Biodiesel is an alternative fuel for diesel engines of renewable origin derived from vegetable oils (soy, colza, sunflower, etc) and/or animal fat. It is one of the fuels used to reduce pollution and could serve as one of the replacements for petroleum fuels in the future

Biodiesel is made through a chemical process in which the vegetable oil reacts with alcohol in the presence of a catalyzing agent. Glycerin, for which there are over 1,500 uses, is a valuable by-product of biodiesel synthesis. In this case, the glycerin would be from natural sources and potentially regarded as "organic".

Argentina is a prime market for making and selling renewable biodiesel fuel thanks to cheap land and labor, as well as bumper crops of soybeans.

In Argentina, which reaps high volumes of soybean and sunflower seeds, biodiesel is often pitched by industry watchers as the alternative fuel with the most national potential.

The country has three key resources that make a certain niche of investors lunge for their calculators: inexpensive land, cheap labor, and bumper crops of soybeans.

The $15 billion global biofuel market is expected to triple by 2015, and one of the most promising niches to step into, experts say, will be refining and selling biodiesel fuel for trucks, buses, and other commercial vehicles in Argentina. Following Brazil's lead, the nation just passed a law mandating that biofuels account for 5 percent of all fuel sold by 2010.

Biodiesel is a renewable fuel because it's made by refining oil derived from plants like soybeans, palm trees, and rapeseed. Thinner than vegetable oil, biodiesel can power diesel engines without further conversion. That gives it a big advantage over ethanol, which burns in standard gasoline engines only when it's blended with petroleum.

The first significant player in this market just emerged: Imperium Renewables, a Seattle startup, will soon begin building a biodiesel refinery in Argentina that CEO Martin Tobias says will produce 100 million gallons of fuel per year. That, for comparison's sake, is more than the entire U.S. output in 2005.

While the VC-backed plant will cost about $50 million to build and takes 50 people to operate, clean-tech experts consider the Argentine biodiesel market wide open to smaller players. In fact, newer off-the-shelf technology that's currently being commercialized will lower plant construction costs to about $3 million, a far more digestible sum for angel investors.

It's possible to go even smaller. Tobias's Argentine refinery - to be situated near a major city, which he declines to name - makes sense because the number of customers within a small radius means minimal shipping costs. But Argentina's farmers account for about 75 percent of the country's diesel consumption; entrepreneurs can apply the same sell-local principle by building micro-refineries in rural areas.

Last year Edmundo Defferrari, an industrial engineer, built a prototype of such a plant 145 miles west of Buenos Aires for just $150,000. It already produces 130,000 gallons of biodiesel a year and requires human labor only to load the plant with soybeans and turn it on. Defferrari sells fuel to local farmers for 95 cents a gallon, about two-thirds the cost of regular diesel. It's a virtuous circle: His customers grow the soybean feedstock that he puts into his machinery.

A biodiesel law that aims to foment biofuels production for the internal Argentinean market was finally approved last week, after being in hold for two years. With this paper, the government expects that biofuels offer reaches 5% of the internal market in three years. According the Federal Planning Minister, Julio de Vido, by 2010 there will be a 600 thousand cubic meters production of biodiesel and 250 thousand cubic meters production of biometanol. To promote the production, the law establishes taxes devolution, the possibility to amortize investments in this field, and also the option not to pay the taxes applied to regular liquid and gaseous fuels. Even though the government recognized the law was just a start and aimed specialists to contribute to improve it, president Kirchner assured that this was the country’s entrance into the “renewable fuels era”.

According to Héctor Huergo, a well-known local journalist specialized in the country business, soy and corn, which are two of the main sources for biofuels, are among the greatest Argentinean harvests. The country produces more than 45 million tons of soy a year, which can give up to 8 million tons of oil, the equivalent to 9 million cubic meters of biodiesel. Seems like good times are coming for green fuels in the country, with the news of big investments coming to this area, and also the First Biofuels Congress of the Americas taking place in Buenos Aires March 2007.

A small Argentinean company, Oilfox, signed the first export contrart of biodiesel on December 31st 2006. This agreement is for 12.000 tons biodiesel a year. Olifox owns to biodiesel factories located in San Luis and in Chabas, Santa Fe province.

Repsol YPF will invest $30 million to build the Argentinean Bio Fuel Investigation Center. The plant is expected to produce 120 thousand cubic meters of biodiesel per year, which will initially be combined with diesel fuel in a 5% proportion. In the future, biodiesel will comprise 10% of diesel fuel.

Repsol YPF, the Spanish-Argentinean petroleum company, estimates that it will begin making biodiesel at the plant in 2007. Repsol YPF hopes to become the first major producer of this renewable fuel in Argentina.