Biodiesel fuel industry is suffering without tax break

    The biodiesel industry has been reeling ever since a $1 per gallon federal subsidy for biodiesel fuel expired at the end of 2009. The U.S. Senate passed a jobs bill in March that would renew the subsidy and make it retroactive to the first of the year, so that biodiesel manufacturers who have sold the fuel since Jan. 1 would be reimbursed as if the subsidy had existed all along.

    Iowa Renewable Energy, the name of the biodiesel plant in Washington, is among those biodiesel producers suffering from the absence of the subsidy, or ?tax credit? as it is commonly called. Plant manager Alan Yoder said the plant ?has not produced one pound? of biodiesel fuel since the tax credit expired in January.

    Yoder said that he has had to lay off a number of workers because of the lack of production, and is now down to eight people at the plant.

    ?I had to lay off six or seven workers in January, and then one more in February,? said Yoder. ?I?ve had to lay off great people. We?re down to the bare minimum staff now.?

    Iowa Renewable Energy opened for business in the summer of 2007. Yoder said that the business was at its peak in 2008 when it had 30 employees. By August of 2009, the work force had shrunk to 20. Yoder said that he had to lay off a few employees in 2009 but that most of the decline was because of attrition.

    Yoder commented that even if the $1 per gallon tax credit is made retroactive, it will not help his business because Iowa Renewable Energy has not sold any biodiesel fuel in 2010. He said that his business was not willing to take the risk that the federal government would not make the tax credit retroactive. The alternative is to sell the biodiesel without the tax credit to the customer and ask the customer to assume responsibility for securing the tax credit. He said that biodiesel consumers have been unwilling to take that risk, too, which is why demand for the fuel has dropped significantly in the last few months.

For more, see our May 12 print edition.