As farmers struggle with drought conditions in states across the country biodiesel producers have continued to stimulate rural economies with domestic energy production. Biodiesel’s feedstock diversity allows for flexibility in times of market instability such as the current drought.
Biodiesel is made from an increasingly diverse mix of feedstocks, including recycled cooking oil, soybean and canola oil, and animal fats. Most biodiesel producers can process multiple feedstocks and can switch from one resource to another if prices rise or supplies are short. This flexibility allows the industry’s impact in commodity markets to be reduced.
On top of a diverse feedstock base, biodiesel demand is also flexible. The Renewable Fuels Standard (RFS), the federal policy that calls for large petroleum companies to blend a certain amount of biofuels, is built to be flexible. The program is designed to allow up to 20 percent carryover production from one year to the next to avoid supply and demand pressures that could develop. This built-in flexibility means that producers can work within short-term market conditions to meet obligations.
Last year, the biodiesel industry set a new production record of nearly 1.1 billion gallons, supporting more than 39,000 jobs and returning more than $3.8 billion to economies across the country.