US biodiesel leadership sends RFS letter to President Trump

Executive leaders of the National Biodiesel Board have sent a letter to U.S. President Donald J. Trump on the 2018-’19 final rule for the Renewable Fuel Standard, which the White House Office of Management and Budget is currently reviewing. This is the first time that the organization’s governing board has sent a letter to the president on the RFS.

The letter reiterates the importance of biodiesel and the RFS to the rural economy, creating tens of thousands of jobs in economically challenged areas, and reaffirms NBB’s ask volumes of 4.75 billion ethanol-equivalent gallons for advanced biofuels in 2018 and 2.5 billion gallons for biomass-based diesel in 2019. Furthermore, the governing board provides data to counter misinformation and highlights the hypocrisy of refiners’ recent statements on compliance costs of the RFS.

“[It is] equally important to understand is that these base numbers contained in EPA’s original, July proposal—4.24 billion gallons for advanced biofuels and 2.1 billion gallons for biomass-based diesel—are themselves so low that, if finalized, they will halt the growth of the biomass-based diesel industry,” the letter states. “The 4.24- billion-gallon number is a reduction from the previous year’s 4.28 billion gallons, which sends a starkly negative signal to the industry as a whole.

“Similarly, the 2.1-billion-gallon volume for biomass-based diesel is a static number—the same as the previous year—again sending the wrong signal to an industry poised for robust, sustainable growth. The RFS program is fulfilled by both domestic and imported biodiesel, but the domestic industry alone can generate 2.6 billion gallons of biomass-based diesel right now. In other words, even if you excluded all imports, domestic producers alone are immediately ready to generate substantially more than the 2.1 billion-gallon volume in EPA’s July proposal.”

NBB’s higher ask volumes “are the numbers that farmers and related industries will be looking for in the final rule that is expected to be released later this month,” the executive leaders state in the letter to the president. “We also understand that some refiners are continuing to complain loudly about the RFS, about RIN prices and about what they see as the adverse impacts on their businesses. Yet strong Q3 refiner earnings reports seem to directly contradict those concerns. For example, PBF Energy, whose executives had earlier made strong statements about the potential negative impact of RIN prices on the company’s earnings, just reported Q3 revenue of $5.5 billion—a whopping 22 percent increase compared to the same period in 2016. The executives’ prior statements were clearly overstated. It is also important to know that many of the refinery owners who are begging for Congress to provide relief by changing or killing the RFS were fully aware of this law when they purchased their companies, and when the RFS was completely factored into their purchase prices. It is not as if the 10-year-old RFS law constitutes some big surprise. Other companies in this space have invested in blending and distribution infrastructure or employed other compliance strategies to minimize their costs.”

The final 2018-’19 RFS rule is due to be released later this month.