EPA Approves 28% Increase in Biodiesel Mandated for 2013
September 19, 2012 8:43 AM
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Biodiesel producers rejoice at new mandate for 2013
The renewable energy industry is applauding President Obama and the U.S. Environmental Protection Agency after the EPA approved a 28% increase in the amount of biodiesel mandated for use in trucks on the nation's highways for 2013. Biodiesel is made in a process that uses soybeans, while the production of ethanol is based on corn.
The president of the Iowa Renewable Fuels Association, Brad Albin, said, "I want to thank President Obama and his staff for listening to our concerns and recognizing the value and potential of America’s Advanced Biofuel—biodiesel.”
The biodiesel industry is celebrating because unlike mandates for the use of ethanol in the nation's fuel set forth in the 2007 Renewable Fuels Act, biodiesel didn't have a mandate until last year. That mandates set a goal of 800 million gallons. The new mandate for 2013 has been expanded to 1 billion gallons, and fell short of the 1.28 billion gallons that biodiesel producers wanted.
“This was an incredibly important decision, and the Obama Administration got it right,” said Joe Jobe, CEO of the National Biodiesel Board, the industry trade association.
“It will allow biodiesel plants across the country to invest and expand, creating thousands of jobs. At the same time, it sends a strong signal that the U.S. is standing firm behind its commitment to producing clean, American-made energy to strengthen our energy security and break our dependence on petroleum.”
When the mandate was introduced in 2011 at 800 million gallons, it helped prevent the closure of several of the nation's biodiesel plants.
Ethanol production has come under fire for
driving up prices
on the food crop, however, there is no indication that the same will happen for soybeans.
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9/19/2012 12:00:09 PM
Ah, found it.
"Operating costs other than the cost of feedstock currently average approximately 59¢ per gallon. By-products of biodiesel production (glycerin, fatty acids, and filter cakes) provide revenues of perhaps 8¢ per gallon. Most U.S. biodiesel plants operate on soybean oil. It takes approximately 7.6 pounds of soybean oil to produce a gallon of biodiesel."
So, I'd make that out to be $0.50 fixed cost plus 7.6 times whatever the cost per pound of soybean oil is. Looks like that's currently ~$0.55. The commodity folks list soybean oil prices by pound, so it's easier to find.
So the cost to make a gallon of biodiesel from soybean oil is about $4.35, at the moment.
I'm seeing diesel prices at the local stations right around $4 a gallon.
Yes, mandating the use of this would seem to push diesel prices higher at the current crop prices. It would also set a ceiling for the cost of foreign diesel, so that it wouldn't be able to go much over $4.35.
9/20/2012 5:24:51 PM
You don't have a clue do you. The $4 you are seeing at the pump is not the raw ingredients cost that you are comparing to biodiesel. There is an average of $.47 / gallon of stand and federal fuel tax in that $4 you see.
So the cost of producing normal diesel is closer to $3.50, and bio would be closer to $4.83. So no biodiesel is not even close to a viable option.
And don't even start with an argument that points to a subsidized (aka lower) tax rate on biodiesel, as that is just shifting numbers to support a flawed logic. Suppose there were no tax on biodiesel, you would have to raise taxes elsewhere to recoup the massive shortfall in revenue, or cut spending (yah right!!).
Look people there is a reason why Big Oil is so damn BIG, and it has nothing to do with conspiracy. Fact is good ole petroleum and coal are still far and away the logical source of energy on this planet. Any delusions you have that these propped up "green" alternatives are anywhere close to competitive, borders on pathological denial or flat out ignorance.
Not even are they not in the ballpark, they are at home on the couch unaware the game is even being played. Yes quite literally they are that far from being anything more than a niche.
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