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Industry stakeholders and legal experts discuss the recent RFS court ruling, the ongoing U.S. trade cases against Argentina and Indonesia, and the biodiesel tax credit in context of U.S. EPA's Notice of Data Availability.  

Biodiesel and the Ever-changing Political Landscape

Solfuels USA recently started shipping commercial loads of high-quality biodiesel from its newly retooled plant in Helena, Arkansas. From left, Matthias Binder, technical director; Henri Bardon, CEO; and Steve Lewis, production manager.

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hth companiesâ€™ equipment is on-site and ready to get the job done, no matter how big or small.

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Frazier, Barnes & Associates engineers inspect a new piping installation at a biodiesel plant.

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Biodiesel Magazine profiles seven companies integral to boosting biodiesel markets through expert RIN management, proficient regulatory guidance, project consulting, customer-oriented maintenance and quality production.  

The Biodiesel Confidence Builders

I&rsquo;ve spent many winter weekends in gyms around the Midwest coaching youth basketball teams my kids were a part of. With competitive teams playing in big-time tournaments, we often found ourselves in close games heading into the fourth quarter. Time to turn up the pressure. As we move into the final minutes of 2017, the National Biodiesel Board is doing the same thing on our D.C. efforts&mdash;putting on the full court press to get the win. Our big three in D.C. remain the Renewable Fuel Standard, the trade case and the biodiesel tax incentive. All three issues require a comprehensive, multifaceted approach made up of advocacy efforts in Congress, various federal agencies and legal work. And all require significant efforts. With the stakes this high, I have taken an expanded role in day-to-day D.C. operations and NBB Chief Operating Officer Doug Whitehead has taken up residence in the district, working full time from our Washington office to orchestrate our expansive, skilled team of staff and contractor resources. Also in this critical time, we have stepped up coordination of D.C. assets of NBB member companies through weekly meetings and near-daily communication. This allows the industry to laser focus our efforts into the most effective strategies and utilize our combined skills, connections and resources for the greater good of the industry. The 45-day comment period on the RVO proposal closed in September with the final rule due Nov. 30. Our extensive comments, guided by the membership, called for higher volumes of both advanced biofuels and biomass-based diesel in the final rule. Our more than 100 pages of comments and supporting documents highlight that our industry can do much more than the proposed 2.1 billion gallons of biomass-based diesel in 2019 and 4.24 billion gallons of advanced biofuel for 2018. We are extremely concerned with the proposed rule&rsquo;s unprecedented cut to the advanced biofuel volume and freeze in the biomass-based diesel volume. Both proposals run counter to Congress&rsquo; objectives to promote the growth of advanced biofuels like biodiesel. Now that the comment period has closed, our efforts have shifted to discussions directly with the administration, including EPA, USDA, DOE, and directly with the White House. The antidumping and countervailing duty petitions against Argentina and Indonesia continue to progress. In late August, the industry saw a favorable preliminary determination on the countervailing duty case as the U.S. Department of Commerce found those countries&rsquo; subsidies to be in violation of international trade rules. The preliminary determination in the companion antidumping investigations is expected in October. Final commerce department determinations will be issued later this year for countervailing duties and in early 2018 for antidumping, with final determinations by the U.S. International Trade Commission soon after. The industry continues to work with the ITC to advance the case, including a standard public hearing set for Nov. 9 in Washington, D.C. These cases are critical to competitiveness of U.S. biodiesel producers and work in concert with our other efforts. And finally, the biodiesel tax incentive, our longest-running federal priority, continues to move forward. There hasn&rsquo;t been as much public discussion around the tax incentive since May when the &lsquo;&lsquo;American Renewable Fuel and Job Creation Act of 2017&rsquo;&rsquo; was introduced in both the House and Senate, but plenty continues to be done to position ourselves for any possible legislative vehicle for tax policy. In the Senate, S. 944, is led by U.S. Sens. Chuck Grassley, R-Iowa, and Maria Cantwell, D-Washington. The companion legislation H.R. 2383 mirrors the Senate bill and is led by U.S. Reps. Kristi Noem, R-South Dakota, and Bill Pascrell, D-New Jersey. Comprehensive tax reform, budget negotiations, and even a tax extenders package are all viable options to move our incentive forward before the end of the year. I continue to believe that you&mdash;the biodiesel industry&mdash;are your own best advocates. But you don&rsquo;t have to do it alone. NBB&rsquo;s team includes key contracts with seasoned D.C. veterans including the American Soybean Association&rsquo;s Tom Hance, former Sen. Byron Dorgan, Tim Urban and Donna Flynn of Washington Council Ernst &amp; Young, former Rep. Kenny Hulshof of Kit Bond Strategies, Jim Massie at Alpine Group, the legal teams at Morgan Lewis and Cassidy Levy Kent, and significant new resources just brought on board to bolster our efforts including the Carmen Group and Sextons Creek. By pooling the resources of the biodiesel industry into concentrated efforts lead by NBB, we gain a comprehensive and coordinated advocacy and regulatory effort that gets results. A full court press, on the basketball court and in our Washington, D.C., efforts, is designed to turn up the pressure in crunch time. As the clock ticks down on 2017, I&rsquo;m confident our increased intensity, effort and focus will yield wins for biodiesel. Donnell Rehagen CEO National Biodiesel Board

