U.S. biodiesel output falls sharply in March: group

WASHINGTON (Reuters) - U.S. biodiesel output is down sharply, an industry group said on Monday, and it called for release of federal regulations to require use of advanced biofuels.

The National Biodiesel Board said production fell in March to 30 million gallons, compared with 49 million gallons in March 2008, according to U.S. Energy Information Administration.

If the trend continues, U.S. output would be half of the 700 million gallons produced last year, the NBB said.

"We are at risk of losing the only domestically produced home-grown fuel for diesel engines," said the industry group, based in Jefferson City, Missouri.

It urged the Environmental Protection Agency to publish regulations that require use of 500 million gallons of diesel fuel made from biomass this year. Its guaranteed share of the market would rise to 1 billion gallons in 2012.

The EIA said on April 22 the outlook for the biodiesel market "remains highly uncertain" due to removal of a tax incentive that encouraged exports and European Commission tariffs recently put in place on U.S. biodiesel.

Output was above 60 million gallons a month in the second half of 2008 until tax law changed.

(Reporting by Charles Abbott; Editing by Marguerita Choy)