Largest US biodiesel plant to open in Washington

HOQUIAM, Wash., Oct 28 (Reuters) A biodiesel fuel company backed by venture capital money broke ground on what will be the largest U.S. biodiesel plant and pledged to develop other facilities nationwide to meet the growing demand for the environmentally friendly fuel.

Imperium Renewables, the largest biodiesel producer on the U.S. West Coast, plans to open in mid-2007 a new refinery capable of producing 100 million gallons of biodiesel a year.

''We stand here today to celebrate not just the foundation of a physical plant, but the foundation of an entire movement,'' said John Plaza, founder and president of Imperium Renewables at a ground-breaking ceremony in Grays Harbor County in the western part of Washington state.

Biodiesel -- made from the fat or oil of a vegetable source such as soy beans -- burns cleaner than traditional diesel, emitting less carbon monoxide and sulfates. It can be used in any conventional diesel engine either in a pure form or a ''blend'' mix of part biodiesel and part petroleum.

U.S. production of biodiesel will rise to between 200 million to 250 million gallons this year from 75 million gallons in 2005, according to the National Biodiesel Association. By contrast, Europe produced over 800 million gallons of biodiesel.

High petroleum prices and federal tax credits have helped to drive biodiesel demand and politicians attending the ground-breaking ceremony said it is vital to extend the tax credit so it does not expire in 2009.

''People want both ethanol and biodiesel and they're pretty excited about it,'' said Sen. Maria Cantwell, a Washington state Democrat.

Imperium's Seattle facility, which produces five million gallons of biodiesel a year, already supplies biodiesel used by government agencies in Washington state for school buses in Seattle and commuter ferries that run throughout Puget Sound.

Seattle-based Imperium, the first U.S. biodiesel company backed by venture capital firms, said it is also investigating plants at four other locations in the U.S., but would not disclose what states it was considering.

Even if biodiesel continues to grow at a rapid pace and meets industry forecasts of 1.5 billion gallons a year by 2010, it would still only represent about 1 percent of about 140 billion gallons a year of gasoline used in the U.S.

Most biodiesel sold in the U.S. comes in the form of ''B20'' diesel, a mix of 20 percent biodiesel with the remainder conventional petroleum diesel.

Reuters DKS VP0700