Canola to biodiesel: a closed-loop system

Canola to biodiesel: a closed-loop system

The cost of fuel to power their mulching and revegetation businesses drove Peter O’Donnell and his partners to create their own supply of biodiesel from canola grown on Peter’s Madowla Park property near Echuca, Victoria.

[December 2013]

Key points
  • With a closed-loop system you try to supply everything that goes in and use everything that comes out. At Madowla Park, they grow the crop, process the crop, make the biodiesel, use the biodiesel and use the by-products.
  • Pelletising the residual, high protein canola meal is an important part of the economics of the whole biodiesel process.
  • At full production of 1.5–2 million litres of fuel and 3000–4000 tonne of canola meal annually, the nearly $2 million investment is expected to have a payback period of 3–4 years.
  • Other by-products, mainly wash water and glycerol, will be used to generate power to run the farm and the biodiesel plant.
  • Mulch producer/distributor Mossrock Australia will save 5%–10% on fuel costs after switching to a biodiesel blend for most of its fuel demand—more than 500,000 litres a year.

A closed-loop bioenergy system

Grinding waste wood to make mulch, transporting it to revegetation sites around Victoria, and doing the earthworks associated with major landscaping projects are fuel-intensive activities.

It’s what drove Peter O’Donnell and his partners, owners of mulch and landscaping companies Mossrock Australia and Ecodynamics, to join experienced cattle industry operators to form Ecofuels Australia.

Peter O'Donnell

Peter O’Donnell: “We try and supply everything that goes in and we try to use everything that comes out. That’s our fundamental approach. So we grow the crop, we process the crop, we make the fuel, we use the fuel and we use the by-products.”

At Madowla Park, a property on the banks of the Murray River near Echuca in Victoria, Ecofuels:

  • grows canola
  • produces biodiesel and
  • uses the residual high quality canola meal as stock feed in its livestock operations.

In October 2013, Mossrock took its first delivery of Madowla Park biodiesel. Within 6 weeks it had substituted 15% of its diesel usage with biodiesel.

“The Ecofuels plan initially is to supply the needs of Mossrock, the farm and the biodiesel plant”, explains Peter O’Donnell. “Once they are running on at least 75–80% biodiesel, any surplus capacity will be offered to other large-scale, rural operations.”

The high protein canola meal, a residue of the oilseed crushing process, is mixed and pelletised at the plant and fed to the thousands of dairy heifers agisted at Ecofuel’s two AQIS-certified, pre-export quarantine stations before they are shipped to China.

Other by-products, mainly soap-contaminated wash water and glycerol, will be used to generate power and create fertiliser. Peter expects to generate more than enough power to run the entire biodiesel plant.

Peter’s philosophy is clear: “We try and supply everything that goes in and we try to use everything that comes out. That’s our fundamental approach. So we grow the crop, we process the crop, we make the fuel, we use the fuel and we use the by-products.”

This ‘closed-loop’ approach, Peter believes, lends itself well to a large-scale farming operation.

“People could set aside a portion of their land to grow an oilseed crop. For example, they could grow enough fuel for that property, and perhaps the neighbouring properties. We always saw the scale of what we were doing as appropriate for a rural or regional operation.”


The Madowla Park biodiesel operation can grind about 4000 tonnes of oilseed a year, with an expected yield of 1200–1400 tonnes of oil which will produce about 1,500,000 litres of biodiesel.

The balance of the oilseed (about two thirds) ends up as meal.

“We can send the meal out without further processing for people to mix into blended rations themselves or we have the capacity to pelletise it”, says Peter. “If we were to mix that meal with cereals, we would end up with about 12,000–14,000 tonnes of blended pellets.”

Off the shelf, the processor that converts the canola oil to raw biodiesel is designed to produce 1,000,000 litres a year, or 3000 litres a day. Ecofuels has doubled its capacity by modifying the control software and adding more raw fuel treatment tanks.

