Prior to August, truck traffic at World Energyâ€™s 72 MMgy biodiesel plant in Natchez, Mississippi, would be causing a whirl of activity. But in mid-August, following the EPA's announcement of 31 new SREs, the company closed the facility. 

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American GreenFuels employees, many of whom are young military veterans, are worried about the future of their jobs and this industry. 

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Amy Klobuchar, a Democratic presidential candidate and U.S. senator from Minnesota, pumps B20 into a diesel truck. Like others in Congress, she is fighting misuse of SREs by the EPA. 

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A series of unfortunate events this summer—all caused by U.S. government action or inaction—has led to a precarious situation in the biodiesel sector, but there may be a silver lining. 

Cruel Summer

Andrew Davison, founder and owner of Sandwich, Massachusetts-based Cape Cod Biofuels, was presented an environmental merit award by the U.S. EPA Sept. 10 for his unique biodiesel business model. Cape Cod Biofuels works with farmers to supply 400 restaurants with vegetable oil. It then collects that used oil back, plus oil from hundreds of other restaurants, and converts it into biodiesel at its community-scale plant. Cape Cod Biofuels supplies regional fleets and 3,000 heating oil customers with B20 and B50 blends while running four company trucks on its own biodiesel. The National Biodiesel Board nominated Davison for the award. The former Australian Renewable Fuels plant in Barnawatha, Victoria, a 13.2 MMgy biodiesel manufacturing facility, has restarted operations under the new ownership of Just Biodiesel Pty Ltd. Formation of Just Biodiesel was finalized in December following the purchase of the mothballed plant from the receiver, KordaMentha, in May 2018. ARF filed bankruptcy and shut down operations more than three years ago. Just Biodiesel began shipping biodiesel in June and will supply the Australian market in partnership with distribution companies Refuelling Solutions and Viva Energy Australia. It will also ship tallow and used cooking oil biodiesel to customers in California and the EU. Renewable Energy Group Inc. celebrated the grand opening of its first diesel fueling station July 17 in Seneca, Illinois. Construction on the fully automated station began earlier this year. Diesel customers from trucking fleets to local diesel vehicle owners will be able to fill up with biodiesel-blended fuel to conveniently reduce harmful greenhouse gas emissions. REG Seneca, a 60 MMgy biorefinery located adjacent to the fueling station, will provide the low-carbon biodiesel used in the diesel blends of B11 and higher. More than 17,000 trucks go through REG Seneca each year, according to Gary Haer, vice president of sales and marketing for REG. Global food company JBS announced it will build a new biodiesel plant in Santa Catarina, Brazil. The company is investing approximately $48 million through Seara Alimentos to build and operate the factory in the city of Mafra. JBS Biodiesel, a JBS Novos Neg&oacute;cios division, will operate the plant, which&nbsp; will use raw material from the Seara production chain, including pork and poultry fat. JBS will also work with the soybean complex to supplement its feedstock. The plant will produce 900 tons of fuel per day and will more than double its biodiesel production capacity to 158.5 MMgy. JBS has two other biodiesel plants in the Brazilian states of S&atilde;o Paulo and Mato Grosso.&nbsp; An open house was held June 25 in Garden City, Kansas, to celebrate Victory Renewables&rsquo; new biodiesel blending facility. The site stores both diesel and biodiesel fuels, allowing suppliers to load biodiesel in concentrations of 5 to 100 percent. The biodiesel offered at the new blending facility is sourced from BQ-9000-certified producers. With inline blending capabilities, the facility can accommodate inbound and outbound product movements by both rail and truck. The Kansas Soybean Checkoff provided infrastructure grants to help make biodiesel blends available in the west-southwest part of the state. Victory Renewables is a subsidiary of Conestoga Energy Holdings. Crown Iron Works, a division of CPM Holdings Inc., has opened its new Global Headquarters and Innovation Center in Blaine, Minnesota. The 68,000 square-foot, $12 million facility will serve as a resource to leading global manufacturers within the oilseed and specialty processing industries. The center includes a 15,000 square-foot pilot plant with a computerized control room for process monitoring and data collection of all plant areas including preparation, extraction, refining, biodiesel, renewable diesel and oleochemical processing. The center features multiple training locations including classrooms of varying size and numerous hands-on capabilities.

