The biodiesel industry is poised to regain growth in 2011 with the reinstatement of the biodiesel blenders’ tax credit ($1 per gallon) for 2011, reported Gary Haer, vice president, sales and marketing, Renewable Energy Group, Ames, IA, and chairman of the National Biodiesel Board's Governing Board.
During a news conference at Ag Connect, January 7-10, in Atlanta, GA, Haer also reported that the tax credit was made retroactive for all B100 gallons sold in 2010. However, the current blenders tax credit is due to expire at the end of 2011.
“We’re going to work hard to get a longer term tax credit for biodiesel,” Haer said, adding that both Senators Charles Grassley (R-IA) and Maria Cantwell (D-WA) have supported a five-year tax incentive.
Senator Cantwell has reported that the Biodiesel Tax Incentive Reform and Extension Act of 2009 would “provide predictability to investors and producers so the United States can continue moving forward to displace imported fossil fuels with low carbon, renewable biodiesel.”
During 2010, biodiesel plants ran at reduced rates or had idled production. But, with the reinstatement of the tax credit and continued demand for Renewable Fuels Standard (RFS2) volume obligations, idled capacity is expected to return. The final 2011 RFS2 Volume Requirements require the use of 800 million gallons of biomass-based diesel, the National Biodiesel Board has reported.
Moreover, because the EPA has categorized biodiesel as an advanced biofuel, it is very likely that petroleum companies and other obligated parties will use biodiesel to meet their EPA RFS2 volume requirements. Biodiesel is currently the only domestically-produced advanced biofuel available on a commercial scale. Other domestically-produced advanced biofuels are still about five years away from becoming commercialized, Haer said.
Haer added that biodiesel demand is being driven by some states with blending requirements: Minnesota, Pennsylvania, Oregon and Washington. There are also financial incentives to blend and use biodiesel in Illinois, Iowa, Texas and South Carolina.
Demand for biodiesel for home heating purposes (Bioheat) in the Northeast as well as for uses in underground mining and the military also bodes well for the industry, Haer said. “Bioheat is an evolving market. Heating oil is facing competitive pressure from natural gas. But, biodiesel’s image as a cleaner burning fuel has been enhanced. This will help throughout the Northeast where home heating oil is used. Farmers on the United Soybean Board are enthusiastic about Bioheat.”
Soybean producers have provided scientific data and have educated industry officials about the sustainability of soybean production and how biodiesel can be used to help reduce greenhouse gas emissions, Haer said.
Also during the news conference, Haer said that 50 percent of the biodiesel used in the U.S. has soybean oil as its primary feedstock, which adds $.25 per bushel to the value of soybeans. There is growing demand for animal fat, other oilseeds and used cooking oil as well. The biodiesel industry also generates some 23,000 green collar jobs.