US biodiesel industry hopes to leave wreckage of 2009

08 February 2010 02:03  [Source: ICIS news]

GRAPEVINE, Texas (ICIS news)--Representatives of the US biodiesel industry will meet at the 2010 National Biodiesel Conference & Expo to survey the wreckage of the year before and plot a course forward.

On the eve of the conference kick-off, with renewable fuel businessmen and advocates watching US football on television in the conference center bar, the mood was battered but hopeful, industry sources said on Sunday.

After a year of flat-lined sales, bankruptcies and other near-death business scenarios, biodiesel sellers were optimistic that last week's news that the US Environmental Protection Agency (EPA) would mandate 1bn gal/year of the renewable fuel be blended into the US fuel supply would invigorate most - if not all - producers. 

"That's 1bn gal of biodiesel that will eventually have to hit the market," said one trader nursing a drink. "Still, there's nearly 3bn gal of capacity in the US." 

The financial upheaval of last year may have culled some of that capacity from the market. For the most part, 2009 was a year biodiesel refiners would like to forget. Production plunged after Europe slapped prohibitive levies on US biodiesel in March, cutting US producers off from what had been their main market.

When things looked as if they could not get much worse, Congress delayed extending the $1/gal blending credit the government had been offering refiners for years. Without that subsidy, biodiesel suppliers could not compete with traditional diesel prices. More refineries halted production and some were forced to lay off employees. Many of the 171 refiners who went into 2009 did not come out.  

At the Energy Information Administration (EIA), the numbers tell the story - production during the first 10 months of 2009 was 414m gal, down more than a third from the 656m gal produced during the same period of 2008. 

Attendance at this year's biodiesel conference is expected to be down. Many of those who survived the fiscal calamities of 2009 will most likely prefer to stay home and lick their wounds than fly to Dallas, even with the “buy one registration, get another free” promotion event organizers offered. The National Biodiesel Board, which organizes the event, did not immediately answer questions as to this year's attendance numbers. 

But after all of last year's pain, this year should hold some gain for the survivors, sources said. Now that the EPA rolled out its renewable fuels mandate, there was some talk that biofuel sellers will no longer need an extension  of the $1/gal blending credit that expired in December, a trader said. 

Joe Jobe, president of the National Biodiesel Board (NBB) had described 2009 as a “hold-on-for-dear-life year” for the industry, which had 171 refiners going into last January.

Jobe remained optimistic: “The good news is that 2010 could be a year of tremendous recovery for us,” he said.

The biodiesel conference runs from 7-10 February.

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