Production efficiency and cost reduction potential of biodiesel fuel plants using waste cooking oil in Japan

Abstract

Biodiesel fuel (BDF) is a potentially carbon-neutral fuel that could play a potentially important role in preventing global warming. However, its high production cost poses a challenge for many BDF producers. To establish an efficient method for BDF production and increase its cost competitiveness, the production efficiencies of 35 BDF plants in Japan, which produce BDF from waste cooking oil, were evaluated. Moreover, the cost reduction potential associated with improved efficiency was estimated. The empirical analysis revealed that (1) approximately 92% of the BDF plants have inefficient production; (2) they exhibit two predominant types of inefficiencies, technical and scale inefficiencies, and (3) improvement of production inefficiency can lead to an average production cost reduction of 3.52 yen per liter of BDF. To increase the production efficiency, it is important to improve the quality of the waste cooking oil used and increase the production scale. It is recommended that operators of inefficient BDF plants learn the production activities of the most efficient plants identified in this study. Furthermore, government policies focused on efficient BDF plants are essential to increase BDF production with limited resources.

Keywords: Biodiesel fuel; Data envelopment analysis; Production efficiency; Renewable biomass; Waste cooking oil.