Data on Biodiesel Production Shows Harmful Impact of Stop-and-Go, Short-Term Policies

On May 4, the Energy Information Administration (EIA) released monthly data on biodiesel production in the United States since 2009. Biodiesel production fell dramatically during 2010 when Congress decided not to renew production tax credits, and then it accelerated dramatically in 2011 after Congress restored the tax credits. Is this any way to run an energy policy?

The EIA Monthly Biodiesel Production Report shows national and regional monthly biodiesel production data from January 2009 through December 2011 and includes data on producer sales, producer stocks, and feedstock inputs.

The data illustrate what a big impact stop-and-go, short-term policy approaches had on this industry during this period. Biodiesel production fell dramatically during 2010 when Congress decided not to renew production tax credits, and then it accelerated dramatically in 2011 after Congress restored the tax credits. This policy disruption caused significant turbulence and uncertainty in the industry and led to dozens of plant closings and thousands of lay-offs. Similar, inconsistent, stop-and-go, short-term policy approaches are affecting the expansion of other renewable bioenergy industries (such as advanced renewable biofuels, biopower, and biomass combined heat and power) which require long lead times for investment and production, as well as the expansion of other renewable energy industries.