Biodiesel has been in commercial production in Europe since 1991 and in the U.S. since 1998. Key drivers for the increased use of biodiesel in recent years include:

• growing concerns about the environmental impact of burning fossil fuels, particularly on climate change, and the dwindling reserves of petroleum
• record high prices for crude oil and consequently diesel fuel
• national targets for uptake of biodiesel (particularly in Europe)
• tax exemptions and incentives
• growing penetration of diesel-powered cars (now almost 50% of all new vehicles sold in Europe)
• support from car manufacturers for biodiesel blends
• improved technologies for biodiesel production

Thus, British Petroleum Magazine (in its Issue 3 in 2007) estimates that “by 2030, biofuels could provide 30% of the world’s road transport fuel, and cut as much as 80% of greenhouse gas per litre (compared with a litre of petrol).” Other organizations, including the US Department of Agriculture, Worldwatch Institute and the International Energy Agency present similar projections.

At the same time, the demand for diesel fuel is expected to surge globally over the next decade. In a 2008 report, J.D. Powers and Associates estimate that the global market share of diesel-powered light vehicles will rise to 31.5% in 2017, from the current market share of 23.6%. Robust increases are expected to occur in every region. Even in the U.S., where the use of diesel has traditionally been more limited, many vehicle manufacturers now have firm plans to enter the diesel market. As a result, the market share for diesel-powered light vehicles in the U.S. is expected to increase from 3 percent in 2007 to 14 percent by 2017.

Consistent with these forecasts, Credit Suisse has forecast explosive market growth for the production of biodiesel globally. This fast growth is partly due to the low starting point (with biodiesel currently contributing about 1% of global transportation fuels) but also to the inherent appeal of biodiesel and its relatively short production cycle.

Recent corporate activity has underlined this potential, particularly for the use of Jatropha as a feedstock, with the following initiatives:

1. British Petroleum formed a US$160 million joint venture with D1-Oils to produce biodiesel from Jatropha
2. Daimler announced a significant research program into the use and standards for Jatropha-sourced biodiesel (in co-operation with Archer Daniels Midland, and Bayer CropScience)
3. Refineries in the US, UK and Singapore announced the switch in feedstock to Jatropha and the start of commercial deliveries of Jatropha oil.