Companies Bet on Biodiesel

John Davis

American companies seem to be betting that biodiesel will continue its explosive growth it has seen in recent years.

This story from Reuters says high oil prices along with the Bush Administration’s commitment to promoting the green fuel industry through monetary incentives seems to helping the industry along:

NBB logoThere are 115 biodiesel plants in the United States with a combined production capacity of 865 million gallons a year — about five days of total U.S. distillate consumption, according to industry group, the National Biodiesel Board (NBB).

But the addition of nearly 80 plants currently under construction is set to boost total U.S. output capacity to over 2 billion gallons over the next 18 to 36 months, adds NBB.

“I would say in the past three or four years, it (capacity) has grown three to four times in size,” Paul Nazzaro, who heads outreach programs at Jefferson city, Missouri-based NBB, told Reuters.

Nazzaro said output capacity grew exponentially after biodiesel producers received a $1 per gallon tax credit a few years ago. The provision is due to expire next year but his group is lobbying aggressively to get it extended, he said.

The article does point that there are still some sticking points with biodiesel such as improving the delivery system and making sure the higher percentage blends don’t gel up in cold weather. But if big oil companies such as ConocoPhillips trying to cash in on the business and tax incentives as well is any indication, this could be just the start of a major change in the domestic fuel business.