Demand for biodiesel falls as industry meets federal mandate

Des Moines Register  • Posted: Monday, October 29, 2012

With the federal biodiesel mandate largely achieved, biodiesel producers have struggled with plummeting demand, and at least one Iowa biodiesel refinery has closed down.

“Production has been quite strong through September,” said Jeff Johannesmeyer, general manager of the biodiesel producer Western Iowa Energy. “We’ve basically met the demand for the year, so that will reduce the incentive for oil companies to buy biodiesel for the rest of 2012.

Producers are dealing with fluctuating prices for renewable identification numbers, or RINs, which oil companies must buy to show their compliance with the federal mandate. Over the summer, RINs sold for as much as $1.50 per gallon, indicating strong demand, but as the industry approached the 1-billion-gallon mandate, the value of the RINs fell to as low as 50 cents.

Soy Energy in Mason City, Iowa, said this week it will temporarily take its plant offline and lay off its 20 employees.

“We have made the difficult decision to temporarily shut down our facility until market conditions improve,” CEO Jeff Oestermann said (Dan Piller, Des Moines Register, Oct. 24). — WW