Biodiesel Industry Rebounding, Looking Toward a Strong End of the Year

By Gary Haer | May 13, 2011

As we near the half-way mark of the year, we are approaching  an important opportunity to assess the state of the industry to date and prepare for the demands of the coming months.

After experiencing the devastating lapse of the federal blenders tax credit last year, the industry is rebounding. We have experienced two quarters of industry growth through the implementation of biodiesel’s first renewable fuel standard.

Public policy remains a significant driver in creating certainty and stability for the biodiesel industry. In June, National Biodiesel Board members from across the country will meet face-to-face with elected officials in Washington, D.C. Our NBB Legislative Affairs team has spent a great deal of time to ensure successful Congressional visits for all NBB members in attendance. These grassroots visits continue to be paramount to achieving our industry’s long-term vision and legislative priorities. 

Whether you are headed to the nation’s capital or not, I encourage you to reach out to NBB’s Washington, D.C., team to get involved. In spite of our industry’s turnaround, there is much work to be done to reinforce and grow our position in the nation’s energy complex.

EPA Committed to RVO Compliance

The renewable fuel standard (RFS2) is creating the nation’s first requirement for biodiesel blending at the petroleum refiner and distillate importer level and is supportive of reducing our nation’s dependence on imported petroleum.

It is estimated that 30 to 45 percent of the 800 million gallon biomass-based diesel renewable volume obligation will be met by blending biodiesel in states with existing infrastructure. States such as Minnesota, Oregon, Washington and Pennsylvania require biodiesel in every gallon of diesel fuel and have built extensive blending infrastructure. States with market-driving incentives such as Iowa, Ohio, Texas and Illinois (which consumes more biodiesel than any other state in the nation) also have blending infrastructure in place. State legislators and governors play a critical role in creating and implementing programs that move our industry forward. The NBB State Government Affairs team is actively engaged in state-level policy creation, and I urge you to stay in touch with state policy makers and the NBB team regarding biodiesel policy development and movement in your state.

While Congress enacted RFS1 in 2005, the U.S. EPA is responsible for implementing and enforcing RFS2. This spring, I was fortunate to participate in a renewable fuels roundtable with EPA Administrator Lisa Jackson at Renewable Energy Group Inc.’s biodiesel facility, during which she voiced her support for the biodiesel industry, the industry’s role in meeting RFS2 and our position as part of the administration’s goals for reducing our dependence on imported petroleum. 

The NBB D.C. team continues to coordinate open dialogue between members and EPA staff to ensure successful implementation.  As a result, the EPA has assured the industry it will maintain renewable volume obligation compliance levels for 2011 and 2012’s biomass-based diesel category. 

The EPA has not yet announced the renewable volume obligation for RFS2 for 2013 and beyond. I recommend that all members participate in comment requests as the NBB staff continues to work closely with the EPA in order to establish biodiesel’s future role in RFS2.

Promote Biodiesel’s Advantages as America’s First Advanced Biofuel

Biodiesel can play a major role in the solution to meeting the EPA’s requirements for advanced biofuels utilization. In order to position biodiesel as “America’s Advanced Biofuel” the NBB, in coordination with numerous soybean associations, is launching the Advanced Biofuel Initiative. This multimillion dollar campaign is targeting biodiesel’s opposition groups as well as decision makers and the public. We must differentiate ourselves in a sea of fuels and technologies. Tens of millions of dollars are being invested to saturate the media with misinformation. The Advanced Biofuel Initiative is our way to meet myths and misinformation head-on.

The campaign will target those that label soybean oil-based biodiesel a “first-generation, conventional biofuel.” We will showcase biodiesel’s role in global protein production. We will differentiate biodiesel from other fuels in the marketplace. We will begin to turn the tide on public opinion.

The scope of the Advanced Biofuel Initiative is designed to make a notable and lasting impact within narrowly defined audiences. This proposal spans three years and is aimed at permanently filling existing information voids among those audiences that have the potential to be the most influential or, conversely, the most detrimental. 

I’m proud of the work done to bring this plan to fruition and ask that all NBB members take advantage of the new resources coming your way and promote “Biodiesel: America’s Advanced Biofuel.”

Rally Support for Federal Biodiesel Tax Incentive

More immediately, the industry must rally in support of our federal biodiesel tax incentive program. The federal blenders tax credit has been one of the most successful pieces of energy legislation in the history of America. Since its inception in 2004, it’s done what we said it would: create jobs, build brick-and-mortar renewable refinery capacity, stimulate economic development, and generate tax revenue that exceeded its cost to the U.S. Treasury.

The tax incentive has promoted America’s role in worldwide biodiesel production and consumption. Global biodiesel production continues to strengthen and could pose a challenge to domestic biodiesel production. 

After last year, we all now recognize how difficult it can be to navigate the legislative process even with a well-supported, bipartisan policy. With another federal incentive fight ahead, we must avoid the temptation to move anywhere but straight ahead. We can only accomplish what we need to through a unified voice. We’ve achieved great initiatives and policy before, and together we can do it again.

As we enter the third and fourth quarters of this year, we must work together. The NBB will continue to work for the success of our whole industry through the maintenance and growth of RFS2, the Advanced Biofuels Initiative campaign and the continuation of a federal biodiesel incentive.

Gary Haer
Chairman, National Biodiesel Board

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