US clean energy bill could be boon or bust for biodiesel

07 August 2009 19:01  [Source: ICIS news]

HOUSTON (ICIS news)--Producers and analysts are debating on Friday whether an amendment to the clean energy bill before the US Senate - meant as a lifeline for biodiesel producers - would actually benefit the industry.

An amendment to the American Clean Energy and Security (ACES) act, which passed the House on 26 June, would exempt a majority of biodiesel plants from criteria the US Environmental Protection Agency (EPA) included in its renewable fuel standards (RFS) and that the majority of the industry opposes.

The RFS calls for 1bn gal/year (3.785 litres/year) of biodiesel to be blended into the country’s fuel supply by 2012. Producers said the mandate would be a critical shot in the arm for US biodiesel demand, which lags considerably compared with the European market. Fewer than one-third of the nearly 180 biodiesel producers in the US are now operating, according to government data.

But the EPA wants to use indirect-land-use measurements to determine which renewable fuels will qualify for the mandate. The measurements counts how much greenhouse gas a fuel emits throughout its entire lifetime, from growing the feedstock crop to refining the fuel to burning it in vehicles.

Under those measurements, as much as 60% of the biodiesel produced today would be ineligible for the proposed renewable fuel standards (RFS), the National Biodiesel Board (NBB) has said.

The Clean Energy Act amendment would exempt biodiesel plants built before 2007, a move that producers said would brighten their business horizon considerably.

“I don’t think the indirect-land-use measure will matter. The climate change bill that passed the House is what’s important,” one producer said.

An EPA spokeswoman declined to discuss the proposed exemption, saying the agency did not comment on pending legislation.

But even with a new source of demand, volatile commodity prices and tight credit would still leave many biodiesel producers in the lurch, some analysts said.

“Producers need to have their raw material booked for more than a month, but banks won’t lend to them,” said Dan Basse, president of Ag Resource, a commodity market analysis firm. “Mandates only work if there’s profit on the end of the rainbow.”

Bookmark Simon Robinson’s Big Biofuels Blog for some independent thinking on biofuels
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By: Ben Lefebvre
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