If the ideal case were plausible, the most effective way to increase production of biodiesel in the US would be to enact additional legislation mandating the blending of BD into all PD products sold. Existing legislation targeted at emissions already provides reason for PD distributors to include BD blends in fuels. Tightening emissions regulations for PD, beyond the ULSD requirements would be one way to enforce change. Now that the EPA has officially classified CO2 as a pollutant, enacting proposed carbon taxes on end consumption would drastically skew sales in the favor of BD or blends.
At 22.2 pounds of CO2 emitted per gallon of PD, a carbon tax of $100 per ton would cost an extra $1.11 per gallon purchased. The increase in retail price of PD would make it less cost competitive. Unfortunately, since BD production is close to only 1% of the total production of PD, drastic increases in production will be necessary for BD to fully displace PD. At a yield of 70 gallons per acre per year for soy based BD, approximately 919M acres (1.53M square miles) of farm land devoted to just soy for BD would be necessary to just displace US PD usage. That is 228% of the total arable US farmland, meaning using only soy based BD is not a viable option to fully displace BD sales. Multiple methods of BD production, will be necessary, as well as using sources that have higher yields per acre.
Because algae based BD production does not have to use arable land and production yields are much higher, it must be explored as option for displacing PD in the US transportation industry. The Aquatic Species Program reached sustained production rates of 5,000 gallons per acre per year, which would require only about 21K square miles of non-arable land. Theoretical limits calculated by the ASP were up to 15,000 gallons per acre, reducing the necessary land to 7K square miles. To reach these theoretical limits, investment in actual production technology must be made. The ASP did much of the research necessary, their conclusions just need to be implemented. As production yields increase, the retail cost per gallon should decrease, making it more viable in the market without subsidy.
While new production technologies are being investigated, producers will need to explore all potential sources of income to decrease production costs, including selling glycol byproducts, and production in conjunction with coal fired power plants to offset CO2 emissions. The ASP also concluded that algae has the potential to drastically reduce CO2 emissions from power plants, so if a carbon tax is instituted, revenue can potentially be generated by working in collaboration with major emitters.
