Making Trump a biodiesel believer

Policy notes and quotes from the 2017 National Biodiesel Conference & Expo, and my own perspective on what could truly make Trump a biodiesel believer
By Ron Kotrba | January 25, 2017

The very first words out of former U.S. Senator Byron Dorgan’s mouth when asked during the spotlight policy session at the National Biodiesel Conference in San Diego about what a new Trump administration will mean for biodiesel were “I don’t know. We don’t know.” This perfectly encapsulated essentially all of the political discussion from the event. Uncertainty abounded as everyone wondered how Trump—whose election victory relied so heavily on rural America and the heartland where biodiesel plays integral roles revitalizing economically depressed communities and providing energy for the coasts where population centers and the need for low carbon fuels exist—will affect biodiesel policy.

Days later, after taking office, President Trump has taken several actions that concern broad segments of the population, including rural Americans, those concerned about climate change and air quality, Native Americans and renewable fuel proponents, not to mention the millions of women who marched this weekend in opposition to the new president.

Trump has frozen new and pending federal regulations to give the new administration time for review. “This is typical of White House transitions, especially when the party also changes,” says Anne Steckel, vice president of federal affairs at the National Biodiesel Board. “It provides time for the incoming administration to review the most recently issued regulations of the prior administration to note any they would like to further review. While this action does change the effective date for the 2017 standards under the renewable fuel standard (RFS), the RFS implementing regulations remain in place, including how the renewable volume obligations (RVOs) are calculated and the compliance deadlines. The standard-setting process is an annual process that just happened to fall within the defined date range. The RFS is clearly working to support a growing biodiesel industry that now supports more than 64,000 jobs across America.”  

The new president, an avowed climate-change denier, is taking action to scrub all climate change information, data and references from the White House and U.S. EPA websites. “The EPA’s public scientific information is vital to the health and safety of our communities, not a political toy for the fossil fuel industry hacks who have invaded the agency to play with,” says Sierra Club Executive Director Michael Brune. “This purge by the Trump administration leads down an extremely dangerous and dark path, and must stop now.”

Trump has signed executive orders to expedite approval to construct the Keystone XL Pipeline and to complete the remaining portion of the Dakota Access Pipeline. The Standing Rock Sioux Tribe in North Dakota has been adamantly opposed to completion of DAPL because the pipe is to cross the sacred waters of the Missouri River and, as the tribe members say, “Water is Life.” Last year I marched with members of the Standing Rock Tribe and others in opposition to DAPL. The even took place in downtown Fargo, North Dakota, to bring awareness to the issue out west.

Last week at the National Biodiesel Conference, much discussion was held on what a new Trump administration will mean for biodiesel. After all the talk and speculation, even the most knowledgeable experts’ opinions were reduced to “We just don’t know.”

“We don’t know what’s yet to come, but we’re anxious and excited to see,” said Paul Argyropoulos, a senior policy advisor in EPA’s Office of Transportation & Air Quality. Argyropoulos spoke to attendees via Skype. “How we move forward depends on a number of factors.” He said EPA has been working on the 2018 RVO standards (and 2019 biomass-based diesel standards) since December, and he discussed the greater divide between volumes in the Energy Independence and Security Act and what the reality of the market is, particularly for cellulosic biofuel. Argyropoulos mentioned the RFS standards resetting process, which is triggered when a volume standard set in the statute is reduced 50 percent in one year or 20 percent two consecutive years. In response to my question on this topic, Larry Schafer, senior advisor to the NBB and co-founder of Playmaker Strategies, said the reset procedure will likely not affect biomass-based diesel since there are no volumes beyond the 1 billion gallon floor in RFS. “There are 20 factors to look at in the reset process,” Argyropoulos said. “They’re not weighted. It’s a lot of work.” He said EPA will continue to monitor the issue over this year and next. He also discussed the voluminous litigation over RFS. “There’s been a lot already and there’s more to come,” Argyropoulos said, referring in part to the lawsuit over EPA’s use of its general waiver authority. “Before we do anything major, we’d like to hear what the courts do on that.”

Schafer followed Argyropoulos in the same session and said there are 14 senators on the Environment and Public Works Committee who view biodiesel and advanced biofuels favorably. “In the Senate and the EPW, we’re in a good spot,” he said. “But that doesn’t mean Pruitt will be favorable to biodiesel. The petroleum world feels good about these nominees—Perry, Pruitt, Tillerson—but we [the biodiesel industry] are not in a horrible position. Many of the issues out there are issues between the ethanol and oil industries.” He said many of the people at EPA who have been instrumental in RFS policy since 2007 are still at the agency, and NBB and biodiesel advocates will continue to work “creatively and heavily” with outside forces—the USDA, the new president and his administration—to move the biodiesel needle forward.

“There are legal issues and a new administration, but the basic plan is we will start in the same place as we ended in 2016,” Schafer said, adding that what isn’t known is how those outside forces, including the new administration’s Office of Management and Budget and its potential desire to rely more heavily on a pure cost-benefit analysis, will affect progress. “We have experience in this process, and that will be beneficial to this industry,” Schafer concluded.

