Industry Rebirth

As we worked to finalize this Summer 2020 print issue of Biodiesel Magazine in late June, the collective American biofuels industries awaited release of U.S. EPA’s next proposal for renewable volume obligations (RVOs) under the federal Renewable Fuel Standard, including conventional, advanced and cellulosic RVOs for 2021 and the biomass-based diesel RVO for 2022.  In advance of EPA’s pending release of its proposal, at least one mainstream media outlet was reporting that it learned of an appreciable uptick in biomass-based diesel volumes for 2022, which would be welcomed—and much-deserved—news.

EPA has been known to cite the absence of the $1 per gallon federal biodiesel tax credit in its reasoning behind stalling the biomass-based diesel RVO. Now that the incentive is locked in through 2022, there is no excuse to quell growth of biomass-based diesel RVOs in the RFS. Moreover, producers are ready to expand and deliver.

Despite setbacks from the coronavirus pandemic, which has been hindering the U.S. economy now for more than three months, biodiesel producers tell me they are working to ramp up production, invest in their operations and expand their footprint in this space. In “Pushing Through the Pandemic,” on page 12, I summarize several of my conversations with producers throughout the months of March, April and May, during the height of the health and economic crisis in the U.S.

This spring, many of the biodiesel facilities that idled last year as a result of the prolonged tax credit lapse and market turmoil from EPA’s abuse of small refinery exemptions (SREs) were in the process of rehiring and restarting operations. One such company is W2Fuel, which shut down its two plants in Iowa and Michigan last year. Some industry players, including World Energy and Hero BX, are ready to continue their investments with increased efficiencies and new projects. Others like Western Dubuque Biodiesel, which detailed its new physical distancing measures with us, were already running at high rates despite the downturn, and once the economy recovers it is prepared to employ new technology to expand production. Others yet, like Integrity Biofuels in Indiana, which also shut down last year, are moving in an entirely different direction to make hand sanitizer instead of biodiesel to supply high market demand. While we hear a lot about ethanol plants doing this, it’s a different ballgame for a biodiesel producer.

As investments grow and manufacturing ramps up, it is important to note that American biodiesel quality has never been higher. On page 18, in “Proof of Quality,” I detail results of the latest quality report from National Renewable Energy Laboratory. The results are encouraging, and OEMs should take notice.

Finally, as we seem to be moving toward more certainty through 2022—at least with respect to soon knowing what EPA proposes RVOs will be through then, and assurance the tax credit is in play for the next two and a-half years—this won’t come without its challenges. On June 18, EPA disclosed 52 pending gap SRE petitions from 2011-’18. At the same time, several oil-state governors are requesting waivers from the 2020 RFS due to economic hardship the pandemic has brought to petroleum companies. While EPA should roundly reject these petitions, only time will tell. Meanwhile, I look forward to continuing conversations with many of you on how your plants and projects are progressing.

Author: Ron Kotrba
Editor in Chief
Biodiesel Magazine
[email protected]