The future of biodiesel fuel looks highly uncertain as federal tax credits that provided refiners $1 for every gallon produced expire with the new year. While many fleet vehicles have been manufactured to use the fuel, few will continue to do so since they are convertible to traditional fuel.
The National Biodiesel Board reports that the industry is currently operating at 15% of capacity. The largest US refinery, located in Houston, is sitting idle.
Prospects for extending the tax credit have been hampered by a major scandal involving Alabama’s Cello Energy, a “next-generation” biofuel company specializing in plants-to-fuel technology. A federal jury found that it had defrauded investors and ordered a $10.4 million payment for plaintiffs. Cello had claimed that it could produce $16/barrel fuel at its refinery using hay, switchgrass and wood chips. The Alabama Press-Register reports that “a string of witnesses testified that samples of the fuel allegedly produced at Cello’s facility… were derived entirely from fossil and not renewable sources”. Grassoline it was not. The EPA had been counting on a tripling of Cello’s refining operations to meet 70% of its target of 100 million gallons for 2010 production.
Biodiesel production, which uses soy beans produced through industrial agriculture, is simply not economically viable. Leaving aside the moral implications of dedicating arable land to fuel production, which results in higher market prices for basic foods, the higher production cost of biodiesel reflects a likely net energy loss once the entire process is accounted for.
The economic hope for soy-biodiesel had been predicated on promised cost advantages in GMO crops which turned out to be largely hyperbole and wishful thinking… full article
