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The decline of biodiesel? Not quite

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Jim T. Ryan
Jim T. Ryan

Is biodiesel facing its next great collapse? Not quite.

In fact, Pennsylvania companies are producing more of it today than five years ago, even if some companies have had a tremendous amount of bad fortune over the years.

That wasn't what I was expecting to find while writing about Cumberland County-based Keystone BioFuels Inc.'s reorganization under Chapter 11 bankruptcy.

I asked the state Department of Environmental Protection — which was overseeing biodiesel blending mandates and the expired state subsidy to producers — what production was like in the state between 2009 and this year. 2009 was the first year the state offered biodiesel producers a 75-cent subsidy.

That year, there were 11 named biodiesel producers, but the state had complete production statistics for just eight companies. All together, they made slightly less than 29.1 million gallons of the renewable diesel fuels, according to DEP.

In 2010, nine producing companies made slightly more than 29.8 million gallons, according to DEP. By 2011, there were just seven biodiesel producers in the state reporting to DEP, but their production had soared to more than 42 million gallons.

The largest in the state was Lake Erie Biofuels Inc., which increased production from 23.8 million to 36.8 million gallons. Lake Erie is now called Hero BX, but it's still the largest biodiesel producer in the state.

The second largest producer in the state? That would be the midstate's own Keystone BioFuels. It grew from 2.8 million gallons to slightly more than 3 million gallons in 2011.

However, as Keystone's president and CEO pointed out in our interview, 2012 was not the greatest of years for the biodiesel industry from the standpoint that many producers had to close. Like the rest of the manufacturing world, it's never a good year when you watch companies close shop.

But, biodiesel production continues to increase. In 2012, DEP had five companies listed, but just four made biodiesel. Total production for the year: 45 million gallons. Hero BX/Lake Erie made 39 million gallons and Keystone had increased its production to nearly 5.7 million gallons.

What happens in 2013 is anyone's guess. So far, just three companies have produced any quantity of biodiesel. Hero BX/Lake Erie appears to be on track for another banner year. Its production up until May already surpasses 2012's numbers.

Hero BX is showing there's a market for biodiesel. The industry is on pace for a record production year nationally, too. That could face the uncertainty of what Congress does with tax incentives for the industry.

There is a lot of promise for biofuels, but as this Wired story points out, that promise is hampered by the high cost of producing the fuel for some applications.

And, of course, we wait for more news from Keystone, which is expected to restart production and possibly announce investors to help it get out from under its debt.

It would be a shame for Central Pennsylvania to lose a company that, up until this year, held the distinction of being the second largest in the state for its industry.

For 2009-2011 biodiesel production, see this Excel file supplied by DEP.

For 2012 and 2013 production to date, see this Word file supplied by DEP.

Jim T. Ryan covers Cumberland County, manufacturing, transportation and workforce issues. Have a tip or question for him? Email him at jimr@centralpennbusiness.com. You can also follow him on Twitter, @JimTRyanCPBJ.

Jim T. Ryan

Jim T. Ryan

Jim T. Ryan covers Cumberland County, manufacturing, distribution, transportation and logistics. Have a tip or question for him? Email him at jimr@cpbj.com. Follow him on Twitter, @JimTRyanCPBJ.

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