Biodiesel production hits 1.1 billion gallons in 2012

Despite allegations of fraud and increased competition from natural gas, production of biodiesel hit a record last year.

The Environmental Protection Agency reported this week that the industry produced 1.1 billion gallons in 2012.

That was up just six million gallons from 2011.

Production had slumped during the year — falling  in December to 59 million gallons, the lowest monthly volume of the year — as Congress failed to renew the biodiesel tax incentive. The $1 a gallon incentive was renewed Jan. 1 as part of the fiscal cliff legislation, which included a number of incentives for renewable energy.

The biodiesel industry takes discarded animal fats, used cooking oil and other materials and processes them into fuel that can be used to power cars, bulldozers and heavy-duty trucks.

Since 2007, the EPA has required large fossil-fuel refiners and importers to produce or purchase enough renewable fuels, including biodiesel, to account for up to 9 percent of total production.

If the companies couldn’t produce the alternative fuels, they had to buy credits from others that did.

But over the last year or so, that led to concerns about the EPA’s oversight of the program. Some companies have been accused of fraudulently creating and selling credits.

Meanwhile, natural gas producers also have begun aggressively pushing liquefied natural gas as an alternative to diesel.

So far, though, biodiesel is holding its own.

“These numbers reflect the ongoing growth and development of our industry and represent real jobs at plants across the country,” Ann Steckel, vice president of federal affairs for the National Biodiesel Board, said in a statement.

She suggested that the figures would have been higher without the uncertainty over the tax credits but predicted significant growth for 2013.