Views on the Biodiesel Policy Climate

Biodiesel Policy PanelTwo former members of Congress talked about attacks on the Renewable Fuel Standard at the National Biodiesel Conference this week in San Diego.

Former Democrat Senator Byron Dorgan of North Dakota, now a DC policy advisory, says the EPA proposal to lower RFS volume obligations this year is inexplicable. “The Obama Administration has always supported renewable fuels,” he said during a general session policy panel. “They will, I assume, say that these mandates support renewable fuels. But they know that these mandates are below what they should be, they have to be adjusted.”

Former Congressman Kenny Hulshof of Missouri, a Republican and founder of the Missouri energy initiative, agrees it is inexplicable, but reasoned that backlash against ethanol and the 2012 drought played a role in the proposal. “I think the EPA came under some very intense political scrutiny, that’s when you saw a lot of bills being introduced to repeal the RFS,” he said.

Dorgan thinks it’s unlikely Congress will repeal the RFS, the first version of which he helped write in 2005. “I think that would be a horrible mistake. Fortunately, the Congress can’t agree on anything,” said the former senator, adding that the president would veto the bill if they tried.

Both Dorgan and Hulshof believe Congress will eventually extend the biodiesel tax incentive which expired at the end of 2013.

You can listen to the session, moderated by National Biodiesel Board Vice President of Federal Affairs Anne Steckel, here: Policy Climate Session

2014 National Biodiesel Conference Photo Album

CARB Receives Eye on Biodiesel Award

Richard CoreyReceiving the National Biodiesel Board’s Eye on Biodiesel Impact Award for the California Clean Air Resources Board was Richard Corey, Executive Officer.

The State of California continues to serve as a national and world leader in regulations related to environmental sustainability, and the California Air Resources Board is at the heart of those efforts. In January of 2010, Air Resources Board staff successfully implemented the first ever market-oriented carbon reduction policy for transportation fuels, a policy known as the Low Carbon Fuel Standard. Since that time, use and production of biodiesel and other renewable fuels has increased significantly. Californians have since enjoyed the benefits of cleaner air, growth in green jobs, and increased fuel diversity.

You can listen to Richard’s remarks here: Richard Corey Remarks

2014 National Biodiesel Conference Photo Album

Feds Continue Crackdown on Biodiesel RIN Fraud

scalesofjustice1The federal government continues to go after the few bad actors who are trying to defraud the incentive system for biodiesel production. The Department of Justice announced the indictment of James Jariv, 63, of Las Vegas, and Nathan Stoliar, 64, of Australia that they netted more than $37 million in part from Renewable Identifcation Number (RIN) credits.

The indictment alleges that beginning around June of 2009, the two defendants, James Jariv and Nathan Stoliar, operated and controlled a company — City Farm Biofuel in Vancouver, British Columbia, Canada — that held itself out as a producer of biodiesel from “feedstocks” such as animal fat and vegetable oils. Jariv also operated and controlled a company based in Las Vegas, Nevada, called Global E Marketing. The government alleges that these defendants claimed to produce biodiesel at the City Farm facility, claimed to import and sell biodiesel to Global E Marketing, and then generated and sold RINs based upon this claimed production, sale and importation. In reality, little to no biodiesel produced at City Farm was ever imported and sold to Global E Marketing as claimed. The indictment alleges that the defendants’ scheme allowed them to generate approximately $7 million in RINs that were fraudulent, which were then sold to companies that needed to obtain them. Continue reading

Bi-Partisan Group Protests EPA Biofuels Reductions

bustosnoemA bi-partisan group of lawmakers is calling on the government to end its proposal to reduce the amount of ethanol and biodiesel that will be blended into the Nation’s fuel supply. Led by Democratic Congresswoman Cheri Bustos (IL-17) and Republican Congresswoman Kristi Noem (SD-AL), the group has sent a letter to the Environmental Protection Agency (EPA) over the agency’s proposal to reduce the renewable volume obligations (RVOs) under the Renewable Fuel Standard (RFS).

