AFPM ’19: US biodiesel hopeful for tax credit reinstatement

HOUSTON (ICIS)–The US biodiesel industry is heading into this year’s International Petrochemical Conference (IPC) with a renewed hope for the reinstatement of the federal tax credit.

Senators Chuck Grassley, a Republican from Iowa and Ron Wyden, a Democrat from Oregon, the chairman and ranking member of the Senate Finance Committee, introduced on 28 February a Tax Extender and Disaster Relief Act of 2019.

The legislation would retroactively reinstate the $1/gal biodiesel tax credit as of 1 January, 2018, and extend it through 31 December, 2019.

The tax credit has been expired for 14 months and biodiesel producers say margins are slim to negative without it.

With the introduction of the legislation the next step is whether it will make it to a floor vote, but market players expect it to be voted on in mid-April.

The industry started 2019 with more stability, 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), requires 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 are as were already proposed in June at 2.43bn gallons, slightly up from 2.1bn in years 2018 and 2019.

Under the former EPA administrator Scott Pruitt, who stepped down in July 2018, 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 finalized for 2019 and 2020 is meaningless without solutions to these issues.”

Some of the US biodiesel producers include, REG, ADM, LDC, Ag Environmental Products and RBF Port Neches.

The graph shows flat pricing for B100 in the US Midwest and US Gulf.

Hosted by the American Fuel & Petrochemical Manufacturers (AFPM), the IPC takes place on 24-26 March in San Antonio, Texas.

Focus article by Leela Landress Perez