The spotlight session at the National Biodiesel Conference & Expo last week featured Steckel as the moderator; former U.S. Senator Dorgan, D-North Dakota; former U.S. Representative Kenny Hulshof, R-Missouri; Jim Massie of Jim Massie & Partners LLC; Timothy Urban, Washington Council Ernst & Young; and Tom Hance with Gordley Associates.

When asked what a Trump administration will mean for biodiesel, Dorgan said, “I don’t know. We don’t know.” Dorgan held in his hand the latest issue of Biodiesel Magazine, the cover article for which is “Biodiesel Renaissance,” he pointed to it in front of the crowd and said this upbeat, positive story of biodiesel featured on the cover of our Winter 2017 edition is a message that needs to be conveyed to the new administration. Dorgan said this magazine needs to be delivered to Trump so he can see the major, positive impact biodiesel is having on the rural economy. “We have a need for good public policy to continue growth in biodiesel,” Dorgan said.

It was said in session that Trump is breaking all the rules, as we’ve never had a president wake up in the morning and start tweeting before anything else.

Hulshof said, “This is going to be a novel and it’s not yet written.” Then, in reference to RFS, he said, “If EPA is to honor the intent of Congress, then the responsibility [of the future of the RFS] lies squarely on the halls of Congress.”

Big issues Trump will be tackling are healthcare and tax reforms, an infrastructure bill, and a budget. Urban said the last major U.S. tax reform bill was in 1986. “For tax nerds, this year is the Super Bowl,” Urban said.

While discussions focused on mechanics of budget reconciliation rules, the border adjustment tax and other initiatives and procedures, Dorgan said there’s a 50/50 chance of getting major tax reform this year vs. an interim tax extenders package in lieu of reform. Urban said if tax reform doesn’t pass this year, or stalls due to opposition, a tax extenders may be possible. “But now it’s very early in the process,” he said.

Tax extenders impact a relatively small number of industries, but tax reform is a massive undertaking that touches virtually every corner of this country. “Tax reform is always a dangerous game,” Urban said. “We will have a say. But there’s a tremendous amount of competition for the attention of these legislators.”

Hulshof said with this new, blank slate of the Trump administration lies opportunity. “The renaissance of rural America has to include those red areas,” he said, adding that there are four new people on the ways and means committee that must be reeducated to the benefits of biodiesel. Dorgan said while there is opportunity with a new administration, “We must understand the cold reality of the challenge as well.”

Dorgan continued, saying, “The advantage of biodiesel is fuel diversity. And its lower carbon output is a huge advantage.” Dorgan added that job creation provided by biodiesel secures a brighter future for America. “If the administration knew all this, they should embrace it and brand it as their own.”

Massie said while we are challenged with a new EPA under Trump and Pruitt, the biodiesel industry needs to make sure it continues to have a strong relationship with the office and administration to advance growth. “I don’t think Trump will go back on what he said of the RFS during his campaign but there’s a lot of room for error, a lot of wiggle room,” he said. “We need to redouble our efforts in 2017.”

One action a new EPA could take to help fulfill Trump’s vision of keeping tax dollars in the U.S. while supporting domestic manufacturing and energy independence is to reverse the alternative feedstock tracking approval given to Argentine producers that has facilitated hundreds of millions of gallons of biodiesel into the U.S. under the RFS program, making it eligible for RINs and tax credits. According to Susan Olson with Genscape, Argentina imported 426 million gallons of biodiesel into the U.S. in 2016. According to the NBB news release we published yesterday, the U.S. imported more than a billion gallons of biodiesel last year in total. Two actions to help curb this would be to reverse the EPA’s decision on alternative feedstock tracking for Argentine producers and simultaneously to reform the biodiesel blenders tax credit to a domestic production credit.

To conclude, I say Dorgan is onto something. Trump does need to read our latest issue of Biodiesel Magazine. And after doing so, someone needs to take Trump on a tour of one of our nation’s many state-of-the-art biodiesel refineries, such as an REG, Louis Dreyfus or Hero BX plant, and show him the innovation, jobs, energy security, the revenue-generating outlet for farmers, grease collectors and renderers that these facilities provide. And then go down the chain and take Trump to the truckers and railroaders who move this product and earn a good living doing so. And the terminals where hundreds of millions, if not billions, of dollars have been invested over the past 20 years for storage and blending biodiesel. And finally Trump should be taken to any diesel fuel pump, say in Minnesota or Illinois, where he can see firsthand that any diesel driver who fills up their tank does so on 10 or 11 percent biodiesel, a double-digit percentage of fuel that comes not from hostile nations or pipelines that flush dirty tar sand crude from Alberta jeopardizing the Ogallala Aquifer, or cut through sacred Native waters, but from the people who helped elect him. He can then see the biodiesel industry for what it is—an industrious, domestic manufacturing sector full of hope, innovation, vision and economic activity that has been working diligently to free society from the chains of its single-source energy complex while providing jobs and a better tomorrow, for which the children of our children’s kids will be grateful.