“We can probably increase capacity by the same factor again, up to 3 million litres, if we really tweak it so that we are maximising the utilisation of the reaction tank. That’s the limiting factor currently on fuel production.”

How the biodiesel process works

The biodiesel plant has three main components:

  • The grinder grinds the canola seed to extract the oil.
  • The filter screens the oil to remove fine particles.
  • The processor converts the filtered oil to raw biodiesel.

The raw biodiesel is then cleaned to remove impurities before being blended with standard fuel.

The Madowla Park biodiesel plant
The Madowla Park biodiesel plant

Extracting the canola oil

“Everything starts with the grinder”, says Peter. “It is the centre of the operation.”

Sitting in the middle of the shed that houses all the machinery required to produce the biodiesel and pelletise the meal, is a German-made Keller K500 press.

From a silo outside the shed, an auger carries the canola to the hopper above the grinder. As the hopper empties the seed into the grinder, the auger starts up and refilling is automatic.

From the grinder, the meal goes to the right and the oil goes to the left. The shed is set up accordingly, with one side used to process meal and the other used to process oil.

“The Keller machine is designed to grind unattended 24 hours a day 350-odd days a year with minimum maintenance”, says Peter. “And we have found that to be the case. At this stage, early days, we are really pleased with it. It seems to live up to all the claims that were made.”

The grinder is the limiting factor in terms of overall production but the plant is set up so that a second machine can be added if Peter decides to expand the operation.

The system produces cold-pressed oil which, Peter says, has some advantages.

“On the oil side, we stay in stainless steel all the way through until we start turning it into fuel. It’s a food-grade product at that point, so we have an alternative market for oil if needed.”

Controlling the pressing process is important, he adds.

The aim is to extract the maximum amount of oil while maintaining oil quality. If the grinder pressure is too high, the oil temperature climbs and quality suffers. This can lead to the need for additional process steps in the fuel production phase.

“With the right machine settings, we can pull out about 30%–35% of the seed weight in oil but still keep the extracted oil temperature below 50 degrees.”

Filtering the canola oil

From the grinder, the oil moves to the main storage tank which holds about 18,000 litres, before passing through a vertical-leaf filter.

The oil contains some fine material and is continually agitated to keep the fines in suspension. The European-made AMA-Filter system uses the fines to filter the oil.

The oil circulates through a series of screens that hang in the vertical chamber. The fines form a layer on the outside of the screens and themselves become the filter medium. When the oil is clear, it is diverted into a storage tank.

The filter screens are self-cleaning and, like the grinder, the filter system is designed to operate unattended.

“It is setup with alarms that notify us by phone if there is any problem”, says Peter. “So it is pretty straightforward and works well.”

Converting the canola oil to biodiesel

The chemistry

To convert the canola oil to biodiesel, the oil is mixed with methanol and a base catalyst—sodium or potassium hydroxide. The triglyceride vegetable oil is converted to a series of fatty acid methyl esters (the molecules that biodiesel is primarily comprised). Glycerol is produced as a by-product and removed, which leaves raw biodiesel.

“The chemistry is no different to that used in small-scale biodiesel manufacture”, says Peter. “It is very straightforward, although there are significant safety issues. Adequate mixing of all components and successful washing of the raw biodiesel are key to the production of quality fuel.”

Selecting the processor

The Girotech Ageratec P3000 processor, a Swedish machine, has been modified extensively.

“We looked at a number of processors around the world and this one seemed to tick all the boxes. It originally sold for about $200,000.

“As we got to know it, we found that it didn’t quite tick all the boxes. The unit was very well made but we struggled to consistently produce fuel of an appropriate quality. We have made extensive modifications, re-written the control software and introduced additional hardware. With these changes, it is proving to be a very robust unit.”

How the processor works

The processor was designed as a 2-tank system but has been reconfigured as a 5-tank system. In the first tank, the oil is pre-heated to about 50 degrees and in the second tank the chemical reaction takes pace. Tanks 3–5 are for chemical recovery, settling and washing.

