Whirlwind of Uncertainty in Washington Damaging, but Not New

Spring in the Midwest can be unpredictable. It can bring damaging storms with lightning, tornados, and flooding—but it also brings the rain that grows the next year’s crops and springs life to flowers and trees from the long, dormant winter. While devastation and damage are impactful when they happen, they aren’t new or altogether unexpected. Some level of threat almost comes with the territory. Much like a Midwest spring, the biodiesel industry lives in a world closely tied to politics that brings with it the threat of devastation in parallel to the opportunity for growth and abundance, side-by-side.

The three-legged policy stool the industry stands on—the Renewable Fuel Standard, trade and tax—has seen real challenges and successes since the calendar last turned over.

On the RFS, the whirlwind of reform talks at the White House and in Congress, Philadelphia Energy Solutions’ bankruptcy blame game, a flood of “hardship” waivers for refiners and more delivered significant uncertainty to biodiesel markets in April. RINs traded at their lowest level in more than three years, cutting discretionary blending and overall demand. This directly reflects the real harm being done to our industry.

Demand destruction is real and was even addressed by USDA Secretary Sonny Perdue in a hearing before the Senate agriculture committee recently when asked about the refinery waiver issue. We have also seen our champions in Congress weigh in with U.S. EPA Administrator Scott Pruitt and directly with the president through phone calls, meetings, letters and appearances on network political talk shows. Our efforts at NBB have included a Freedom of Information Act request to EPA; a joint letter with NBB, the American Soybean Association and the National Renderers Association urging the president to halt the issuance of RFS waivers and to bring transparency; an economic study to quantify the damage of capping RIN prices; countless meetings with administration and congressional staff and leadership; and more.

While all the activity around the RFS has been incredibly damaging to our industry in the short-term, one bright spot from the spring in Washington, D.C., is the success in the trade case to level the playing field against unfairly dumped imports of biodiesel from Argentina and Indonesia. After a four-to-zero vote April 3 from the U.S. International Trade Commission in favor of the National Biodiesel Board Fair Trade Coalition’s position, the Department of Commerce issued final antidumping duty orders on April 26. This win, in conjunction with an affirmative decision on the companion countervailing duty determination from early November, establishes a level playing field for true competition in the market that will allow the domestic industry the opportunity to put to work substantially underutilized production capacity.

NBB and the coalition members invested significant resources to defend a fair market with true competition. We’ve said all along we are for free trade, but it must be fair trade. This leveling of the playing field has already helped stimulate demand for U.S.-produced biodiesel and the corresponding economic and environmental benefits that come with it.

The biodiesel tax incentive continues to garner broad bipartisan support but is hampered by the hyperpartisan nature of tax issues in the current environment. We remain grateful for our champions and their tireless effort, but this year has been a mixed bag so far. While we were able to get a retroactive extension of the credit for 2017 in a two-year budget deal passed in February, we were disappointed that some of the negotiators prevented the extension from covering 2018 as well. We continue to make the case that a long-term extension of biodiesel and renewable diesel tax incentives is good energy and tax policy, and it would produce more of the environmental and economic benefits that were envisioned when Congress originally designed the incentives.

The biodiesel industry is in the midst of a storm in Washington, D.C., but we’ve been here before. It has again brought damage but also growth opportunity. We will do—and are doing—everything we can to minimize the damage and capitalize on the growth to ensure the good outweighs the bad when the sunshine returns.

Donnell Rehagen
CEO
National Biodiesel Board