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Donnell Rehagen, CEO of the National Biodiesel Board, discusses policy priorities in his column from the Inside NBB section of our Fall 2017 print issue of Biodiesel Magazine.  

Industry in Full Court Press on DC Priorities

The biodiesel industry mobilized to respond to a notice from U.S. EPA announced Sept. 26 calling for comments on a proposal to further reduce the renewable volume obligations under the 2018 and 2019 Renewable Fuel Standard. The Notice of Data Availability requested comments on the possibility of deeper cuts to the RFS than the levels in its July 21 proposed rule and triggered a new 15-day comment period that closes 15 calendar days after its formal posting in the Federal Register. &ldquo;The EPA&rsquo;s proposal earlier this summer was inadequate, underestimating the power of domestic biodiesel production and ignoring the intent of the law,&rdquo; said Doug Whitehead, chief operating officer of the National Biodiesel Board. &ldquo;This additional request for comment is even more disappointing. It is critical that our members, champions in Congress and stakeholders again demonstrate to EPA the industry&rsquo;s proven success record and capacity for continued growth. There will be serious impacts to the tens of thousands of American biodiesel workers who were promised that this administration had their back.&rdquo; Along with NBB&rsquo;s formal comments, stakeholder comments can also be submitted to EPA through NBB&rsquo;s Fueling Action Center found at <a href="http://www.biodiesel.org">www.biodiesel.org</a>. In addition to this coordinated effort to generate comments to EPA, NBB is engaging stakeholders and arming champions in Congress with the data to correct EPA and working directly with the administration. &ldquo;What&rsquo;s most frustrating is it appears that EPA has not bothered to look at the facts we&rsquo;ve put before them in our formal comments on the original proposal for the RFS&mdash;facts that support higher volumes of biodiesel and other advanced biofuels,&rdquo; said Donnell Rehagen, NBB CEO. &ldquo;This is not the first year the biodiesel industry has been without the tax credit, or the first year there&rsquo;s been uncertainty in the biodiesel industry. But every year we have prevailed, providing volumes above and beyond the requirements.&rdquo; The EPA&rsquo;s Notice of Data Availability requested comments on options for reductions in the 2018 biomass-based diesel, advanced biofuel and total renewable fuel volumes.

New proposed RFS cuts threaten to stymie American jobs and advanced biofuel growth.

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U.S. EPA's NODA requested comments on the possibility of deeper cuts to the RFS than the levels in its July 21 proposed rule and triggered a new 15-day comment period that closes Oct. 19. Go to NBB's Fueling Action Center today to submit comments. 

Biodiesel Industry Mobilizes to Respond to Proposed RFS Cuts

Published research supports the benefits of biodiesel in reducing wastes, supporting domestic jobs and reducing harmful emissions. The National Biodiesel Board has long-touted biodiesel&rsquo;s benefits by standing behind quantified, scientific analysis and making the biodiesel industry a leader when it comes to bona fide sustainability benefits. Data is the cornerstone of sound policies like the Renewable Fuel Standard and the California Low Carbon Fuel Standard. Previous work by U.S. EPA, the California Air Resources Board, USDA, Argonne National Lab and others consistently show biodiesel lifecycle emissions at least 50 percent better than petroleum. But skeptics wonder about the indirect expansion of global agriculture as U.S. policies have their positive effect on rural farm communities. A new academic paper published in Biotechnology for Biofuels shows biodiesel&rsquo;s benefits are even better than previous models suggest. More data is available now than ever before, and that data shows farmers are producing more on fewer acres. This means that penalties for indirect land use change by EPA and CARB overestimate emissions from creating new farm land. &ldquo;This latest research verifies biodiesel is an ideal option to support American-made energy,&rdquo; said Don Scott, NBB director of sustainability. &ldquo;The more accurate the models become, the more clearly they show biodiesel&rsquo;s benefits.&rdquo; Without the controversial indirect effects, biodiesel reduces greenhouse gas (GHG) emissions by 85 percent compared to fossil fuels. Using modeling that includes predicted indirect emissions lowered biodiesel&rsquo;s advantage to just more than 50 percent cleaner than diesel fuel. That is, according to the modeling done by EPA in 2010 and CARB in 2014. Purdue University&rsquo;s latest research shows these models underestimated the carbon benefit of biodiesel by 10 percent. &ldquo;Biodiesel is already recognized as the commercial biofuel with the lowest net GHG emissions,&rdquo; Scott said. &ldquo;The power in these new findings is that science is improving. The prediction of economic impacts and land use change is becoming more reliable. More data has been analyzed today than has ever been available in the past. As these models look more and more like the real world, biodiesel&rsquo;s extensive benefits become more clear.&rdquo;

Data is the cornerstone of sound policies such as the Renewable Fuel Standard and the California Low Carbon Fuel Standard, and a new academic paper shows biodieselâ€™s benefits are even better than previous models suggest.

