Goodbye 2009

By Joe Jobe, CEO, NBB | November 20, 2009
Looking back on the past year and beyond, I imagine our industry feels much like Captain Cook and crew of the Endeavor must have after they nearly lost all in a collision with the Great Barrier Reef. The team's ingenuity and quick thinking brought them safely down from the reef and enabled repairs, yet their trials continued. After surviving a brush with certain disaster and patching their ship, crew members found themselves trapped between the Australia coastline and the Great Barrier Reef with no apparent way out.

Since 2008, our industry has been hit by numerous trials. Like the Endeavor's collision, several events and realities came together all at once to send the biodiesel industry into a significant state of contraction and negative growth for the first time since its commercialization. Some of the challenges include the following:

1. Feedstock costs became highly correlated with crude oil prices and followed crude to a high of more than 70 cents per pound in March 2008 (compared to a 20-year historic average of 23 cents)
2. A global credit crisis put a tremendous squeeze on operating capital

3. A global economic recession caused a collapse in diesel fuel demand and prices

4. A trade dispute that resulted in European tariffs closed off access to the single largest diesel market in the world

5. Uncertain federal policy signals such as a delayed implementation of the revised renewable fuel standard (RFS2) and a flawed proposed rule that threatened to disqualify almost 70 percent of domestic feedstock

6. A well-funded and well-coordinated attack on biofuels throughout 2008-'09 by the Grocery Manufacturers Association, environmentalists and others attempting to disparage biofuels' sustainability including indirect land use change, food-versus-fuel, water usage, and energy balance


Any one of these factors would have posed a serious challenge to the industry. However, the combination of these factors was overwhelming, leading to widespread idling, shuttering and even bankruptcies of biodiesel plants.

Though most of the trials of the past years were beyond the scope and control of NBB, we had identified some as major challenges on the horizon. Comprehensive programs to counter misinformation with confirmed science have helped dull the impact of some of these otherwise devastating attacks.

Just as the crew of the Endeavor did not let an obstacle like the Great Barrier Reef end its voyage, the U.S. biodiesel industry has not been beaten. It is surely battered and bruised, yet still afloat and still working towards healthy, long-term, sustainable industry growth.

The legend of Captain Cook would be no legend at all had the Endeavor remained trapped at sea. Instead of turning back or giving up, the good captain anchored on what he named Lizard Island. The island offered a vantage point from high above the waters and threatening reef. After a rough climb to the top, the captain was able to look ahead, examine the terrain and identify a safe passage through the reef.

Looking forward, we will continue successful offensive and defensive countermeasures and refocus efforts to support our members. Federal regulatory issues surrounding the biodiesel tax credit and RFS2 remain our top priority. The issue of indirect land use change and how it impacts biodiesel's life-cycle carbon assessment across our diverse feedstock base will undoubtedly determine biodiesel's role in future federal and state energy policy. This will drive future economics of biodiesel production and sales, impacting the industry's overall success.

Our industry is similarly poised atop Lizard Island. We have weathered the worst of the challenges and now look ahead to signs of recovery in 2010.
 
 
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