Biodiesel and the Ever-Changing Political Landscape

by Ron Kotrba (Biodiesel Magazine) Industry stakeholders and legal experts discuss the recent RFS court ruling, the ongoing U.S. trade cases against Argentina and Indonesia, and the biodiesel tax credit in context of U.S. EPA’s Notice of Data Availability. -- ... According to the NODA, issued just weeks after the comment period closed on the Trump administration’s disappointing first RFS volume proposal, the agency is seeking comment on possible ways to cut required biodiesel volumes in RFS based on supply concerns resulting from the lack of the $1-per-gallon tax credit and a projected reduction in biodiesel imports from Argentina and Indonesia resulting from the ongoing trade cases.

The problem with EPA’s logic is that as of 2010, the biodiesel tax credit has expired five times, but this ultimately did not stop the industry from growing and supplying product.

Even with nearly 2 billion gallons of domestic production in 2016, various accounts indicate that one-third of existing domestic productive capacity remained idle.

Michael Devine, the New England sales and marketing consultant for biodiesel distributor Amerigreen Energy, says, “The EPA administrator put this out for a reason.” What that reason is, however, as surmised by some biodiesel advocates, is appeasement of Big Oil, which has long sought to abolish the RFS by any means necessary.

The gravitas the oil industry’s comments carry with EPA is evident, while it is equally evident that the agency discounts submitted comments and historical evidence from the U.S. biodiesel industry demonstrating it has outperformed every RFS increase to date, creates American manufacturing jobs, provides increased energy security and independence, adds much-needed value to rural economies, and is beneficial to the environment.

The NODA has essentially brought together all the policy issues facing the biodiesel industry today: The need to grow RFS volumes in this hard political culture, a recent court ruling that supposedly narrowed EPA’s discretion on its use of the general waiver authority, the tax credit and trade. Here we will examine each of these in the context of the NODA.

Three likely vehicles to pass a biodiesel tax credit this session or early next are comprehensive tax reform, a tax extenders package, or a disaster relief bill. “In the past month, the atmosphere has become rife with momentum for tax reform,” Urban says. “There is a decent chance a major tax reform bill will be enacted, either this year or early next.”

The RFS reset process, point of obligation issue, and agriculture policy are all additional important issues facing the biodiesel industry.

Ag and RFS policies are inextricably intertwined. The farm bill will be up for consideration next year, as it expires in 2018, and committees have begun work on that.

Henri Bardon, CEO of Solfuels USA, a 40 MMgy biodiesel plant in Helena, Arkansas, says people underestimate the fact that RFS is not just about emissions reductions, energy security and independence, but it’s also a farm support program. “It has significantly reduced government farm subsidies,” he says. He adds that the oil and gas industry, which is clearly behind the NODA, should embrace rather than seek to reduce biofuels worldwide, since biofuels can help shelter petroleum from an emissions crusade in the context of growing international interest in eliminating internal combustion engines. READ MORE