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A new academic paper published in Biotechnology for Biofuels shows biodiesel's benefits are even better than previous models suggest. More data is available now than ever before, and that data shows farmers are producing more on fewer acres. 

Scientific Data the Cornerstone of Biofuels Policies

The National Biodiesel Board exists to serve and provide value to its members. Functioning much like a farm coop, members pool their resources, share expenses and gain scale to reach achievements that wouldn&rsquo;t be possible individually. Members define the direction of the association each year through the annual program plan process that becomes the playbook for staff to execute. The success stories highlighted in NBB&rsquo;s FY17 Annual Report are a result of highly coordinated efforts among a multitude of program areas working in concert to move the industry forward. &ldquo;This year, we saw many challenges as a trade association but we also saw significant successes,&rdquo; said NBB CEO Donnell Rehagen. &ldquo;All of which would not be a reality without the support of the membership, and our hard-working, dedicated team of experts pulling towards a singular goal.&rdquo; One of the greatest benefits of NBB membership is the ability of the organization to leverage membership dues dollars with outside funding sources. Member dues made up only a third of NBB&rsquo;s total revenue in FY17. For every $1,000 in membership dues paid, NBB members receive the benefit of nearly $3,500 in revenue support through the trade association&rsquo;s ability to secure outside funding.
&ldquo;Membership in NBB is a tremendous value due to the outside funding NBB is able to secure,&rdquo; said Brad Shimmens, NBB director of operations and membership. &ldquo;You would be hard-pressed to find this kind of return on investment anywhere else.&rdquo; Successes in 2017 include continued implementation of the California Low Carbon Fuel Standard and Oregon Clean Fuels Program that generated carbon credits for the industry in excess of $250 million, the reduction of biodiesel&rsquo;s indirect land use change penalty used by regulators to craft biofuels policy by 37 percent, General Motors&rsquo; announcement of 20 diesel vehicles, all approved for B20, and much more. Learn more about the National Biodiesel Board at <a href="http://www.NBB.org">www.NBB.org</a> and see this year&rsquo;s Annual Report at <a href="http://www.NBB.org/results/project-showcase">NBB.org/results/project-showcase</a>.

NBBâ€™s ability to raise more than $8 million of outside funding allows member dues dollars to be used almost exclusively for critical federal and state advocacy efforts. 

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The National Biodiesel Board exists to serve and provide value to its members. Functioning much like a farm coop, members pool their resources, share expenses and gain scale to reach achievements that wouldn't be possible individually. 

NBB Annual Report Highlights Industry Success Stories

The National Biodiesel Board continues to spearhead the only comprehensive national education campaign designed to promote biodiesel. The effort reaches many audiences from national opinion leaders to local fleet managers, but a main component focuses on thought leaders in Washington, D.C. Among NBB&rsquo;s constant objectives is safeguarding against roadblocks that might impede industry growth. &ldquo;This year&rsquo;s national ad campaign encourages thought leaders to explore the promise of more with biodiesel,&rdquo; said NBB Communications Director Jessica Robinson. &ldquo;The content focused on the 64,000 jobs the biodiesel industry supports and the tremendous economic benefits that brings to communities across the country.&rdquo; The national ad campaign has been cited as influential in offering the positive message support needed to secure key federal policy victories. And survey work conducted by NBB backs that up.
&ldquo;According to NBB&rsquo;s annual survey, 93 percent of people who recalled seeing the ad had a more favorable impression of biodiesel,&rdquo; Robinson said. &ldquo;The more people know about biodiesel, the more favorable their opinions are, which is exactly why this education campaign works so well to increase the perception of biodiesel.&rdquo; The campaign wraps up this fall with preliminary data showing millions of impressions, hundreds of thousands of video views, and thousands of clicks through to the campaign homepage, www.AmericasAdvancedBiofuel.com. Discovery Channel Documentary on Biodiesel This Fall Over the past 18 months, NBB has worked with a documentary film crew working for the Discovery Channel. The 120-minute piece titled Hot Grease will air Nov. 16. It involved some nine days of shooting with NBB staff and members and countless discussions, interviews and materials to help accurately tell the story of the commercial biodiesel industry.

