Tax credits announced as biodiesel still suffers

Posted January 14, 2010

The Obama administration coming out with billions of dollars from the American Recovery and Reinvestment Act to increase "clean energy manufacturing" could seem almost like a taunt to biodiesel producers.

President Barack Obama announced "awardees" of the $2.3 billion clean energy manufacturing tax credits as existing biodiesel producers languish over the lapse of their specific federal blender tax credit. "Projects are assessed based on the following criteria: commercial viability, domestic job creation, technological innovation, speed to project completion, and potential for reducing air pollution and greenhouse gas emissions," the White House stated on Jan. 8.

There's a word that describes the 2009 renewable fuels year-idle. Huge plants sat quiet for months as vegetable oils were high and diesel prices were not. Imperium Renewables Inc., which suffered an explosion at its Grays Harbor plant in Washington, said it was in no big hurry to make repairs while the tax credit is nonexistent. And just as the blender tax credit birthed the term "B99," its expiration also killed it. Producers, such as Renewable Energy Group Inc., are offering the more expensive B100 in its place.

"I don't think this Obama administration is any different than any other-Republican or Democrat-in that often the right hand doesn't know what the left is doing," said Joe Gershen of Los Angeles' Tellurian Biodiesel. "So it does hurt, but I will say that I don't think they're doing it on purpose."

The renewable energy sector can have legitimate economic impact for farm areas, usually far away from population centers where builders and other entrepreneurs often look for labor resources. Wind, ethanol and biodiesel have fewer formal labor requirements so their expansion can help rural development, said Ernie Goss, professor of economics at Creighton University in Omaha, Neb. "The incentives are fairly generous," Goss said. "The cost per job in the renewable energy sector is high, but it's easier to support in underdeveloped areas."

The ARRA has already made history and headlines with various programs like "Cash for Clunkers," where new car buyers were able to trade in their used vehicles for a generous rebate. But there have been several bureaucratic bottlenecks in the way the funds are distributed, there are concerns about massive frauds and the ill, uninformed spending of funds, Goss told Biodiesel Magazine.

Tellurian Biodiesel added that federal money often goes to "shiny" energy products that are several years away from commercialization. "They're not looking at what works right now-and that's biodiesel," Gershen said.