26 January 2009 21:13 [Source: ICIS news]
By Ben Lefebvre
HOUSTON (ICIS news)--US biodiesel producers who are accustomed to shipping most of their product overseas may see new state renewable fuel state mandates that would increase domestic demand, sources said on Monday.
The US biodiesel industry, which usually sells about 70% of its biodiesel to Europe, has struggled to develop a market closer to home. Despite the country being the world’s largest producer of soy methyl ester (SME), it consumed only about 1% of the 490m gal of biodiesel it produced in 2007, according to Will Thurmond, president of Emerging Markets Online energy consulting group.
But with a flurry of states eyeing legislation that would mandate blends of at least B2 (2% biodiesel and 98% mineral diesel) at fuel pumps, US producers are cautiously optimistic they may no longer depend completely on life-support from overseas.
“This is positive news if states are pushing ahead, especially the ones with the agricultural resources like Louisiana to make it happen,” Thurmond said.
According to the National Biodiesel Board (NBB), 14 states have either passed or are looking at legislation that would require biodiesel blends of at least B2 at the pump. If these states started at a minimum of B2 blends, it would create demand of 195m gal, the NBB said.
On 15 January, Pennsylvania said its fuelling stations would dispense B2 blends starting in 2010 and then increase the blend in line with state biodiesel production rates.
Minnesota, Oregon and Washington state have mandates requiring B2 diesel fuel blends, with Minnesota possibly moving to a B5 (5% biodiesel, 95% mineral disel) blend later this year, according to the NBB.
Louisiana, Massachusetts and New Mexico have passed legislation calling for B2 and B5 blends after production benchmarks are met. Lawmakers in New York, Virginia and Missouri have shown interest in passing similar mandates.
“State legislation has the potential to be a pretty big driver for biodiesel demand. State mandates will help boost the use of renewable fuels in those states, which creates economic and environmental benefits at the local level, ” NBB spokeswoman Jenna Higgins said.
The US biodiesel industry would welcome any increase in domestic consumption. The country had 171 biodiesel refineries with total capacity of 2.24bn gal/year for much of 2008, more than four times the 500m gal/year the federal Renewable Fuel Standard (RFS) calls for in 2009.
Without a large US market, producers here depended on sales to Europe. But with trade disputes there threatening to diminish demand and volatile feedstock costs at home, US biodiesel producers’ margins have fallen dramatically, sometimes to the point of insolvency.
Ren Moore, vice president of strategic accounts at New Jersey-based Innovation Fuels, said business at his company has increased thanks to new regional fuel mandates and incentives in Pennsylvania and New York, which offers a one-cent rebate for every percentage of biodiesel included in heating oil up to 20%.
“I believe that state mandates will drive regional volume. Dealers, distributors and refiners are coordinating efforts to be able to meet these new requirements,” he said.
Bookmark Simon Robinson’s Big Biofuels Blog for some independent thinking on biofuels
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