Popular acceptance of biodiesel and several tax credits offered by the Government are triggering growth of the biodiesel market in the United States. Apart from the continuation of the federal tax credits post 2008, the international prices of crude oil is also likely to greatly influence the biodiesel market.


favorable economics for biodiesel projects, federal incentives are crucial to maintain the competitiveness of biodiesel production. Furthermore, the U.S. federal regulations also have a huge bearing on the growth of the biodiesel markets in the country.

“For instance, the Energy Policy Act (EPAct) of 2005 stipulates that a specific amount of renewable fuel has to be used in the nationwide gasoline pool, which is likely to increase every year to reach 7.5 billion gallons in 2012,” says Frost & Sullivan Industry Analyst Sreekanth Venkataraman.

However, for biodiesel manufacturers to sustain growth, they need to deal with the intense anti-biodiesel lobbying by oil industry.

“Leaders in the oil industry have always been reluctant to accept the relatively inexpensive biodiesel, due to the perception that it could substantially lower profits,” notes Venkataraman. “Moreover, the oil industry does not own biodiesel, and the uncertain demand for this fuel due to various associated risks further discourages the industry from investing in this market.”

To overcome this challenge, market participants and pro-biodiesel groups need to highlight the potential of biodiesel to contribute to the growth of the economy. The prospects of substantial increase in gross domestic product, employment opportunities, and better prices for soya bean producers are likely to influence the Government to continue supporting renewable fuels. Consequently, it can encourage the oil and gas industry to accept biofuels, resulting in market expansion for all stakeholders.