Lubricated by a combination of high petroleum prices, federal subsidies and stricter environmental standards, U.S. biodiesel production is expected to double this year, to 50 million gallons.

	John Beale, Post-Gazette Richard Jackson, founder of Capital Technologies, holds a sample of biodiesel fuel as Katie Miller, a chemical engineer, works in the lab. Click photo for larger image.

Capital Technologies International, a Carnegie Mellon University spinoff in Hazelwood, expects to jump on the bandwagon with a new process for making the fuel, which is derived from plant oils and animal fats.

The fledgling company's technology "is better, cheaper, faster and safer" than conventional biodiesel plants, said Richard Jackson, Capital Technology's chief executive officer.

The firm's first commercial-scale venture is slated for Neville Island, where it is finalizing details of a partnership with Valley Proteins, a Virginia-based rendering company whose Neville Island rendering plant was shut down because of foul odors.

The new plant will produce few, if any, emissions, said Jackson.

Michael Smith, vice president of Valley Proteins, said he expected the biodiesel operations on Neville Island to begin in the first quarter of next year. It will use oils that Valley Proteins obtains in its rendering operations and from restaurants, from which it collects waste cooking greases.

"We're always looking for new markets from our products," Smith said.

Biodiesel has been in use since Rudolph Diesel powered his namesake engine with peanut oil in the 1890s.

Long a novelty -- used mainly by farmers and backyard tinkerers -- biodiesel has been gradually gathering commercial strength since the early 1990s. At the time, soybean growers in search of new markets began promoting the oil from their crop as a renewable, earth-friendly source of transportation and boiler fuel.

Now, record oil prices, which have risen 46 percent in the past year, along with increasing government support, have put biodiesel in the spotlight again.

The U.S. Department of Energy estimates that a decade or so from now, biodiesel could account for 10 percent of the U.S. diesel market, said Amber Thurlo Pearson, spokeswoman for the National Biodiesel Board. Based on last year's nationwide diesel consumption, that would amount to about 5 billion gallons.

Some analysts think that may be optimistic.

But the $14.4 billion federal energy legislation enacted earlier this month helped give the industry a boost by sustaining tax credits for fuel distributors who blend biodiesel with petrodiesel. In addition, the new law provided tax credits to retailers to add biodiesel pumps to their filling stations.

Some states, including Minnesota, which this week is set to require that all petrodiesel fuel be blended with at least 2 percent biodiesel, also are getting into the act, said Leland Tong, an energy consultant with Marc-IV Consulting in Kansas City, Mo., who has helped the National Biodiesel Board keep tabs on the market.

"I think the future is bright," Tong said. "The tax incentives go a long way toward making biodiesel competitive, and the high oil prices really do help," he said.

Without the tax breaks, he estimated that a gallon of biodiesel, depending on the raw material used to produce it, might cost 75 cents to a dollar more per gallon than the most commonly used petrodiesel, which averaged about $2.41 a gallon last week. Some other analysts don't agree that the cost differential is that high.

But as much as tax advantages, biodiesel industry players are counting on federal environmental regulations which, beginning next year, will require diesel producers to lower the sulfur content of their oil by 97 percent.

Because lowering sulfur content reduces the oil's lubricating properties, something must be added to restore lubricity. Biodiesel industry analysts expect biodiesel to be a preferred alternative.

Jackson, at Capital Technologies, said he and his colleagues were "grateful" that the industry will benefit from tax breaks.

But he said the business was being built to survive without them and is looking abroad as well as in the United States to set up joint production ventures. Jackson said the company already had a venture partner lined up in Ireland, as well as letters of intent from some other foreign companies.

The Neville Island plant, where it is partnering with Valley Proteins, will be the first showcase for Capital Technologies' new process.

Conventional biodiesel plants use batch processing, mixing together alcohol and liquid catalysts that are stirred and heated to produce a methylester from a pure plant oil or animal fat, along with the by-product, glycerine. The processing of pure oils prevents them from thickening too much in colder temperatures.

By contrast, Capital Technologies' equipment and process involves microwave heating, proprietary solid catalysts and continuous processing that can be expanded by adding production modules that the company is assembling at a South Side manufacturing facility, said Marc Portnoff, senior scientist at CMU's Center for Advanced Fuel Technology.

The CMU center developed the new process with financial sponsorship from Capital Technologies, which until recently was a research and development venture backed by investors, including Jackson and John Sununu, former New Hampshire governor and onetime chief of staff during the first Bush administration.

Among the advantages of the new technology are that it takes up less space, in part because of the microwave heating, and can be readily expanded, said Portnoff. He, along with the CMU center's director, David Purta, expects to leave his CMU post to join the new venture in several weeks.

In addition, because it uses solid rather than liquid catalysts, "Our cleaning process [to remove impurities from the biodiesel] is a lot easier," and the manufacturing facility can be much smaller, Portnoff said. Production rates also are double the rates for conventional processes, he added.

All of that adds up to an advantage if oil prices fall or if recently enacted tax credits or other government support fade, Portnoff said.

"In the hard times, that will make our technology survive," he said.

There will be plenty of interest to see if the optimism is well-founded.

Tong, the biodiesel board's consultant, said, "I think they've got some real promise."

He cautioned, however, that the promise wouldn't be tested until a plant larger than the lab version, which can produce 500,000 gallons of biodiesel annually, goes into operation.

"I'm anxious for them to get their [first] plant built to see how it works on a commercial scale," Tong said.