Governor Mitch Daniels said “the sky’s the limit for biofuels” at yesterday’s ceremonial opening of the world’s largest soy biodiesel plant in northern Indiana. Louis Dreyfus Commodities, the company behind the new Claypool facility, said in a press release yesterday that biodiesel technology is “contributing to America’s national energy Independence and can immediately begin to address the country’s energy security issues.” Indiana University School of Public and Environmental Affairs professor Evan Ringquist says he agrees that soy biodiesel has some potential to offset dependence petroleum-based fuels, but only as a small player in a much broader strategy.
Ringquist says in the Midwest, biodiesel could serve as a reasonably important niche fuel, as ethanol has over recent decades. But he says the market competitiveness of biofuels is highly dependent on the amount of public subsidies the biofuels industry receives. He says soy growers and fuel producers like Louis Dreyfus receive heavy subsidies both at the state and federal level. All told, Ringquist says well over a dollar of public subsidies goes into each gallon of liquid biofuels produced.
The Louis Dreyfus plant will have the capacity to produce 88 million gallons of soy biodiesel a year. Ringquist says legitimate arguments could be made either way as whether such subsidies constitute good public policy. Ringquist says while soy diesel and other biofuels may never be able to supplant petroleum’s role in the energy market, they could constitute a significant stepping stone toward devising new technologies with more long term potential.