Oklahoma, Iowa: New Biodiesel Plants Announced

Oklahoma Governor Brad Henry signed into law last week a bill that will provide tax credits for the production of biodiesel within the state, creating an incentive that has already spurred construction of the state’s first biodiesel facility. A large plant is also being planned in Iowa by Cargill, one of the largest private companies in the world.

In Oklahoma, House Bill 1398 will provide a tax credit of 20 cents per gallon of biodiesel for the first five years of production, up to $5 million per year. It applies to new and expanded facilities producing at least 25 percent of their capacity. Biodiesel plants placed into production after 2012 will earn a smaller tax credit: 7.5 cents per gallon for the first three years of production, capped at $750,000 per year. The bill’s passage in the legislature led Apollo Resources Inc. to announce that its subsidiary, Earth Biofuels, had completed the purchase of four acres of land in Durant for construction of a biodiesel refinery that will produce 10 million gallons of biodiesel per year. Construction will begin immediately, and the plant could start producing biodiesel in October. “We see many proposed tax benefits in every state in which we consider building, but this credit takes it to the next level,” said Tommy Johnson, CEO of Earth Biofuels and President of Apollo Alternative Fuels. “Biodiesel makes so much sense, economically and environmentally. The passing of this bill tells us that the state of Oklahoma recognizes these benefits, and is encouraging biodiesel production as rapidly as possible.” Biodiesel is already firmly rooted in Iowa, but the state will gain another biodiesel plant if Cargill’s newly announced plans come to fruition. The company plans to build a plant in Iowa Falls capable of producing 37.5 million gallons of biodiesel per year. The plant will initially draw on soybean oil but could eventually accept animal fat or waste grease as its biodiesel source. If approved, construction will begin this summer, and biodiesel production will start in April 2006. “The price volatility of the soybean oil and petroleum markets can be challenging for biodiesel producers. However, we believe that we are uniquely positioned to manage this volatility and make this enterprise a success by leveraging Cargill’s experience with other renewable fuels, utilizing our expertise in processing, logistics and risk management, as well as accessing our production of multiple feedstocks,” said Wayne Teddy, president, Cargill Grain and Oilseed Crush Supply-North America. Cargill is the nation’s third-largest ethanol producer. It has a 35-million-gallon-per-year ethanol production facility in Eddyville, Iowa and an 85-million-gallon-per-year ethanol production facility just across the Nebraska border in Blair. Information courtesy of the Department of Energy’s Office of Energy Efficiency and Renewable Energy.

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