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Business Briefs

Global Fuel Recovery Come January, International Maritime Organization regulations require oceangoing vessels to use bunker fuel with 86 percent less sulfur, moving from 3.5 to 0.5 percent. The new IMO 2020 requirement is expected to increase diesel demand by 1.2 million barrels per day, says Michael Smith, co-founder of Global Fuel Recovery. It will also push used motor oil prices down, forcing many reclaimers to raise their prices. Smith has been in the reclamation business for more than 20 years and, fortunately for generators and buyers, his three-year-old startup is ready and well-positioned for this market shift. With strategic partner Modern Fuels, GFR is managing feedstock for a 17 MMgy used oil refinery in Houston to re-refine used motor and high-sulfur bunker oils into IMO 2020 fuel by mid-next year. Through its cloud-based, outward-facing software developed by business partner and co-founder Barry Lile, GFR is an asset-light company giving small- and medium-sized collection companies the ability to link together and obtain national contracts for used motor oil, yellow grease, off-spec biodiesel, crude glycerin and more. &ldquo;Most software that companies use faces them, but ours faces the customer and their needs,&rdquo; Smith says. &ldquo;It covers everything&mdash;billing, transportation, regulatory compliance, how much oil is taken out and where, and how much is paid. It tracks the transaction the whole way.&rdquo;
GFR is bringing technology to bear on an old problem. &ldquo;The way many collection companies are doing things is super antiquated,&rdquo; Smith says. &ldquo;Our customers go into our software, set up their account, and we match them with the right aggregator. Everything&rsquo;s right there. It&rsquo;s all automated.&rdquo; GFR&rsquo;s software eliminates selling, general and administrative (SG&amp;A) costs.
&ldquo;On the biodiesel side,&rdquo; Smith says, &ldquo;we can schedule trucks based on contracts months out and reshuffle as markets change, giving plants the ability to see what the supply line will look like.&rdquo; GFR&rsquo;s software will be fully accessible on Android and Apple smartphones in December. &ldquo;It&rsquo;s very customer-friendly and easy to get service,&rdquo; Smith says, whether for the aggregator or buyer.&nbsp;
GFR is more than a reclamation broker with unique software. &ldquo;We&rsquo;re a facilitator,&rdquo; Smith says. &ldquo;If a company has yellow grease and wants to sell to biodiesel producers and then buy biodiesel back from them to run in their trucks and close the loop, we can do that. We bring these types of creative solutions to the market. We&rsquo;re able to cut out a lot of fat and bring really high values to people generating yellow grease, while giving small- and medium-sized collection companies software and new customers.&rdquo;
Feedstock quality analysis is one of GFR&rsquo;s new endeavors. &ldquo;Soon we can identify, whether for a biodiesel or re-refining plant, what feedstocks work best for them based on price, recovered material and recovery rate,&rdquo; Smith says. &ldquo;The price they&rsquo;re currently paying for material can be way off, depending on the amount of recovery they get out of it. We can help make these important decisions.&rdquo;
Modes of commerce have shifted and GFR, which Smith expects to grow 10-fold in five years, is a catalyst for efficiency and change. &ldquo;The same old sales channels aren&rsquo;t efficient anymore,&rdquo; he says. &ldquo;Our software drives efficiencies and looks for excess capacities. We bring liquidity to the fuel markets. We help our customers make a profit&mdash;and a difference. If they can&rsquo;t make a profit, then they can&rsquo;t make a difference.&rdquo;&nbsp;
 Special Report In August, three industry veterans&mdash;Joe Jobe, former CEO of the National Biodiesel Board and founder of Rock House Advisors; Manning Feraci, former NBB vice president of federal affairs and founder of Playmaker Strategies; and Larry Schafer, former NBB consultant and principal at Playmaker Strategies&mdash;released their comprehensive policy and market report, &ldquo;Biodiesel and Renewable Diesel Policy, Regulatory and Market Perspectives.&rdquo; The report is the result of the trio&rsquo;s 60 years of combined experience in the field, much of which was earned as a team helping steer and develop legislation and regulations that, more than a decade later, remain the industry&rsquo;s cornerstone policies. &ldquo;The report is comprehensive by design,&rdquo; Feraci says. &ldquo;It serves as a detailed, one-stop shop to gain a good grasp and perspective on policies that make or break projects.&rdquo; Jobe points out growing corporate interest in sustainability. &ldquo;Today, almost every Fortune 500 company has a chief sustainability officer,&rdquo; he says. High concentrations of carbon emissions come from transportation, and political will for electrification is growing. But electrifying the heavy-duty sector will not come quickly. &ldquo;Biomass-based diesel is the anchor solution,&rdquo; Jobe says. Demand for information in this report comes from Wall Street investors, hedge fund interest and private equity funds, but also from those already invested in the space&mdash;biodiesel firms that are growing or have new board members lacking industry knowledge. &ldquo;If you&rsquo;re in this industry, then it&rsquo;s important to understand all the interactions of the different products and policies,&rdquo; Jobe says. Biofuels investments span from Wall Street to Main Street and include companies looking to buy assets or create new ones. &ldquo;Companies making investment decisions need to understand the policy, analyze risk and evaluate the market today and five to 10 years out,&rdquo; Schafer says. &ldquo;This is an important step in determining whether there is good investment opportunity. Our report helps people get up to speed to determine whether they should enter this space.&rdquo; In biodiesel&rsquo;s early days, plants made biodiesel and glycerin. Today, &ldquo;products&rdquo; such as D4 RINs, LCFS credits, Illinois sales tax credits and the federal tax credit, to name a few, must be managed and marketed independently. &ldquo;The interplay between all those things matters a lot,&rdquo; Jobe says. &ldquo;There&rsquo;s tremendous complexity that is difficult to grasp, so when you try to put together how biodiesel, renewable diesel and coprocessed renewable diesel compete with one another inside the policy framework, it is quite the spiderweb.