The system is fully automated.

“It’s a set-and-forget system”, says Peter. “You just put the oil in to the first tank. When it hits the temperature, it is automatically pumped to the second tank where the appropriate amounts of methanol and catalyst are added and mixed. The mix settles for about 6 hours, during which time the glycerol drops out and sits as a layer on the bottom of the tank. That’s drained off, and what you have left is raw biodiesel.”

Cleaning the raw biodiesel

Any excess methanol that hasn’t been used in the reaction is recovered from the raw biodiesel. Then the biodiesel is washed to remove soaps and any residual catalyst.

“There are a number of ways you can wash biodiesel”, Peter explains.

“We use a water-wash system because it is pretty straightforward and it works. Water washing requires access to a supply of clean water equal to about 20% of the fuel volume produced.

“A number of people are using dry-wash arrangements to minimise water usage and there are a number of dry-wash products available. As we have good access to water and can recover most of the water used in our wash system, it is not really an issue for us, so we haven’t looked at non-water alternatives in any detail.”

The washed biodiesel is heated under low pressure to take out any remaining water.

“The water is evaporated off and then that’s it, you’ve got biodiesel. We also run it out through a final cartridge filter, to take the filtering down to about 2–2.5 micron.”

A beaker of biodiesel
Any excess methanol that hasn’t been used in the reaction is recovered from the raw biodiesel. Then the biodiesel is washed to remove soaps and any residual catalyst.

Using the biodiesel

The biodiesel can be used as a total substitute for standard diesel without any engine modification required. It also mixes readily with standard diesel to form a range of blends.

Blending is not complicated”, says Peter. “We add the biodiesel to the mixing tank first and then add standard diesel at a decent flow rate. The blends are stable once the mixing is done.”

The blends that you use, he adds, are really a function of manufacturer’s warranties and the taxation situation.

“We use a maximum B20 blend (20% biodiesel: 80% standard diesel) in vehicles and machines that are eligible for the diesel fuel rebate. For vehicles where that can’t be claimed, we use higher mixes consistent with warranty provisions if applicable. I have run a Hilux common rail diesel motor on straight biodiesel (B100) without problem.”

Mossrock Australia produces and distributes mulch around Victoria and has been using Madowla Park biodiesel since October 2013.

“We have three large tub grinders onsite as well as loaders, excavators and trucks which we use to deliver our products”, says General Manager Chris Wearne.

Chrise Wearne
Chris Wearne has begun using biodiesel at Mossrock Australia with “very pleasing” results.

“We have been running the biodiesel B20 blend throughout those machines and so far the results are very pleasing. There has been no adverse effect in any way on any of our machines.

“We are currently using biodiesel as 10%–15% of our total fuel. The B100 costs 30%–40% less than our usual fuel so, when we move to a biodiesel blend for most of our usage, cost savings will be in the range of 5%–10%. So it makes sense to me and it makes sense on the bottom line.

“It is still a trial period, but we are very confident that it will continue to prove to be the right way to go.

“We hope to be a flagship on the biodiesel path. And hopefully people will come in and look at our operation and see what we have done.”

Cost savings
Mossrock Australia will save 5%–10% on fuel costs after switching to biodiesel for the majority of its fuel demand, which will equate to 500,000–600,000 litres of biodiesel a year.

Biodiesel is quite detergent, according to Peter.

“My vehicle had done about 200,000 km when I started using biodiesel, and I had to replace fuel filters 2 or 3 times in a short period. It stripped sediment out of the fuel tank and out of the fuel lines. It’s also pretty tough on paint so don’t let it sit on your car.

“People should be aware that they will have to watch their maintenance regimes, particularly for older vehicles. Having said that, the articles I have read on marine diesel studies suggest that long-term maintenance costs are comparable or even reduced using biodiesel.”

Storing biodiesel

Storage of biodiesel is a subject that people need to research, says Peter.

