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Biodiesel Production: Protecting our National Security, Economy and Climate Tumbling Run / Flickr

Biodiesel Production: Protecting our National Security, Economy and Climate

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A new study released today by FTI Consulting provides fresh insight into the biodiesel industry.  Although when many people hear the word biodiesel they think of corn-based ethanol, the term encompasses much more. Biodiesel is produced from a variety of natural oils such as soybean oil, soy oil, animal fats such as chicken fat and waste cooking oils and greases. Since the fuel is made from natural organic material, biodiesel is both renewable and biodegradable.

Biodiesel has a large impact on the US economy, providing benefits which reverberate across the entire economy. The overall economic output (economy wide sales) of biodiesel is valued at $21.6 billion. The industry also provides direct employment for over 61,900 workers and produces paid wages and benefits totaling $3.8 billion. The benefits extend to the government on both the federal and local levels as tax revenue. The industry provided $1.2 billion to the federal government and $600 million to state and local governments.

Biodiesel not only provides jobs and bolsters the economy, but also promotes our national security by decreasing our dependence on foreign oil sources. The reduction in foreign oil consumption is most pronounced amongst OPEC nations whose oil exports to the US have fell from 45 percent of all oil imports in 2000 to 33 percent in 2017. While most of the drop in imports can be attributed to rapid expansion of U.S. domestic oil production, fuel switching from petroleum-based fuels to bio-based fuels like ethanol or biodiesel has added significantly to the drop. Additionally, biofuels better enable military readiness by providing it with a reliable domestically sourced fuel source. For example, both the Navy and the Air Force have plans to acquire up to 50% of the fuels from alternative sources, so long as they are cost competitive with petroleum-based fuels.

Biodiesel also benefits the climate and environment by reducing the greenhouse gas emissions which cause  the devastating effects of climate change. In just 2017 alone, the biodiesel industry reduced US greenhouse gas emissions by approximately 14.8 million tons. That reduction is the equivalent of taking 3.2 million passenger cars off the road. Additionally, this reduction is equal to approximately $750 million in social benefits when using the EPA’s definition for the social cost of carbon.  This metric takes into account the loss in total net agricultural productivity, human health, property damages from increased flood risk and changes in energy system costs that result from Climate Change.

These benefits, however, are in jeopardy if the biodiesel blenders tax credit (BTC) is not continued. This tax credit provides approximately $1 of tax relief for every gallon of biofuel produced. The BTC helps provide stability in the biofuels market, and without the BTC biofuel producers lost .25 cents on every gallon produced in 2017. On Monday, House Ways and Means Committee Chairman Kevin Brady, R-Texas, released a tax and oversight package that includes the reinstatement of the BTC, but the bill has yet to be voted on in either the House or the Senate. Congress has voted multiple times in the past to renew the BTC and must do so again to protect our economy, national security, environment and climate.

To read more about the link between biofuels and our national security read  Andrew Holland’s 2013 white paper entitled ‘Advanced Biofuels & National Security’