Progress on Federal Policies for Biodiesel

As we await a much-anticipated RFS volume proposal from U.S. EPA for next year (and 2022 for biomass-based diesel), favorable developments in this sector should convince the agency to boost biodiesel and overall advanced biofuel volumes.
By The National Biodiesel Board | July 08, 2020

NBB is focused on growth of biomass-based diesel and advanced volumes in the annual Renewable Fuel Standard rulemaking process. The multiyear biodiesel tax credit extension and favorable determinations in trade cases should convince the U.S. EPA to promote achievable growth for biodiesel and renewable diesel this year.

“By renewing the biodiesel tax incentive through 2022, Congress sent a strong signal that it supports growth in the biodiesel market,” said Kurt Kovarik, NBB vice president of federal affairs.

NBB recently worked with Sens. Joni Ernst, R-Iowa, and Chuck Grassley, R-Iowa, to ask the Internal Revenue Service to speedily process payments to producers. In prior annual RFS rules, EPA has noted that the tax incentive fuels growth of domestic biodiesel production and increases its competitiveness with imported renewable fuels.

NBB also defended fair trade orders to support U.S. biodiesel producers. In mid-May, the U.S. Department of Commerce published its final determination in “changed circumstances” reviews of Argentina’s biodiesel subsidization. In July 2019, the commerce department proposed to virtually eliminate countervailing duties for Argentina. Since then, NBB’s Fair Trade Coalition has engaged in meetings with U.S. trade officials and submitted factual information about the impact of Argentina’s subsidies for its biodiesel producers. The commerce department finally determined that no change was warranted in existing antidumping and countervailing duty rates on Argentine biodiesel. EPA has also noted the role of these trade protections in ensuring that U.S. producers and consumers benefit from increased RFS volumes.

Congress scheduled an advanced biofuel increase of 500 million gallons in RFS volumes for 2022. For 2023 and beyond, EPA will be responsible for setting RFS volumes and evaluating growth opportunities. NBB will argue that the biodiesel and renewable diesel industry is prepared to meet the statutory growth in advanced biofuel volumes for 2022, and it is ready to continue growth well into the future.

NBB is also working to ensure that RFS volumes will not be rolled back through small refinery exemptions. Beginning in 2017, EPA rapidly ramped up the number of these exemptions and undercut demand for hundreds of millions of gallons of biodiesel. For the 2020 rule, EPA changed the RVO formula to include projected gasoline and diesel gallons exempted for small refineries, thereby accounting for the expected shortfall in annual biofuel use. The change resulted from a petition by NBB and other biofuel groups and a unified industry campaign to demand transparency and accounting in the RFS program. NBB will ask EPA to maintain the new method to account for any 2021 small refinery exemptions.

NBB is also seeking clarity around future exemptions. In January, the U.S. Court of Appeals for the Tenth Circuit struck down several 2016 and 2017 small refinery exemptions, ruling that EPA exceeded its authority in granting them. NBB is working with a coalition of biofuel groups to pursue a corresponding court challenge to all the exemptions EPA granted in 2018, which would further limit EPA’s use of the exemptions. In June, NBB wrote to EPA Administrator Andrew Wheeler to ask that he apply the Tenth Circuit standard to all small refinery petitions.

Opening more market space for biodiesel and renewable diesel through the RFS is an important step in achieving NBB’s 2020 vision for continued growth of the industry.

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