Please use this identifier to cite or link to this item: http://hdl.handle.net/1946/8597
Feasibility Study of Converting Rapeseed to Biodiesel for use on a Fishing Vessel
The fishing industry is the most important industry in Iceland in addition to the agricultural sector. Biodiesel is a natural, renewable transportation fuel which increases lubrication of diesel engines and decreases carbon emission equal to 3.11 kg for each kilogram of biodiesel used instead of fossil diesel. This research provides a feasibility assessment for biodiesel production in Iceland, including oil extraction, which is an industry in its infancy in Iceland. The main idea is to convert rapeseed into biodiesel for use in marine engines. The profitability analysis is based on usage of 175 ha in the first year with an annual increase of 18% between years. A standard profitability assessment method with a 10-year operation time period provides a Net Present Value (NPV) equity of minus 24 thousand USD and a 14% Internal Rate of Return (IRR). The Minimum Attractive Rate of Return (MARR) is 15% and is, therefore, a project that borders on being feasible. A sensitivity analysis illustrates that with a 10% decreased fixed cost and variable cost for oil extraction, the IRR of equity is 22% and 20%. In the same way, a 10% increase in the price of rapeseed meal and in price of biodiesel means an IRR of equity is 22% and 21%. One of the main assumptions for this result is based on the required price for the fishing company FISK Seafood ltd. (FISK). The required price of biodiesel is 10% lower than marine gas oil (MGO). The conclusion of this thesis corresponds to other studies which conclude that biodiesel production is not feasible without government subsidy. Nevertheless, a government subsidy in Iceland in the biodiesel supply chain is substantial with tax exemption and cultivation subsidies. Other usage, feedstock methods and biodiesel are also considered in this research which in the near future may potentially provide producers with a positive NPV and IRR.
KEYWORDS: Biodiesel; net present value; internal rate of return; rapeseed oil; Iceland; Fisk Seafood Ltd.
Lokaritgerð (MS) frá Háskóla Íslands og Háskólanum í Reykjavík. Verkefnið er einnig sett fram sem Reyst report.