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The rollback of a $1/gallon federal tax credit on biofuels threatens to sink many small biodiesel producers across the country.  (Source: Alibaba)
Without the $1/gallon federal tax credit, the biodiesel industry no longer appears commercially viable

While most are hoping that the U.S. can transition to electric vehicles and vehicles running on sustainable biofuels, this last year has made it clear that the process will be no walk in the park.  Recent studies showed that, in their current form, hydrogen cars emit more carbon over their lifecycle than gas cars.  And early consumer electric vehicles, like the BMW Mini E, while low emissions, have suffered from a variety of temperature related woes.

Now the biofuels sector has become the latest green transportation field to suffer disappointment in 2009.  The year started off rocky with the European Union in March unveiling import-killing tariffs on biodiesel and other biofuel.  Then, as the U.S. recovered from the recession, diesel prices dropped 18 percent off their highs, making it harder to justify the high costs of biodiesel.

Now another nail has been placed in the commercial biofuel industry' coffin -- the government $1/gallon federal tax credit will expire this Friday.  And for many businesses in the industry, it may be the last; amid a frustrating market, many biodiesel makers across the U.S. say they will likely call it quits and cease production when the credit ends.

The largest biodiesel refinery, located in Houston, Tex. has already shut down.  Another large refinery, located in Hoquiam, Wash. has been shut down as well, following a December explosion. 

However, it's not just big businesses that are cutting biofuel production and jobs.  Small businesses are also suffering.  Dwight Francis of Valliant, Okla. launched a new biodiesel venture earlier this year when the local timber economy tanked.  He was producing 12,000 gallons of biodiesel fuel per week by mid-year, and his business was viable, thanks to the $1/gallon tax credit.  Now with the credit gone, he says he's shutting down the promising startup.

He bemoans, "By the time you buy the feedstock and the chemicals to produce the fuel, you have more money in it than you get for the fuel without the tax credit.  We won't be producing any without the tax credit."

Congress and the U.S. Environmental Protections Agency have set the ambitious benchmark of producing 36 billion gallons of home-grown biofuel a year by 2022, reducing dependence on volatile foreign oil.  The prospects of achieving that goal now look bleak, according to government officials.  States Robert McCormick, principal engineer at the Department of Energy's National Renewable Energy Laboratory, "You could say the entire biofuels industry has had a rough year."

Despite these setbacks both optimism and debate on biofuels remains high.  Many liken the departure from traditional gas combustion to EVs, fuel cell vehicles, and biofuel vehicles to be similar to other past modern technological breakthroughs such as the computer, internet, airplane, and railroad.  These past innovations only reached consumers thanks to massive subsidies and investment of both money and land from the U.S. federal government.  Many argue that similar investments are needed to allow the alternative energy transportation industry to reach viability.  The real question, many say, is which candidate(s) is/are best to invest in (EVs, fuel cells, and/or biofuels) and when and how much should be invested.

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RE: just goes to show
By Motoman on 1/4/2010 11:55:27 AM , Rating: 2
Agreed. Biodiesel makes a lot more sense than electric does, at the very least at this point in time anyway. The government is picking EV over biodiesel for us by continuing tax credits for one but eliminating incentives for the other.

Cutting off the biodiesel industry while propping up the EV industry is, at best, a highly dubious action.

RE: just goes to show
By Oregonian2 on 1/4/2010 12:29:57 PM , Rating: 2
How many dollars have been collected for the electric incentive, and how many dollars actually collected for the biodiesel one? :-)

I think the biodiesel credit is something that industry revolves around. I think the EV one helps some, but probably makes comparatively little difference in the product being made -- mostly just makes more be sold (as opposed to the 100%/0% sales sort of difference with bio-fuel).

The volt would still sell w/o any incentive at all. The biodiesel would probably sell pretty close to none at all w/o the incentive.

RE: just goes to show
By Emma on 1/5/2010 12:08:26 AM , Rating: 2
You can have both! It acutally makes sense to use biomass fuels to generate electricity in efficent turbines and charge our electric vehicles with this energy. This is the best way of utilising the most energy from biomass.

So yes, support biofuels where it makes sense, and support the EV industry also.

RE: just goes to show
By knutjb on 1/5/2010 12:24:44 AM , Rating: 2
Does it produce carbon? Whoops sorry can't have it. Only non-carbon producing energy is Ok. Carbon is the cause of climate change, just ask Al Gore.

RE: just goes to show
By Emma on 1/5/2010 11:44:00 PM , Rating: 2
This is a poor comment. This paints Al Gore as an environmental zealot, when in reality he is generally a supporter of biomass sourced energy. Please read up on the issue before posting an ill-informed comment that does nothing to help this discussion.

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