The Biodiesel Industry: Impacts on the Economy, Environment and Energy Security
This study considers the impact of the biodiesel industry on the U.S. economy, environment and energy security. It also examines the impact on the industry’s financial health if an important incentive – the biodiesel blenders tax credit (“BTC”) – were discontinued.
By analyzing 2017 production and financial data, FTI Consulting found that the biodiesel industry generated the following impacts for the U.S. economy and environment:
- Economic output (economy-wide sales) valued at $21.6 billion across the economy, which translates to U.S. GDP of $6.5 billion;
- Employment for approximately 61,900 workers, 2,300 of which were employed directly in the biodiesel industry;
- Paid wages and benefits totaling $3.8 billion;
- Federal tax and state and local tax contributions of $1.2 billion and $600 million, respectively; and,
- A reduction in GHG emissions by 14.8 million tons, which is equivalent to taking 3.2 million cars off U.S. roads and equal to approximately $750 million in social benefits.
In addition to these benefits, biodiesel can help the U.S. decrease its reliance on foreign oil.
The BTC is a critical element in maintaining the viability of the biodiesel industry – and the realization of the benefits listed above – because it helps mitigate industry exposure to fluctuations in market prices for petroleum diesel. This study finds that biodiesel producers would have suffered an average loss of $0.25 per gallon produced in 2017 without the retroactive BTC. As such, certainty regarding the future of the BTC is vital for the biodiesel industry and, without legislative action retroactively implementing the BTC for 2018 and extending the BTC for 2019, compromises the significant economic, environmental and energy security-related benefits the industry provides.