US biodiesel production reached a new monthly high of 81 million gallons in June 2011, according to the latest Environmental Protection Agency statistics. This marks a third consecutive month of record volumes and continuing a turnaround in which biodiesel production in the first half of 2011 has already eclipsed production for all of 2010.
The new numbers—coming after the US Congress reinstated the biodiesel tax incentive this year—demonstrate the power that strong domestic energy policy can have in helping create jobs and economic activity.
Despite the weak economy, the biodiesel industry is on track to produce at least 800 million gallons this year, more than double the biodiesel production of 315 million gallons in 2010, when Congress allowed the biodiesel tax incentive to temporarily lapse. According to a recent economic study, this year’s rejuvenated production will support more than 31,000 US jobs and generate income of nearly $1.7 billion to be circulated throughout the economy. It also is expected to generate an estimated $345 million in federal tax revenue and $283 million in state and local tax revenues.
“Policymakers should take a look at our experience over the last couple of years,” said Joe Jobe, chief executive officer of the National Biodiesel Board. “It’s a textbook case in how sound energy policy equates to sound economic policy. Congress should not allow the biodiesel tax incentive to expire again at the end of this year. In this kind of economy, we need every tool we have.”
Since the introduction of the $1-per-gallon biodiesel tax credit in 2005, US biodiesel production climbed steadily until 2010, when Congress allowed it to lapse temporarily as the health care debate overshadowed other issues. Production immediately plummeted from a record of about 700 million gallons in 2008 to about 315 million gallons in 2010.
The industry has bounced back quickly, after Congress reinstated the tax incentive in December 2010 and the EPA included biodiesel as an advanced biofuel in its new Renewable Fuels Program (RFS2), requiring minimum volumes of biodiesel use in US fuels. In the first six months of 2011, US biodiesel production already has exceeded 375 million gallons.
The tax credit is again slated to expire in December 2011. Sens Maria Cantwell (D-WA) and Charles Grassley (R-IA) have introduced S 1277 to extend the tax incentive for three years. Reps Aaron Schock (R-IL) and Collin Peterson ( D-MN) have introduced a similar bill, HR 2238, in the House.
To see the EPA’s production numbers, see the volumes numbers in the “Biomass-based Diesel” category on the EPA’s website at www.epa.gov/otaq/fuels/renewablefuels/compliancehelp/rfsdata.htm.
Go to www.biodiesel.org/news/pressreleases/supporting_docs/20110615_Economic%20Impact.pdf for the most recent economic analysis of the biodiesel industry.