Study Shows Biodiesel Will Add $24 Billion to U.S. Economy

GreenBiz

WASHINGTON, Dec. 29, 2006 - America's biodiesel industry will add $24 billion to the U.S. economy between 2005 and 2015, according to a study by the National Biodiesel Board. The figure foresees biodiesel growth reaching 650 million gallons of annual production by 2015.

The economic analysis, conducted by John M. Urbanchuk of LECG and funded by the soybean checkoff through the United Soybean Board, also found that biodiesel production will create a projected 39,102 new jobs in all sectors of the economy.

Additional tax revenues from biodiesel production will more than pay for the federal tax incentives provided to the industry, concluded Urbanchuk. It will keep $13.6 billion in America that would otherwise be spent on foreign oil. This total impact of biodiesel on the economy includes the temporary impacts of construction, the permanent impacts of annual production and the direct value of biodiesel and co-products (glycerin).

"Because these plants buy local goods and local services, the second and third-round employment-generating impacts are really significant," Urbanchuk said. “You’re looking at a fairly substantial employment-generating impact. Most of these jobs are going to be located in rural communities, and you can’t overstate the impact of the biofuels’ industry on these rural economies.”

The study finds that if 498 of the 650 million gallons of estimated biodiesel demand in 2015 is produced from soybean oil, farmer-level soybean prices will increase nearly 10 percent. Using the U.S. Department of Agriculture’s 2006 Long-Term Baseline forecast for soybean prices as a starting point, soybean farmers can expect increased biodiesel demand to increase average soybean prices $0.58 per bushel by 2015.

American Ag’s Lankenau says his plant’s expansion will be worthwhile investment for his business, and for his community.

“I have to believe that 80 percent of dollars we’ve spent stay within 150 miles of here,” he said, adding that of all the businesses he’s run, this is the most fulfilling. “I drive my diesel pickup through our rural area where I see soybeans growing, and it makes me feel good about what I do.”

There are 88 plants in the nation producing an estimated 200 - 250 million gallons of biodiesel in 2006. That’s triple last year’s production of 75 million gallons.