Did you know that glycerin (also known as glycerol) isn’t actually made on purpose, but is in fact a byproduct? When fats or oils such as coconut oil, soybean oil, palm oil, lard, tallow, etc. are separated, split, or transesterified to produce any number of useful chemicals, we are left with crude glycerin as a byproduct. Two primary industries that do this separating are oleochemical manufacturing and biodiesel production.
Viewing glycerin through a biodiesel scope
With this in mind, it’s important to know that approximately 70% of the world’s crude glycerin comes from the biodiesel industry. This is a significant change from 20, or even 10 years ago when the primary source was the oleochemical manufacturing industry. Over 75 countries now have some form of biodiesel mandate. This means that diesel fuels within these countries must contain a certain amount/percentage of biodiesel (methyl esters).
For instance, Indonesia has a B30 mandate, meaning 30% of their diesel fuel must be bio-based (30% biodiesel, 70% petroleum diesel). These methyl esters are created when a fat or oil molecule (or triglyceride) is split using a methanol stream. This process, as mentioned above, produces crude glycerin as a byproduct.
Mandates and agendas
Countries establish these biodiesel mandates for several reasons. The most publicized would be that these are green fuels and therefore support a greener agenda. Another reason is to support agriculture within the country. We see this here in the US with soy and corn producing states being huge supporters of biodiesel mandates.
Also noteworthy is that in Q4 of last year, Congress passed the much-awaited biodiesel blender’s tax credit. This retroactively gives a credit of $1 per gallon to 2018 and also extends the credit thru 2022 for biodiesel producers. The result of this should keep a healthy stream of crude glycerin on the market.
The key takeaway here is that regardless of where glycerin comes from in the supply chain, it is always a byproduct and all glycerin, regardless of derivation, is chemically identical. No one makes glycerin on purpose. Therefore, the drivers on market pricing for glycerin come from the products (like biodiesel) that are the primary reason for the process.
If you’re looking for a strategic partner to help fulfil your glycerin needs, contact Univar Solutions today. As the premier glycerin distributor with more than 120 locations with bulk tank, rail car, custom formula, blending and packaging capabilities we are the strategic partner you need to meet your product requirements.