In a letter to EPA Administrator Gina McCarthy, the Members of Congress said that reducing the amount of renewable fuels in gasoline could hurt rural economies, jeopardize American jobs, raise prices at the pump and deter investment in biofuels and biofuel infrastructure. They asked that the EPA revise their proposal before the 60 day comment period ends on January 28th.

“We are writing to express our concern regarding the Environmental Protection Agency’s (EPA) proposed rule for the 2014 renewable volume obligations (RVOs) under the Renewable Fuel Standard (RFS) program,” the Congresswomen said in their letter. “The significant reduction in renewable volume obligations under this proposed rule could destabilize the renewable fuel industry and send the wrong message to investors. This risks jobs and threatens the development of advanced and cellulosic biofuels that bring higher-level ethanol and biodiesel blends to consumers.”

The effort is seen as part of a full-court press by biofuels advocates to reverse the proposal, which ends its comment period in about a week.

Farm Bureau Lends Support to Keeping RFS

afbf-logoAs the U.S. Environmental Protection Agency (EPA) considers its proposal that would, in effect, slash the amount of ethanol and biodiesel to be blended into the Nation’s fuel supply, the American Farm Bureau Federation (AFBF) is telling the government to leave the Renewable Fuel Standard (RFS) alone. During their policy session at the recent AFBF annual meeting in San Antonio, Texas, delegates voted to reaffirm “their support for the renewable fuels standard and approved a policy supporting renewable fuels tax incentives for the production of biodiesel and cellulosic ethanol and installation of blender pumps.”

ilfb-guebertAs we reported earlier this week, the new president of the Illinois Farm Bureau, Richard Guebert, told us RFS remains the top priority for farmers in his state and the region.

“Midwest farmers have worked so hard and so long to get those standards where they are today,” he told Chuck right before heading into a policy session at the meeting. Richard added they have even overcome some of the price spikes for commodities that go into the green fuel, so other sectors aren’t hurt by high prices for someone else’s feedstocks. “It’s just difficult for us to understand why we’re being forced to rollback those standards.”

The EPA has proposed to set the cellulosic biofuel category at 17 million gallons, biomass-based diesel at 1.28 billion gallons, advanced biofuel at 2.20 billion gallons and renewable fuel at 15.21 billion. The comment period on the proposal ends in the next two weeks.

New Illinois Farm Bureau Prez: RFS Top Priority

ilfb-guebertMembers of the American Farm Bureau Federation have met in San Antonio, Texas, where they have been talking AFBF policy. And the new Illinois Farm Bureau President Richard Guebert says ethanol and the Renewable Fuels Standard (RFS) remains the top priority for farmers in his state and the region.

“Midwest farmers have worked so hard and so long to get those standards where they are today,” he told Chuck right before heading into a policy session at the meeting. Richard added they have even overcome some of the price spikes for commodities that go into the green fuel, so other sectors aren’t hurt by high prices for someone else’s feedstocks. “It’s just difficult for us to understand why we’re being forced to rollback those standards.”

He went on to say that he doesn’t understand the Obama Administration’s position that most renewable energy experts agree will hurt biofuel producers and markets, especially in the rural economy, considering how the president has repeated his dedication to green energy, including biofuels, time and time again.

You can hear all of Chuck’s interview with Richard here: Interview with Illinois Farm Bureau President Richard Guebert
2014 AFBF Convention Photos

Group: Budget Creates Uncertainty for Biofuels

AGEC-logo1The $1.1 trillion U.S. budget deal passed by the House and awaiting action from the Senate has removed discretionary funding for Farm Bill energy programs, according to a group that considers ag-based energy issues. And this story from BioFuels Journal says the Agriculture Energy Coalition (AgEC) feels the 2014 Consolidated Appropriations agreement underscores the need for Congress to get busy on a 5-year farm bill.

