NBB In Sight

The three-legged stool: Promoting the industry's needs
By Manning Feraci | October 16, 2007
America's biodiesel industry has experienced impressive growth over the last few years. In 2004, the industry produced 25 million gallons of fuel. By 2006, production increased to 250 million gallons. Although the 2007 numbers are not final, it is safe to assume that our production will exceed 300 million gallons. The National Biodiesel Board (NBB) is proud of this accomplishment and proud to serve those whose hard work and efforts yielded these results.

Despite the past success, the NBB is very aware of the challenges facing our industry. High feedstock costs and the need to expand domestic demand for our fuel are making it hard for some producers to make ends meet. The NBB's broad membership-producers, marketers and feedstock suppliers-share a commitment to biodiesel's potential and have a vested interest in the success of the industry.

For a viable U.S. biodiesel industry to thrive, federal policy must provide a framework that is conducive to growth. In Washington, D.C., the NBB's advocacy team is pushing an agenda that will provide this framework. The agenda is based broadly on three policy proposals-the three legs of our legislative stool-that will provide a solid policy foundation upon which our industry will grow and prosper.

The stool's first leg is the extension of the $1-per-gallon biodiesel tax incentive. Congress enacted the incentive in 2004, and it was extended in subsequent energy legislation. As the industry's growth since 2004 demonstrates, the credit is achieving its desired public policy objective by helping make biodiesel price competitive with petroleum diesel fuel, ensuring the growth of a domestic biodiesel industry that will displace 242 billion barrels of crude oil between 2006 and 2015.

However, the credit is set to expire at the end of 2008. If the credit lapses, it would be nearly impossible for the industry to survive under current market conditions. That is why extending the biodiesel tax incentive is a top priority for the NBB. The U.S. House of Representatives recently approved legislation extending the credit through 2010, and the Senate's tax writing committee has approved an energy tax package that also extends the credit. Though more work remains, these are positive developments, and the NBB will keep working with our champions in Congress to get an extension signed into law.

The second leg of the stool is an initiative to create a renewable requirement as part of the nation's 60 billion-gallon pool of diesel fuel. For the long-term health of the industry, we must have a strong, reliable domestic market for our fuel. There is bipartisan consensus that expanding the production and use of environmentally friendly, domestically produced renewable fuels are integral parts of a national strategy to reduce our reliance on foreign oil. A renewable standard in the diesel pool is consistent with this effort, and the biodiesel industry is well-positioned to play a constructive role in helping achieve this common sense goal.

Sens. Richard Durbin, D-Ill., and Chuck Grassley, R-Iowa, have introduced legislation in the U.S. Senate that would establish a 1 billion gallon biodiesel fuel standard by 2012. Companion legislation will be introduced in the House in the near future. The U.S. EPA is also in the process of crafting the regulatory rule to implement President George W. Bush administration's 20-in-10 initiative, which proposes to reduce America's consumption of oil by creating a 35 billion-gallon renewable and alternative fuel standard. The NBB's Washington, D.C., team will remain fully engaged in these efforts.

The third leg of our legislative effort is a strong Commodity Credit Corp. (CCC) Bioenergy Program that provides support to biodiesel producers on a per-gallon basis. By design, the CCC Bioenergy Program helps producers offset the cost of feedstock, a policy objective that is timely and relevant given dramatic increases in feedstock prices.

The U.S. House passed H.R. 2419, its version of the Farm Bill, on July 27. It contained $1.4 billion in mandatory funding for the CCC Bioenergy Program between 2008 and 2012. The U.S. Senate is expected to consider its version of the bill in the near future. As the process moves forward, the NBB will continue working with Congress to structure the program in a manner that helps producers offset rising input costs.

NBB's membership is varied and dynamic, as it represents all sectors of the industry. The three legs of the stool-the pillars of our legislative agenda in Washington-are common sense items that are consistent with sound federal energy policy and will help all sectors of the American biodiesel industry thrive.

At this point, it is unclear how events in the legislative process will unfold. What is clear is that the NBB's Washington, D.C., team will keep pushing an agenda consistent with the needs of our diverse membership.

Manning Feraci
NBB Vice President of Federal Affairs
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