Microbial growth and oxidation of fuel over time need to be understood or you can do some damage to fuel systems.

“The steps needed are not complicated or expensive but they are important and will vary from site to site. Feedstock, temperature and types of storage containers are all relevant.

“Standard diesel additives can be used and early blending with standard diesel can help to address oxidation problems.”

Storing the canola meal

Peter has enough canola meal storage for 2 days worth of grinding.

“As with the oil storage, we have tried to introduce buffer capacities. So if the oil side of the process stops, we can keep going with the meal, and vice versa.”

The meal needs to be stored dry or mould can be an issue, so he monitors the moisture content.

“We are really just learning in this area. The local stockfeed people are helping us in terms of quality control and keeping the whole thing safe. We are feeding this to cattle that are worth a lot of money, and we don’t want to see any of them falling over with it.

“People should also be aware that mice love this stuff”, he adds.

Pelletising the canola meal for stockfeed

The canola meal, or ‘cake’, that comes out of the grinder is a high quality, high protein stock feed. Some of it is sold straight off the grinder. The rest is combined with other materials in a mixer wagon to make a total ration.

“The canola meal as is can’t be fed directly to stock in volume because of the very high protein content”, says Peter. “We can make up blends with cereals, straw, trace elements or whatever recipes the nutritionists come up with.”

From the mixer wagon, the mix is fed into the pelletiser.

“The protein content of the pellets depends on the stock you are feeding. We are producing pellets with a protein content of about 16%, while the canola meal itself is 30%–35%. That’s the initial reason to pelletise.”

Peter has found that pelletising the meal is also a convenient way of handling it. “It’s not dusty, and with cattle there can be eye problems with dust.”

Canola-meal pellets
High-protein canola-meal pellets are easy to handle.

Pelletising is an important part of the economics of the whole process, he believes: “It adds value to the meal. For a lot of people, the economics of the biodiesel operation revolves more around the economics of the meal. The fuel has a pretty clear and consistent market but the meal price fluctuates a lot. So if you can’t get a good return on the meal, then the economics start to look shaky.”

The pelletiser was made in Griffith by Palmer Milling Engineers and the electrics and control system were done locally. Peter could have saved money by importing a machine from China but was keen to have the back-up of a locally made product.

Feeding heifers the pelletised canola meal

To maximise the value of the canola meal produced from the biodiesel operations, Ecofuels began dairy-heifer backgrounding operations at two locations: Kalumunda, the western-most block on Madowla Park; and south of Deniliquin.

Both sites now include AQIS-registered pre-export quarantine facilities.

“We take in dairy heifers destined for China and we put them in quarantine for 30 days before they go onto the boats”, explains Peter.

“We use the pellets produced from our biodiesel operation to supplement the pasture grazing for those animals while they are in quarantine.”

Heifers at Madowla Park
Heifers are fed canola-meal pellets as a supplement while in quarantine.

The quarantine operation uses most of the meal produced and there are nearby outlets for the excess.

“We are close to the dairy areas around Shepparton and Tatura so there is a ready market for the meal that we produce. And we are working in with the local stockfeed producers who are interested in our pelletised canola meal.”

Powering the plant using ‘waste’ products

Ecofuels has designed a digester system that can use the waste water, glycerine and any surplus meal to generate power.

“The soap-contaminated wash water and other waste streams from the property will feed into a digester system which, on current calculations, will give us enough power to run the whole plant, so we can go off grid at that stage”, says Peter. “That’s what we are aiming for.”

From the digester, Ecofuels expects to get power, clean water and fertiliser by-products that can be used on the property.

The digester is awaiting approval and permits, and is expected to be operational early in 2014.

“Digesters on the market are enormously expensive for a small-scale operation. So we have had to look at the components and put something together that works for our operation. We think that what we have developed may have a place in the wider market as well, where effluent, waste and power prices are increasingly an issue.”