The Omnibus provides $3.5 million in funds for the Rural Energy for America Program, but rescinds $40.7 million from the Biorefinery Assistance Program and another $8 million from the Bioenergy for Advanced Biofuels program.

Lloyd Ritter, co-director of the AgEC, said, “Today’s Omnibus Appropriations bill will create uncertainty for renewable energy and energy efficiency leaders across the country who have been working with private lenders and USDA to access credit for biorefinery and other important energy projects.

“The Farm Bill currently in conference should provide stable policy and the necessary investments in energy programs to help these projects create jobs and economic opportunities.

“Thousands of hardworking American agriculture and renewable energy producers need Congress to adopt a new 5-year Farm Bill now more than ever.”

The article goes on to point out how programs, such as the Biomass Crop Assistance Program, the Biorefinery Assistance Program, and the Renewable Energy for America Program (REAP), have supported the rural economy while producing more domestic, renewable energy.

Congress in No Hurry to Renew Biodiesel Tax Credit

us-capitol-fiscal-cliff-voteCongress seems to be in no hurry to renew the $1-a-gallon federal biodiesel tax credit. And this analysis from Bloomberg BNA indicates that the biodiesel credit, as well as some other renewable energy credits, won’t come until later this year but at least will be applied retroactively.

“I think Congress has gotten over the idea that the world will stop spinning if they don’t rush back and do extenders,” said [John Gimigliano, principal in charge of the energy sustainability group in KPMG's Washington national tax practice], who previously served as senior tax counsel for the House Ways and Means Committee.

While Gimigliano said quickly passing legislation on tax extenders will be “very difficult,” he said Congress would be likely to approve a legislative package in 2014 that extends the expiring provisions retroactively.

Any interest in moving quickly on tax extenders is likely to come from the Senate, where Sen. Orrin Hatch (R-Utah), ranking member of the Senate Finance Committee, has said committee staff from both parties have started the process of developing extenders legislation.

One legislative vehicle probably would be a bill needed possibly in March to extend the debt ceiling, although Congress may wait until after the November elections to act, analysts said.

Another thing bogging down the renewal of the credit is the nomination of Sen. Max Baucus (D-Mont.), chairman of the Senate Finance Committee, to become U.S. ambassador to China. Some analysts believe it might not be until the November elections before the biodiesel credit is renewed.

Ethanol’s Story

The Missouri Corn Growers Association has produced a video that tells “the greatest story never told” – Quiet Revolution: The Ethanol Story.

Like the National Corn Growers Association (NCGA) and all state corn grower groups, the Missouri Corn Growers are urging their members and others to submit comments on the Environmental Protection Agency proposal made November 15 to cap corn-based ethanol in the nation’s fuel supply this year at 13 billion gallons. “This may be the most significant challenge to corn farmers in many years. Your community and your industry are counting on you to stand up and be heard today.”

The comment period on the proposal is open until January 28.

Biodiesel Production, Imports Records for October

eiaThe U.S. produced a record amount of biodiesel in October, and it imported a record amount during the same time as well. The Energy Information Administration (EIA) reports biodiesel production hit 132 million gallons during the month, up from around 127 million gallons in September. And this article from Biodiesel Magazine says the U.S. imported more than 46 million gallons of biomass-based diesel in October, up from 28.7 million gallons in September, and more than tripling August volumes of more than 15 million gallons.

Nearly half of October’s U.S. biomass-based diesel imports came from Argentina, representing 23 million gallons. Imports from Indonesia came in distant second at around 8.5 million gallons, followed by biodiesel from Germany, totaling slightly more than 6 million gallons. Argentina and Indonesia have been effectively shut out of the European market as a result of provisional antidumping duties imposed by the European Commission this spring. Definitive duties, lasting five years, were put into place in November. Argentina has filed a formal complaint with the World Trade Organization, but the two biodiesel exporting nations have been steadily increasing exports to the U.S. since being shut out of the EU market.

