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From algae and wood chips to grasses and solid waste, scientists are looking far and wide for the raw material that will yield a new generation of renewable fuel—a source that doesn't divert food into energy, and is abundant enough to make a significant dent in the oil market.

The world's largest meat company thinks the answer may have been congealing in its facilities all along: Animal fat.

Food-processing giant Tyson Foods, in partnership with the synthetic fuels research firm Syntroleum Corporation, has opened a plant in Geismar, Louisiana (map), that is testing the prospects for converting low-grade, inedible fats and greases into a renewable diesel fuel for transportation.

The partnership, called Dynamic Fuels, opened its plant in October and is already producing 105,000 gallons (397,000 liters) a day and says it has capacity to produce up to 75 million gallons (284 million liters) per year.

Beyond the Soybean

Dynamic Fuels aims to make a fuel quite different from the typical biodiesel alternative currently processed from soybeans. Soybean-based biodiesel has remained costly and is controversial in food security circles. And federal regulations prohibit its transport through most existing pipelines for fear it will mix with jet fuel. (Biofuel has been thought to degrade jet fuel, although industry studies now dispute that.)

But diesel fuel made from animal fats such as beef tallow, pork lard, and chicken fat—known as "renewable diesel"—is distinct from biodiesel in part because of the way it's made.

To make biodiesel, fats in the vegetable oil are reacted with a form of alcohol—usually methanol—to form the biodiesel molecule. For renewable diesel made from animal fat, fats are hydrogenated by reacting the tallow with hydrogen under high pressure at high temperature. The result is a molecule that's basically a pure—but synthetic—hydrocarbon, which means it's chemically identical to regular diesel.

"It's all the best molecules from petroleum without the harmful ones," said Jeff Bigger, Syntroleum's senior vice president for business development.

The harmful compounds in petroleum absent from renewable diesel include benzene, which becomes an airborne carcinogen when burned. Renewable diesel also creates far fewer sulfur dioxide, particulate, and nitrogen oxide emissions. Bigger says the exhaust has a light waxy smell, like paraffin. And, renewable diesel is a low-carbon fuel, even when its emissions are measured from the slaughterhouse to the refinery to the vehicle. The California Energy Commission, which has measured the emissions of a wide variety of alternative fuels, says renewable diesel has 58 to 80 percent lower greenhouse gas emissions than petroleum diesel.

Renewable diesel advocates like Bigger say that it beats out biodiesel in other areas as well.

Unlike biodiesel, renewable diesel can go directly into the petroleum pipeline and refining infrastructure.

"Biorefining is very promising," said Gordon Schremp, a senior fuels specialist at the California Energy Commission. "These 'drop-in' fuels can be mixed with normal fuels and we're seeing more focus on them than [on] biodiesel."

Renewable diesel can be blended with petroleum-based diesel or biodiesel. And, according to Syntroleum, it has a dramatically longer shelf life than biodiesel, measured in years rather than months.

Policy, Supply Challenges

Despite renewable diesel's advantages, it's expensive to refine any kind of fuel. And, like the petroleum sector, the renewable fuels industry counts on government subsidies like the $1 per gallon renewable diesel and biodiesel tax credit that Congress restored in the big tax break extension bill signed by President Barack Obama this month. That credit had lapsed for a year after Congress allowed it to expire in December 2009.

Traditionally, Tyson has sold its non-food-grade fats to producers of soaps, cosmetics and pet food. So far, Tyson spokesman Gary Mickelson says that the volume of fat and grease en route to the Dynamic Fuels plant "currently represents a very small percentage of our overall production" of fats. But fuels could turn out to be the most profitable use of the waste products, if renewable diesel can take off.

The U.S. military is one sector that has expressed interest in renewable diesel and jet fuel. Dynamic Fuels has been making jet fuel for testing by the Air Force Research Laboratory.

"You've got all these different sources and they all have they potential to be made into biodiesel or renewable diesel," said Douglas Tiffany, a biofuels expert at the University of Minnesota. "The great thing about fats from animals is that they're quite a bit cheaper than vegetable oil. The strength of the venture is the supply."