Feeling the Effects

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As we put the final touches on this February issue of Biodiesel Magazine, there is little good news to report on the industry right now-as you must know. For the first time since it was passed in 2004, the federal blender tax credit, a staple for the industry, has lapsed.

Biodiesel was barely cost competitive with the $1-per-gallon incentive, and with the much lower diesel prices of 2009, it was still rare to find a gallon of B99 cheaper than No. 2 diesel. Now, without the credit, B100 and No. 2 diesel prices aren't even close. A source close to legislators in Iowa tells me it may be March before Congress even begins to remedy the situation.

The biodiesel industry has faced major challenges for years. Despite this, the industry hangs on, driven by all of the dedicated individuals in the forefront and behind the scenes. The core of the industry must be comprised of optimism.
Being an optimist myself I believe this entire experience could be used for the industry's benefit. What better time to make a compelling argument to Congress for a longer-term biodiesel tax credit than when the incentive disappears and production screeches to a halt on the brink of the U.S. EPA implementing the first federal biomass-based diesel fuel standard, making fulfillment of the standard economically unfeasible?

Expiration of the tax credit will have a number of different effects outside of meeting RFS2 requirements. In underground mining operations, biodiesel has become a preferred, low-cost method of reducing carcinogenic particulate emissions-by 47 percent compared to No. 2 diesel-that miners are exposed to from the equipment exhaust. Also, various government fleets are required to use renewable fuels such as B20 where available. If production stops, there will be little or no biodiesel for these fleets to meet their requirements. A handful of states , including Minnesota and Illinois, have biodiesel mandates, the fulfillment of which may be jeopardized as a result of the tax credit situation. The fact is, allowing renewable fuel blending obligations to slide because of the lack of available supply is a dangerous road we as a nation should not go down. It's a slippery slope-and we had better put our cleats on.

I hope you find this month's issue interesting and informative. In my feature article, "Year of the SCR System," on page 44, I review how urea selective catalytic reduction (SCR) systems work at controlling nitrogen oxide emissions from new diesels and the potential technological glitches yet to be fully worked out. Despite some of the issues associated with SCR systems, there are few concerns about the interaction of biodiesel blends with the sophisticated exhaust technology.

In "Europe's Diesel Portfolio," on page 32, Associate Editor Nicholas Zeman profiles the relationship between biodiesel and the extensive diesel passenger vehicle offerings in Europe. Interestingly, Zeman finds there is disappointment and concern at automakers' unwillingness to embrace biodiesel blends greater than 7 percent.

Assistant Editor Susanne Retka Schill's review of the Canadian Renewable Fuels Summit held in Vancouver, British Columbia, in December, is featured on page 38. This is Schill's last issue as assistant editor of Biodiesel Magazine, as she has taken over editorship of Ethanol Producer Magazine.

Enjoy the 2010 National Biodiesel Conference & Expo!