U.S. biodiesel production reached a new monthly high in June of 81 million gallons, marking a third consecutive month of record volumes. Biodiesel production in the first half of 2011 has already eclipsed production for all of 2010.


The new EPA statistics come after Congress reinstated the biodiesel tax incentive this year.

Despite the weak economy, the biodiesel industry is on track to produce at least 800 million gallons this year, more than double biodiesel production of 315 million gallons last year, when Congress allowed the biodiesel tax incentive to temporarily lapse, according to the National Biodiesel Board.

"We've dramatically increased production and doubled our number of employees at a time when many industries are shrinking or treading water," said Ben Wootton, owner of Keystone Biofuels in Camp Hill, Pa. "It's like night and day from 2010. I think that's a testament to biodiesel's staying power as an advanced biofuel and also to strong federal policy. We're a young industry, and we wouldn't be where we are today without the tax incentive - and a lot more people would be standing in the unemployment line."

Since the introduction of the $1-per-gallon biodiesel tax credit in 2005, U.S. biodiesel production climbed steadily until 2010, when Congress allowed it to lapse temporarily as the health care debate overshadowed other issues. Production immediately plummeted from a record of about 700 million gallons in 2008 to about 315 million gallons in 2010.

Congress reinstated the tax incentive in December 2010 and the EPA included biodiesel as an Advanced Biofuel in its new Renewable Fuels Program (RFS2), requiring minimum volumes of biodiesel use in U.S. fuels. In the first six months of this year, U.S. biodiesel production already has exceeded 375 million gallons.

The tax credit is again slated to expire in December of this year. Sens. Maria Cantwell, D-Wash., and Charles Grassley, R-Iowa, have introduced S. 1277 to extend the tax incentive for three years. Reps. Aaron Schock, R-Ill., and Collin Peterson, D-Minn. have introduced a similar bill, H.R. 2238, in the House.