In late August, the U.S. EPA denied a request by Texas Gov. Rick Perry in April for a 50 percent waiver of the national renewable fuels standard (RFS). The agency determined that the implementation of the RFS would not severely harm the economy of a state, region or the entire United States during the period specified in the waiver request-September 2008 through August 2009.

If Texas' request for a waiver had been approved by the EPA, it would have affected RFS blending requirements nationwide. Instead, the requirement that 500 million gallons of biomass-based diesel fuel be consumed in the United States in 2009 remains. This number will increase to 1 billion gallons in 2012. The EPA's definition of biomass-based diesel includes renewable diesel, green diesel and biodiesel.

Brent Yacobucci, a specialist in energy and environmental policy with the Congressional Research Service, detailed specifics regarding the biomass-based diesel blending requirements in a May report generated for U.S. Congress. "Currently, most of [the biomass-based diesel produced] is biodiesel," Yacobucci said in his report. "If the EPA administrator determines that there are significant market circumstances (including feedstock disruptions) that would make the price of biomass-based diesel fuel increase significantly, the administrator may reduce the amount mandated for up to 60 days." With regard to biomass-based diesel, however, any blending reduction granted on economic bases can't represent more than 15 percent of the total volume required for that year. If a 60-day waiver was granted for biomass-based diesel, the EPA may only extend it for another 60 days, according to Yacobucci.

An extension of the federal blender's tax credit, currently set to expire at the end of this year, has passed through the U.S. House of Representatives in H.R. 6049, but the U.S. Senate hadn't heard and voted on the measure at press time. If the tax credit isn't extended, additional "biomass-based diesel" waivers may be requested.


Note: measured in billion gallons
Source: Renewable Fuels Association

The U.S. biodiesel industry's production capacity has fluctuated in recent years. According to the National Biodiesel Board, the industry has the capacity to produce 500 million gallons. However, high feedstock costs have forced many plants to halt or slow production. Today, a great deal of U.S.-produced biodiesel is exported as B99 to Europe, which allows blenders to maximize the benefit of the 1-cent-per-percentage-point credit, plus any additional state credits or incentives, and any European incentives. However, the European Biodiesel Board filed antidumping and antisubsidy complaints with the European Union earlier this year, which subsequently initiated an investigation (see "Biodiesel Trade Wars" on page 38).