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Editorial: Biodiesel subsidy needs renewal

Minnesota Public Radio reported Monday that the $1-per-gallon biodiesel subsidy paid to refineries that blend the fuel into their products will likely be renewed at some point in 2010. In the meantime, however, Minnesota's 5-percent biodiesel mandate -- and the biodiesel industry in general -- could face some extremely challenging times.

"Without an extension of the tax credit, all U.S. biodiesel production will grind to a halt," Sen. Charles Grassley, R-Iowa, told MPR. "Plants will be shuttered, and workers will be let go."

The status of the subsidy is particularly noteworthy in our backyard, as Minnesota Soybean Processors in Brewster is the state's largest biodiesel plant. An employee of the facility expressed confidence in the MPR report that fuel production will continue; a Minnesota Commerce Department official, meanwhile, said the situation will be watched closely.

The state could potentially opt to suspend the 5-percent biodiesel mandate if the product, in essence, dries up -- which would clearly be a disappointment to both farmers and those who consistently tout the environmental benefits of biodiesel. Prices could also go up without the subsidy.

We think that in a struggling economy, the last thing needed is a further-challenged agriculture market. Washington should act and renew the subsidy at once.