Biodiesel looks like good long-term investment

Wednesday, February 28, 2007

The state's ethanol incentives program is a success -- if one uses participation in the program as a measure of success.

In fact, Nebraska may owe more than $150 million over the next few years to ethanol plants that have qualified under the system.

One only has to look as far as Trenton, Cambridge, Wallace, Madrid or other area plants proposed or under construction to see how strong the response has been.

The incentives have put Nebraska in third place in ethanol, and gaining; only two states produce more than the Cornhusker state.

But while the future of ethanol looks rosy now, questions cloud the horizon. What are its long-term prospects as a fuel? What about new concerns about pollution? Can it compete in a free market without tax incentives? And how about mileage, since ethanol packs less energy per gallon than gasoline?

State Sen. Cap Dierks of Ewing wants us to hedge our bets, with a bill that would pay biodiesel producers 30 cents for every gallon of biodiesel they sell.

Manufactured from soybeans and other sources of vegetable oils, biodiesel has a huge potential for Nebraska, proponents say, but the state has only one commercial plant so far and two more under construction. Most of the state's biodiesel production -- expected to reach about 75 million gallons in two years -- will come from a Beatrice plant that is expected to produce 50 million gallons of biodiesel a year.

Biodiesel has the potential to help us use even less imported oil, and new diesel power plants, including diesel-electric hybrids, promise to boost mileage far beyond what is possible with straight ethanol or gasoline engines and gasoline hybrids.

Like ethanol, biodiesel production puts food and energy production in direct competition -- the same corn or soybeans that could be feeding people can also go into our fuel tanks.

And observers don't expect Sen. Dierks' biodiesel bill to pass at its present cost -- even with optimistic state revenue forecasts.

But Nebraska would be wise not to put all its newfound alternative energy eggs in one basket. Investment in biodiesel production should be a good idea for the long term.

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