Iowa's Biodiesel Blues: Plants Temporarily Shut Down
Gazette -- CEDAR RAPIDS, IA -- January 8, 2010 -- After producing at only one-quarter of their capacity in 2009, many of Iowa's 15 biodiesel refineries have temporarily been forced to shut down since a federal blenders credit expired on Dec. 31.PAID ADVERTISEMENT
The Iowa Renewable Fuels Association released the statistics this week along with an advertising campaign to help revive biodiesel demand in Iowa. The association said Iowa's biodiesel refineries made only 73 million gallons of biodiesel in 2009. They are capable of producing 320 million gallons when operating at full capacity.
Association Executive Director Monte Shaw estimated that only three or four of the 15 biodiesel plants in Iowa are operating, and said those are operating "at trickle capacity." Iowa Renewable Energy LLC in Washington, one of the state's largest biodiesel plants, continues to operate at reduced output, according to Alicia Clancy of Renewable Energy Group, which manages the facility.
Clancy said the plant's work force is down from its usual staffing level of about 30, however, and employees at all eight biodiesel plants Renewable Energy Group owns or manages have had to deal with reduced pay or hours.
The blenders credit goes to the entity that blends biodiesel with petroleum diesel.
Clancy said the credits is renewed by Congress annually, but was not renewed last year because of other legislative priorities such as health care that dominated Congress' time.
The credit is part of the Tax Extenders package that includes a total of 73 tax credits.
Biodiesel groups hope that the Senate will take up the issue after it reconvenes on or about Jan. 19, and has been told the credit will be made retroactive.
One problem, Clancy said, is that anyone blending biodiesel now has to do it without any assurances the extension will pass with the retroactivity provision and assume that risk.
Because of that risk, she said biodiesel demand has fallen and production has been scaled back.
Although Renewable Energy Group has decided to keep its plants operating, "our production is down significantly from the fourth quarter of last year," Clancy said.
Industry groups are asking producers of biodiesel feedstocks such as soybean oil, beef tallow, pork lard, and poultry fat to join them in asking their senators to renew the tax credit.
"IRFA is seeking to work with legislators and regulators at both the state and federal level to help set the course for Iowa's biodiesel producers," Shaw said.
Clancy said it's not clear how the situation will affect the retail price of biodiesel, because that will depend on factors such as product demand and the willingness of blenders to continue blending biodiesel.
For the time being, Renewable Energy Group is selling only B100 (pure renewable) and curtailed sales of B99 (blended with petroleum diesel) biodiesel.
Author: By Dave DeWitte, The Gazette, Cedar Rapids, Iowa
-- Comments: (319) 398-8317; david.dewitte@gazcomm.com
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