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Survey shows biodiesel producers hit hard by policy uncertainty

By The National Biodiesel Board | May 14, 2014

Policy setbacks in Washington, D.C., are taking a major toll on the most successful advanced biofuel in the U.S., according to a nationwide survey of biodiesel producers released May 14.

The survey, conducted by the National Biodiesel Board, found that nearly 80 percent of U.S. biodiesel producers have scaled back production this year and more than half have idled production at a plant altogether. Additionally, two-thirds of producers said they have already reduced or anticipate reducing their workforce as a result of the downturn. The cutbacks come in the face of a weak renewable fuel standard (RFS) proposal from the EPA and Congress’ failure to extend the biodiesel tax incentive.

Biodiesel producers and other advocates joined a group of U.S. senators at a press conference May 14 in calling for Congress and the administration to act quickly to restore the industry’s progress by supporting a strong RFS and reinstating the tax incentive.

“Inconsistency in Washington is wreaking havoc on the U.S. biodiesel industry,” said Anne Steckel, NBB’s vice president of federal affairs. “It’s not just hurting these producers. It is a setback for local economies where these plants operate, for our environment, for our national energy security, and for drivers who are tired of ever-increasing fuel prices that result from the petroleum industry’s monopoly at the pump.”

The producers nearly universally attributed the industry decline to the weak RFS proposal and loss of the tax incentive.

The RFS proposal, which has not yet been finalized, would establish a biodiesel standard of 1.28 billion gallons this year. That is a sharp cut from last year’s record production of nearly 1.8 billion gallons that would likely force many producers to shut their doors.

The biodiesel tax incentive expired on Jan. 1, marking the third time in five years that Congress has allowed it to lapse. The House and Senate have begun moving tax extenders legislation but it remains unclear when or if the incentive might be reinstated.

Among the other survey findings:

-78 percent have reduced production versus 2013

-57 percent have idled production altogether or shut down a plant this year

-66 percent have reduced workforce or anticipate reducing workforce

-85 percent have delayed or canceled expansion plans

At the press conference, several biodiesel producers and senators called on the administration and Congress to restore stable policy to get the industry back on track.

“Unless Congress and the administration act, we will be forced to make very difficult decisions in the near future,” said Jeff Haas, CEO of General Biodiesel in Seattle. “We are all slowly being bled dry, and America’s growing biofuels industry may be irreparably harmed.”

“We made these investments because we believed in what the administration and Congress were trying to accomplish with the renewable fuel standard and because a road map was laid out for growth under the RFS for the next decade, particularly in advanced biofuels,” said Wayne Presby, owner of White Mountain Biodiesel in North Haverhill, N.H., discussing the growth of his business in recent years and now-delayed expansion plans. “But with this RFS proposal, and the uncertain tax policy from Congress, that expansion and the jobs that would come with it are on hold.”

“This uncertainty is bad for producers, it’s bad for agriculture, it’s extremely bad for investors, it’s bad for the environment, and it’s particularly bad for those of us who took cues from Congress and the administration and made the commitments to build a U.S. renewable fuels future,” said Terry Goerger, a seed company owner and third-generation farmer from Mantador, N.D.

Sen. Heidi Heitkamp, D-N.D., said the administration’s proposal and the loss of the tax incentive is hurting her state’s agriculture sector as well as its production plant in Velva, N.D.

“Biodiesel has an incredible success story to tell,” Heitkamp said. “Farmers in North Dakota and throughout the country are supporting good jobs, reducing our dependence on foreign oil, and boosting rural communities. But instead of promoting these successes, federal policies are dragging our farmers and producers down. That’s the wrong direction.”

“Indiana is a leader in biofuel production, and I have seen firsthand the good work being done at our biodiesel plants across our state,” said Sen. Joe Donnelly, D-Ind. “The biodiesel industry is an excellent example of American-made energy that increases our energy security and creates jobs at home. That is why it is so critical that we continue and strengthen energy policies, like the biodiesel tax credit and the renewable fuel standard, that increase the production of American-made biofuels.”

Made from a diverse mix of fats and oils including soybean oil, recycled cooking oil and animal fats, biodiesel is the first and only EPA-designated advanced biofuel to reach commercial-scale production nationwide. Last year, the industry produced a record of nearly 1.8 billion gallons, with plants in almost every state in the country supporting some 62,200 jobs. According to a recent study, nearly 8,000 of those jobs would be threatened by a drop in production back to 1.28 billion gallons as the EPA has proposed.

The survey of NBB members was conducted April 14-25. Fifty-four biodiesel producers from across the country participated in the survey.

 

 

3 Responses

  1. Peter Brown

    2014-05-14

    1

    It is hard to build a business when up to 30% of the anticipated income is at the whim of a group of people we elected and who are now dedicated to only support the financial well being of our bloated competitors. Biodiesel could be a good and solid business if it was saddled with the same support as the oil and gas industry. If we could pass legislation as quickly as they do and if we could pull the rug our way in the same manner as BP does. I look at thousands of little towns, cities and megalopolises that could institute biodiesel production if given the slight nudge and assurances that our government could generate, and yet they do naught and wonder at our degenerating environment.

  2. No War Required

    2014-05-14

    2

    Let's not forget that while the petroleum industry is needed and valuable for distributing biodiesel throughout the nation's existing fueling infrastructure, virtually every foreign military operation is a petroleum subsidy in disguise. This added cost is conveniently left out at the pump as it is collected in 'other ways'. We should probably be paying $29.999/gal at the pump for gasoline and petro-diesel to truly reflect reality. With the veil removed, do you suppose biodiesel could stand on its own?

  3. Peter Brown

    2014-05-15

    3

    Complex question requiring a number of what ifs. To start with, if all we had was biodiesel we could probably stand on our own hind legs. It starts with what we designate as feedstock, so far we have picked the low hanging fruits, soy and canola making up the bulk and complex PR campaigns that have eliminated a number of solid contenders, food or fuel for palm oil, deforestation for others. Then we review the process methods, there are systems out there that will transform sewer sludge into biodiesel, instead most waste treatment facilities send it to landfill rather than sending me the $5 million to build a facility. We could increase available and plausible feedstock by twenty fold by just using what is available. Some of these newbies would be more expensive to produce and some would be less expensive to harvest while more expensive to process. They could and should be used. Then we have the consumption side, to the few, timid souls in America driving diesel powered cars, we salute you and assure you that you aint seen nothing yet! 60MPG will be the norm and over 100MPG is achievable in the near future. The gas engine has been ultra-refined and has little theoretical improvements in it any more. Besides the world runs on diesel, not gas. So improvements in that are will go a long way to make it so, as Mr. Picard likes to say. What is becoming clear is that we cannot afford NOT to convert to renewable energy, the economics alone apart from the ethics, dictate the move. If we intend to scrape the surface of Alberts, ship the tar all over North America and drop it off in China, then we certainly can raise crops, clean rivers and sewers at the same monumental financial level. We may miss the war profiteering so important for the actual business model, on the other hand I am sure that the politicians will come up with a reasonable substitute for taking lives and lining their pockets.

  4.  

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