Thursday, April 24, 2008

Biofuel wavering by governments leads to uncertainty in shipping industry

Will governments continue to use biofuel in the face of criticism? It’s not certain – the United Kingdom is sending mixed messages while the U.S. continues ahead, for the time being.

But this uncertainty has lead has created a minor shortage in the fuel tanker industry, which must transport biodeisel on special chemical carriers. Ship owners would like the U.K. government to allow biodiesel to be transported on oil tankers.

For now, ship owners are standing pat – until things clear up. That means ship owners won't be investing in building or transforming current tankers for the near future, possibly creating a transportation bottleneck down the road.

In Britain, the government recently introduced a law that requires at least 2.5 percent of gasoline sold in stations to come from crops, such as soy or palm oil. The sticking point is the 2010 threshold, which pegs 5 percent of gasoline deriving from these plants. Prime Minister Gordon Brown has admitted the government is currently reviewing the 2010 rules. Also up in the air is Britain’s involvement in the European Union rules that state by 2020, 10 percent of gasoline will be plant based.

In the United States, where an estimated 80 ethanol refineries are under construction, the government stipulates that by 2012, 7.5 billion gallons of gasoline must be made by ethanol. By 2017, that should increase to 35 billion gallons. Presently, the U.S. consumes about 385 million gallons of gas per day.

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