Efficiency and economic arguments

Pure biodiesel (B-100) from soybeans

According to a study by Drs. Van Dyne and Raymer for the Tennessee Valley Authority, the average US farm consumes fuel at the rate of 82 litres per hectare (8.75 US gal/acre) of land to produce one crop. However, average crops of rapeseed produce oil at an average rate of 1,029 L/ha (110 US gal/acre), and high-yield rapeseed fields produce about 1,356 L/ha (145 US gal/acre). The ratio of input to output in these cases is roughly 1:12.5 and 1:16.5. Photosynthesis is known to have an efficiency rate of about 3-6% of total solar radiation and if the entire mass of a crop is utilized for energy production, the overall efficiency of this chain is currently about 1% While this may compare unfavorably to solar cells combined with an electric drive train, biodiesel is less costly to deploy (solar cells cost approximately US$1,000 per square meter) and transport (electric vehicles require batteries which currently have a much lower energy density than liquid fuels). A 2005 study found that biodiesel production using soybeans required 27% more fossil energy than the biodiesel produced and 118% more energy using sunflowers.

However, these statistics by themselves are not enough to show whether such a change makes economic sense. Additional factors must be taken into account, such as: the fuel equivalent of the energy required for processing, the yield of fuel from raw oil, the return on cultivating food, the effect biodiesel will have on food prices and the relative cost of biodiesel versus petrodiesel, water pollution from farm run-off, soil depletion, and the externalized costs of political and military interference in oil-producing countries intended to control the price of petrodiesel.

The debate over the energy balance of biodiesel is ongoing. Transitioning fully to biofuels could require immense tracts of land if traditional food crops are used (although non food crops can be utilized). The problem would be especially severe for nations with large economies, since energy consumption scales with economic output.

If using only traditional food plants, most such nations do not have sufficient arable land to produce biofuel for the nation's vehicles. Nations with smaller economies (hence less energy consumption) and more arable land may be in better situations, although many regions cannot afford to divert land away from food production.

For third world countries, biodiesel sources that use marginal land could make more sense; e.g., honge oil nuts grown along roads or jatropha grown along rail lines.

In tropical regions, such as Malaysia and Indonesia, plants that produce palm oil are being planted at a rapid pace to supply growing biodiesel demand in Europe and other markets. Critics argue that the removal of rainforest for palm plantations is not ecologically sound. It has been estimated in Germany that palm oil biodiesel has less than one third of the production costs of rapeseed biodiesel. The direct source of the energy content of biodiesel is solar energy captured by plants during photosynthesis. Regarding the positive energy balance of biodiesel:

When straw was left in the field, biodiesel production was strongly energy positive, yielding 1 GJ biodiesel for every 0.561 GJ of energy input (a yield/cost ratio of 1.78).

When straw was burned as fuel and oilseed rapemeal was used as a fertilizer, the yield/cost ratio for biodiesel production was even better (3.71). In other words, for every unit of energy input to produce biodiesel, the output was 3.71 units (the difference of 2.71 units would be from solar energy).