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Over the past 18 months, NBB has worked with a documentary film crew working for the Discovery Channel. The 120-minute piece titled Hot Grease will air Nov. 16.

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NBB continues to spearhead the only comprehensive national education campaign designed to promote biodiesel. The effort reaches audiences from national opinion leaders to local fleet managers, but a main component focuses on D.C. thought leaders. 

National Education Campaign Supports Critical Policy Efforts

The National Biodiesel Board works hard to be a coordinating voice for the industry, taking the direction of our members and implementing it in concrete ways to build up the industry. NBB&rsquo;s state policy program is a key piece in advancing biodiesel markets and relies heavily on coordination with members and regional stakeholders. The biodiesel industry saw a number of state policy milestones achieved in 2017 that will help build valuable market demand for America&rsquo;s advanced biofuel. On West Coast, Carbon Reduction is King Biodiesel plays a key role in West Coast policies focused on carbon reduction. Continued successful implementation of the California Low Carbon Fuel Standard and Oregon Clean Fuels Program increased demand for biodiesel in the two states from 315 million gallons to 455 million gallons collectively in 2017. These volumes generated carbon credits in excess of $250 million in real value that was injected into the biodiesel industry. The California Air Resources Board announced in July its approval of a NOx-mitigant additive for biodiesel blends that was developed through an NBB-led effort over the course of more than 18 months. This first-of-its-kind approval by CARB will ensure access to B20 blends throughout California. The additive takes already clean-burning biodiesel and ensures it reduces every measurable regulated emission, including NOx, when blended with California&rsquo;s unique diesel formulation called CARB diesel. B20 blends are now certified as the lowest emissions liquid fuel available within the state. New York Expands Bioheat For Cleaner Air On the East Coast, New York state passed legislation this year requiring B5 Bioheat in eight downstate New York counties beginning in 2018. The bill will expand New York City&rsquo;s biodiesel blending standard to 70 percent of the state&rsquo;s residents, or nearly 14 million people. &ldquo;New York has long been a leader in recognizing the environmental, public health and economic benefits of biodiesel, not only in transportation applications but in the heating oil market as well,&rdquo; said Shelby Neal, NBB director of state governmental affairs. &ldquo;We commend Gov. Cuomo for signing this important bill that will provide cleaner air for more New Yorkers by improving emissions from heating oil. Increasing the use of Bioheat in the nation&rsquo;s largest heating oil market also supports local jobs in the clean energy sector.&rdquo; The bill expands on New York City&rsquo;s previous commitment to biodiesel, a citywide 2 percent biodiesel requirement implemented in 2012 that increased to 5 percent Oct. 1. Illinois, Minnesota Extend, Expand Landmark Policies Biodiesel champions in the Midwest continued to build upon long-running, proven efforts that support biodiesel market growth with continuation and expansion of policies in Illinois and Minnesota. This year, Illinois passed a five-year extension of its diesel fuel sales tax exemption for biodiesel blends over B10. The policy has made Illinois one of the largest biodiesel markets in the country at more than 150 million gallons of annual use. &ldquo;The biodiesel sales tax incentive in Illinois has been a tremendously successful policy supporting the growing market for American-made advanced biofuels,&rdquo; Neal said. &ldquo;It spurs economic activity, supports U.S.-produced fuels, and adds value to the agricultural economy. Illinois is a top-five biodiesel producing and use state, and this policy extension will help maintain the state as an industry leader.&rdquo; Minnesota, the first state to require a biodiesel blend in 2005, is taking another historic step as it announced this summer it is ready to move to B20 on May 1, 2018. Once implemented in May, the requirement will be in effect April through September, reverting to B5 in the winter months. &ldquo;Minnesota has been a visionary leader on biodiesel policy for 15 years, starting with passage of the nation&rsquo;s first statewide biodiesel requirement,&rdquo; said Neal. &ldquo;This milestone policy couldn&rsquo;t have been achieved without the hard work of so many of our members and biodiesel stakeholders&rsquo; dedicated efforts.&rdquo;

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The National Biodiesel Board's state policy program is a key piece in advancing biodiesel markets and relies heavily on coordination with members and regional stakeholders.The industry saw a number of state policy milestones achieved in 2017. 

