2013: A Year For Record Growth
2013 started with a bang as Congress voted on New Year’s Day to pass one of the industry’s top objectives—an extension of the biodiesel tax incentive that had expired a year earlier. The extension was retroactive, covering 2012 and 2013 production. This came just months after our success on the 2013 volume increase under the renewable fuel standard (RFS). Passage of the incentive meant the policy tools were in place for an incredibly successful year, and as expected, the industry shattered previous production records.
The year was one of the most challenging, yet successful years on record for the industry. We saw intense and sustained attacks to the RFS through political, public relations, and legal challenges. The year started off at harvest time having suffered through one of the worst droughts in decades. Liquidity had not fully returned to the RIN market due to previous year’s RIN fraud cases, and the biodiesel tax incentive had been lapsed for nine months. The industry, however, was able to overcome these significant challenges and achieve nearly complete success on all of our major priorities, setting the stage for continued industry growth.
The RFS was originally designed and later expanded to increase domestic energy production, reduce greenhouse gases and develop commercial production of advanced biofuels. Many on Capitol Hill have referred to biodiesel as one of the success stories of the RFS and it is because we as an industry have surpassed RFS volume requirements in each year of the program. We are producing significant volumes of advanced biofuels in commercial facilities from coast to coast that are making real contributions to our domestic energy supply. As the program encounters increasingly aggressive attacks, we have worked hard to demonstrate that biodiesel is an advanced biofuel that’s working today to achieve our nation’s renewable fuels goals of diversifying fuel supplies, strengthening energy security, boosting the economy and reducing emissions.
During the 2013 National Biodiesel Conference & Expo in Las Vegas, the industry celebrated its 20th anniversary. This celebration offered the opportunity to both reflect on how far we have come and also to look ahead to our future. In 20 years, we have come from zero commercial volumes and selling biodiesel by the 5-gallon bucket, to a third straight year of more than 1 billion commercial gallons. With two decades in the rearview mirror, industry leaders announced a lofty, yet attainable 10-year vision during the conference for biodiesel to be 10 percent of the diesel market by 2022. This goal is benchmarked to the on-road diesel volume, but is expected to be met in various markets, applications and blend levels. This goal sends a strong message to the marketplace that biodiesel is here to stay as part of the diversification of America’s transportation energy supply.
Another driving force for increased biodiesel demand is the climate benefits of biodiesel as states such as California and New York pass and implement low carbon fuel standards (LCFS) and other similar climate policies. Successful industry efforts in New York State and Rhode Island led to passage of statewide Bioheat mandates this year. The New York state policy requires B2 blended in all heating oil beginning in 2015, and the Rhode Island policy starts at B2 next year and increases to B5 in 2017. On the West Coast, the California LCFS keeps moving forward. The LCFS survived two major legal challenges this year and biodiesel volumes used for compliance are expected to double for a second consecutive year. As more states take it upon themselves to mitigate the effects of greenhouse gases, biodiesel is sure to play an increasing role.
NBB continues to work tirelessly to address the technical needs of those within the supply chain and end users, as biodiesel volumes in the marketplace continue to grow. Our ongoing efforts with OEMs proved successful again this year as General Motors announced the launch of the diesel Chevy Cruze. The launch of an American-made diesel passenger car was significant by itself, but on top of that, it was approved for use with B20. It is very fitting that the first American advanced diesel passenger car is approved for America’s first advanced biofuel.
While the industry continues to grow and expand, NBB as an organization also expanded in 2013. This year, NBB members approved the addition of a Renewable Hydrocarbon Diesel category to its membership. This means that NBB now represents the entire biomass-based diesel category of the RFS. NBB also streamlined its governing board structure, dropping the mandatory seats for various membership categories. This will hopefully simplify the election process and be more inclusive and inviting for good new leaders to run for the board.
NBB also continued to successfully raise funds to execute projects on behalf of the biodiesel industry this year. Membership dues remain a modest portion of the organization’s revenue stream as those dues dollars are leveraged with federal grant and soybean checkoff dollars to advance the industry and complement our member-funded federal and state policy efforts. This blueprint continues to work in providing value to our membership.
Over the past three years, I have been extremely honored to serve as your chairman. As I pass the torch on to the next chairman, I remain committed to NBB and to this industry. I am sincerely grateful for the dedication of the governing board, the fine work of NBB staff, and the contributions of NBB members. I can tell you that your trade association is completely committed to serving you. We have an incredibly diverse membership, but yet have managed to stay united as a single industry group. It is my fervent belief that this diversity coupled with industry unity has been the formula for the incredible success that we’ve had. Even as we wrap up this enormously successful and record-breaking year, we will no doubt face intense challenges and uncertainty moving forward. But the industry is the strongest it has ever been, and we have demonstrated to ourselves and to others that we can handle whatever is thrown at us. And so we fight on.
Gary Haer, Chairman, National Biodiesel Board