NBB Works to Maintain an Effective, Workable RFS

By Joe Jobe | February 28, 2012

Last year saw one of the most dramatic comebacks of an industry in recent memory. After production volumes dropped by more than half over the past two years, the biodiesel industry hung in there and pulled itself up to more than 300 percent growth in a single year—our first 1 billion gallon year.
But despite record biodiesel production, job creation and billions of dollars of economic activity, the industry still faces challenges ahead. The RFS is an incredibly powerful piece of energy policy but it is still very new and vulnerable to attack.

Recently, two serious legal challenges to the RFS were resolved. The petroleum industry challenge was rejected by the U.S. Supreme Court, and the U.S. District Court dismissed the challenge from the environmental and livestock groups. NBB was an intervener in both cases, fighting for our industry’s position. Now, with no current legal challenges in courts the industry can focus on three areas key to solidifying the RFS: integrity of RINS in the marketplace, biomass-based diesel volumes for 2013 and beyond, and political attacks to the program.

First, we all know that there have been cases of RIN fraud that created invalid RINs in the system, and we at NBB fully understand the difficulties this is creating in our industry. While RIN fraud harmed obligated parties significantly, it has also had adverse effects on the RIN markets. Many medium and small biodiesel producers have been unable to monetize the value of their RINs because of the uncertainty the fraud cases have created. NBB is fully committed to addressing this issue head-on, and we are working as fast as we can to develop both short- and longer-term solutions.

For the near-term, we are exploring interim measures to help NBB members move quickly to monetize the value of their RINs.

For the long-term, NBB Chairman Gary Haer recently appointed a RIN Integrity Task Force that includes representatives from obligated parties, blenders, biodiesel producers and the EPA. The goal of the task force is to formally evaluate the RIN program, identify possible weakness, consider existing RIN integrity programs and options, and identify solutions. To ensure that the RFS remains a workable piece of energy policy it is paramount that obligated parties have confidence within the marketplace in the program’s currency for compliance.

The main driver for biodiesel gallons within the RFS has been, and likely will continue to be, the biomass-based diesel category. As many of you know, the EPA in December delayed its proposed volume increase for the 2013 volumes. With the agency having the authority to grow the biomass-based diesel category above 1 billion gallons for 2013 and beyond, NBB ratcheted up its grassroots advocacy campaign this winter.

NBB members hit Capitol Hill in February for a fly-in to meet with lawmakers and key administration officials, nearly 1,600 letters were generated and sent to Washington from the National Biodiesel Conference, and NBB staff continue to have daily meetings on the Hill with representatives from EPA, the Office of Management and Budget, USDA, the White House, and members of the House and Senate. The decision on the 2013 volumes could potentially set a precedent for future growth for the biodiesel industry and is vitally important in the growth of the industry within the RFS policy framework.

The third challenge that the RFS faces is political attacks. One of the main arguments for political opponents of the RFS is the cost of the program. Opponents argue the costs for the obligated parties to comply are being passed directly to the consumers. While this hasn’t shown to be the case, anything we can do to lower the cost of biodiesel to the obligated parties strengthens the industry’s position, and this includes extension of the biodiesel tax credit.

NBB is absolutely committed to the success and the protection of the RFS as our top priority. That means that everything we do is supportive of that objective including government affairs efforts on RIN integrity, biomass-based diesel volume obligations, the biodiesel tax incentive, as well as efforts within our communications, technical, sustainability, fuel quality or other programs.

Last year demonstrated that the RFS is a successful policy and that it works in achieving what Congress intended, which is to stimulate the production of clean, American-made renewable fuels. But despite the successes of the first year of the program for the biodiesel industry, it is clear that the RFS will have its challenges today and in the future.

Joe Jobe, CEO, National Biodiesel Board

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