ABOUT-FACE

By Ron Kotrba | January 19, 2016

What a year it’s been. If I’d been asked at the end of first quarter 2015, what the end of the year would bring for the U.S. biodiesel industry, my optimistic attitude would have compelled me to say, “Better things,” but my countenance might have telegraphed a different story.

Overall, the downed U.S. biodiesel market impeded investment and stymied growth. This environment was precipitated by a confluence of factors, such as low diesel prices, and in many cases, negative margins, a prolonged delay in the RFS targets for 2014-’15—the rule for 2014 that should have been finalized by Nov. 1, 2012, was not published until Nov. 30, 2015—no tax credit for the fourth time in six years, and seriously depressed RIN values. For more information on 2015’s market activities and what 2016 may hold, be sure to read “Poised for the Best Year Yet” on page 18, written by associate editor Katie Fletcher.

While the U.S. biodiesel sector suffered as a whole in 2015, this didn’t stop many domestic companies from making progress in developing new projects, as evidenced in the page-12 story, “Standing On Its Own 2 Feet,” by associate editor Anna Simet. This is a genuinely positive story of the perseverance and ingenuity exhibited by those in this business, whose efforts shine like the sun against a backdrop of stormy regulatory and market environments.

On page 28, in the article, “Biodiesel Opportunities Abroad,” I feature four U.S. companies that are focusing on expanding their businesses overseas for a variety of reasons—whether they are fed up with federal policy inconsistency, state and local regulatory constraints, or are taking advantage of hungry international biodiesel markets. With the serious issues our domestic industry has faced in recent years, it’s no wonder companies are seeking this avenue. Given the U.S. EPA’s more robust biomass-based diesel volumes in the final RFS rule for 2014-’17, however, it will be interesting to see whether some of these companies refocus their efforts on domestic projects. Other influencing factors may include the EPA’s commitments to get the program time line back on track and continue raising biodiesel volumes, and the reinstated blender tax credit retroactively in effect from Jan. 1, 2015, through Dec. 31, 2016. For more on the RFS final rule, program time line and tax credit, check out “Back On Solid Ground,” on page 24.

The events that unfolded late in 2015—EPA’s release of a strong RFS rule and reinstatement of the tax credit—are setting the stage for performance of an about-face in 2016, which, by all accounts, could be the greatest year the U.S. biodiesel industry has ever experienced. I’m placing my bets on it.

Author: Ron Kotrba
Editor, Biodiesel Magazine
218-745-8347
rkotrba@bbiinternational.com

 
 
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