Opportunities Abound for U.S. Biodiesel Industry

Posted: 10/31/2017

By J. Alan Weber

A mentor in graduate school would refer to every obstacle or challenge faced as an opportunity.  Using his philosophy, the biodiesel industry has had its fair share of “opportunities” in 2017.

As a quick primer, the Renewable Fuel Standard (RFS) was signed into law a decade ago. It has been a significant market driver for expansion of the U.S. biodiesel industry. Under the statute, a minimum number of gallons of biodiesel to be blended into our nation’s energy supply will be determined on an annual basis. The United States Environmental Protection Agency (EPA) Administrator Scott Pruitt is required to examine market factors outlined in the statute when making this decision and is expected to consult with the Secretaries of Agriculture and Energy. 

Beginning in July, the EPA issued its proposal for 2018 standards and 2019 biomass-based diesel (biodiesel/renewable diesel) volume obligation under the RFS. The EPA’s proposal did not provide an opportunity for growth in 2018 and beyond. The biodiesel industry responded with data and economic analyses to demonstrate both the capability to grow production and economic benefits from increased biodiesel use. The EPA then published a Supplemental Request for Comment on Oct. 4 seeking input on whether or not biomass-based diesel volumes should be reduced in 2019 and on possibly reducing blending requirements in 2018 that had previously been finalized.

The National Biodiesel Board (NBB) urged the EPA to reject each of the proposed courses of action described in the Supplemental Request for Information and instead increase the volume use requirements. U.S. capacity for biodiesel and renewable diesel production alone (2.6 billion gallons) is more than sufficient to meet volumes even higher than those in the EPA’s proposed rule.  

Pruitt has now signaled that some of the concepts proposed on Oct. 4 will be dropped (i.e., the retroactive altering of 2018 volumes and further reductions of 2019 volumes), but the EPA administrator’s letter did not commit to raising the 2019 biomass-based diesel volume higher than 2.1 billion gallons. 

Stagnating volume requirements are not only counter to the intent of the RFS but also will negatively impact our economy, including production agriculture and the canola industry. Canola producers have continually played a significant role, providing feedstock to the U.S. biodiesel industry. Last year, more than 1.1 billion pounds of canola oil were utilized by U.S. biodiesel producers. Almost 800 million pounds of canola oil have already been used in the first seven months of 2017, which is a 25 percent increase compared to last year. 

Facing multiple challenges in Washington, D.C., it is easy to forget that biodiesel has been a great success story of the RFS and has grown to support more than 64,000 jobs throughout its supply chain. The industry also provides benefits to American farmers and livestock producers and contributes positively to the effort to reduce greenhouse gas emissions. With all of these benefits, the opportunities truly do abound for biodiesel and growers of feedstock.

J. Alan Weber is senior advisor to the National Biodiesel Board based in Columbia, Mo.

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