6th July, 2010
On July 28 of last year, a law requiring sellers of home heating oil and road diesel to blend biodiesel into their products went on the books in Massachusetts, with a plan for the mandate to take effect on July 1, 2010. When that day arrived on Thursday, however, the Commonwealth’s Department of Energy Resources announced an indefinite suspension of the requirement, Boston.com reported on Friday. The department cited complications encountered while writing regulations for blending biofuels into petroleum products as the reason behind the suspension. Fearing that these complications could lead to high costs for businesses and higher prices for consumers, the Department of Energy Resources opted to suspend the requirement until blending parameters and programs are streamlined.
According to Philip Giudice, commissioner of the Department of Energy Resources, the suspension “was the best way to go, unfortunately.”
While heating oil dealers and consumers likely appreciate Massachusetts’s cautious approach aimed at keeping heating oil and diesel prices down, the suspension of the biofuel mandate is terrible news for the state’s biofuel producers. The decision dealt a heavy blow to an industry already weakened by a federal $1-per-gallon tax credit that was allowed to expire at the end of 2009. The tax credit has been added to and cut out of several bills this year, but has not been passed by both houses of Congress. The credit is currently under consideration in the Senate as part of the American Jobs and Closing Tax Loopholes Act (H.R. 4213). A June 30 motion to adjourn debate on the bill and put it to a vote did not pass, so it is hard to determine when, if ever, the bill will pass out of Congress and onto the president’s desk.
Until then, biofuel producers in Massachusetts who have counted on both the federal tax credit and the state blending mandate to support their businesses will be in dire economic straits. Heating oil dealer Jeff Bursaw of Bursaw Gas & Oil in Acton told Boston.com that he had to cut back on the amount of biodiesel he is adding to his product, as its rising price could push up retail prices beyond his comfort zone. “I have to back off,’’ Bursaw said. “Otherwise I’m going to blend the cost of my heating oil up another five, 10 cents a gallon.’’ Biofuel producer Curt Felix of Plankton Power, which makes biofuel from algae, is considering moving his business out of the state. “I really don’t know what to do next,’’ he said.
Despite these major setbacks, there is some optimism in the biofuel and heating oil industries that both the federal tax credit and state mandate will be reinstated soon. Said Michael Ferrante of the heating oil industry group the Massachusetts Oilheat Council, “We think the state is committed to it. July 2011 is a more realistic start date for it.’’
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