Biodiesel production in the United States has dropped sharply, and the green fuel’s biggest advocate warns of the dire consequences of that drop and urges implementation of federal environmental rules that would support biodiesel and other renewables.

The National Biodiesel Board says commercial biodiesel production in the U.S. in March 2009 fell to 30 million gallons… down from 49 million gallons just a year earlier and as low as 2006 levels. In this statement from NBB CEO Joe Jobe, he says that if the trend continues, industry production will only be half of the 700 million-gallon output in 2008… putting the country “at risk of going backwards in energy security” :

“A primary reason for this dramatic downturn is the absence of the federal Renewable Fuels Standard. The RFS would initially require the use of 500 million gallons of bio-massed based diesel, which would substantially stabilize the young biodiesel industry as it struggles to compete on an uneven playing field.

“We are at risk of losing the only domestically produced homegrown fuel for diesel engines. In fact, biodiesel is the only commercially available advanced biofuel, as defined by the federal government, which is currently derived from any fat or plant oil. It is the most diverse fuel on the planet. At last count, 176 plants in the U.S. enabled production of almost 2 billion gallons of homegrown, renewable fuel per year, but many plants sit idle, and at least 20 have gone out of business. This costs jobs and increases America’s dependence on foreign oil at a time when President Obama is calling for economic investment in American renewable energy. Our industry stands ready and waiting to answer that call.

An Energy Information Administration (EIA) report blames the closing of European markets because of punitive tariffs put on American biodiesel by the Europeans earlier this year for part of the reduction in U.S. production.