Biodiesel Industry Producing Record Volumes

WASHINGTON -- U.S. biodiesel production reached a new monthly high of 81 million gallons in June, according to the latest EPA statistics, marking a third consecutive month of record volumes. 

Biodiesel production in the first half of 2011 has already eclipsed production for all of 2010, the National Biodiesel Board reported. Despite the weak economy, the biodiesel industry is on track to produce at least 800 million gallons this year, more than double biodiesel production of 315 million gallons last year, when Congress allowed the biodiesel tax incentive to temporarily lapse. Congress reinstated the tax incentive earlier this year.

What’s more, new research from the University of Idaho and the U.S. Department of Agriculture concludes that for every unit of fossil energy needed to produce soybean biodiesel, the return is 5.54 units of renewable energy. That’s a markedly improved “fossil energy ratio,” compared to test results from previous years. 

The study’s results reflect the biodiesel industry’s progress in generating higher feedstock yields and developing more efficient processes for producing the fuel. And the industry has bounced back quickly this year, after Congress reinstated the tax incentive in December 2010 and the EPA included biodiesel as an advanced biofuel in its new Renewable Fuels Program (RFS2), requiring minimum volumes of biodiesel use in U.S. fuels. In the first six months of this year, U.S. biodiesel production already has exceeded 375 million gallons.

"We've dramatically increased production and doubled our number of employees at a time when many industries are shrinking or treading water," said Ben Wootton, owner of Keystone Biofuels in Camp Hill, Pa.  "It's like night and day from 2010. I think that's a testament to biodiesel's staying power as an advanced biofuel and also to strong federal policy. We're a young industry, and we wouldn't be where we are today without the tax incentive -- and a lot more people would be standing in the unemployment line."

"Policy makers should take a look at our experience over the last couple of years,” added Joe Jobe, CEO of the National Biodiesel Board. “It's a textbook case in how sound energy policy equates to sound economic policy. Congress should not allow the biodiesel tax incentive to expire again at the end of this year. In this kind of economy, we need every tool we have."

Since the introduction of the $1-per-gallon biodiesel tax credit in 2005, U.S. biodiesel production climbed steadily until 2010, when Congress allowed it to lapse. Production immediately plummeted from a record of about 700 million gallons in 2008 to about 315 million gallons in 2010.

The tax credit is again slated to expire in December of this year. Senators Maria Cantwell (D-Wash.) and Charles Grassley (R-Iowa) have introduced S. 1277 to extend the tax incentive for three years. Representatives Aaron Schock (R-Ill.) and Collin Peterson (D-Minn.) have introduced a similar bill, H.R. 2238, in the House.