Biodiesel plants cheaper to build than than Ethanol

Biodiesel industry taking off:
by Andy Bell -- Delta Farm Press -- July 14, 2005

A cross-section of representatives from legislators, offices, oil companies, and Farm Bureau and soybean producers from several states met recently to discuss new developments at the first USDA sanctioned biodiesel plant in Mississippi. Jimmy Chiles, chief operating officer of the refinery Biodiesel of Mississippi Inc., Nettleton, Miss., told the audience that biodiesel-derived from plant oil and particularly soybean oil, is currently profitable for producers and suppliers, as well as less expensive than petroleum for truckers, farmers and other users. Its economic advantage is due in large part to the federal government, which offers a $1 tax credit reimbursement for every gallon of biodiesel burned, as a well as an additional blending credit that pays 20 cents a gallon up to a 20 percent biodiesel blend (or $4 for 100 gallons of B20 mix)...

Under the bio-energy program, part of the 2002 farm act legislation, $150 billion (currently $100 billion) — has been earmarked toward subsidizing bio-energy plants. However, that program could expire by September 2006, placing potential investors in the industry in an unfavorable position.

William Tacker, owner of the refinery in Nettleton, which produces 60,000 gallons of biodiesel daily, said most experts and officials seeking to boost alternative fuel sources are focusing on ethanol plants.But, he said, for the cost of every ethanol plant built, five biodiesel refineries (at a cost of about $3 million each) can be constructed. “Financially, you can build a refinery and pay for it in one month,” he said. “But money management is the problem.
“If you go to the bank to borrow money on a government program that could go out next year, the banker is not too happy.”

Due primarily to the high cost of crude oil and environmental friendly advantages of burning biodiesel, demand remains high.