sell the fuel. Some gas stations purchase biodiesel, as do companies that have large vehicles like trucks, which operate on biodiesel. It is also an option to sell the fuel locally on a smaller scale to individual users; however, this may create more work for the business owner who saves time by selling in bulk.

  8. Tip

    Some business owners choose to collect the oil and sell it to larger biodiesel companies rather than process it themselves.

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Things You'll Need

  • Animal fat, vegetable oil
  • Biodiesel tanks, chemicals and processing tools

About the Author

Based in northern Michigan, J.R. Erickson has been a freelance writer since 2006. She has been published at the White Pine Press, Michigan Nature Association, Life in the USA, Storyhouse.org and The Four Cornered Universe. Erickson holds a Bachelor of Arts in psychology from Michigan State University.

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