Biodiesel in U.S. & Asheville treading on thin ice

As the country watches the oil spill in the Gulf destroy wetlands and the livelihoods of tens of thousands of people, the biodiesel industry in the U.S. is on the brink of collapse. Biodiesel is the only commercially available advanced biofuel in the U.S. It dramatically reduces carbon pollution, lessens our dependence on foreign oil and employs thousands in green jobs across the country. While paying lip service to U.S.-made energy and alternative fuels, Congress and the Obama Administration allowed the federal biodiesel tax credit to expire in December 2009. In the five years since it was enacted, the energy legislation has been highly effective, leading to over 150 biodiesel plants in 44 states, 53,000 green jobs added to the economy, and billions of dollars of net tax revenue to state and federal governments, all while displacing billions of gallons of petroleum. Yet since the sunset of the biodiesel tax credit in December 2009, biodiesel producers across the country have been forced to close or severely curtail production, resulting both in the loss of good paying, "green" jobs, as well as the availability of alternative fuels at reasonable costs to consumers. In fact, Blue Ridge Biofuels in Asheville is one of a handful of biodiesel producers still in operation today.

Some argue that businesses should be required to function without assistance from the government, and ultimately the public. However, current government assistance to the petroleum industry — which subsidizes a large portion of the true costs of such fuels to the tune of 9 to 17 billion dollars a year — is the chief reason why the biofuels industry needs this assistance. Without government subsidization of petroleum-based diesel fuels, the U.S. biodiesel industry would be able to offer a competitively priced product that is not only beneficial for the environment, but also to our energy security while at the same time creating jobs in the green economy.

While Blue Ridge Biofuels is currently treading water, the biodiesel tax credit is stalled in the Senate, having passed the House in the American Jobs and Closing Tax Loopholes Act of 2010 (HR 4213). We in the industry and our supporters have been sending letters and making calls to our respective senators and representatives, but there is very little movement on the issue. We believe that if the general public were aware of the precarious state Blue Ridge Biofuels and, indeed, the entire biodiesel industry, are in, there would be much more support from our elected officials.

If there are continued delays in passage of the biodiesel tax credit, we will have lost much ground in our fight to wean ourselves from our overwhelming dependence on foreign petroleum. With the utter catastrophe that is yet unfolding in the Gulf of Mexico, this would be an excellent time to highlight the benefits of alternative fuels, and raising the public’s awareness would bring much needed support to our industry. Please call your senators and representatives and tell them that you support the U.S. biodiesel industry and urge them to pass the biodiesel tax credit immediately.

— Melita Kyriakou
Blue Ridge Biofuels
Asheville

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24 thoughts on “Biodiesel in U.S. & Asheville treading on thin ice

  1. travelah

    There are a lot of bogus “facts” in your letter.
    1. Biodiesel is not the only commercially avaialble advanced biofuel. Ethynol is also avaialble, perhaps much more so than biodiesel.
    2. I seriously doubt there are 53,000 employees involved with producing biodiesel. Your stat of 150 plants would mean there are an average of 353 employees at each of them. The majority of these plants have few employees.
    3. There are not billions of dollars of tax revenues generated from biodiesel fuel. This fuel has been exempted from most fuel excise taxes.

    I stated all that to get to the my point that biodiesel is a good alternative fuel but the way to promote it is to be clear with the facts and present a clear game plan.

  2. travelah

    I forgot to note that you pulled most of your information from the National Biodiesel Board’s PR talking points and inflated their “green jobs” number from 23,000 to 53,000

  3. travelah

    (Joe) Jobe, (CEO of the National Biodiesel Board) says the inaction by the two chambers of Congress to reconcile their two versions of the bill that would save the nation’s first successful advanced biofuel is causing the loss of jobs every day.
    http://domesticfuel.com/2010/05/11/jobe-calls-for-biodiesel-tax-credit-renewal-at-afvi/

    That seems to indicate that lacking a subsidy of $1/gal. this fuel is not economically viable given current technology. Of course the industry wants the subsidy but is it worth it to the tax payers? Perhaps the industry needs to develop an alternative business model that enables them to manufacture this product and at least break even doing so with the goal of being profitable and covering the cost of capital within a short few years.

  4. Johnny

    I applaud Blue Ridge Biofuels for their work.

    However, growing crops to produce biofuels is simply a lose-lose proposition from an total energy standpoint. Sad but true.

    Using waste vegetable oils is an excellent end-use for those products but it is a (relatively) small niche and best filled by clever home enthusiasts and small businesses.

    The growing of crops for fuel doesn’t cut it. Not with ethanol. Not with biodiesel.

  5. pff

    trav says it well, but i would like to also say that biofuels are NOT a realistic alternative to petroleum. Recycled oil is in incredibly limited quantity, and virgin oil is INCREDIBLY environmentally destructive.

    just because it is plant-based does not make it benign whatsoever.

    power down if you want a real solution. There is no ‘green’ band aid for our consumer-culture.

