Ag Policy Blog

Study: Biodiesel Expansion Sparks Economy

Todd Neeley
By  Todd Neeley , DTN Staff Reporter
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Despite all the fits and starts for the biodiesel industry in the United States in the past decade, a new industry sponsored study found economy wide benefits from biodiesel production even as the industry continues to fight for a more robust Renewable Fuel Standard.

The National Biodiesel Board released a study Tuesday as industry officials from across the country arrived in Washington, D.C., this week to tout the benefits of their businesses with members of Congress.

Even with what the industry believes is a modest RFS of 2.1 billion gallons of biodiesel production in the next couple of years, the study by LMC International points to the potential benefits of producing all those gallons domestically.

In recent years the industry has fought an Obama administration move to open the RFS up to foreign biodiesel imports. It is a move the U.S. industry says has hurt domestic producers.

The study looks at the economic benefits of the current RFS for biodiesel, compared to what it would be if the U.S. Environmental Protection Agency would bump RFS volumes to 2.5 billion gallons as the industry as requested.

The study evaluated a U.S. biodiesel supply of 2.1 billion gallons, with U.S. production of 1.43 billion gallons and imports of 0.67 billion gallons. Those numbers reflect the actual market in 2015, based on estimates of biodiesel and renewable diesel domestic production and imports.

LMC found those volumes generated about $8.4 billion in total U.S. economic effect, 47,400 U.S. jobs and $1.9 billion in wages paid.

“The average wage per worker translates to $39,300, which compares favorably to an average rural wage of $36,000 per year,” the study said. “By contrast, had all 2.1 billion gallons been domestically produced, the total economic impact would have been $12.3 billion, supporting 68,600 jobs and $2.7 billion in wages paid. The economic impact of the imported biodiesel under a 2.1-billion-gallon scenario is $60 million, a fraction of the impact of domestically sourced biodiesel.”

The study also looks at what economic effect an RFS of 2.5 billion gallons would have on the economy.

“If the split between domestic production and imports continues at two-thirds versus one-third,” the study said, “2.5 billion gallons would generate $9.8 billion in total U.S. economic impact, 55,000 U.S. jobs, and $2.2 billion in U.S. wages paid.

“By contrast, if all 2.5 billion gallons are produced in the U.S., the impacts would rise to $14.7 billion in total economic impact, 81,600 jobs, and $3.2 billion in wages paid. In other words: If the 2.5 billion gallons are produced entirely in the U.S. that would lead to $4.9 billion greater U.S. economic impact, 26,100 more U.S. jobs, and $1.0 billion more paid in U.S. wages.”

The study also took a broader look at what an RFS of 3 billion gallons would mean to rural America.

“At 3.0 billion gallons of biodiesel, a feasible market size when looking out five years, the economic impacts of shifting supply from 67% domestic to 100%, of course, become magnified,” the study said.

“At this level of consumption, if 100% of biodiesel use were met by U.S. supplies, that would imply support for an additional $6 billion in economic activity, an additional 33,000 jobs, and $1.4 billion in wages paid, within the U.S., compared to a 33%/67% split between imports and domestic production.

“Given the sharp contrast in the economic activity associated with domestically sourced versus imported biodiesel, a move toward greater self-sufficiency in biodiesel sourcing and away from imports could have tremendous positive ramifications for the U.S. economy, ones that will only grow with market size.”

Read the study here: http://bit.ly/…

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