Biodiesel Startups Run Out of Gas

By ANGEL GONZALEZ

HOUSTON -- When Imperium Renewables Inc. opened what was then the largest U.S. biodiesel plant on the coast of Washington state two years ago, its executives thought it would be the cornerstone of a far-flung empire.
The Grays Harbor, Wash., facility is still there, but hasn't produced a drop of the stuff since February. The closely held Seattle company now makes its money by storing biodiesel produced by other facilities.
John Plaza, Imperium's chief executive, said a combination of volatile commodity prices, a financial crisis, antibiofuel rhetoric, and U.S. and state governments' tardiness in enforcing renewable-fuel mandates have arrested the biodiesel industry's momentum.
Biodiesel, a fuel derived from vegetable or animal fat, can be used in engines designed to run petroleum diesel. Biodiesel production in the U.S. has been surpassed by corn-based ethanol, which is blended into most U.S. gasoline to satisfy federal mandates.
GreenHunter Energy Inc.'s Houston plant, which surpassed Imperium's as the largest in the U.S. after its 2008 opening, also has been idle since February. On Tuesday, GreenHunter said it is mulling a sale of the plant to pay down debt.
About one-third of the nation's biodiesel plants are idle, said officials with the National Biodiesel Board, an industry group.
With many plants being idle and running below capacity, at the current rate of production without an effective mandate, U.S. biodiesel producers are forecast to cut output by almost half this year, to 350 million gallons.
Write to Angel Gonzalez at angel.gonzalez@dowjones.com