US Biodiesel Industry Smashes Previous Production Record for 2011 Despite Ongoing Concerns

After coming off a disappointing year in 2010 for US biodiesel production, the industry in 2011 has come roaring back to life, smashing all records, including the most recent record in 2008, the US Biodiesel Board recently announced. However, the US biodiesel federal tax credit set to expire at the end of 2011, there is some concern within the industry, as biofuels companies continue their onward advance as a solution to get nations off of fossil fuels.

This year saw 802 million gallons of biodiesel produced all across the US, including in Iowa, Florida, and Washington, the Board said. That is more than double 2010 production of 315 million gallons, and far ahead of the previous all-time record of 690 million gallons in 2008.

The contributing factor to the upward trend in US biodiesel production was the reinstatement of the US biodiesel federal tax credit. However, the same credit is supposed to expire at the end of this year unless Congress can come up with a solution to keep the credit going into 2012.

Industry participants note, of course, that the potential of the US federal biodiesel tax credit being axed at the end of December could do some serious damage to the sector.

“It will affect how many people we can hire, how much feedstock and equipment we buy, how many truckers we put to work delivering fuel,” said President Gabe Neeriemer of Patriot Biodiesel of Greensboro, North Carolina. “This incentive is working, and particularly in this kind of economy when politicians say they’re doing everything they can to create jobs, I can’t imagine why Congress would allow it to expire.”

The US$1-per-gallon tax credit has helped pushed employment up to 31,000 in the United States, compared to 13,000 a year earlier, and helped the industry reach a GDP of US$3 billion, the Board said. The tax credit has also been a benefit to strapped government coffers, providing US$628 million in local, state and federal revenue.

While biodiesel saw good production this year, along with the biodiesel credit set to expire, the ethanol blenders tax credit is done this year and could also hurt the industry. Other concerns, including the ongoing food versus fuel debate and a recent report stating the US may have problems reaching its ethanol targets by 2022 unless technologies are ramped up to offer more support, could cause additional concern in the biofuel industry.

Despite the challenges within the biodiesel and ethanol industries, renewable fuels will definitely continue as a part of the energy mix of the US and other industrialized countries. Even if they face energy challenges within their the U.S. and Canada, new demands from emerging markets are anticipated to stimulate the creation of more sustainable fuels that can also support global economic growth.

Photo Credit:  By Spencer T.