Biodiesel tax break backfires

Houston Chronicle
By BRETT CLANTON
Copyright 2008 Houston Chronicle
Nov. 29, 2008, 8:03AM

U.S. producers reap federal subsidy while selling most of the fuel overseas

Federal subsidies to the U.S. biodiesel industry were supposed to help wean the nation from foreign oil, and a new law in 2009 will bolster the effort, but the money has fueled a controversial side business.

Domestic producers of the renewable fuel have been selling huge quantities of biodiesel in Europe and in other foreign markets, where prices are often better, and then receiving a $1-per-gallon tax credit from Uncle Sam.

Biodiesel, made in the U.S. mostly from soybean oil or recycled cooking oil from restaurants, is blended at low levels with petroleum diesel to reduce emissions and reliance on fossil fuels.
Today, American exports of biodiesel represent more than half of domestic output.

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