The digester produces a burnable gas, which can be used to generate heat or steam, or which can be burnt directly in an engine that will drive a generator.

“Our intention is to put it into a generating system and generate power through it. We have units that are going to run 24 hours a day so, if we can produce power 24 hours a day, it all fits together quite well.”

Excess power could be fed back into the grid but Peter has chosen not to do so.

“We use enough power on this property to say, well, let’s be sensible about using it ourselves and scale accordingly.”

Cotton seed as an alternative to canola

Ecofuels is exploring cotton seed as an opportunistic alternative to canola.

“If the canola market gets to $600–$650/tonne, as it has done previously, that is more than we can afford to pay and still produce fuel at a competitive price.

“Obviously for us it is not a total disaster if the price gets up because we can cover part of our requirements with what we are growing. But the cotton seed can be at a lower price.”

The price of cotton seed can vary enormously. “It might be $175/tonne some years and $400/tonne in other years. In years where it is cheap it may be an option for us.”

At Picola, 20 km from the Madowla Park facility, Peter has 600 tonne of cotton seed stored in an ex-Graincorp silo facility.

“Cotton seed has its own problems because it’s covered with lint and we have had to work out ways to take the lint off. We have just about got that in place now. Then we will put delinted seed through our grinder and see what sort of results we get.”

A pile of cottonseed
Cottonseed is a possible alternative to canola because it is usually cheaper. The lint needs to be removed before extracting the oil.

From the trials done so far, Peter reckons he’ll get about 12% oil from the cotton seed, compared with the 30%–35% he gets from canola.

He’s happy to continue trials with that yield because the cotton seed can be cheaper and the meal still has a significant value as a stock feed. And he can grind it through the same systems.

He also plans to look at other oilseeds as long as they are available in the right volume.

“The whole idea of what we are doing is that we don’t want to be carting stuff all over the country. And you can’t afford to anyway—the margins are not there to have a lot of transport built into the system.

“If you can source your raw material from within a sensible catchment, say 50–100 km, then that’s fine. If you have to go further than that for material, you go and build another plant.”

Capital costs and payback period

The machinery and the design and development of Ecofuel’s 15 m x 25 m shed represents nearly $2 million of investment. That includes the grinder, filter, processor, pelletiser, mixer wagon tanks and, Peter adds, “a lot of time”.

The company expect to produce 1.5–2 million litres of fuel and 3000–4000 tonne of meal a year.

On that basis, this operation has a payback period of 3–4 years.

Peter cautions others to choose their processor carefully. “The equivalent Ageratec unit to the one we are using has gone up in price by nearly $250,000 [AUD]. We are looking at that situation at the moment.”

Excise, licences, standards and grant schemes

People need to be aware of the excise requirements for biodiesel, says Peter.

Excise and licensing requirements for biodiesel are explained vey clearly through the ATO website—what you need to do and what licences you have to have.

“And you do need to be licensed. People think that if they are producing fuel just for their own consumption then they are outside the system. That is not the case unfortunately. So you need to have all the licenses in place. That then gives you the opportunity to apply for various grant schemes, so it is worthwhile.”

Biodiesel qualifies for payment under the Cleaner Fuels Grant Scheme as long as it meets the appropriate standard, he says, though B20 and weaker blends are treated as standard diesel with respect to the diesel fuel rebate.

“There are a series of quality levels based on the European standard that locally produced biodiesel has to meet. So there are quite extensive requirements that you have to satisfy in terms of the record keeping and testing, and you can be audited at any time.

“But if the fuel you produce meets the relevant standards, and you are registered, then you can claim back the full value of the fuel excise.

“The requirements are well explained on the various websites. The applications for registration are straightforward. And I would have to say that the departments that I dealt with were really helpful, and it was a pretty painless operation.”

Power supply

With an extensive network of three-phase power on the property, Ecofuels didn’t have to pay a lot to upgrade the power supply to the shed.

