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Biodiesel is a renewable, petroleum fuel substitute made from fresh or used vegetable oils as well as animal fats by way of a modest amount of simple, albeit greasy, chemistry. This document will attempt to provide a comprehensive review of the technical issues, logistics, regulation, safety, and tax issues surrounding the small or micro-scale production of biodiesel from waste restaurant fryer oil. Some business related issues will be discussed with a particular emphasis on the formation of a small scale cooperative business venture to produce, distribute, and educate on the use of recycled veggie oil biodiesel. This document provides numerous resources and examples to small scale biodiesel production, as well as a custom engineered 1/8 million gallon per year batch type production engineering & business model, complete with parts list, cost, sources, as well as a operating cash flow model and seven year expense projections. The business model describes the self collection of used restaurant oil to provide for a profitable operation. Whether it is you endeavor to start a 1/8 million gallon per year cooperative, as described here, a local homebrew club, or merely brew a few gallons of biodiesel for your own education and enlightenment, this document will set you on path for success. This will be an “open source” document that will be posted on the internet for use, review, and contribution by other enthusiasts and biodiesel entrepreneurs. Although the focus of this document is on the State of Michigan, most of what is discussed will pertain to any biodiesel operation, anywhere in the United States or abroad. |
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| TABLE of CONTENTS | |
| EXECUTIVE SUMMARY | 3 |
| DISCLAIMER | 3 |
| TABLE of CONTENTS | 4 |
| INTRODUCTION | 6 |
| BIODIESEL CHEMISTRY | 7 |
| SUGGESTED COOP STARTUP PLAN & PHASING | 8 |
| Some of the SE Michigan suppliers | 9 |
| Why a Cooperative? | 10 |
| TAXES, TAX CREDITS, AND OTHER INCENTIVES | 12 |
| Federal Government Excise Tax & Blender Credit | 12 |
| State of Michigan | 14 |
| REGULATIONS | 14 |
| Storage tanks & regulations | 14 |
| Above ground storage tanks | 15 |
| Waste restaurant oil transport | 15 |
| FEEDSTOCK PROCUREMENT | 16 |
| Restaurant waste oil availability & quantities (yellow grease) | 16 |
| Restaurant waste oil collections | 16 |
| Purchasing of oil feedstock | 19 |
| Methanol | 19 |
| STORAGE, HANDLING & DISPENSING | 20 |
| Cold weather handling | 22 |
| Case Study - Stand Alone Natural | 23 |
| Building Biodiesel Fueling Site | 23 |
| (Piedmont Biofuels) | 23 |
| PRODUCTION TECHNOLOGY | 23 |
| The major steps required to synthesize biodiesel are as described below. | 23 |
| Purification of Waste Oil Feedstock | 23 |
| Neutralization of free fatty acids | 24 |
| Transesterification | 24 |
| The Reaction | 25 |
| Base catalyzed mechanism | 25 |
| The Process | 26 |
| Micro scale processor and operation | 27 |
| Make your own processor | 27 |
| Purchase a micro scale processor | 27 |
| DISPOSAL OF SIDESTREAMS & WASTE | 36 |
| Waste management | 36 |
| Wash water vs Magnesol | 36 |
| BUSINESS CONCERNS | 36 |
| Organizational structure(s) | 36 |
| Insurance | 37 |
| Market potential | 37 |
| COOP BUSINESS MODEL | 39 |
| Cash flow example | 39 |
| CONCLUSION | 39 |
| APPENDIX A : Education & Advocacy Web Site | 40 |
| APPENDIX B: Straight Vegetable Oil Conversion Information | 41 |
| APPENDIX C : Biodiesel Cooperative Survey & Results | 42 |
| APPENDIX D : List of Biodiesel Cooperatives and Clubs | 44 |
| APPENDIX E : Material Safety Data Sheets | 45 |
| APPENDIX F : Small Scale Production Plant Design | 46 |
| APPENDIX G : SAMPLE MEMBERSHIP AGREEMENT | 48 |
| APPENDIX H : SAMPLE BYLAWS (or ARTICLES OF INCORPORATION) | 51 |
| APPENDIX I : COOPERATIVE START-UP INFORMATION | 57 |
| APPENDIX J : Mich. Form 4334 | 61 |
| APPENDIX K : LIQUID INDUSTRIAL WASTE DOCUMENTS | 63 |
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DISCLAIMERThis document is a combination of a new engineering design, business plan, as well as a compilation of information from various internet resources including the US government, the State of Michigan, and numerous not-for-profit organizations. The creators of this document assume no liability for omissions, inaccurate information, or for any activities base all or in part on the guidance provided herein. This document does not offer any guarantees of accurate legal, tax, and regulatory advice or counsel. Readers are obligated to know and understand all safety, legal, and regulatory issues in their own state and locality. Having said that….. ENJOY & PERSEVERE!!! |