US Biodiesel Refiners On Hold Pending Tax Credit Renewal

US biodiesel operating rates plunge near zero

6 Jan 2010 , Houston : Operating rates for the US biodiesel industry is [sic] approaching “zero percent” as Congress waits on a vote to extend a blending tax credit that would help producers make sales, sources said on Tuesday.

Biodiesel refining in the country ground to a halt after the Senate said it would not vote on extending a $1/gal (€0.18/litre) blending tax credit until members returned from Christmas break. Without that credit, biodiesel producers cannot sell their material at prices competitive with traditional diesel.

Some material is still being produced to meet individual state mandates, but the combined 84m gal/year (318m litres/year) needed for Minnesota, Pennsylvania and Oregon is but a sliver of the total 2.9bn/gal year US capacity.

We’ve seen oil-rich countries in the Middle East, Indonesia and Mexico wreck their economies by subsidizing fuel for their masses.

Why would “green” fuel subsidies – in effect, the government paying refiners to make what would otherwise be a noncompetitive product – be any different for our economy?

The House passed legislation to extend the biodiesel credit in December. The Senate, being otherwise occupied before Christmas, will not consider the measure until late January at the soonest.

With lows forecast around -10F later this week in Minneapolis, I’m guessing that the demand for biodiesel isn’t all that great anyway.