A pair of University of Illinois researchers say the reinstatement of the $1 a gallon biodiesel blenders credit has changed the equation back in favor of American biodiesel versus Brazilian ethanol.

Back in December and even earlier this month, Darrel Good and Scott Irwin found that Brazilian sugarcane ethanol, which qualifies as an advanced biofuel under the Renewable Fuels Standard, was a cheaper alternative to American biodiesel to meet RFS obligations. But according to this Biodiesel Magazine article, since the renewal of the biodiesel tax credit and making of the credit retroactive back to 2012, Good and Irwin have relooked at the issue, especially after getting several comments pointing out omissions in their analysis, including the 2.5 percent Ad Valorem tax on Brazilian ethanol:

“The price relationships at the U.S. Gulf on Jan. 10 favored biodiesel blending over the blending of Brazilian ethanol, even without consideration of the opportunity cost of Brazilian ethanol,” write Good and Irwin. “That cost added substantially to the advantage of biodiesel.”

After the more complete analysis of blend economics, Good and Irwin conclude the data suggests an economic advantage to U.S. biodiesel over Brazilian ethanol in meeting the advanced biofuel requirements of RFS2.

“The biodiesel advantage is large and a dramatic change from our analysis [on January 10],” they write. “It also has potentially far-reaching implications for both U.S. corn and domestic fats and oils consumption in 2013.

Good and Irwin also point out that since Brazilian ethanol has to be shipped, that would add to the cost of that fuel.