State Policy Successes Build Valuable Markets for Industry

Sapp Bros., owner of 17 travel plazas and more than 30 wholesale locations across the U.S., celebrated the opening of its new biodiesel blending terminal in Norfolk, Nebraska, Aug. 30. Fuel suppliers can load diesel at the nearby Norfolk NuStar Terminal and then load biodiesel to the desired blend level at the Sapp Bros. terminal just 2.5 miles away. Fuel suppliers will have 24/7 access and loading upon approval. The biodiesel available at the new terminal will be sourced from BQ-9000-certified biodiesel production facilities and made from soybean oil. The Nebraska Soybean Board and MEG Corp. helped Sapp Bros. develop the new blending terminal. Sapp Bros. first began offering biodiesel in 2004 in Peru, Illinois. Cargill announced in September it would build a 60 MMgy biodiesel plant in Wichita, Kansas. The 42,000-square-foot facility is expected to cost $90 million and open in early 2019. Construction will begin in December. The new biodiesel plant will be located next to its oilseed processing plant and will replace an existing oil refinery currently managed by Cargill&rsquo;s global edible oil business. The biodiesel plant will employ 35 fulltime workers. Cargill currently operates two large-scale biodiesel plants in Kansas City, Missouri, and Iowa Falls, Iowa. It produces ethanol and biodiesel in the U.S. and the EU, ethanol in Brazil, and biodiesel in Argentina. Ag Processing Inc. (AGP) recently completed a major expansion project at its Sergeant Bluff, Iowa, biodiesel production facility&mdash;the nation&rsquo;s first commercial-scale biodiesel plant, built in 1996. Production capacity at AGP&rsquo;s Sergeant Bluff biodiesel refinery doubled from 30 to 60 MMgy. The plant expansion was first announced November 2015. The project, coupled with construction of AGP&rsquo;s new on-site soybean oil refinery that supplies feedstock to the biodiesel plant, was completed this summer. AGP&rsquo;s Sergeant Bluff complex in Iowa now features integrated soybean processing, soybean oil refining and large-scale biodiesel production. AGP&rsquo;s total biodiesel production capacity is now 150 MMgy from three Midwestern biodiesel plants. Biofuels marketer Targray announced the nationwide launch of its turnkey biodiesel solution for the convenience and fuel retailing segment. Created following a two-year pilot program and multiple rounds of customer consultations, Targray&rsquo;s innovative 24/7 biodiesel solution for the convenience store segment provides a simplified approach to biofuel procurement that emulates purchasing standard diesel. It enables chains and independently owned c-stores and fuel retailers to achieve a positive return on investment from their very first biodiesel order. Typical savings range from 3 to 10 cents per gallon of diesel sold, depending on regional market conditions and federal and state program eligibility. A letter of intent (LOI) was signed in August between North Dakota Soybean Processors LLC and the Jamestown/Stutsman Development Corp. to advance development of a $287 million soybean crush and biodiesel refinery in Spiritwood, North Dakota. NDSP has selected a site on approximately 80 acres in the Spiritwood Energy Industrial Park. According to Minnesota Soybean Processors (MnSP)&mdash;the majority investor in and managing member of the NDSP project&mdash;the LOI facilitates transfer of land from JSDC to the Spiritwood Energy Park Association LLC and infrastructure improvements such as additional rail capacity. NDSP has completed a feasibility study and a preliminary frontend engineering and design study for the project that is expected to crush 125,000 bushels of soybeans per day to produce soybean meal, RBD soybean oil and 30 MMgy of biodiesel. The California Air Resources Board announced it has certified a biodiesel additive that will make B20 blends in California the cleanest proven and tested diesel fuel with the lowest emissions profile available anywhere in the U.S. The additive, branded Vesta 1000, takes already clean-burning biodiesel and ensures it reduces every measurable regulated emission, including NOx, when blended with California&rsquo;s unique diesel formulation called CARB diesel. The National Biodiesel Board led the initial research and development into the additive to maintain biodiesel&rsquo;s competitive advantage under the state&rsquo;s Low Carbon Fuel Standard. The CARB-certified additive ensures compliance with the Jan. 1, 2018, implementation of the state&rsquo;s Alternative Diesel Fuel Regulation. California Fueling LLC will produce the formula and Pacific Fuel Resource LLC will deliver the product to market. Renewable Energy Group Inc. completed upgrades at its Emden, Germany, biodiesel plant this summer. REG invested 2.5 million euros for the installation of a new biodiesel distillation column and a thermal oil heater. REG acquired full ownership of the Emden plant in January after its initial majority investment in the former Petrotec AG in December 2014. Emden is one of the company&rsquo;s two German biodiesel processing facilities, along with 13 biomass-based diesel refineries across the U.S. that have a combined nameplate production capacity of 1.7 million metric tons (502 million gallons) annually.

