> > > U.S. producers reap federal subsidy while selling most > of the fuel > overseas > > > By BRETT CLANTON > Copyright 2008 Houston Chronicle > > > Nov. 29, 2008, 8:03AM > > > Federal subsidies to the U.S. biodiesel industry were > supposed to help wean the nation from foreign oil, and a new > law in 2009 will bolster the effort, but the money has > fueled a controversial side business. > > Domestic producers of the renewable fuel have been selling > huge quantities of biodiesel in Europe and in other foreign > markets, where prices are often better, and then receiving a > $1-per-gallon tax credit from Uncle Sam. > > Biodiesel, made in the U.S. mostly from soybean oil or > recycled cooking oil from restaurants, is blended at low > levels with petroleum diesel to reduce emissions and > reliance on fossil fuels. > > Today, American exports of biodiesel represent more than > half of domestic output. > > Biodiesel's $1-per-gallon subsidy, known as the > "blender's tax credit," is available to U.S. > companies that blend biodiesel with petroleum diesel and was > intended to boost biodiesel production and encourage diesel > marketers to buy the fuel. > > Exports have helped some biodiesel companies survive a > difficult period in recent years, when high costs and a weak > U.S. market forced firms to close plants. > > But exporting has been criticized as an abuse of a federal > subsidy that was presented to the American public as a down > payment on a future in which the U.S. would rely less on > fossil fuels. > > "This is a government boondoggle financed by the > taxpayers," said Tom Elam, an agricultural economist > with FarmEcon in Carmel, Ind., who estimates biodiesel > exports could be costing American taxpayers several hundred > million dollars a year. > > Texas has more installed biodiesel production capacity than > any other state, and several companies along the Houston > Ship Channel participate in the export business. > > > Industry cites benefits > > The industry defends exports as a temporary but important > practice that has created thousands of "green" > jobs and helped build a domestic infrastructure to make the > fuel. > > In 2009, a new energy law will require blending of 500 > million gallons of biodiesel into the nation's fuel > supply, growing to 1 billion gallons by 2012. > > "It is reasonable to assume that the vast majority of > U.S. production will be needed to meet domestic use > requirements," said Manning Feraci, vice president of > federal affairs at the National Biodiesel Board, a trade > group based in Jefferson City, Mo. > > For now, however, the business of exporting the renewable > fuel is still going strong. > > Through August, the nation's biodiesel exports hit 511 > million gallons, with most of that going to European Union > nations and small quantities heading to Mexico and Canada, > according to Census Bureau data tracked by the U.S. > Department of Agriculture. > > That's 85 percent of the estimated 600 million gallons > that American biodiesel producers will make this year—and > that's only for the first eight months. > > In 2007, the U.S. exported 291 million gallons of > biodiesel, and domestic producers made 490 million gallons, > government figures show. > > Critics say the data highlight how little oversight there > is over biofuels programs despite huge federal spending on > them. > > "It's probably an indicator that our renewable > energy strategy in the United States needs to be > revisited," said Texas Agriculture Commissioner Todd > Staples, whose office oversees state biofuel initiatives. > > But while the biodiesel industry acknowledges the fuel is > going overseas, it contends government figures are not > reliable and may overstate the issue. > > Federal biodiesel export figures actually reflect exports > of refined U.S. vegetable and animal oils, which mostly > means biodiesel. > > Current export data also do not draw a distinction between > domestically produced biodiesel and foreign-produced > biodiesel that passes through U.S. ports. > > Through August, the U.S. had imported 232 million gallons > of biodiesel, Census figures show. > > Yet even if all the foreign fuel were included in the 511 > million gallon export figure, domestic producers would still > be sending about half their output abroad. > > Like ethanol, biodiesel has been touted as a homegrown way > to help reduce U.S. dependence on oil, cut tailpipe > emissions and aid American farmers. Ethanol, which is > blended with gasoline, also is subsidized, but almost all of > it is consumed domestically. > > The $1-per-gallon biodiesel tax credit was created under > the 2004 American Jobs Act. The tax credit had been set to > expire at the end of 2008, but recently received an > extension for another year. > > > Vegetable oil costs > > Today, the domestic biodiesel industry has more than 2 > billion gallons of installed production capacity from more > than 170 plants in 40 states. > > Texas has 686 million gallons of production capacity in 31 > plants. More than half of that capacity is located along the > Houston Ship Channel, said Jess Hewitt, president of the > Biodiesel Coalition of Texas. > > But many U.S. plants shut down temporarily this year after > soaring vegetable oil prices made production too costly. > Some of those that kept working relied on exports to stay > afloat. > > John Kellogg, spokesman for World Energy, a Boston-based > biofuel marketing firm that exports biodiesel out of the > Ship Channel, said he sees no conflict with sending U.S. > subsidized fuel overseas. > > "Support from the federal government in the form of a > tax credit is appropriate to allow biodiesel to become a > global business and a global competitor," he said. > > /[EMAIL PROTECTED] > <mailto:[EMAIL PROTECTED]>/
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