Fragile future for biofuel industry foretold

Source: Dan Piller • Des Moines Register  • Posted: Wednesday, January 25, 2012

Industry leaders warn of opponents’ attacks, urge renewal of federal mandate

A federal mandate has helped biodiesel make a comeback, but the head of the National Biodiesel Board warned the Iowa Renewable Fuels Association on Tuesday that the victory is fragile.

“Our opponents will continue to wage a determined attack against the Renewable Fuels Standard,” Joe Jobe of the Biodiesel Board told the annual convention of the Iowa Renewable Fuels Association in Des Moines.

The standard will require use of 1 billion gallons of biodiesel this year.

Jobe predicted that opponents of the mandate will compare it to “Solyndra-like abuse,” referring to the widely publicized solar panel company that went bankrupt after receiving federal loan guarantees and now is the focus of anti-Obama television advertisements.

But Jobe said “the Renewable Fuel Standard is a powerful tool, and it must be maintained at all costs.”

Iowa has 13 operating biodiesel plants, but when the $1 per gallon tax credit lapsed in 2010, most plants were forced to shut down or vastly reduce operations.

Last year, after the tax credit was restored and the mandate kicked in, most plants reopened and biodiesel surged to record production.

The executive director of the Iowa Renewable Fuels Association, Monte Shaw, told the meeting that the $1 per gallon biodiesel tax break, which Congress again allowed to lapse after the one-year reprieve last year, should be restored.

“The tax credit is needed so that biodiesel can continue to build,” said Shaw. “Biodiesel is the only heavy-duty fuel application available other than diesel.”

Shaw also warned of further political battles for ethanol in his state of the industry address. He named “big oil, big food processors and big livestock” for being at the epicenter of anti-ethanol political sentiment.

For good measure, Shaw threw in the nation’s second-largest state for his verbal jabs.

“Taxpayers used to subsidize farmers who couldn’t make their cost of production, so that Texas cattlemen could have cheap feed,” Shaw said. “You didn’t hear criticism of corn and agriculture then, did you?”

Gov. Terry Branstad, a supporter of biofuels both as a politician and as an investor, said, “The ethanol industry has been under attack from the East Coast, the West Coast and from the Wall Street Journal,” long an editorial opponent of biofuel subsidies.

“We must be prepared to answer those attacks,” the governor said. “Biofuels have been very good for Iowa.”