U.S. Biodiesel Industry at a Crossroads
Opinion Editorial by Ed Hegland, Chairman, National Biodiesel Board

“But to truly transform our economy, protect our security, and save our planet from the ravages of climate change, we need to ultimately make clean, renewable energy the profitable kind of energy…we will invest fifteen billion dollars a year to develop technologies like wind power and solar power; advanced biofuels, clean coal, and more fuel-efficient cars and trucks built right here in America.”
– President Barack Obama, February 24, 2009

In his first address to a joint session of Congress, President Obama promoted a bold “new energy” agenda. Biodiesel is the only fuel commercially available today that meets all the federal government’s criteria of an “advanced biofuel.” But it is facing monumental challenges to help make his vision of energy independence a reality. In a time of financial uncertainty, biodiesel’s contributions to the American economy are abundant. Last year alone, U.S. biodiesel producers supported 50 thousand green collar jobs, contributed $4 billion to the nation’s economy and displaced almost 700 million gallons of petroleum.

Produced from a wide variety of renewable resources, including soybean oil, other plant oils, and even recycled restaurant grease, biodiesel is a truly sustainable fuel. Crucially, soybean-based biodiesel actually has a positive impact on the world’s food supply. In processing soybeans for use in biodiesel, only the oil is used, leaving 80 percent of the bean for protein-rich soybean meal. This soybean oil demand makes the protein portion cheaper than it otherwise would be. Last year, the 690 million gallons for biodiesel produced from soybeans co-produced enough soybean meal for 115 billion rations of protein for the hungry in developing countries.

Compared to petroleum diesel, biodiesel reduces life cycle carbon dioxide emissions by 78 percent. In 2008, biodiesel’s contribution to reducing greenhouse gas emissions was equal to removing 980,000 passenger vehicles from America’s roadways. And biodiesel is an extremely efficient fuel. A 1998 U.S. Department of Energy/Department of Agriculture study shows for every unit of energy used to create it, this proven fuel provides an industry-leading 3.2 units of energy in return. That number is expected to climb even higher due to technological advancements.

Yet despite the numerous economic, energy security and environmental benefits derived from biodiesel production, America is at risk of losing this green industry. Squeezed by the tight credit market and extreme volatility in the commodities markets, biodiesel producers are struggling in these uncertain times.

Already, some of the nation’s 176 biodiesel plants have closed their doors. Absent any change in federal policy, U.S. biodiesel production will likely fall even more – costing the economy up to 30,000 jobs. Critically, biodiesel’s ability to meet the important advanced biofuels goals established by the federal government is threatened if significant issues are not addressed.

The biodiesel industry is not seeking the creation of new programs. Instead, common-sense improvements will help the industry survive in this difficult economic climate. Specifically, a multi-year extension of the federal biodiesel tax incentive is vital to the growth of our green industry. In the past, we’ve asked for a marriage and Congress has given us a “maybe” by only extending the tax incentive on an annual basis. Our producers need a firm commitment to encourage capital investment in the industry.

Then there is implementation of the renewable fuels standard (RFS-2), which was developed to require that renewable energy replace significant volumes of foreign oil. RFS-2 is supposed to encourage use of renewable fuels like biodiesel. But a technical interpretation could prevent the majority of biodiesel from being part of the solution.

America’s biodiesel producers are prepared to help the President achieve his important goals for more renewable, domestic fuels. But without a common sense approach from the federal government itself, we’re going to be forced to take a step back before we can make a leap forward.

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