Biodiesel industry wins subsidy extension

    The president of Iowa Renewable Energy (IRE) said 2011 figures to be a much better year for the biodiesel industry than 2010. Mike Bohannan is the president of IRE, a biodiesel plant in Washington. He said that one reason the industry will be better this year is the passage of the $1 per gallon biodiesel tax credit.

    Between 2004 and 2008, the U.S. government approved a $1-per-gallon subsidy on biodiesel fuel. The Senate did not renew the subsidy in 2009, so biodiesel manufacturers around the country had to scale back their operations. Last month, President Barack Obama signed a bill which included an extension of the $1-per-gallon biodiesel tax credit through 2011, and made the tax credit retroactive for biodiesel sold in 2010.

    Bohannan said the retroactivity of the tax credits is little consolation at this point. In September, he said the plant had not produced any biodiesel in 2010.

    ?We didn?t have a good year in 2010,? said Bohannan in an interview Friday.

    Bohannan said IRE was not the only biodiesel plant that struggled in 2010. The Iowa Renewable Fuels Association reported that biodiesel production in the state was cut in half from 2009 to 2010 ? from 85 million gallons to 48 million gallons.

    The passage of the tax credit brings stability to the market, which Bohannan said is the most important thing. He said everyone in the market wants to know what the price of biodiesel will be in the future, and that?s not possible while there is uncertainty about the tax credit extension.    

    ?We?d like to see that uncertainty go away,? he said.

    Bohannan said it is more important for the industry that the issue be resolved than to win the tax credit.

    Iowa Renewable Energy boasted its largest work force in 2008 when it had 30 workers. By the fall of 2010, it had cut that number down to 10. Bohannan declined to comment on when or if the company will hire more workers but said that the prospects for IRE look good.

    ?We haven?t started filling orders yet, but we?re hopeful for the possibilities in 2011,? said Bohannan.

    Another important law that went into effect in 2010 is the Environmental Protection Agency?s (EPA) mandate of 800 million gallons of biodiesel to be consumed in 2011. Those who refine or import petroleum are known as ?obligated parties? because they are obligated to ?retire? a certain amount of biodiesel, proving that it has been used. They can do this either by using biodiesel themselves or by paying non-obligated parties who, in essence, have used the biodiesel on their behalf.

For more, see our Jan. 14 print edition.