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Business Briefs

Policy changes in the U.S. and Europe are quickly regearing biodiesel demand toward a focus on the carbon emissions cuts which feedstocks can hit, triggering an upsurge in international interest in feedstocks able to deliver low carbon emissions. Demand growth for low carbon, particularly waste-based feedstocks in North America, is being driven independent of federal policymakers. This has allowed the sector to sidestep some of the gyrations in RFS2 expectations seen under the Trump administration. California&rsquo;s Low Carbon Fuel Standard carbon cap-and-trade scheme for the road transport fuels sector has pioneered the carbon counting approach now mushrooming across other western states and parts of Canada. California&rsquo;s greenhouse gas (GHG) saving target will hit 10 percent by 2020. The introduction of a Clean Fuels Program in Oregon targeting similarly aggressive carbon cuts will bolster California&rsquo;s demand. Oregon plans a 10 percent cut in state transport GHG emissions by 2025 relative to a 2015 baseline by adopting a declining average carbon intensity (CI) for transport fuel suppliers to hit each year. The success of California&rsquo;s program meanwhile has inspired the Canadian government to consider launching its own transport fuel carbon cap-and-trade program, which will supplement provincial carbon-cutting efforts, including Ontario&rsquo;s high-GHG threshold for blended biofuels. California&rsquo;s aggressive carbon-saving mandate and the subsequent rise in state carbon ticket prices have already triggered a boom in low carbon renewable and biodiesel demand. Corn oil, which boasts a relatively low average CI of 36.49g CO2e/MJ under the California LCFS methodology, has seen its consumption as a U.S. biodiesel feedstock soar 25 percent year-over-year (YoY) through the first seven months of 2017 to 842 million pounds, supporting a steady rise in corn oil prices. Prima Markets&rsquo; data shows corn oil prices had gained 4 percent since the beginning of 2017 by the middle of September, despite the 6 percent slide in soybean oil prices over the same period. U.S. consumption of other low carbon wastes is also growing. U.S. white grease consumption as a U.S. biodiesel input climbed 8.5 percent YoY through the first half of this year, despite a 1 percent drop in output. U.S. consumption of yellow grease as a biodiesel input jumped 6 percent in the first half of this year. Overseas Markets Hungry for US Waste U.S. buyers of waste feedstock are facing mounting competition from international buyers interested in using the low carbon footprints of these grades to feed growth in overseas carbon-counting mandates. The EU will restrict the use of crop-based biofuels in the European road transport fuel sector, while increasing the market share of waste-based advanced biofuels to 6.8 percent by 2030. Europe&rsquo;s demand for imported waste is already rising. Chinese exports of used cooking oil (UCO) climbed almost 200 percent to more than 176,000 tons in the first eight months of this year, with two-thirds shipped to the EU. A hefty flow of UCO, corn oil and other feedstocks, such as fish and tall oils, has been scheduled to ship to Europe from the U.S. this year. European buyers continue to seek fresh supply from Asia, North Africa and South America. U.S. exports of corn oil to Europe have breached 100,000 tons so far this year, according to shipping data collated by Prima Markets. Strong overseas demand for U.S. yellow grease into waste-dominated biofuels markets such as the U.K. has been constrained by falling U.S. domestic supply, driving U.S. prices higher. While domestic tallow consumption as a biodiesel feedstock in the U.S. has been weaker YoY, California&rsquo;s insatiable appetite for imported renewable diesel is ironically pulling the strings behind much of the recent export boom. Exports of inedible tallow skyrocketed 38 percent YoY through the first seven months of 2017. Most of this was shipped to feed renewable diesel production in Singapore, before being sent back to the U.S. West Coast. Big Oil Turns to Small Carbon Longer term, shifts in corporate strategy look set to continue diversification into low carbon feedstocks, regardless of government policy. Even with the politics of the U.S. RFS2 mandate looking uninspiring, oil majors are increasing their commitment to developing advanced biofuels, aware these investment signals could be critical to long-term prosperity in a low carbon fuel economy. In the distillates world, ExxonMobil has given top billing to its research work into algae as an advanced biofuel feedstock, while French oil firm Total has been busy advertising its global commitment to aviation biofuel. Global renewable diesel leader Neste meanwhile is busy considering where to build its fifth large-scale renewable diesel plant after exhausting its capacity to supply global demand growth from its existing international production footprint. Longer term, low carbon feedstock suppliers are likely to find supplementary demand from the petrochemicals sector as these firms increase their focus on the production of low carbon, biodegradable products such as plastics. Author: Niamh Boyle Senior Research Analyst, Prima Markets +44-207-064-6470 Niamh.boyle@prima-markets.com

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Prima Markets provides a comprehensive summary of the growing international demand for low carbon fuels, including U.S. policy drivers and waste feedstock consumption, along with a detailed overview of the international trade of low carbon feedstock.

