2007 to be a bumper crop year for biodiesel legislation

By | April 06, 2007
States around the country have picked up the pace in addressing biodiesel policy. Policy-makers are considering everything from mandates to production incentives to tax exemptions and credits that encourage the growth of the industry.

At press time, at least 11 states were considering some form of requirement legislation-or mandate-that would require either a certain percentage of diesel sold in a state to be biodiesel or that all diesel fuel sold in a state contain a minimum of B2. Many states are adding language that would increase the B2 blend to B5 after a designated period. These states include Florida, Connecticut, Missouri, California, Oregon, Mississippi, Arkansas, Nebraska, Montana and New Mexico.

Some states' proposals, such as Missouri and New Mexico, simply require by a specific date that all diesel fuel sold at retail stations contain at least 2 percent or 5 percent biodiesel by volume. In some cases, it increases to 5 percent by volume at a later date. Similar to what occurred in some states last year, state legislatures such as Maryland are leaning toward establishing a task force, or study committee, to research mandates further before turning them into law. Other states have chosen to tie their requirements to in-state or regional feedstock production.

Oregon, for example, has proposed legislation similar to what passed in Washington in 2006. It would require all diesel fuel sold in the state to contain a minimum of 2 percent biodiesel by volume when the production of biodiesel in this state from Pacific Northwest feedstocks reaches a level of at least 5 million gallons on an annualized basis for at least three months. (The Pacific Northwest includes Oregon, Washington, Idaho and Montana.) The requirement increases to 5 percent biodiesel by volume when production levels reach at least 15 million gallons on an annualized basis.

Oregon's mandate legislation has a unique twist in that it coincides with the city of Portland's biodiesel mandate that passed in 2006. That city ordinance, effective July 1, 2007, requires all diesel fuel sold by fuel distributors or resellers to fuel retailers, nonretail dealers or wholesale purchaser-consumers to contain a minimum blend of B5. Beginning Aug. 15, 2007, it requires all diesel fuel sold by fuel retailers, dispensed by nonretail dealers or purchased by wholesale purchaser-consumers to contain a minimum blend of B5. In 2010, the required blend level increases to B10.

A big state with big biodiesel hopes
California is also considering a series of bills that would encourage biodiesel use there. Sen. Dean Florez, D-Shafter, introduced a package of legislation in early January that was making its way through the state Senate at press time. SB70 would define biodiesel as a fuel, not an additive, and would implement regulation on meeting the ASTM spec. SB71 would mandate the use of biodiesel in state-owned, diesel-powered vehicles. SB72 would require the use of biodiesel fuel in school buses throughout the state. SB73 would create a tax credit to stimulate the production of biodiesel in California. SB74 would exempt biodiesel fuels from state sales and excise taxes. SB75 would mandate that the state only purchase diesel-powered vehicles that come with a warranty on the engine, something the diesel manufacturing industry has resisted. SB76 would establish the California Biodiesel Investment Account, which would offer incentives such as grant money to local governments, farmers and research agencies to build fueling stations, grow feedstock crops and develop new biodiesel technologies. Hearings on most of these bills were to take place in late March.

Many other states are also looking at ways to encourage biodiesel use and production through a variety of tax incentives, grants and loans. For example, Florida Gov. Charlie Crist asked the state legislature for $68 million in funding incentives for Florida-based biodiesel and ethanol projects. Arkansas's legislature wants to provide grant money as part of a $20 million biodiesel incentive bill to Arkansas companies willing to build the equipment necessary to crush soybeans into oil for biodiesel production. The bill, proposed by House Speaker Benny Petrus, D-Stuttgart, would offer grants to companies wanting to build such equipment. It would also provide the state Department of Agriculture with $16 million to distribute to companies that make biodiesel fuel from soybeans or ethanol from wood products. Several states, such as Connecticut and Tennessee, have proposals to exempt the state's diesel tax for the portion of biodiesel in the blend. In Tennessee, for example, that would work out to 17 cents per gallon for B100 and roughly 4 cents per gallon for B20.

Label legislation
Several states are considering the issue of labeling pumps that dispense biodiesel. Some states are pursuing options in line with the recommendations of the National Conference of Weights and Measures that would require labels for pumps dispensing biodiesel blends between B6 and B20. In most cases, pumps dispensing fuel containing less than 5 percent of biodiesel by volume wouldn't be required to be labeled. A few states, such as Arizona, have proposals that would require biodiesel and biodiesel blends be identified by the capital letter B followed by the numerical value representing the volume percentage of biodiesel fuel, regardless of the blend level.

It is likely that many of these proposals will become law in some form by the end of this year. The year 2007 promises to be yet another active time for the biodiesel industry.
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