Survey shows biodiesel producers hit hard by policy uncertainty
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.