Biodiesel Bounces Back in Iowa

John Davis

iowabiodieselboardThe last year or two has been especially tough for the biodiesel industry, but the green fuel is seeing a comeback. And nowhere is that more apparent than Iowa, one of the nation’s leaders in biodiesel production. This article in Iowa Farmer Today says the biodiesel industry is having a much better year this year and even quotes Iowa Biodiesel Board executive director Randy Olson saying that this could be a “record year.”

There are several reasons.

First and foremost is the fact the renewable fuels standard (RFS) considers biodiesel an advanced biofuel and includes a target of 1.28 billion gallons for 2013, Olson says.

He adds it is possible the industry could produce as much as 1.5 billion or 1.6 billion gal. in 2013. That would be an increase of roughly 50 percent from 2012.

Second, the federal tax credit is in effect. That credit was allowed to expire in 2010 and again in 2012. When it was renewed at the end of this past year, the renewal was made retro-active to 2012.

That credit could expire again, and Olson says the industry supports a renewal of it, but he says because of the RFS, biodiesel producers are in a better position to weather the loss of a tax credit than they were in 2010.

“We’re just looking for stability right now,” he says of government policies.

A third factor helping today’s biodiesel producers is the basic economic fact that oil prices are comparatively high, and soybean prices have come down from the record highs they reached in recent years.

The result of all this is fuel blenders are using more biodiesel than they have in the last couple of years, with some using it for the first time and others upping their blends from B5 all the way up to B20 in some cases,

Another factor that serves the Iowa biodiesel industry well is the nature of feedstocks. More than half of biodiesel nationwide is made from soybean oil, a major product for Iowa, with corn oil and animal fats, also big products for the Hawkeye State, going into the green fuel.

Supporters of biodiesel in Iowa say their biggest concern right now is preservation of the RFS.