US biodiesel faces demand, infrastructure woes

22 October 2008 23:02  [Source: ICIS news]

HOUSTON (ICIS news)--US biodiesel capacity will likely exceed domestic demand - even if the nation had the infrastructure in place to deliver the fuel to the market, an executive said on Wednesday.

US biodiesel capacity could reach 3.85bn gal/year (14.57bn litres/year) in 2009, said Jess Hewitt, president of Gulf Hydrocarbon, a US biodiesel marketer. US demand, however, will be a quarter of that amount.

US capacity is now at 2.5bn gal/year, he said.

Hewitt was speaking before the Americas Methanol and Fuels Conference, held in Houston by Jim Jordan and Associates, a consultancy.

Currently, 70% of US biodiesel is exported to Europe. However, that market could freeze due to trading disputes.

The relatively meagre US demand comes despite several government programmes meant to promote biodiesel.

Already, the US renewed its $1/gal (€0.20/litre) tax credit for biodiesel and adopted other renewable fuel standards, Hewitt said. States have also adopted their own laws promoting biodiesel.

In addition, blenders can start adding up to 5% biodiesel to diesel and heating oil, Hewitt said. Other laws will allow independent fuel retailers to sell diesel mixed with 20% biodiesel at their service stations.

However, even if US demand could meet the its potential supply, the nation's infrastructure can only handle about 200m gal/year of biodiesel, Hewitt said.

The US has about 1,000 retail stations that sell biodiesel, half of which market to tractor trailers and other large trucks, he said.

Moreover, the US needs more than 150 biodiesel terminals, each of which can handle 8m gal/year, Hewitt said. The total cost could be $50m.

($1 = €0.76)

Bookmark Simon Robinson’s Big Biofuels Blog for some independent thinking on biofuels
To discuss issues facing the chemical industry go to ICIS connect

By: Al Greenwood
+1 713 525 2653

< previous article(VIDEO - ICIS news Europe Lunchtime Bulletin 27 October 2009)

For the latest chemical news, data and analysis that directly impacts your business sign up for a free trial to ICIS news - the breaking online news service for the global chemical industry.

Get the facts and analysis behind the headlines from our market leading weekly magazine: sign up to a free trial to ICIS Chemical Business.

Printer Friendly