&rdquo; The report was created as a candid, informational piece&mdash;not an instrument of advocacy. &ldquo;We approached it from the perspective of, if we were an investment group, what would we like to know?&rdquo; Jobe says. &ldquo;This includes key strengths, weaknesses, red flags and pitfalls to be aware of for those who intend to deploy their or their strategic partners&rsquo; resources.&rdquo;&nbsp; The document provides in-depth analysis on federal policies, including RFS legislation and implementation, RINs, court decisions and their impacts, the reset provision, the blenders tax credit and other incentives, trade, and more; state policies and incentives; and markets dynamics, the competitive environment, and economics. For more information on obtaining the report, visit <a href="http://www.rockhouse.us/doc">rockhouse.us/doc</a>. Avalara Federal excise taxes on fuels may not change very often, but in more than 12,000 state, county, city and local special jurisdictions, excise taxes are in constant flux. For a company to operate as a fuel wholesaler or distributor across multiple jurisdictions without a tax partner such as Avalara by its side could cost precious time, resources and money. How does Avalara stay on top of all the changes in excise taxes across so many jurisdictions? &ldquo;We have an army of people,&rdquo; says John Beaty, general manager for Avalara&rsquo;s excise business unit. This army of tax specialists is deployed throughout North America. &ldquo;We added Mexico this year,&rdquo; Beaty says. Beaty has worked in oil and gas for the better part of 25 years and saw the need for good tax solutions. With biofuels such as ethanol and biodiesel playing a much bigger role in the fuels market over the past decade, this need has become even greater. &ldquo;The rules to determine which taxes apply and the complexity in calculating them accurately deviate a great deal,&rdquo; Beaty says. &ldquo;The rules can be different based on the state, and the excise taxes can apply either above, at or below the rack. So, when you add in blending, there could be a third party involved, which adds to the complexity.
Standard sales and use taxes are rather straightforward. The rate is based on physical location, typically at the point of sale. This is not hard to calculate, and most don&rsquo;t need help with this. But excise tax is based on the volumetric ratio of the product, and the blend of biofuel could be a very different calculation, as sometimes biofuel is taxed at a different rate than petroleum fuel. On top of that, they may have an environmental fee, which we lump in as a tax, but there&rsquo;s still a loading fee that must be calculated in as well.&rdquo; To grasp just how complex all this can be, Beaty says for every rule, there&rsquo;s an exception, and for every exception, there&rsquo;s another rule. &ldquo;Having a consistent, accurate solution to calculate and maintain the content of these rules and rates takes the burden off organizations so they don&rsquo;t have to constantly monitor websites and rule changes,&rdquo; he says. Avalara&rsquo;s traditional core products are Avalara AvaTax Excise, which is the company&rsquo;s &ldquo;calculator engine&rdquo; that determines excise tax; and Avalara Returns Excise, which generates signature-ready returns. Both are designed for energy suppliers, distributors, retailers and traders. But a new product Beaty is excited about is Avalara&rsquo;s general ledger reconciliation. &ldquo;We look at reconciliation like trying to find a needle in a stack of needles,&rdquo; Beaty says. &ldquo;With our new solution, we highlight where the needles are.&rdquo; The purpose of Avalara&rsquo;s new product is to reconcile what a client reported to the state with what they posted in their general ledger, which Beaty says is an incredible efficiency tool and cost savings for companies. &ldquo;In every company, the tax manager is inundated with day-to-day work,&rdquo; he says.
&ldquo;Between troubleshooting, research and special projects, there&rsquo;s no time to reconcile what&rsquo;s been reported vs. what&rsquo;s been posted. It&rsquo;s a very labor-intensive process. You want to make sure what you reported is what&rsquo;s posted in the accounting system. The traditional way to do this is to run a report, take the listings, and pick and look through them all with a ruler. By the end of the day, you want to go mad.&rdquo;&nbsp; Beaty says a transaction may be posted as one financial amount in one volume on the company&rsquo;s accounting ledger, but on the report submitted to the state it may be broken out in four different ways. &ldquo;You want to reconcile this because the state will audit, and if what&rsquo;s posted in the ledger is different than what&rsquo;s been reported to the state, then you can get a penalty and interest finding,&rdquo; he says. &ldquo;We&rsquo;ve created a function to electronically generate a report to highlight what&rsquo;s been posted in the general ledger. We&rsquo;re super excited about it, and all our clients are as well.&rdquo; Beaty says Avalara&rsquo;s general ledger reconciliation solution is currently in beta testing and it plans to roll the product out by the end of the year. The generic perception around tax is that it is an unavoidable cost of doing business. A few simple calculations&mdash;how hard can it be? &ldquo;In reality it&rsquo;s not standard calculations across the board,&rdquo; Beaty says. &ldquo;Rules can greatly differentiate outcomes. If you take a more proactive or strategic approach, you can optimize your margins by getting taxes correct. There&rsquo;s a great business value proposition case to be made.&rdquo; Beaty says companies can do their own taxes and, maybe&mdash;just maybe&mdash;they&rsquo;ll get them right. &ldquo;Or, if they underpay, then they face penalties and interest findings,&rdquo; he says. &ldquo;If they overpay&mdash;and the overpayment is actually identified&mdash;then it can take six to nine months to recoup that money. There&rsquo;s a weighted cost to capital when it goes out the door, particularly when it didn&rsquo;t have to go out in the first place.&rdquo; He says partnering with Avalara is a strategic business decision to optimize tax determination, preparation and reconciliation. &ldquo;In the fuels business, pennies on the gallon mean everything,&rdquo; he says. &ldquo;Any efficiency can direct bottom line improvements to the general ledger.&rdquo;

