Slow start seen for US biodiesel following tax credit reinstatement

03 February 2011 20:24  [Source: ICIS news]

HOUSTON (ICIS)--The US biodiesel industry is undergoing a slow start following the reinstatement of the federal tax credit, market sources said on Thursday.

Reinstatement of the $1/gal federal blender’s credit took place in late December, with the credit becoming effective in January and retroactive to 2010.

While the industry welcomed the tax credit as a necessary sustaining plank, pulling up from a less that 15% production rate has continued to pose significant challenges.

“We are beginning to see some output, but it is slow,” one biodiesel market participant said.

“No one has any credit right now, so sourcing feedstock and moving back into operating conditions is difficult,” another player said.

Dennis Griesing, VP/Government Affairs for the American Cleaning Institute (ACI) said the “Lazarus effect” is the question.

“How many plants can come back after eleven months and how many were dismantled during the industry downtime is something we just don’t know,” he said.

Of 176 US plants listed by the National Biodiesel Board (NBB) at one time, Griesing said about 110 are either closed or shuttered. Some were dismantled completely, but statistics following these plants are not being collected, according to Griesing.

The ACI, formerly The Soap and Detergent Association (SDA), home of the US cleaning products industry, representing producers of household, industrial and institutional cleaning products.

These products use ingredients including glycerine, fatty acids and fatty alcohols that compete with biodiesel for feedstocks such as tallow and vegetable oils.

The approximately 200 members of the ACI include Procter & Gamble, BASF, Acme-Hardesty, Peter Cremer North America, Shell Chemical, Huntsman Corporation and numerous other companies ranging from fragrance producers to biodiesel and glycerine producers.

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By: Judith Taylor
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