More Evidence of Problems in Biofuel Industry

The News Tribune reports delays in planned expansion of the Imperium Renewables, Inc. biodiesel plant in Grays Harbor. The facility, commonly referred to as "the nation's largest" biodiesel plan, opened last year with much fanfare. Since then, the biodiesel world has done a 180. Here's the short take from the TNT.

mperium Renewables Inc. has delayed a $345 million initial public offering, put on hold its plans for four additional plants and trimmed its corporate staff. Its chief executive officer resigned without explanation.

The $78 million plant is still operating, though the price of soybean oil and other vegetable oils has jumped 100 percent to 200 percent in the past year. Hopes to buy much of the feedstock from Eastern Washington farmers haven’t blossomed and, instead, the plant is using mostly canola oil from Canada.

And while biodiesel is supposed to help reduce American’s dependence on foreign oil and cut greenhouse gas emissions, the domestic market has not materialized as expected. Virtually all of Imperium’s product is being shipped to Europe.

AWB president Don Brunell warned of problems back in 2006. Chris McCabe, AWB's governmental affairs director of environmental policy, also addressed the issue after the 2006 Legislature adopted a biodiesel mandate.

... Imperium Renewables will complete a refinery in Grays Harbor County by the end of 2007 that could produce as much as 100 million gallons of biodiesel per year. The plant is a boon to the economically challenged Aberdeen/Hoquiam area, but the plant would rely largely on resources not produced by Washington’s farmers. Instead, it will use Malaysian palm oil and soybean oil produced elsewhere in the United States. This contradicts the very intent of the legislation.

As for reducing our nation’s dependency on foreign oil, biodiesel and ethanol use would still not curb America’s appetite for oil. According to the U.S. Energy Information Association, oil exports are expected to increase 10 percent over the next 20 years as Americans use more oil but produce less in the United States.

As Brunell wrote last February, now even the Greens have soured on biofuels.

Todd Myers of the Washington Policy Center offers a thoughtful perspective in an op-ed in today's TNT. Perverse incentives (mandates and subsidies) have proven counterproductive, he writes, increasing food prices, inefficient agricultural practices, and adding to carbon emissions.

These problems are why many environmental activists who previously supported these programs, have turned against biofuel subsidies and mandates. Even the United Nations, home to the leading voice of concern about climate change, the Intergovernmental Panel on Climate Change, has condemned biofuels. Now it is time for Washington to rethink its approach on biofuels and switch away from this costly and ineffective path.

Unintended consequences or unbridled hubris? Perhaps the problems will engender a little caution as lawmakers consider their next steps in the climate change crusade.