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From a company whose software facilitates small feedstock generators landing big contracts to a comprehensive report on biomass-based diesel, and a tax specialist with new solutions, the industry knowledge in this spotlight edition runs deep. 

Industry Know-How

The usage of algae oil as a feedstock for renewable fuel is present in the literature, but less information is available when it comes to practical application. In course of the &ldquo;7th Framework Programme for Research and Technological Development&rdquo; (FP7), the European Commission supports the research and demonstration of sustainable biofuel production from algae. The All-Gas Project demonstrates the sustainable large-scale production of biofuels based on low-cost microalgae cultures using municipal wastewater. Beside the upstream cultivation testing, two different ways for using algae as feedstock for fuels were investigated within the downstream part of the project. One way was to use algae directly in an anaerobic digester. After different cleaning procedures, the biogas was then used in a vehicle fleet test. The other way of using algae as fuel is the production of biodiesel. Austria-based technology company BDI-BioEnergy International took over responsibility for this part. Algae oil was first extracted from the biomass and thereby a new, patent-pending process was invented for lipid extraction out of wet algae biomass.&nbsp; Concerning biodiesel production, algae lipids turned out to behave completely differently compared to fresh vegetable oil or waste oil and fats due to the extremely high content of impurities. In particular, the high content of phospholipids hinders phase separations within conventional biodiesel processes. It was therefore obvious to apply BDI&rsquo;s benchmark RepCat process. RepCat avoids phase separation and, as a result, is the first choice for difficult types of feedstock. Both esterification and transesterification happen in a two-stage reactor system operated at elevated temperature and pressure by means of a heterogeneous, recyclable catalyst. Methyl ester is then finally purified by distillation to achieve EN 14214 requirements. In detail, it was possible to reduce the initial 995 parts per million (ppm) phosphorus in the algae oil to below 1 ppm. In the case of magnesium, which was also extracted as it is part of the co-extracted chlorophyll, the final concentration in the algae biodiesel was below the detection limit. The sulfur content was reduced by more than 92 percent. Nevertheless, since its initial content in the algae oil was at 1,320 ppm, the EN 14214 limit of 10 ppm could not be achieved; further sulfur reduction steps are necessary and available with BDI technology. In the algae oil, fatty acids (either bound or free) were found to be between 40 and 50 percent mass/mass (m/m). Only this part of the algae oil can be converted into fatty acid methyl ester and is therefore influencing the EN 14214 parameter ester content. However, with the RepCat process, the ester content of the algae biodiesel was 97.1 percent (m/m), which is above the 96.5 percent (m/m) limit in the standard. Special attention was also paid to the fatty acid profile, since there are limits in the EN 14214 on the content of linolenic acid methyl ester (C18:3) and polyunsaturated methyl esters with more than three double bonds. The content of C18:3 was below the limit of 12 percent (m/m). An interesting topic is the content of polyunsaturated fatty acids (PUFA). These PUFAs are responsible for improper fuel stability as they rapidly polymerize. Surprisingly, the unusual fatty acid C16:4 was found in the algae biodiesel with a very high content of 3.4 percent (m/m). However, the oxidation stability after the addition of 1,000 ppm butylated hydroxytoluene (BHT) resulted in 8.2 hours, above the limits of ASTM D6751 and EN 14214. The algae biodiesel was mixed with a conventional fossil diesel&mdash;EN 590 quality with a cold filter plugging point (CFPP) of minus 31 degrees Celsius&mdash;particularly to investigate its influence on cold flow properties of the blend. The neat algae biodiesel had a CFPP of 1 degree C, which is comparable to biodiesel derived from used cooking oil. The cold weather properties of a B7 blend were not significantly influenced, and the resulting CFPP was minus 29 degrees C. Summing up, it was shown by BDI that, despite the very unconventional composition of the algae oil, it is possible to produce algae biodiesel by using the BDI RepCat technology. However, it must be noted that the term algae oil represents a high variation of different lipids and that its composition depends on the type of algae and its cultivation process. Therefore, a comprehensive analysis of the oil and transesterification trials are necessary to evaluate its suitability for biodiesel production. Author: Robert Raudner Technical Expert R&amp;D Biofuels BDI-BioEnergy International GmbH +43 316 4009 100 robert.raudner@bdi-bioenergy.com

