US biodiesel industry stalled amid regulatory uncertainty

01 October 2009 16:18  [Source: ICIS news]

HOUSTON (ICIS news)--The US biodiesel industry is struggling with regulatory uncertainty and is in a holding pattern while state legislators debate sustainability arguments and which specific biofuel they will endorse, a member of the National Biodiesel Board said on Thursday.

The rise in climate change and carbon-based policy has been good in a broad sense, given that states with large diesel markets are moving forward with low carbon fuel standards, which could benefit biodiesel, said board member Richard Nelson.

Those states include California, Iowa, Massachusetts and Oregon, he said.

The concern, however, is that many states are re-thinking the assumption that biodiesel is good for the environment and are unsure which biofuel they will promote, Nelson said.

A key objective of the proposed greenhouse-gas-emission rule in the new Renewable Fuel Standards proposal (RFS-2) is the desire to be certain that biofuels are produced in a manner that reduces the emissions from the petroleum products they are replacing, he said.

Tests would be done against a 2005 petroleum diesel baseline. But until official findings for biodiesel are in, the introduction of biodiesel-specific policies has slowed, which poses a problem for an industry that benefits greatly from alternative fuel policies, he said.

As a result, biodiesel production will likely remain on hold at current levels until those issues have been fully vetted, Nelson said.

Nelson spoke at the 7th Annual Methanol Forum, which was hosted in Houston by consultancy firm Jim Jordan & Associates.

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By: Ben DuBose
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