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State suspends mandate for wider use of biofuels

Cost and complexity cited; suppliers upset

By Erin Ailworth
Globe Staff / July 2, 2010

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Massachusetts energy officials have suspended a requirement, scheduled to take effect yesterday, that oil retailers blend biofuel into the diesel and home heating oil they sell.

The decision, delivered Wednesday in a notice from the Massachusetts Department of Energy Resources, sparked an outcry from biofuel makers, distributors, and sellers, who said their businesses will suffer without the state mandate.

State officials said they ran into too many complications as they tried to write regulations for blending biofuel, a petroleum alternative made from plant waste and other substances, and they decided that initiating the regulations now would be too costly for businesses and consumers.

Suspending the rule “was the best way to go, unfortunately,’’ said Philip Giudice, commissioner of the Department of Energy Resources, who said the quota for using biofuel will be voluntary until the state can figure out how to make the program work.

Biofuel businesses said that since the mandate was passed in 2008, little has been done to put it into practice.

“It has been delay, delay, frustration,’’ said Brooke Coleman, executive director of the New Fuels Alliance, a group that advocates the use of biofuels.

Efforts to promote the use of petroleum substitutes had already been shaken by the expiration in January of a federal tax credit for using biofuels in conventional oil products. The credit cut the cost for biofuel consumers, and although federal legislators have considered renewing the incentive, they have not done so.

That, Guidice said, put biofuels “at a real disadvantage’’ and was a factor in the state’s decision.

It was widely expected that Congress would renew the credit.

Jeff Bursaw, owner of Bursaw Gas & Oil in Acton, said he is out about $15,000 in federal reimbursements for recent purchases of biofuel. Bursaw said he will cut back on the biofuel he has been mixing into the heating oil and diesel he sells.

“I have to back off,’’ Bursaw said. “Otherwise I’m going to blend the cost of my heating oil up another five, 10 cents a gallon.’’

At Baystate Biofuels, a North Andover distributor of biofuel, chief executive Jesse Reich said the expiration of the federal incentive contributed to a slowdown that forced him to lay off some employees. Even so, he was optimistic the federal subsidy would return and that Massachusetts would reinstate biofuel quotas.

“We can get this mandate up and running as soon as there is a will to do so,’’ Reich said.

That might not happen soon enough to retain some of the state’s share of the burgeoning biofuel industry.

Curt Felix, chief executive of Plankton Power, a Cape Cod company that makes fuel from algae, said he has had difficulty doing business here and has considered moving out of state.

“I really don’t know what to do next,’’ he said.

John Quinn, executive director of the trade group Massachusetts Petroleum Council, questioned the need for the state’s biofuel initiative, which he called ill-conceived and “premised on a number of faulty assumptions,’’ including the continued existence of the federal subsidy.

Michael Ferrante, president of the Massachusetts Oilheat Council, said he thinks Massachusetts will mandate use of biofuel, despite the delay.

“We think the state is committed to it,’’ Ferrante said. “July 2011 is a more realistic start date for it.’’

Erin Ailworth can be reached at eailworth@globe.com.