Marlene Kreinz conducts R&D for BDI-BioEnergy International and investigates algae oil properties along with the effectiveness of conversion to biodiesel with BDIâ€™s RepCat process.  

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Algae biomass and the resulting biodiesel  

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Within the All-Gas Project of Europe's 7th Framework Programme for Research and Technological Development, BDI-BioEnergy International demonstrates algae oil extraction, characterization and conversion to biodiesel using its RepCat process. 

Algae Oil to Biodiesel: A Practical Application

Tom Brooks Western Dubuque Biodiesel Farley, Iowa Western Dubuque Biodiesel became a member out of necessity in 2007 due to the health effects study and BQ-9000 program. Since joining, we have found that NBB has offered us a team of highly competent and professional experts that greatly assist our company. Our partnership has allowed us to become successful as a quality producer and profitable as a company due to the excellent D.C. team that hits well above its weight class on key legislative successes for our industry and plant. I&rsquo;m proud to not only be an NBB member, but to have the privilege to serve on the governing board while helping to continue the success and advancement of biodiesel.
Danielle Brannan New Leaf Biofuel San Diego, California Biodiesel&rsquo;s impact throughout California is incredibly important to New Leaf Biofuel. Through the ongoing energy fight on the West Coast, the work that the National Biodiesel Board has done has been invaluable to our company. We depend on the investments NBB has made to ensure biodiesel&rsquo;s place in the California fuel supply, which have helped make California the nation&rsquo;s largest market for biodiesel. I&rsquo;m proud to be a member of NBB, and I look forward to driving growth even further for this great industry. How to Be a Member Whether you want to be a producer of biodiesel or are a company that supports the biodiesel industry through provision of goods or services, or simply an individual that supports biodiesel, the NBB has a lot to offer. If you&rsquo;re interested, please contact Brad Shimmens, director of operations and membership, at bshimmens@biodiesel.org or at 573-635-3893.

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NBB Membership Testimonials

The National Biodiesel Board is excited to unveil an update to NBB&rsquo;s digital presence that has been more than a year in the making. NBB recently launched full redesigns of <a href="http://www.biodiesel.org">www.biodiesel.org</a>, <a href="http://www.nbb.org">www.nbb.org</a>, and <a href="http://www.mybioheat.com">www.mybioheat.com</a>. The three websites offer abundant information in a clean, modern style, enhanced with mobile optimization allowing quick and easy website access from any phone or tablet while on the go&mdash;making biodiesel information more accessible than ever. NBB&rsquo;s websites are often the introduction to biodiesel for fleet managers, government officials, reporters, key influencers, the general public and so many others. Keeping this platform clean, up-to-date and user-friendly is critical to NBB&rsquo;s mission of educating key audiences on the various aspects of our fuel and industry. NBB&rsquo;s family of websites continues to be the premier destination for finding biodiesel material on the internet. While the flagship websites, biodiesel.org and nbb.org, generate more than 1.2 million page views annually, NBB manages an additional dozen websites that form the NBB family of websites. The trio of redesigned websites offers a fresh new face to deliver the same great biodiesel content NBB has maintained for years. NBB is dedicated to ensuring content and delivery mechanisms are top-of-the-line in order to continue providing helpful information to millions more in the future.

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The National Biodiesel Board recently unveiled its full redesigns of three of its most popular websites. The organization says the new sites offer abundant information in a clean, modern style, enhanced with mobile optimization. 