The EIA says U.S. biomass-based diesel exports in October totaled 22.5 million gallons, but the agency lists exports to specific countries only at 17 million gallons. The U.S. shipped nearly 10 million gallons to Malaysia, more than 3.5 million gallons to Spain, more than 2.5 million gallons to Canada, and less than a million gallons to Taiwan and Australia combined.

Biodiesel exports were also up during October, totaling 22.5 million gallons, up from September’s export volumes of 15.9 million gallons.

Congress Warned About Biodiesel Incentive Lapse

nbb-logoFailure once again to renew the $1-per-gallon biodiesel tax incentive is putting jobs and the industry’s growth at risk. The incentive lapses on Dec. 31st of this year, and the National Biodiesel Board (NBB) has sent out a warning letter to Congress as that date grows near.

“This marks the third time in five years that this incentive will have expired,” Anne Steckel, vice president of federal affairs at the National Biodiesel Board (NBB), wrote in the letter. “The uncertainty this creates is a major reason why we are still so dependent on petroleum. It is incredibly disruptive, not just to biodiesel plants across the country but also to our bipartisan goals of creating jobs in new domestic energy industries and boosting our energy security by diversifying our fuel supplies.”

“Biodiesel producers, many of them small companies, are reluctant to add new jobs when there is a strong likelihood that the incentive will disappear,” the letter continues. “Many are forced to cut back production when the incentive expires, causing job losses and even plant closures.”

Steckel added that NBB is pleased to see the ongoing discussion around tax reform but urged the lawmakers to not hold up tax extenders while those long-term negotiations continue.

Losing the tax incentive comes as a second recent blow to biodiesel, as the Environmental Protection Agency has proposed limiting biodiesel volumes under the RFS to 1.28 billion gallons for the next two years.

EPA Invalidates 33.5 Million RINs from Indiana Co.

scalesofjustice1The U.S. Environmental Protection Agency has invalidated 33.5 million Renewable Identification Numbers (RINs) worth about $13.4 million sold by Indiana-based E-Biofuels LLC. This story from the Indiana Business Journal says while Big Oil has jumped on the announcement as an indictment of the Renewable Fuel Standard (RFS), biodiesel advocates are quick to point out this is just an isolated incident and proof that the system is working to catch any frauders.

“This fraud is disappointing for everyone, but it is important to remember that these are isolated cases from several years ago,” Ben Evans, a spokesman for the National Biodiesel Board, said in an e-mail. “Despite what RFS critics would like us to believe, they do not show that the RFS is broken any more than an isolated case of trading fraud shows the stock market is broken.”

This latest case comes as the EPA developed a proposal to tighten oversight of the RFS, expected to be formally implemented next year.

54 Reps Call for Reversal on Biodiesel RFS Proposal

us-capitol-fiscal-cliff-voteFifty-four members of Congress from both sides of the political aisle are calling on the Obama Administration to reverse course on its proposal to cut the amount of biodiesel to be required to be blended into the Nation’s fuel supply. This news release from the National Biodiesel Board says the call comes as the Environmental Protection Agency (EPA) has proposed biodiesel production under the Renewable Fuel Standard (RFS) for 2014 and 2015 to be 1.28 billion gallons, despite the fact the green fuel’s numbers are expected to hit 1.7 billion gallons this year.

In a letter led by U.S. Reps. Tom Latham, R-Iowa, and Mike McIntyre, D-N.C., the U.S. representatives – a bipartisan group representing districts from California to Iowa to Florida – called on the Administration to establish an RFS volume that is at least consistent with this year’s anticipated production of 1.7 billion gallons. The letter … was sent to the EPA and other Administration officials.

“It is clear that biodiesel has been a great RFS success story. It has exceeded RFS targets in each year and is clearly poised to do so again in 2013,” the lawmakers wrote. “This type of reduction could have very damaging repercussions. It could result in dozens of biodiesel facilities shutting down permanently and ceasing production.”

