Competing against other state's production incentives plus contending with rising soybean oil prices in the last several months has Pennsylvania’s biodiesel producers struggling.

In fact, four of the six Pennsylvania Biodiesel Producers Group's (PABPG) members are producing at just 10% of their capacity, while two have halted production.

Pennsylvania’s six biodiesel producers have the capability of producing approximately 15 million gallons of biodiesel annually, but currently are selling only about 800,000 gallons.

The state consumes as much as 6 to 8 million gallons per year.

“This is a result of biodiesel coming into our state cheaper than we can produce it here,” says Ben Wootton, PABPG president, and president, Keystone Biofuels, Shiremanstown, PA, adding that other states have in-state incentives that subsidize biodiesel production.

Twenty-four states currently provide incentives to biodiesel producers. Pennsylvania is not one of them.

That makes it difficult for producers from the Keystone state to compete with other producers—Indiana’s biodiesel producers, for example, receive a $1 per gallon tax credit.

Biodiesel plants producing B100 in Iowa can earn up to $1.50 per gallon in incentives, Wootton adds.

Pennsylvania Incentives

PABPG is working to reverse this situation.

In the last five months, it has been meeting with state legislators, the governor’s office and Pennsylvania’s Department of Environmental Protection (DEP) to propose a $1 per gallon production incentive for Pennsylvania producers for the next three years.

This would be followed by a mandate--all diesel fuel sold in the state to be blended with 2% biodiesel--when the state’s annual biodiesel production reaches 30 million gallons.

A mandate could help the state’s producers lock up long-term feedstocks for a more sustainable market, Wootton says, adding these incentives would not only help the biodiesel producers, but also soybean growers, marketers and distributors.

While the state’s House of Representatives already passed an energy bill in June, the Senate will not pass a bill until this fall.

The Senate Committee on Environmental Resources and Energy will hold hearings on September 19 and September 25.

These will focus on an alternative fuel mandate.

PABPG has been invited to testify at one of these hearings, which has the organization feeling like it at least has the ear of the Committee, Wootton says.

He also has been pleased by the discussions the organization has had with the Republican-led Senate, the DEP and the governor’s staff.

PABPG has not yet faced opposition on its proposed production incentives.

The main obstacle will likely be the state budget.

The Senate will need to find funding sources without raising taxes, Wootton says.

While timelines are never easy to predict in politics, PABPG could learn whether the incentives will become reality by Thanksgiving.

For more information, call 717-761-3511.

PA bio-d producers largest problem is that they are not using the right crop.  Soy is a horrible crop to base a bio-d business sector on.

PA's budget sucks.  PA can not afford to give out the incentives other states can.  Doing so would require pulling already too scarce state money from other areas where the cost in damage to human life and quality of life will be even worse if funding is reduced.

If they want to compete economically, they have to grow a more efficient oil producer locally than soy.  Rapeseed is the obvious initial choice, but even that is a stop gap measure.

Voltaire:

If they want to compete economically, they have to grow a more efficient oil producer locally than soy.  Rapeseed is the obvious initial choice, but even that is a stop gap measure.

Let's say you are a farmer and are producing corn and soy. Your crop is worth more now that it ever has been and farming has finally turned a smile on the face of many struggling farmers. (especially the ones with generational farms that are being offered significant dollars for their land) Why would they want to plant a crop that offered a lower return per bushel when the demand for soy and corn is so high -- although rapeseed can be produced in northern climates better than soybeans. There isn't currently an incentive if you have productive soybean feeds when the capital markets are willing to pay top dollar for soybeans; not that I disagree with your premise that their are better choices of oil producing feedstocks, it just that soy and corn is a guaranteed winner from the farmers perspective.

On the bright side, high prices for soybeans, etc help to create a market for crops that can be produced economically in areas not currently farmed. I still fall back to the mechanized algae ponds located where there isn't anything currently being grown. A high price for soy and corn will give these new technologies a fiscal reason to be developed ... let's just hope there is enough reality behind the algae based biodiesel to make it attract investor dollars.