Bad year for biofuel ends on a dour note

BusinessWeek
By SEAN MURPHY

An alternative fuel for diesel engines is off to a shaky start this year though it emits fewer pollutants and cuts down on petroleum use because it's made from environmentally friendly waste and vegetable oil.

A federal tax credit that provided makers of biodiesel $1 for every gallon expired Friday. As a result, some U.S. producers say they will shut down without the government subsidy.

Biodiesel's woes come on top of a year of problems for the fledgling biofuel industry -- an irony given the push to cut down on greenhouse gases and ease the nation's need for foreign oil. A key driver for the alternative fuel -- the high cost of oil -- disappeared as diesel prices dropped 18 percent since the beginning of the recession. Then in March the European Union placed import-killing tariffs on biodiesel and other biofuels.

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