22 April 2009 18:13 [Source: ICIS news]
By Ben Lefebvre
HOUSTON (ICIS news)--The US biodiesel industry is in danger of imminent demise if the federal government continues to delay implementing the country’s Renewable Fuel Standards (RFS), Imperium Renewables founder and CEO John Plaza said on Wednesday.
The past four months have been a disaster for biodiesel producers, Plaza said. Crude oil’s sustained drop below $50/bbl made renewable fuels less attractive to fuel blenders, while consumers have cut their fuel usage due to the global recession.
Meanwhile, the EU levied large tariffs against US material to protect its own renewable fuels industry. The region was the largest market for US biodiesel producers, who sent about 75% of their product there in 2008.
“It’s been one frustrating experience after another for the industry,” said Plaza, who started the company as Seattle Biodiesel in 2004.
Imperium knew it could not base its entire business model on selling subsidised biodiesel to Europe, Plaza said. But the EU shut the door to the market before the US government fully implemented its RFS, which would require half a billion gallons of biodiesel to be sold at retail pumps by 2012.
Imperium had counted on weaning itself away from Europe as domestic demand kicked in. Now, it is forced to “hide under a rock” as the US Environmental Protection Agency (EPA) delays the standards as it examines the issue of indirect land usage, Plaza said.
Proponents of using the indirect land usage measurement argue that a fuel’s energy output should be offset by how much energy went in to produce it. For renewable fuels producers, that would include the fuel used to harvest crops. Biofuels producers worry that the method will be applied to their fuels but not to petroleum.
Now biodiesel producers have seen their output drop as much as 95% from last year and are forced to wait for policy makers to finish the debate, Plaza said.
“We’re quite frustrated with the lack of policy. This highbrow debate on direct land use is really killing renewable fuel options,” he said.
Imperium, which was the second largest US producer, laid off about half its workforce and suspended refining at its 100m gal/year (379m litres/year) Grays Harbor plant in Seattle earlier this year.
The company is still optimistic about renewables, especially the possibility of “green jet fuel”, Plaza said. But for now, it is forced to lease out its facilities to a global trading company for storage just to survive.
While the federal government holds back, states such as Illinois and Minnesota are setting their own biodiesel mandates. But piecemeal mandates will not be enough for the renewable fuel industries to see a true turnaround, Plaza said.
“I agree with the major oil companies that having one federal mandates is better than having a bunch of states with separate mandates. The easier we make this for everybody, the better it is,” he said.
But with many biodiesel producers scrambling just to stave off bankruptcy, renewable fuels producers are finding that their voice in Washington is shrinking as others recession-afflicted industries are raising theirs, Plaza added.
“There’s really not a lot we can do, especially with no production. A lot of companies have pared back their lobbying efforts. We have a tiny voice in a big hall full of screaming people,” he said.
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