Cost fears see Massachusetts biodiesel mandate suspended

July 8, 2010

The state of Massachusetts has suspended its requirements for the inclusion of biofuel within diesel fuels used for transportation and heating.

Concerned at potential compliance costs, officials are opting instead for a voluntary program.

The Department of Energy Resources said last week it was taking the option within the state’s Clean Energy Biofuels Act to delay the biofuel mandate if it was “not feasible due to lack o supply, lack of blending facilities or unreasonable cost”.

The rules adopted in 2008 had been due to come into force on June 30, initially requiring 2% of transportation and heating diesel to be made up by renewable biodiesel, rising to 5% by 2013.

However, after the termination of federal biodiesel blender subsidies in January, the Department said it now fears the mandate could not be achieved without “unreasonable cost”.

Burden

The fuel industry in Massachusetts comprises 1,500 suppliers, including a handful of large companies and hundreds of small businesses, which the Department warned would be hit by excessive costs under the mandate.

Officials warned: “The cost of compliance with the program would significantly burden all fuel companies and the cost will largely be passed on to consumers.”

The Department calculated that consumers would face a three cent per gallon increase in the cost of diesel as a result of the 2% mandate, even without including the extra admin and infrastructure costs associated with supplying the fuel.

Instead, fuel suppliers will be encouraged to take part in a voluntary program to make use of biofuels that meet the standards laid out in the Clean Energy Biofuels Act.

The Department said it would aim to expand the voluntary program and said it would “continue to work toward full implementation of the biofuel mandate at an appropriate time in the future”.