U.S. Biodiesel Sector In Great Decline

Alternative fuels have been a hot topic for years, especially with countries wanting to avoid relying on foreign oil. Biodiesel was a prominent alternative fuel, especially when diesel prices were escalating. Such vehicles as snow plows, garbage trucks and buses were turning to the fuel in order to save money while helping the environment.

In addition to the increasing popularity of the fuel, the United States’ government also gave producers of the fuel $1 for each gallon produced. However, this subsidy expired as of January 1st. An extension for the subsidy was to be approved by the Senate but in the end did not get passed. However, lawmakers are still working on the subsidy. If passed, the subsidy will be retroactive.

Between the subsidy and the growing popularity of the biodiesel, almost 180 biodiesel plants sprung up across the United States. The plants were in forty of the fifty states. However, due to declining diesel prices and the now expired subsidy, many plants are closing their doors. In total, diesel prices have dropped 18 percent, greatly impacting the biodiesel sector.

In addition to the declining prices and no subsidy, the Europan Union put import tariffs on the fuel as of March. These new tariffs greatly impacted the United States’ biodiesel sector as 95 percent of all exports were going to the European Union.

In total, the biodiesel sector is now only able to operate at 15 percent of its total capacity. It is unknown whether the U.S. biodiesel industry will make it past 2010 without government subsidies.

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