Feb. 6--The struggling U.S. biodiesel industry got some good news Wednesday when President Barack Obama announced initiatives designed to expand the use of biofuels.

But business leaders preparing for a national biodiesel conference in Grapevine next week say there's another step vital to the industry's future.

They want Congress to restore the $1-per-gallon tax credit for biodiesel that expired Dec. 31.

"We're counting on that," said Warren Bonham, president of Direct Fuels, which operates a Euless biodiesel facility. "It's pretty critical. Without it, it's real tough for the economics at the plant level to work."

Federal policy will be a hot topic at the National Biodiesel Conference and Expo at the Gaylord Texan Resort & Convention Center. More than 1,000 people are expected to attend, said Jessica Robinson, spokeswoman for the National Biodiesel Board, the event's sponsor.

Obama's new energy measures include a mandate to more than triple production of biofuels, such as biodiesel and ethanol, from 11 billion gallons in 2009 to 36 billion gallons in 2022.

Under a final rule adopted by the Environmental Protection Agency, U.S. biodiesel production could approach 1 billion gallons this year, more than double the output in 2009. The new renewable-fuel standard, dubbed "RFS2," is an important step toward ensuring a stronger and more secure market for biofuels, Bonham said.

Direct Fuels' 45-acre biodiesel facility can produce 10 million gallons annually, mostly from animal fats obtained from slaughterhouses. Last year, however, it produced about half that.

If the federal tax credit were restored, Bonham said, "we ought to be running at pretty close to full capacity."

He's not the only one in the business who feels that way.

Jonathan Hoopes, president of GreenHunter Energy in Grapevine, was happy to see the new standard adopted but said it must be accompanied by congressional action restoring the tax credit.

"One without the other is a nonstarter," Hoopes said. Without the tax credit, "we're still missing a piece of the puzzle."

GreenHunter has an idled Houston biodiesel refinery -- among the biggest in the nation -- with the capacity to produce 105 million gallons annually. Shortly after the $55 million refinery opened in summer 2008, however, it suffered heavy damage from Hurricane Ike the following September. It still needs "minor repairs," and the company is looking to sell it or find a joint venture partner, Hoopes said.

Beacon Energy (TX) Corp.