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Popularity of Biodiesel Grows Amid High Gas Prices

Biodiesel consumption is up across the country. High gas prices have made what was once seen as an expensive and wacky alternative not only economical but a respectable mainstream fuel. Eric Mack reports from New Mexico.

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MICHELE NORRIS, host:

Now a story about a different kind of fuel, biodiesel. You've probably heard about it. It's made from a number of crops, animal fats, even algae. More vehicles are running on it, thanks in part to a new tax credit and high oil prices. Reporter Eric Mack has this look at the growing biodiesel industry.

ERIC MACK reporting:

In Alamosa, Colorado, a cluster of three-story-tall holding tanks stand next to railroad tracks a block south of Main Street. A tanker car with the words South Dakota Soybean Producers painted on its side sits unloading its cargo for processing. This is the first commercial biodiesel blending terminal in the country, where pure soybean oil travels through a maze of pipes to be blended with regular diesel, pumped into tanker trucks and shipped to market. Dan Mortensen is the president of Alta Fuels, the distributor that opened this facility last year.

Mr. DAN MORTENSEN (President, Alta Fuels): What this facility does is it puts economic development in a small community. It helps the farmers directly. We can be competitive with the major oil companies. Tomorrow we're running five different transports of biodiesel throughout Montrose, Santa Fe, the military bases down in New Mexico. It's going to do nothing but grow.

MACK: The fuel is produced by Blue Sun BioDiesel. Founder John Long started the company in his garage four years ago.

Mr. JOHN LONG (Founder, Blue Sun BioDiesel): We definitely started from humble beginnings. Now we're currently building our first plant, starting to develop a second and third plant.

MACK: Those plants will supply biodiesel to a list of commercial customers that includes New Mexico Public Service, the Department of Defense; even oil and gas companies buy fuel from Blue Sun for their drilling rigs. Long says one of the company's biggest accounts recently became Denver Public Schools.

Mr. LONG: We had 50 buses running on our fuel, and they announced that they are going to expand the biodiesel program to all 450 buses that they operate.

(Soundbite of multiple conversations among group of children)

MACK: Children at Denver's Greenlee Elementary School stand next to a familiar yellow bus that now runs off of B20, a blend of 20 percent biodiesel and 80 percent regular petroleum diesel. Fleet manager Bill Noble(ph) says the switch has meant significant savings for the district.

Mr. BILL NOBLE (School Bus Fleet Manager): You know, with some of the incentives that they are offering, it's probably anywhere from 11 to 14 percent.

MACK: That incentive is a $1 per gallon EPA tax break for pure biodiesel that went into effect last January. The credit is prorated 1 cent per percentage point on biodiesel blends. That means the credit for B20 is 20 cents per gallon. Combined with recent record petroleum prices, the program has brought the price of B20 almost in line with regular diesel.

Mr. MARK LARKIN (Biodiesel User): As soon as it became available, I read their pamphlets and, you know, in the media you hear reports about the benefits of it. My engine runs quieter, I get better mileage and it's doing something for the environment.

MACK: Mark Larkin pulls his Dodge truck up to a pump at the Amigo Mart in downtown Santa Fe, New Mexico. The station began selling Blue Sun B20 a year and a half ago, and Larkin has been driving out of his way to fill up here ever since.

Mr. BOB McCORMICK (Department of Energy, National Renewable Energy Laboratory): There's a number of other analyses, as many as six, that come down on the positive side for biodiesel.

MACK: Biodiesel's detractors claim that the total energy that goes into making a gallon is over 25 percent more than that same gallon produces when burned. But Bob McCormick from the Department of Energy's National Renewable Energy Laboratory says the majority of scientific studies have found the opposite to be true.

Mr. McCORMICK: There's a number of other analyses, as many as six, that come down on the positive side for biodiesel.

MACK: Last year the industry produced less than 30 million gallons of biodiesel. But once all plants currently in various stages of planning or construction are complete, that number could jump to nearly 800 million gallons a few years from now. That's still barely a drop in the ocean when compared to how much regular diesel was burned last year. But according to NREL's McCormick, if the market for biodiesel continues to grow and incentives stay in place, annual production could increase more than tenfold over the next few decades. For NPR News, I'm Eric Mack in Taos, New Mexico. Transcript provided by NPR, Copyright NPR.

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