OUTLOOK ’18: US biodiesel hopeful heading into new year

HOUSTON (ICIS)–The US biodiesel industry is heading into 2018 with more certainty than in previous years, following the finalisation of federally mandated blend volumes for 2018 and 2019. However, the highly politicised industry remains unsure as to the outcome of the $1/gal federal tax credit.

Harvested grain corn and a flask of corn oil, used both as a cooking oil and a feedstock used for biodiesel. (Photo by Design Pics Inc/REX/Shutterstock)

The US Environmental Protection Agency (EPA) will keep intact biodiesel blending mandates for the nation’s diesel supplies in 2018, the agency announced in late November 2017.

The regulation, known as the Renewable Fuels Standard (RFS), will require fuel manufacturers to mix 2.1bn gal (7.9bn litres) of biodiesel into the diesel fuel pool.

US biodiesel market players were not enthusiastic with the news.

The US National Biodiesel Board said it was disappointed with the EPA’s decision to maintain blending volumes unchanged.

“EPA Administrator Pruitt has disappointed the biodiesel industry for failing to respond to our repeated calls for growth,” said Doug Whitehead, chief operating officer of trade group National Biodiesel Board (NBB).

“These flat volumes will harm Americans across several job-creating sectors – be they farmers, grease collectors, crushers, biodiesel producers or truckers – as well as consumers,” he said.

The NBB had pushed for biomass-based diesel volumes of 2.5bn gal for 2019 – down from its original ask volumes of 2.75bn – and for 4.75bn gal of advanced biofuels for 2018.

The biodiesel industry has consistently exceeded the EPA’s standards despite the agency underestimating the volumes each year, the NBB said.

“These volumes are important for setting a baseline and our industry will again surpass these low expectations, but the failure to increase volumes will inhibit continued growth and investments,” the trade group said.

Grant Kimberley, executive director of the Iowa Biodiesel Board said that the RFS decision brings a “heightened urgency” to extending the federal biodiesel tax credit, “which will augment US demand and could re-energize economic growth”, he said.

Biofuels lobbyists, who failed to get a range of expired breaks for biofuels into the $1.5 trillion tax overhaul bill making its way through the US Congress, may get a second chance before the end of the year.

The US Senate plans to act on a slate of expired tax credits before the end of December.

Lobbyists have been told the package of “tax extenders” – renewing tens of billions of dollars in expired tax incentives – could be hitched to must-pass government funding legislation expected in coming weeks.