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The biodiesel board's Higgins said the market for the alternative fuel could climb to more than half a billion gallons per year if diesel refiners add just 2 percent biodiesel to their products. This could provide the economy of scale that would lower the price of the renewable fuel for everyone, Higgins said.
"Could we meet that demand instantly? No," said Higgins. She estimated that the 21 existing biodiesel production plants in the United States could produce up to 80 million gallons a year, and another 20 plants could quickly go online. Higgins said 90 percent of today's biodiesel comes from soy oil, and 10 percent from recycled cooking oil. Other feedstocks, such as animal carcasses, could be used to fill any gap, according to Higgins.
Biodiesel currently costs between 20 cents and 30 cents more per gallon than standard diesel, Higgins said, but pending legislation may help to make it more economical. In May, the Senate passed a bill that would give a 1 cent tax credit for each percent of biodiesel blended with petroleum diesel.
Higgins said that if gasoline prices continue to climb and the tax credit becomes law, biodiesel could become cost-competitive with petroleum. "Anything that lessens our demand on foreign oil helps," Higgins said.
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