Greentech Media

It’s been a bad few days for biodiesel.

It all started Monday, when Cargill was ordered to pay a $100,000 civil penalty for environmental violations relating to its biodiesel facility in Iowa Falls, Iowa.

The penalty settled a lawsuit filed by the state’s attorney general, Tom Miller, claiming the plant didn’t pretreat its wastewater and sludge to acceptable levels before discharging it into the city’s treatment facility.

The lawsuit also claimed that after Iowa Falls notified Cargill it had reached its waste limit, the company -- along with a family-run waste-treatment company called Mort’s -- dumped 135,000 gallons of sludge, breaking land-use requirements and killing more than 500 fish.

Then Tuesday, the New York Times reported that the Alabama Biodiesel Corp. plant had leaked a ribbon of oil and grease into the Black Warrior River.

The biofuels industry already had plenty of challenges, including shrinking margins and canceled plants. D1 Oils, a U.K.-based biodiesel company, is set to cut about 30 jobs, according to Greenbang. And that’s after Seattle-based biodiesel firm Imperium Renewables in January cut its staff and delayed plans for an initial public offering.

But the unwanted attention for pollution has some industry watchers wondering what the fallout will be for an industry capitalizing on being green.

Amber Thurlo Pearson, a spokeswoman for the National Biodiesel Board, said Cargill and Alabama Biodiesel’s polluting issues are rare -- occurring at only two of the more than 170 biodiesel plants operating in the United States.

"We hope consumers are discerning enough to not let a couple of bad apples spoil the whole bunch or the whole thought of biofuel," she said, adding that the trade association doesn’t condone polluters.

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Still, there’s some fear of spillover.

After all, biodiesel isn’t the only green technology to come under environmental fire recently.

According to the Washington Post on Monday, Chinese solar-silicon maker Luoyang Zhounggui, which sells silicon to customers like LDK and Suntech Power, was found dumping toxic waste in its homeland.

And ethanol has faced opposition from critics who argue that using farmland for fuel crops will jeopardize the food supply and could have unforeseen environmental effects (see Lester Brown Talks Smack About Ethanol and this Environmental Defense report).

"Ethanol has been blasted for months now," said Michael Tian, a Morningstar equity analyst.