Biodiesel Websites Get Major Upgrade 

Biodiesel was the featured topic of an hour-long segment on RFD-TV&rsquo;s flagship series Rural America Live in August. Steve Howell, the senior technical advisor for the National Biodiesel Board, and Greg Anderson, an NBB governing board member and farmer leader, were guests on the program that was viewed by thousands across rural America. &ldquo;This unique opportunity gave the biodiesel industry one hour of earned media, in prime time across the United States,&rdquo; Anderson said. &ldquo;We told the story of biodiesel, from its inception to how far the industry has come today and were able to give the biodiesel story national exposure. Knowing RFD-TV reaches approximately 52 million homes, I know our influence was broad and deep.&rdquo; During the segment, viewers were able to learn more about the benefits of using biodiesel fuel in the agricultural industry and on the road. &ldquo;I think what connected with the farmer and rancher viewers was the value that biodiesel brings to agriculture,&rdquo; Anderson said. &ldquo;We were able to go in-depth on what biodiesel brings to soybean farmers&rsquo; bottom line, as well as the livestock industry.&rdquo; NBB shared its history and success stories of those who use America&rsquo;s first advanced biofuel. Viewers were able to call in with questions and comments about the use of biodiesel fuel. &ldquo;During our segment, we covered a lot of ground,&rdquo; Anderson explained. &ldquo;Steve and I spoke about how the biodiesel industry has created 64,000 jobs, generated 2.5 billion dollars in wages paid, and has an overall impact of $11 billion to our economy.&rdquo; The full RFD-TV segment can be found at the NBB YouTube channel.

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Biodiesel was the featured topic of an hour-long segment on RFD-TV's flagship series Rural America Live in August. Steve Howell, NBB senior technical advisor, and Greg Anderson, an NBB governing board member and farmer leader, were guests. 

National Biodiesel Board Premieres on Rural America Live

California has cleared the way for storing biodiesel blends of up to 20 percent (B20) in underground storage tanks (UST), removing the last major barrier to satisfying the state&rsquo;s thirst for biodiesel. Through an effort lasting more than 10 years, the National Biodiesel Board, several member companies and the California Advanced Biofuels Alliance provided the state water board with data necessary to demonstrate B20 compatibility in underground storage tanks. &ldquo;This is a major victory toward biodiesel&rsquo;s mainstream integration into the California fuel supply,&rdquo; said Donnell Rehagen, NBB CEO. &ldquo;We recognize the huge potential for biodiesel to supply California with a better and cleaner fuel and applaud state regulators for working closely with us to clear this final hurdle that will allow for more low-carbon biodiesel to make its way to the consumers and fleets all across the state.&rdquo; The vast majority of diesel fuel is stored in underground storage tanks, particularly at retail fueling locations. Although biodiesel biodegrades in water as fast as sugar, regulators had concerns that any degradation of UST materials could allow diesel fuel to compromise the water supply. The California State Water Resources Control Board amended California&rsquo;s UST regulations Aug. 6. The new language reverses the previous wording of the regulation, which in effect required tank owners to prove that every component of the tank was compatible. The regulation will go into effect Jan. 1. &ldquo;This change in regulations represents a huge milestone for consumers in California, who will now have increased access to B20 in a state where protecting the environment is greatly valued,&rdquo; said Tyson Keever of SeQuential and Crimson Renewable Energy, who also chairs CABA. &ldquo;Our company is driven to make a positive impact on reducing carbon emissions, stimulate local economies and reduce dependence on fossil fuels, and this new regulation will amplify our ability to do all three.&rdquo;

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Biodiesel Secures Big Win in California with B20 in Underground Storage 

The biodiesel industry has now waited 20 months for Congress to renew the biodiesel tax incentive. For some companies, the delay has become a crisis. Several producers stopped purchasing feedstocks, shut down plants and furloughed workers over the summer. NBB and its members continue to call Congress&rsquo; attention to the situation. Unfortunately, Congress has not set a firm timeline for renewing the tax policy. In June, Rep. Mike Thompson, D-California, introduced the Taxpayer Certainty and Disaster Tax Relief Act of 2019. Among other things, the bill would extend the biodiesel tax incentive for 2018 through 2020. NBB encouraged members of the House ways and means committee to mark up and approve the legislation. The committee&rsquo;s approval means the legislation can be voted on by the full House of Representatives at any time. The full House, however, did not vote on the legislation. Congress also missed an opportunity to attach the biodiesel tax incentive renewal to a late July budget agreement, even as NBB and its members advocated for them to do so. Both the House and the Senate left Washington, D.C., for the summer without further action to renew the tax incentive. In early July, Flint Hills Resources announced the closure of the Duonix Beatrice biodiesel plant in Nebraska, citing uncertainty over the tax credit as one of the primary reasons. Other large producers also announced plant closures or production cuts across the country, including REG in late July, World Energy in mid-August, and American GreenFuels in late August. More than 200 million gallons of production is impacted by the publicly announced closures, and more than 200 employees at the plants have been idled. Overall, the production loss impacts thousands of jobs throughout the industry. NBB member companies met and worked with congressional champions throughout the summer to highlight the crisis facing the industry. Producers hosted roundtable meetings and plant tours with several of the lead sponsors of the Biodiesel Tax Credit Extension Act of 2019. That legislation, introduced by freshman legislator Rep. Abby Finkenauer, D-Iowa, now has 59 co-sponsors&mdash;including 35 Democrats and 24 Republicans. With such strong bipartisan support for the policy, it&rsquo;s difficult to understand why Congress has allowed the biodiesel tax incentive to remain lapsed for more than a year and a half. The credit is highly effective; the biodiesel industry has proven its ability to grow with support from the incentive. NBB and its members continue to meet with and ask representatives and senators to make renewing the biodiesel tax incentive an urgent priority. NBB organized members to fly to Washington during the third week of September, soon after Congress returns from the summer break. NBB is emphasizing that rapid renewal is necessary to prevent additional plants from closing and long-term certainty can bring those that have closed back online.

