The Advantages of Biodiesel Fuels

Biodiesel, the popular name for methyl ester, is an alternative to petroleum diesel fuel. It is made from renewable feedstocks, principally plant and animal fats. There is currently research underway to make the process more amenable to any type of waste food, but this is yet to be cost-effective.

The primary advantages of biodiesel derived from the fact that its inputs are domestically produced and are renewable, and that it is recognized by the EPA as an alternative fuel that provides tax incentives so it can compete with petroleum diesel.

Benefits of Biodiesel Fuels:

The primary reasons that biodiesel has emerged as one of the leading alternative fuels include:

• Clean alternative – biodiesel is biodegradable and burns cleaner than petroleum diesel.

• Operates in conventional engines – in its most common form of B20 (a 20% mixture with petroleum diesel) most diesel, both heavy and light-duty, require little or no modification providing the same performance and mileage characteristics. In the past two years, B20 fuel has been approved in both Dodge pick-ups as well as New Holland farm equipment without any modifications as long as the fuel meets ASME standards which have been set.

• Outperforms ethanol-based fuels – biodiesel returns 3.2 units of energy for every unit consumed in production while ethanol returns only 1.25 units. Biodiesel is more energy efficient.

• Biodiesel does not require special storage like natural gas.

• Uses renewable inputs that are grown domestically. In addition, its full production provides jobs domestically as well. The use of plant oils as feed stock provides markets for crops and revenues to farmers, especially for soybeans.

Biodiesel Tax Incentives:

The EPA Energy Policy Act was amended in 1998 by the Energy Conservation Reauthorization Act (EPAct). This included the use of biodiesel fuel to meet alternative fuel requirements for federal, state and public utility fleets. EPAct was amended again in 2005, extending the tax credit to 2008. Several incentives were included for producers of biodiesel, including a $.10 per gallon credit. Finally, the use of a minimum of 7.5b gallons of renewable fuels per year be used by 2012 was mandated.

EPAct considers B100 (unblended biodiesel fuel) an alternative fuel. However, in blends of 20% or higher covered fleets can earn EPAct credits for every 450 gallons used.

There is also a federal tax credit available to all users. It provides a one penny per percent of biodiesel in a fuel blend made from agricultural products and one-half penny for recycled oils. In this instance, a gallon of B20 fuel is eligible for a $.20 tax incentive per gallon when made from plant oils. The USDA projects that this will increase the demand for biodiesel to 124 million gallons per year from the 2005 level of approximately 60 million gallons. Of course, this depends a great deal on the market price of oil.