Low Carbon Demand Regears Biodiesel Inputs 

Three recent developments will shape the future of U.S. EPA&rsquo;s Renewable Fuel Standard. In late July, the U.S. Court of Appeals for the D.C. Circuit in Americans for Clean Energy v. EPA invalidated EPA&rsquo;s use of its &ldquo;inadequate domestic supply&rdquo; waiver authority for the 2014-&rsquo;16 volume requirements. Weeks before, EPA announced in its proposed standards for 2018 and 2019 that it is beginning work on a new rulemaking to &ldquo;reset&rdquo; required RFS volumes for years to come. And on Sept. 26, EPA issued a Notice of Data Availability seeking comment on potential bases for further reducing the proposed 2018 advanced biofuel and total renewable fuel volumes, and/or the 2019 biomass-based diesel (BBD) volume. EPA&rsquo;s 2014-&rsquo;16 rule was promulgated in December 2015, though the statute requires volumes to be set by November of the year before the compliance year (or two years before, for BBD). EPA retroactively set total renewable fuel, advanced biofuel and cellulosic requirements for 2014-&rsquo;15 at the levels of actual production&mdash;while requiring modest prospective increases for 2016 (and 2017 for BBD). The D.C. Circuit rejected biofuel producers&rsquo; challenge to the rule, concluding that EPA &ldquo;may promulgate late renewable fuel requirements&mdash;and even apply those standards retroactively&mdash;so long as EPA reasonably considers and mitigates any hardship caused to obligated parties by reason of the lateness.&rdquo; But the core issue in the case was EPA&rsquo;s interpretation of its &ldquo;general waiver&rdquo; authority to reduce volumes based on &ldquo;inadequate domestic supply&rdquo; of renewable fuel. EPA focused on addressing the E10 &ldquo;blendwall&rdquo;&mdash;shorthand for limitations on the rate at which ethanol use can be increased once the fuel supply is saturated with E10. EPA first used its cellulosic waiver authority, which authorizes EPA&mdash;once it reduces cellulosic volumes based on projected production&mdash;to reduce total and advanced biofuel volumes by up to the same amount. EPA then used its general waiver authority to further reduce total renewable fuel, reading &ldquo;inadequate domestic supply&rdquo; to include situations like the blendwall. The D.C. Circuit upheld EPA&rsquo;s use of its cellulosic waiver authority, but not the general waiver. The court held that &ldquo;the &lsquo;inadequate domestic supply&rsquo; provision authorizes EPA to consider supply-side factors affecting the volume of renewable fuel that is available to refiners, blenders, and importers,&rdquo; but does &ldquo;not allow EPA to consider the volume of renewable fuel that is available to ultimate consumers or the related demand-side constraints that affect the consumption of renewable fuel by consumers.&rdquo;
Notably, it struck down only the 2016 standard, not the 2014-&rsquo;15 standards, though all three were based in part on &ldquo;inadequate domestic supply.&rdquo; This seems to reflect the court&rsquo;s view that EPA has authority to reduce requirements for past years without reliance on a specific waiver authority. On July 5, EPA proposed requirements for 2018, and BBD standards for 2019, seeking to maintain volumes at levels comparable to the 2017 standards. As in the 2017 rule, EPA relied exclusively on its cellulosic waiver authority to reduce total and advanced requirements. Thus, neither the 2017 rule nor the 2018 proposal are affected by the court&rsquo;s narrowing of EPA&rsquo;s &ldquo;inadequate domestic supply&rdquo; waiver authority. This approach seems likely to continue. The difference between cellulosic production (which is increasing slowly) and the statutory levels (which rise more quickly) continues to grow, allowing EPA to rely on the cellulosic waiver alone for greater reductions in volumes.&nbsp;&nbsp; EPA&rsquo;s September NODA, meanwhile, requests comment on reductions to the proposed 2018 advanced and total renewable fuels requirements and 2019 BBD requirement. It points to possible price impacts of the expiration of the biodiesel tax credit and pending countervailing duties on imported biodiesel from Argentina and Indonesia. And it seeks comment on several possible authorities to reduce volumes, including the &ldquo;inadequate domestic supply&rdquo; provision (read to allow reductions based solely on supply from U.S. producers, not imports), authority to address &ldquo;severe economic harm,&rdquo; authority to waive BBD volumes for up to 60 days based on market disruptions (which EPA would apply by reducing annual BBD volumes by the proportion of a year represented by 60 days, or 15 percent), and finally, the statutory factors EPA applies in setting annual BBD volumes. Potentially overshadowing all these developments, EPA has announced its intention to undertake a rulemaking to &ldquo;reset&rdquo; annual RFS requirements for future years. EPA&rsquo;s 2018-&rsquo;19 proposal highlights its statutory obligation to &ldquo;reset&rdquo; volume standards if annual requirements are waived by 20 percent or more for two consecutive years. This requirement has been triggered for cellulosic and advanced biofuels, and the 2018 rule, if finalized as proposed, would trigger it for total renewable fuel. The 2018-&rsquo;19 proposal states that EPA&rsquo;s administrator has directed staff to conduct a technical analysis for such a reset. The outcome of that rulemaking, and the litigation that inevitably would follow, will have substantial consequences for the future of the RFS. &nbsp; Authors: Joel Beauvais, Partner Joshua Bledsoe, Counsel Steven Croley, Partner Environment, Land &amp; Resources Department Latham &amp; Watkins LLP joel.beauvais@lw.com joshua.bledsoe@lw.com steven.croley@lw.com

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From the Fall 2017 print edition of Biodiesel Magazine, attorneys from Latham & Watkins discuss in a Legal Perspectives column how three recent developments will shape the future of U.S. EPA's Renewable Fuel Standard. 