NBB board members have been pressing lawmakers to reinstate the biodiesel tax credit. 

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With such strong bipartisan support for the policy, it's difficult to understand why Congress has allowed the biodiesel tax incentive to remain lapsed for so long. The National Biodiesel Board is emphasizing that rapid renewal is necessary. 

Congress Leaves Biodiesel Producers Waiting for Tax Incentive

Earlier this summer, oil refiners threatened to sue the U.S. EPA for failing to retroactively issue 2018 small refinery waivers in a timely manner. The group claims that the uncertainty &ldquo;tied up&rdquo; small refineries&rsquo; working capital and prevented them from investing in their refineries to make efficiency improvements to remain competitive and profitable. This assertion is ironic, since those are the exact harms that retroactive small refinery waivers have been causing to biodiesel and renewable diesel producers for the past several years. The U.S. adopted the Renewable Fuel Standard, signed by President George W. Bush in 2007, to encourage investment in advanced biofuels such as biodiesel, renewable diesel and renewable jet fuel. Biodiesel producers responded by investing billions of private dollars and building an industry that produces more than 2 billion gallons of transportation fuel each year.&nbsp; These great fuels are better for engines and cleaner for the environment while providing a vital market for surplus and recycled animal fats, agricultural oils and used restaurant greases&mdash;all products that are considered waste or coproducts of food production. The RFS was designed to increase the volume of advanced biofuels being introduced into the marketplace year after year. For biodiesel and renewable diesel, the annual increase is established directly by the EPA after fact finding and data collection. This volume-setting exercise then gives the U.S. industry the clear signals it needs to increase its investment, buy more feedstock and hire more people to produce an increased volume.&nbsp; The fact is that biodiesel and renewable diesel growth has consistently exceeded EPA&rsquo;s estimates of what can be achieved. Year after year, the two fuels fill more than 90 percent of the RFS volumes reserved for advanced biofuels. The EPA complains that advanced biofuels have not materialized quickly enough to meet the goals of the RFS. But the agency itself is holding its thumb on the industry and blocking growth. These blocking actions are specifically counter to the intent of Congress when the law was passed. And many of the lawmakers who were intimately involved in drafting the RFS have told the EPA so. These small refinery waivers act as an &ldquo;after-the-fact&rdquo; reduction in the annual volume the EPA has previously set and codified. The annual volume commitment the EPA made, many times nearly a year before, is reduced by hundreds of millions of gallons in order to provide &ldquo;relief&rdquo; to some of the largest and most profitable companies in the entire world. This comes&nbsp; at the expense of the small companies around the country that originally invested in the biodiesel and renewable diesel industry when the government sent out its &ldquo;call to action&rdquo; by passing the RFS in the first place.&nbsp; The EPA has made clear that it will stand in the way of future growth for biodiesel and renewable diesel under the RFS. In proposing&nbsp; its 2021 volume for biodiesel and renewable diesel, EPA simply repeated the exact same numbers from its 2020 volume, without any analysis of the biodiesel industry&rsquo;s ability to continue sustainable growth. How is this consistent with congressional intent to grow advanced biofuels? According to University of Illinois economist Scott Irwin, virtually all of the demand destruction from small refinery waivers is falling on the biodiesel industry. This summer, EPA granted 31 more of these petitions. The damage to the U.S. biodiesel and renewable diesel industry will soon reach $7.7 billion or 2.54 billion gallons, according to Irwin. Consider that the annual volume of our industry is approximately 3 billion gallons. Consider as well that a &ldquo;small&rdquo; oil refinery, one that is eligible for an RFS hardship waiver&mdash;one that can make up to 3 million gallons a day or more than 1 billion gallons a year&mdash;would have an RFS obligation to use just 20 million gallons of biodiesel or renewable diesel in a year. Dozens of U.S. biodiesel plants produce less than 20 million gallons a year&mdash;just one small refinery exemption would eliminate their entire market. In response to the unfairness in Washington, D.C., Davie Stephens, American Soybean Association president, and I requested a meeting with President Donald Trump to discuss small refinery exemptions and the RFS. Our request emphasized the need to include biodiesel-specific measures in any proposed resolution. Biodiesel producers have suffered the greatest impact from the administration&rsquo;s small refinery exemptions. We are seeing biodiesel producers across the country&mdash;from Pennsylvania to Iowa to Georgia and Texas&mdash;shutting their doors and laying off workers as a result of demand destruction. The RFS was designed to support the growth of advanced biofuels, but the small refinery exemptions have turned the program upside down. Biodiesel and renewable diesel producers have been playing by the rules the EPA established in 2007. It appears a couple of years ago the rules were changed, and refinery waivers became extremely easy to acquire&mdash;you simply just have to ask. This is all at the expense of those small companies that answered the original call to action and have now invested billions of dollars to grow a renewable fuels industry in the U.S. It&rsquo;s hard to find the fairness in that. Donnell Rehagen CEO National Biodiesel Board