  6. travelah

    Biodiesel has potential as a relatively low volume solution for recycling waste oils. I do no believe it is a long term sustainable use of wide spread agriculture. Other natural elements offer greater promise, in particular hydrogen. However, for the foreseeable future diesel fuel of some sort is an essential commodity for continuing commerce i.e. trucking and shipping. Biodiesel is not going to fill the demand for those markets.

  7. Blue Ridge Biofuels

    Thanks everyone for the comments – we realize that biodiesel made from waste oil is only a part of a broader movement to decrease our energy consumption and dependence on petroleum fuel.
    We’re trying hard to make fuel for our region from resources collected in our region. The US produces 2.18 million gallons of waste oil annually, according to the US Census Bureau, which mostly goes to feedlots. Soybean oil, which is the main feedstock for biodiesel in the US, is actually a by-product of the soy meal industry for animal feed.
    If as much money (private and governmental) was put into developing the biofuels industry as the petroleum industry (deep water drilling, foreign wars) then there would be much more oil (alternative crops, algae, etc) and much more biodiesel available for fuel.
    If the petroleum industry wasn’t so heavily subsidized by the government, the biodiesel industry would be on a level playing field – and that’s all we ask for.
    Biodiesel does indeed incur the same excise taxes as petroleum at both the federal (0.244/gal federal form 720) and state (0.32/gal NC form 1264) levels. We do not get any special tax breaks like the petroleum industry enjoys.
    We try to be as accurate as possible in our facts. The vast majority of ethanol sold in the US is made from corn and is therefore not considered an “advanced biofuel,” as per the Energy Independence and Security Act of 2007. The 53,000 jobs lost is an updated figure from the National Biodiesel Board (www.biodiesel.org) of which we are a member. There are also supporting industries, like T-Fab in AVL that used to make our oil collection bins but we can no longer afford to buy any new ones, that also suffer from the collapse of the biodiesel industry. Also, the NBB has encouraged its members to use their press releases and talking points to get the word out about the lack of tax credits and the collapse of the US biodiesel industry. Hopefully we’re accomplishing that. If anyone has any questions about our company, the biodiesel industry, stated facts, etc., please feel free to email us at info@blueridgebiofuels.com.

  8. travelah

    Is it fair to state that blueridge biofuels can only stay afloat if tax payers subsidize the company with direct credits of $1/gal? Also, since your source stream is waste oils and according to your claimed numbers, only 2.18 million gallons of waste oil are produced annually, how in the world do you propose to continue? I keep seeing a lot of claims of heavy subsidies to the petroleum industry but if we look closely at what is deemed a subsidy, I think people are playing fast and loose with reality. Leasing foreign owned equipment and treating that as a business expense is considered a subsidy by some. It remains a fact that the U.S. Petroleum industry pays a significantly greater percent of it’s income in taxes than most U.S. businesses. Blaming oil and war is not going to make your business case.

    How would you propose to build a sustainable business manufacturing biodiesel fuels in the western North Carolina region without relying on dipping into my pockets and others in order to make yourself profitable? Assume the $1/gal subsidy is gone. What are you going to do to stay in business and if you fail due to a lack of economic viability,is there a real loss to the community?

  9. travelah

    As for whether or not ethanol is an “advanced” biofuel really is not substantial to your argument. It is an available fuel source that, as with biodiesel, lacks an economically viable business model to continue without subsidies. That does not even begin to address the issues with committing agricultural resources to such an endeavor and what that does to world food baskets. The fact remains there is not enough vegetable oil production in the world to come even remotely close to serving whatever needs you envision for a “virgin” production source.

    Here is the ultimate test of your business plan. Put it together and take it to a group of investors. Sell your plan on the merits of the business.

  10. travelah

    As for whether or not ethanol is an “advanced” biofuel really is not substantial to your argument. It is an available fuel source that, as with biodiesel, lacks an economically viable business model to continue without subsidies. That does not even begin to address the issues with committing agricultural resources to such an endeavor and what that does to world food baskets. The fact remains there is not enough vegetable oil production in the world to come even remotely close to serving whatever needs you envision for a “virgin” production source.

    Here is the ultimate test of your business plan. Put it together and take it to a group of investors. Sell your plan on the merits of the business.

  11. localisgood

    Blue Ridge Biofuels is a great, if small, component to a locally sourced energy future. They work hard to improve the quality of life in WNC and should be applauded their hard work. One error from an earlier post, there are more like 218 million gallons of yellow grease (recycled vegetable oil in US) annually… I read once that there are 750k in WNC alone. It is still a small percentage of overall fuel consumption in the US, but combined with conservation and higher fuel economy, it can and does make a meaningful difference. No one is arguing that biodiesel is a silver bullet for our energy needs, but it is a step in the right direction.