Recent Developments Will Shape Future of RFS

The U.S. biodiesel industry is no stranger to uncertainty. Unfortunately, it has been the norm for the better part of a decade. Trade, the tax credit and RFS, and other important policy issues are the topics of my feature article on page 22, &ldquo;Biodiesel and the Ever-changing Political Landscape.&rdquo; These issues are also at the heart of increased uncertainty today. Most notably, U.S. EPA&rsquo;s Notice of Data Availability, issued Sept. 26 after comments closed on EPA&rsquo;s already weak proposal, is seeking ways to reduce biodiesel volumes in 2018 and 2019, even though 2018&rsquo;s volume of 2.1 billion gallons was set by the Obama administration in 2016. At press time, just after I finished writing my policy article, Renewable Energy Group Inc. hosted a press conference at its biodiesel plant in Newton, Iowa, featuring U.S. Sen. Chuck Grassley, R-Iowa. The senator and great biodiesel champion noted once again that this proposal would drastically undermine biodiesel production and that it is contrary to statements made by Republican presidential nominee Trump on the campaign trail and subsequent statements by President Trump, and those he nominated to serve in his cabinet. &ldquo;A platform is not just to run on,&rdquo; Grassley said, &ldquo;it&rsquo;s also to stand on.&rdquo; Grassley said during the senate confirmation hearings, it was important for those involved to know how Trump&rsquo;s nominees from oil-producing states viewed biofuels, whether it was energy secretary nominee Rick Perry from Texas or EPA administrator nominee Scott Pruitt from Oklahoma, and whether they were aware what the president promised to the people of the biofuels industries. Grassley made a senate floor speech the day the NODA was issued, subsequently writing a letter to the president about the matter, he said. &ldquo;And [on Sept. 29] I had the opportunity to speak with [the president] on the phone, on this very subject,&rdquo; Grassley said. &ldquo;It was a three-way call with another, who is very involved in this issue,&rdquo; intimating this third party was Pruitt. The result led to a meeting that was scheduled to be held Oct. 17 between Midwestern senators and the EPA, including Pruitt. &ldquo;We&rsquo;ll see what comes from that, but I hope my message is heard,&rdquo; Grassley said. &ldquo;This proposal needs to be dropped.&rdquo; Earlier this year, in an attempt to show EPA that the National Biodiesel Board is willing to work with the agency, NBB lowered its 2019 biomass-based diesel ask volumes from 2.75 billion gallons to 2.5 billion between the Aug. 1 hearing held on the original 2018-&rsquo;19 RFS proposal, and Aug. 31 when NBB submitted its official comments. &ldquo;We&rsquo;re trying to be professionals,&rdquo; Doug Whitehead, chief operating officer at NBB, told me. &ldquo;We know what domestic production capacity is, so the numbers we pitched at the Aug. 1 hearing are accurate and attainable, but we have seen and heard signals in the marketplace, and we want reasonable growth. We&rsquo;re not coming off our numbers, but we&rsquo;ll come off our ask to show EPA, &lsquo;We heard you.&rsquo;&rdquo; Donnell Rehagen, CEO of NBB, told me, &ldquo;A one-time shift from a trade standpoint is good, but a shift in our government, which put RFS in place, is more meaningful for us. We are simply waiting for a signal from the government&mdash;not once a year it might be this or it might be that. Stakeholders can&rsquo;t make business decisions that way. To expand this industry, they are looking for a longer-term commitment. That&rsquo;s what RFS was designed to do. And it has worked effectively to do that. We can&rsquo;t afford to have starts and stops in the RFS. We experience that with the tax credit and it&rsquo;s very harmful, but we&rsquo;ve learned to deal with it. We can&rsquo;t deal with same situation in the RFS.&rdquo;

2017 Fall Issue

Business Briefs

Business Briefs

Columns

Industry in Full Court Press on DC Priorities

Low Carbon Demand Regears Biodiesel Inputs

Recent Developments Will Shape Future of RFS

Poise Amid Uncertainty

Featured

Biodiesel and the Ever-changing Political Landscape

The Biodiesel Confidence Builders