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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 lelias2k on 1/4/2010 2:54:33 PM , Rating: 3
Anything produced in small scale is expensive. And when you're competing with the biggest companies in the world (oil companies) you may need a hand.

Pay attention to this website for a little while and you will see that most users only talk about how stupid any green tech is because it costs too much.

Most of them forget that they're using a sub-$1000 computer due to the $5000+ computers of the 80s.

I know, I know, computers weren't subsidized, but they weren't competing against one of the biggest industries in the world either.

And while some may argue the oil companies are investing in renewable energy, including biodiesel, their business is still focused on gasoline.

Maybe if they added a $0.1 tax to gasoline to subsidize American biodiesel companies... oh wait, I forgot, we don't want to pay for anything...


RE: just goes to show
By rcc on 1/4/2010 4:56:03 PM , Rating: 2
quote:
Maybe if they added a $0.1 tax to gasoline to subsidize American biodiesel companies... oh wait, I forgot, we don't want to pay for anything...


While you're at it, could we tax the fuel oil used for heating in cold regions and apply it to air conditioners?? Cuz you know, you can always put more on, but there is only so much you can take off.


RE: just goes to show
By lelias2k on 1/5/2010 10:34:49 AM , Rating: 1
Better yet, provide better tax incentives so people replace their HVAC from 30 years ago for something that is 10x more efficient...

http://www.energystar.gov/index.cfm?c=heat_cool.pr...


RE: just goes to show
By rcc on 1/5/2010 3:54:35 PM , Rating: 2
WOOOOOOOOOOSH


RE: just goes to show
By Cerin218 on 1/5/2010 10:43:40 AM , Rating: 4
How much tax is on a gallon of gas? I pay 27.1 cents in Minnesota on top of the 18.4 cents Federal. So 45 cents total. At what point will you be satisfied to stop taking money? Why is it I only hear people ask how we get more money, not how to control spending. Biodiesel is not necessary. We have plenty of oil in this country if people would quit whining about it and start using it. Simply put, "green" technology is not mature enough to actually use. Where will I plug my electric car in at work? If I live some where the temp doesn't kill the battery in the first place. 60 miles on a charge and 3 hrs to charge? How is that realistic? I am not using a computer thats 1k because 20 years ago it was 5K, it's because the cost to produce that computer has dropped due to changes in manufacturing and technology. It's a great idea to start looking green, but realistically the technology is in it's infancy and is not currently scalable. Or does stupid things like use our food supply as an energy source.

So keep looking for your tax increase. ANd while you are at it, do a little research and understand how much money you pay now in taxes. I don't understand why people are always so quick to say tax more so we can spend more. Yes if it makes sense, but when a product costs more to produce then it does to consume, that's just bad economics. I'll give you a quarter for every dollar you give me and we'll see how long till your broke.


RE: just goes to show
By ArcliteHawaii on 1/5/2010 6:29:52 PM , Rating: 1
It isn't about "taking money". There should be a floor on gas prices to provide stability for other start up alternatives like electric and others. It would also promote conservation and innovation in high mileage cars. When gasoline prices hit $8 per gallon we as a nation are going to be in extreme pain. Shouldn't the USA be preparing for that now? Other nations like Japan and Germany have had these in place for decades, and as a result, have much higher fuel economy averages than we do (I think Japan is double mpg on average than the US). It has also spurned innovation. Is it any wonder that the best and best selling hybrids are coming out of Japan? Is it any wonder that the best diesel vehicles come out of Germany? Is it any wonder that the only US car company to survive the collapse last year was Ford who didn't put all of its eggs in the SUV basket ( by basically realizing gas prices could get very high very quickly)?


RE: just goes to show
By hashish2020 on 1/5/2010 11:57:35 PM , Rating: 1
And the taxes you pay on petroleum product is nothing compared to the market subsidies of an artificially strong dollar, CIA funded revolutions, wars in a part of the world that was just flat desert that noone wanted until oil spurted up...if you think oil itself is not subject to government subsidies than I think you have blinders on.


RE: just goes to show
By lelias2k on 1/14/2010 2:07:03 PM , Rating: 1
I'm originally from Brazil, so don't talk to me about taxes, because you have no idea what it is to pay taxes in order of 50% or more of the price of pretty much anything.

You can dream as much as you want about trying to control spending, but there are two factors that make that almost impossible: We're dealing with humans, and most of those who are responsible for spending do so in areas where they are not experts. This won't change for at least a few generations more, and only if we revamp our education system.

quote:
I am not using a computer thats 1k because 20 years ago it was 5K, it's because the cost to produce that computer has dropped due to changes in manufacturing and technology.


Duh, that was partially the point of the comment. The other half is that if people didn't buy those 5k computer the industry wouldn't have survived long enough to be able to produce today's computers at these prices.

quote:
It's a great idea to start looking green, but realistically the technology is in it's infancy and is not currently scalable.


And that's why somebody has to invest in it. Other governments are investing in it. Why can't we?

And we have to be happy for those who have the vision (and the money) to buy these "pieces of crap," just as we should thank the ones who bought those 5k computers. But instead all you hear is people whining and making fun of them.

Oh well, I guess we are the smart ones, right?


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