EXECUTIVE SUMMARY

 

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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DISCLAIMER

This 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!!!