But for people who don’t have access to the three-phase network, or are isolated from it, it may be a real issue, Peter says.

“Before we got the power hooked on, we ran from a generator. It worked, but it was a bit underpowered, and had its moments.

“We have a 200 kW power supply to the shed now and we are sitting pretty close to the limit of what that can supply to the machinery that we have got here. If we started everything up at once, we probably couldn’t do much more than what we are doing. So power is something that people need to be aware of.”


Safety is a concern with biodiesel manufacture, principally because you are using methanol in the process.

“Methanol is a highly volatile liquid with a very low flash point”, says Peter. “And you don’t want to come into contact with it through your skin or eyes. You need to be sensible about it.”

Ecofuels has had inspections done by Energy Safe Victoria who made a series of recommendations. They have also developed full safety manuals for the site and have had extensive discussions with the Country Fire Authority and the local council.

“Careful consideration of safety issues is important”, says Peter, “as accidents have the potential to be very serious.”

As with other fuel facilities, provision has to be made to contain spills. Regulations around bunding requirements are clear, he says, and need to be incorporated into the shed design. Spills at Madowla are captured in a separate drainage system that leads to an isolated storage.

For more on safety with biodiesel, Peter recommends starting with Biodiesel Safety and Best Management Practices for Small-Scale Noncommercial Use and Production, published by Penn State University.


During construction, more than 25 local contractors worked on the Madowla Park site. Now operational, the biodiesel facility alone employs at least 5 people.

The whole operation will soon employ 15–20 people, Peter says. “We are growing the crop; the meal side of things is going to employ a number of people; we are pushing significant numbers of cattle through with the meal we produce; and we will have trucks running virtually full-time collecting raw material and delivering product.”

Depending on the results from Madowla Park, Ecofuels plans to build more plants in partnership with large rural biofuel users, providing increasing numbers of long-term jobs in rural areas.

Getting started and getting help

Peter credits Deane Belfield, who runs environmental consultancy Eco2Sys, with the original concept for the biodiesel plant.

“Deane’s idea was to have a plant that was owned by the end users of the fuel”, explains Peter. “We went a couple of steps beyond that and became the crop growers, the users of the meal and the users of the other by-products.

“Deane was also of enormous help to us in negotiating a way through the array of regulations, requirements and departments that was initially confusing, and in putting together the subsequent planning and funding applications.

“The Victorian Government has made a substantial contribution through its regional development initiative, which has allowed us to move far more quickly and far further than would otherwise have been the case. We have got, and continue to get, a lot of assistance from Ian Guss at Regional Development Victoria.

Steven Hobbs at BE Bioenergy in Kaniva has been involved in biofuel manufacture for a long time now and has really detailed, practical and technical knowledge. His company Yarrock Oils produces fuels from a range of seeds and he has done extensive research into the viability of Indian mustard as a dryland oilseed crop in northern Victoria. I’m on the phone to Steven regularly, both in his commercial guise as the local agent for Keller Presses, but far more often for his help and industry knowledge—and he’s very generous with both.

“And there is lots of information on the net. Some of the information from the American universities is extensive and detailed.

“Getting started is not totally straightforward, but it’s not that difficult either”, says Peter. “We have certainly run into some roadblocks along the way, and I would hope that the next plant that we build will be easier because of the knowledge that we have gained. I think you have pretty much got to expect that when you start on something new.”


Peter O’Donnell,
General Manager,
Ecofuels Australia,
Phone: 0419 511 433
Chris Wearne,
General Manager,
Mossrock Australia Pty Ltd
480 Cooper St., Epping, Vic 3076
Phone: 03 9408 7900
Steven Hobbs,
General Manager,
BE Bioenergy Yarrock Oils
713 Yarrock Road, Kaniva, VIC 3419
Phone: 0419 003 752
Dr Leigh Clemow,
Manager Energy, Infrastructure Development,
Regional Development Victoria
Phone: 03 9027 5438