“We would strongly urge you to continue your support for this developing and fragile industry with a reasonable increase in the RFS volume requirement for 2014 and responsible growth in the future,” the letter states.

This comes on the heels of a similar letter last month sent by 32 U.S. senators, and it comes with similar warnings of dire consequences: Continue reading

Senate Energy Tax Reform Proposal

Baucus1Senate Finance Committee Chairman Max Baucus (D-MT) today unveiled a proposal to streamline energy tax incentives.

“It is time to bring our energy tax policy into the 21st century,” Senator Baucus said. “Our current set of energy tax incentives is overly complex and picks winners and losers with no clear policy rationale. We need a system of energy incentives that is more predictable, rational, and technology-neutral to increase our energy security and ensure a clean and healthy environment for future generations.”

The discussion draft released today focuses on reforming the current set of energy related tax preferences. Under current law, there are 42 different energy tax incentives, including more than a dozen preferences for fossil fuels, ten different incentives for renewable fuels and alternative vehicles, and six different credits for clean electricity. Of the 42 different energy incentives, 25 are temporary and expire every year or two, and the credits for clean electricity alone have been adjusted 14 times since 1978 – an average of every two and a half years. If Congress continues to extend current incentives, they will cost nearly $150 billion over 10 years.

aeclogoAdvanced Ethanol Council (AEC) Executive Director Brooke Coleman commended the proposal. “Senator Baucus has rightly put all existing policies on the table while proposing a new path that will achieve these goals and ensure that the United States leads instead of follows when it comes to developing new technologies and producing less carbon intensive energy,” said Coleman in a statement.

Coleman said they look forward to working with Chairman Baucus and the Senate Finance Committee to ensure that any new piece of legislation covers the critical bases when it comes to maximizing investment. He also called for immediate energy tax extenders in the context of the proposal’s 3-year extension of existing law. “The proposal admirably calls for a 3-year extension of existing law for cellulosic biofuels to provide a reasonable ramp to a new tax regime. We commend the Chairman for recognizing the hazards of frequent expirations and change of law. That said, tax provisions for cellulosic biofuels still come off the books in two weeks while those offered to the fossil fuel industry persist. We recommend that Congress invoke the ‘do no harm’ principle going forward and pass extenders in 2013.”

Obama’s Proposed Biodiesel Cuts Could Cost Dems

showsDemocrats looking to make gains on the Republican majority in the U.S. House and hold back any possible GOP takeover in the Senate in the 2014 elections could be hurt by the Obama Administration’s proposal to cut the amount of biodiesel in the Nation’s fuel supply. And that criticism is coming from one of the Democratic Party’s own. This opinion piece in Roll Call from former Mississippi Democratic congressman Ronnie Shows, says the proposal is likely to hurt fellow Democrats in some important states.

The biodiesel announcement was puzzling because the president has stated for years that advanced biofuels, such as biodiesel, are a critical component of this nation’s fuel supply. Throughout his presidency and even on the campaign trail, Obama has made his support of advanced biofuels a hallmark of his administration’s efforts to reduce our dependence on foreign sources of oil…

But despite the president’s recent support of biodiesel, as you read this, the EPA, which determines the number of gallons of biofuels federally required in the nation’s fuel supply, is soliciting comments on a proposal to reduce the amount of biodiesel sold every year in the United States by hundreds of millions of gallons.

Why the Obama administration is doing this to biodiesel is unclear, but I suspect the White House is planning to deny the Keystone XL pipeline — and offer Big Oil a consolation prize by cutting competition from renewable fuels, even advanced renewables such as biodiesel.

Shows goes on to say that the biodiesel proposal really hurts Democrats in key battleground states, such as North Carolina and Iowa. He concludes that the Administration’s lack of decisiveness on biodiesel could play into the hands of Republicans who accuse the White House of being “rudderless.”