    To pretend that the oil industry does not get huge subsidies is naive at best. If Big Oil and Blue Ridge Biofuels had to both create business plans with no subsidies at all, I’d put my money on Blue Ridge to succeed. See the following article for more info on oil subsidies:
    http://cleantech.com/news/554/oil-industry-subsidies-for-dummies

    Here is a sampling of the benefits enjoyed by the petroleum industry:
    * Construction bonds at low interest rates or tax-free
    * Research-and-development programs at low or no cost
    * Assuming the legal risks of exploration and development in a company’s stead
    * Below-cost loans with lenient repayment conditions
    * Income tax breaks, especially featuring obscure provisions in tax laws designed to receive little congressional oversight when they expire
    * Sales tax breaks – taxes on petroleum products are lower than average sales tax rates for other goods
    * Giving money to international financial institutions (the U.S. has given tens of billions of dollars to the World Bank and U.S. Export-Import Bank to encourage oil production internationally, according to Friends of the Earth)
    * The U.S. Strategic Petroleum Reserve
    * Construction and protection of the nation’s highway system
    * Allowing the industry to pollute – what would oil cost if the industry had to pay to protect its shipments, and clean up its spills? If the environmental impact of burning petroleum were considered a cost? Or if it were held responsible for the particulate matter in people’s lungs, in liability similar to that being asserted in the tobacco industry?
    * Relaxing the amount of royalties to be paid (more below)

  12. travelah

    Let’s look at these “subsidies”.

    * Construction bonds at low interest rates or tax-free – This is avaialble to everybody. Interest rates are at the lowest they have been in generations.
    * Research-and-development programs at low or no cost – R&D expenditures are treated as deductions and eligible for credits regardless of industry. The same deductions and credits are available to the biodiesel fuels programs.
    * Assuming the legal risks of exploration and development in a company’s stead – The Federal governement does not assume the legal risks of exploration and development.
    * Below-cost loans with lenient repayment conditions – There is no such thing as a below cost loan. There is a market interest rate given the credit worthiness and risk associated with the project involved.
    * Income tax breaks, especially featuring obscure provisions in tax laws designed to receive little congressional oversight when they expire – You would have to be more specific here. What are the provisions that are unique to the Petroleum industry that would not also be available to the biodiesel fuel industry?
    * Sales tax breaks – taxes on petroleum products are lower than average sales tax rates for other goods – That is not at all true. The combined excise tax on gasoline is I believe $0.56 per gal. That is significantly higher than NC sales and use tax rates.
    * Giving money to international financial institutions (the U.S. has given tens of billions of dollars to the World Bank and U.S. Export-Import Bank to encourage oil production internationally, according to Friends of the Earth) – How is that a subsidy to the petroleum industry assuming it is true?
    * The U.S. Strategic Petroleum Reserve – How is that a subsidy?
    * Construction and protection of the nation’s highway system – How is that a subsidy to the industry? Most of those costs have been paid for through excise taxes.
    * Allowing the industry to pollute – That is something of a stretch with regard to subsidies.

    The point in all this is to again stress that you need to make a solid business case for these endeavors. Alternative fuels including biodiesel and ethanol are not clean, pollution free industries without any adverse environmental effects. Present tthe facts clearly and truthfully and proceed. I am not an enemy of the industry. I just do not see a case being made by attacking petroleum and demanding economic subsidies.

  13. JWTJr

    Ethanol is morally wrong. Growing gas so we can go to the mall when so many are starving. Its wrong. We need to find another solution.

  14. travelah

    Ethanol certainly takes productive land out of the food basket. In addition, corn heavily depletes nutrients out of the soil requiring heavy fertilizing and more frequent crop rotation. The growers like the market created by ethanol but perhaps there are better crops and waste streams to look at. I know there were efforts to use cane bagasse in Lousiana but I don’t know the status of that.

  15. JWTJr

    This might kick start the conversation again. NOAA says that last year the temp went up 1.5 degrees. NASA says it was 1/2 degree with their satellite data. That’s a 300% difference. If we are making policy on predictions from this data, who do we believe?

  16. dhalgren

    If the Atlantic was lapping at your doorstep you and scrooge (trav) would still deny that human activity causes global warming. Why bother to post your opinion when it’s already widely known? Yes, scrooge hates taxes and jr. hates science. What else is new? What else do you want to deny? Slavery or the holocaust?

  17. travelah

    The Atlantic laps at my back yard and it’s got nothing to do with Al Gore’s charter jet flights.

  18. JWTJr

    Afraid to think for yourself d? Answer the question if you have the guts.

  19. JWTJr

    Which data set do you think is more accurate? Personally I think satellite data is best.

  20. dhalgren

    “Answer the question if you have the guts.”

    Actually it’s a question of time and patience, but here you go. So you in all your resplendent highly educated glory have decided that the issue hinges on some fabricated one degree temperature discrepancy. That is silly. The issue is far more complicated than someone of your educational background could possibly fathom. (it’s above your pay grade there hoss) It’s your visits to “climatedepot.com” what’s causing your confusion! By the way, that’s Marc Morano’s website, the same liar(political operative) who brought you the phony Swift Boat scandal that damaged John Kerry’s presidential bid.

  21. JWTJr

    You make too many presumptions hoss.

    My point is that we are making energy policy based on climate projections. If the data from our research is inconsistent how can you have confidence in your projections? NOAAs numbers aren’t looking so good when compared to NASAs satellite data.

    I’m not debating warming. I’m debating the best numbers to use for reliable projections.

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