Biodiesel Economics Get Closer Look

During testimony recently, National Biodiesel Board spelled out just you the renewable fuel pays off for local communities.

Published on: May 22, 2012

Digging through the pile of testimony launched at the U.S. House last week as final hearings wound down for the 2012 Farm Bill, you come across a range of little gems. During the House Agriculture Subcommittee on Conservation, Energy and Forestry hearing, lawmakers learned how biodiesel benefits rural communities; and they learned about how key programs in the farm bill bolster the renewable fuel.

Of course every person who testified before the House was making his or her case to keep specific programs alive, but when Gary Haer, National Biodiesel Board chairman and a vice president of Renewable Energy Group took the stand, he came representing an industry that is already getting by without a tax incentive to foster development of the industry. Yet Haer's company, a leading biodiesel producer, and  more than 200 other biodiesel plants keep plugging away.

TELLING THE STORY: During testimony recently, National Biodiesel Board spelled out just you the renewable fuel pays off for local communities.
TELLING THE STORY: During testimony recently, National Biodiesel Board spelled out just you the renewable fuel pays off for local communities.

During his testimony, Haer also pointed out that more than half of the lawmakers on the panel have at least one biodiesel production plant in their districts. "NBB estimates that those plants and others like them across the country supported more than 39,000 jobs in all sectors of the U.S. economy in 2011," he says. He adds that most of the facilities are located in rural areas, and a majority of the feedstock used to produce the fuel is grown or originates in rural areas.

What parts of the 2012 Farm Bill energy title might be needed to keep the ball rolling for this fuel without the aid of a tax incentive? Haer called for the committee to continue funding two programs: the Biodiesel Fuel Education Program and the Bioenergy Program or Advanced Biofuels. Both work to raise awareness of biodiesel and stimulating new production. Haer notes the programs are succeeding, noting they helped the industry produce a record 1.1 billion gallons of fuel last year.

With U.S. energy policy still in flux, Haer points to the idea that biodiesel fits the "all of the above" energy strategy that's been outlined by energy leaders around the country. "The recent oil price spikes should remind us all why this is important. With domestically produced alternatives to oil, we can reduce the influence that global forces…have over our economy," he says.

One issue common in the argument about renewable fuels is that food versus fuel debate. Biodiesel is changing to include a wide range of feedstocks in addition to crop oils. The divers mix ranges from recycled cooking oils and animal fats to agricultural oils. And it can be used in diesel engines without further engine modifications. Already some states are mandating higher blends of biodiesel in state fuels. B2 - a 2% blend - is increasingly common.

NBB notes that biodiesel is the first, and only, commercial scale fuel produced across the United States to meet the U.S. Environmental Protection Agency's definition as an Advanced Biofuel. That means EPA has determined the fuel reduces greenhouse gas emissions by more than 50% when compared to petroleum diesel.

Where the 2012 Farm Bill ends up is anyone's guess. Significant differences between the House and Senate appear to be brewing - however the final House version has yet to be marked up.