Donnell Rehagen, CEO, National Biodiesel Board 

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From the Fall 2019 print edition of Biodiesel Magazine, National Biodiesel Board CEO Donnell Rehagen provides his perspective on small refinery exemptions and what they are doing to U.S. biodiesel producers. 

Biodiesel Producers Want Fairness

July and August were without question some of the toughest months for the U.S. biodiesel industry in years, perhaps ever.&nbsp; Biodiesel producers have seen their fair share of adversity. In my 15 years covering this industry, I have learned what resilience truly means. Here are just a few obstacles you have overcome in the past decade and a-half. Fighting for and getting the all-important biodiesel tax credit in 2004-&rsquo;05. Being shut out of the European market in the late 2000s. Seeing the great possibilities of market expansion through passage of the second Renewable Fuel Standard, only to have its implementation seriously delayed and overlapping with the first tax credit lapse in 2010. Subsequent expirations of the tax credit followed by retroactive reinstatements, destroying its utility as an instrument of investment. Devastating RIN fraud. Constant pushback from Big Oil. The RFS program going off-track in 2014 and 2015 with no final RVOs for two years. Changing administrations and Congress. Arduous reeducation of lawmakers and agencies. The administering agency of RFS&mdash;the U.S. EPA&mdash;becoming an unofficial tool of Big Oil. Hyper-partisan politics causing gridlock and divisiveness. A president who promises big things for farmers and biofuels but whose actions have, so far, shown little support for those same constituents.&nbsp;
 In early July, the biodiesel industry was thrown for a loop when the commerce department announced its preliminary determination from the &ldquo;changed circumstances review&rdquo; of countervailing duties (CVDs) put on Argentine biodiesel imports a year and a-half prior. The determination was to significantly reduce CVDs while leaving in place the antidumping tariffs. How this will play out and whether the latter is enough to keep imports from flooding the U.S. market like in 2016 is anyone&rsquo;s guess. Two days later, EPA released its 2020-&rsquo;21 proposal for RFS volumes, in which it planned to keep 2021 biomass-based diesel volumes at 2020 levels&mdash;without cause. Furthermore, with the administration&rsquo;s increasing number of granted small refinery exemptions to RFS over the past two years&mdash;and 38 pending SREs at the time&mdash;the situation was getting dire. Then, on Aug. 9, 31 of those 38 petitions were granted, wiping out more than a billion gallons of biofuel demand in the blink of an eye. The outrage from farmers and biofuel constituents was palpable. Perhaps in hindsight this will be viewed as a good thing, considering it has forced the Trump administration to address SREs when all previous attempts had failed. A Trump deal to appease his base was pending at press time. Meanwhile, the tax credit has remained lapsed for the longest period&mdash;more than 20 months&mdash;since its inception. Any one of these issues would be devastating, but to have all of them converge simultaneously is too much for any industry to take. Following these affairs that unfolded over this summer, I talked with more than a dozen people&mdash;lawmakers, producers, plant employees, representatives of soybean and biodiesel associations, trade specialists&mdash;and documented their perspectives on the events and the effects being felt, particularly on producers and plant employees, in &ldquo;<a href="http://biodieselmagazine.com/articles/2516797/cruel-summer">Cruel Summer</a>&rdquo; on page 12. One thing is certain&mdash;they are absolutely feeling the effects. However, depending on the deal struck by Trump and whether Congress can come together in bipartisan support of an extenders package that includes the biodiesel tax credit, it may not be too late to turn these obstacles into means of progress. As the constant underdog, this industry has repeatedly beaten the odds in Rocky-like fashion to overcome seemingly insurmountable challenges. And I have no doubt it will do so again.&nbsp; Author: Ron Kotrba Editor Biodiesel Magazine rkotrba@bbiinternational.com

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In his editor's note from the Fall 2019 print edition of Biodiesel Magazine, Ron Kotrba discusses the tough market and policy conditions that materialized this past summer, how it is impacting biodiesel producers, and the resiliency of this industry.

2019 Fall Issue

Business Briefs

Business Briefs

Columns

Biodiesel Producers Want Fairness

Feeling the Effects

Featured

Cruel Summer

Industry Know-How

Contributions

Algae Oil to Biodiesel: A Practical Application