Poise Amid Uncertainty

By Ron Kotrba | October 27, 2017

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, “Biodiesel and the Ever-changing Political Landscape.” These issues are also at the heart of increased uncertainty today. Most notably, U.S. EPA’s Notice of Data Availability, issued Sept. 26 after comments closed on EPA’s already weak proposal, is seeking ways to reduce biodiesel volumes in 2018 and 2019, even though 2018’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. “A platform is not just to run on,” Grassley said, “it’s also to stand on.” Grassley said during the senate confirmation hearings, it was important for those involved to know how Trump’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. “And [on Sept. 29] I had the opportunity to speak with [the president] on the phone, on this very subject,” Grassley said. “It was a three-way call with another, who is very involved in this issue,” 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. “We’ll see what comes from that, but I hope my message is heard,” Grassley said. “This proposal needs to be dropped.”

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-’19 RFS proposal, and Aug. 31 when NBB submitted its official comments. “We’re trying to be professionals,” Doug Whitehead, chief operating officer at NBB, told me. “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’re not coming off our numbers, but we’ll come off our ask to show EPA, ‘We heard you.’”

Donnell Rehagen, CEO of NBB, told me, “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—not once a year it might be this or it might be that. Stakeholders can’t make business decisions that way. To expand this industry, they are looking for a longer-term commitment. That’s what RFS was designed to do. And it has worked effectively to do that. We can’t afford to have starts and stops in the RFS. We experience that with the tax credit and it’s very harmful, but we’ve learned to deal with it. We can’t deal with same situation in the RFS.”

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