OUTLOOK ’19: US biodiesel industry unhappy heading into new year

HOUSTON (ICIS)–The US biodiesel industry is heading into 2019 with more certainty than in previous years, following the finalisation of federally mandated blend volumes for 2019 and 2020. However, the highly politicised industry remains unhappy with the undecided outcome of the small refinery blend waivers.

The regulation, known as the Renewable Fuels Standard (RFS), will require fuel manufacturers to mix 2.1bn gal (7.9bn litres) of biodiesel in 2019 into the diesel fuel pool.

Under the US RFS, oil refiners must blend increasing amounts of biofuels into their fuel each year or purchase blending credits.

The US Environmental Protection agency (EPA) in December lifted its requirement for advanced biofuels for 2019, while keeping the volume for conventional biofuels like corn-based ethanol and biodiesel steady. The biomass-based diesel volumes for 2020 set by the agency were already proposed in June at 2.43bn gallons, slightly up from 2.1bn in years 2018 and 2019.

US biodiesel market players are not enthusiastic with the news.

Republican Senator Chuck Grassley from farm state Iowa welcomed the increase in the advanced biofuels requirement, but expressed displeasure with the EPA for its refusal to reallocate biofuel volumes that had been previously waived under the small refinery exemptions program.

“The increased levels are an encouraging development after a year of underwhelming and often disappointing news from EPA,” said Grassley. “I’m disappointed the rule didn’t reallocate waived volumes to make up for the damage done by former Administrator Pruitt.”

Under the former EPA administrator Scott Pruitt, who stepped down in July, the EPA vastly expanded the number of waivers it issued to small refineries, exempting them from blending the biofuel.

“EPA’s RFS rule fails to address the uncertainty associated with the unprecedented flood of small refiner hardship exemptions,” said Kurt Kovarik, NBB Vice President of Federal Affairs. “Moreover, the agency still has not addressed the court order in the ACE case, which remanded the agency’s improper waiver of the 2016 volumes. The rule that EPA has finalised for 2019 and 2020 is meaningless without solutions to these issues.”

The Trump Administration’s actions on the RFS before this proposal have been disappointing for both the biodiesel industry and farmers in the Midwest, who have seen commodity prices of their crops plummet as a result of international trade and other market dynamics, the NBB has said.

Farming income has dropped more than 50% and sits at its lowest level in more than a decade, according to the NBB.

The US Energy Information Administration’s (EIA) Monthly Biodiesel Production Report provides data on operations of the US biodiesel industry.  The source of data is used to collect the following information from registered producers of biodiesel.

Focus article by Leela Landress

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