The Challenges and Benefits of Using Biodiesel in Freight Railways

Abstract

The recent history of biofuels, particularly biodiesel fuel, in the United States has been a turbulent one. After an initial boom in the production of biodiesel and a huge expansion in capacity in advance of expected increases in demand, the bottom fell out of the market by the end of 2010. Annual biodiesel production, which had approached 700 million gallons in 2008, fell to just over 500 million gallons by 2009 and reached the lowest point at only 340 million gallons in 2010.¹ Since then, however, the boom times have returned; 2011 saw the highest-ever level of production, at almost a billion gallons.² Much of this ebb and flow has been caused by the policy environment faced by biodiesel producers. Since the 1970s, federal efforts have broadly favoured increased production of biofuels, particularly corn-based ethanol. Since the 1990s, those encouragement efforts have expanded to include biodiesel production.³ The enactment of the Energy Policy Act of 2005 and, more recently, the Energy Independence and Security Act of 2007 have mandated increased biofuel penetration into the transportation fuel market.⁴ By diversifying the transportation fuel mix, federal policies aim to improve energy security and environmental performance, although the latter is more controversial than the former.⁵ Together, these actions have created a market for biofuels as a substitute for its petroleum counterparts. Of particular interest is the market for biodiesel, an overshadowed alternative to the more popular corn-based ethanol gasoline substitute.