Biodiesel Presses Trump

Biodiesel Industry Board Asks for Higher RFS Volumes

Todd Neeley
By  Todd Neeley , DTN Staff Reporter
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Biodiesel industry officials have asked the White House to set Renewable Fuel Standard volumes higher for advanced biofuels and biomass-based diesel. (DTN file photo)

OMAHA (DTN) -- Just ahead of an expected release of the final Renewable Fuel Standard volumes for 2018, biodiesel industry officials are asking President Donald Trump to expand advanced biofuels and biomass-based diesel volumes above and beyond what the U.S. Environmental Protection Agency proposed.

After reports surfaced in October that the EPA was considering a further reduction in RFS volumes, an outcry from Midwest lawmakers and others led EPA Administrator Scott Pruitt to withdraw the proposal. Pruitt said the agency would set the biomass-based diesel number to at least 2.1 billion gallons as proposed. The agency also has proposed setting the advanced biofuels number at 4.24 billion gallons.

The Trump administration continues to face pressure from both oil and biofuels interests over the RFS. The EPA's final renewable volume obligations for 2018 are set for release by the end of November.

Republican Sen. Ted Cruz of Texas, who won the 2016 Iowa presidential caucuses, reportedly is prepared to hold up the confirmation of USDA nominee Bill Northey until the administration grants a meeting on the RFS with lawmakers from oil-producing states.

In a letter to the president on Thursday, however, directors of the National Biodiesel Board asked for an increase in the proposed volumes.

"Biodiesel supports roughly 64,000 jobs across the country, many in rural states, and has been a key source of tangible economic prosperity and development in these areas," the letter said.

"To continue that economic growth, we urge your administration to increase the volumes required by the RFS from last year's levels, preferably to at least 4.75 billion gallons for advanced biofuel for 2018 and at least 2.5 billion gallons for biomass-based diesel for 2019."

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The letter is signed by Kent Engelbrecht of Archer Daniels-Midland; Mike Cunningham with the American Soybean Association; Greg Anderson, Nebraska Soybean Board; Ed Hegland, Minnesota Soybean Research and Promotion Council; Chad Stone, Renewable Energy Group Inc.; Timothy Keaveney, Lake Erie Biofuels; Jennifer Case, New Leaf Biofuel LLC; Ron Marr, Minnesota Soybean Processors; Amy Sigg Davis, Ohio Soybean Council; Robert Morton, Newport Biodiesel LLC; Ron Heck, Iowa Soybean Association; Steve Nogel, Ag Environmental Products; and Robert Stobaugh, Arkansas Soybean Promotion Board.

The industry said further reductions in the volumes would "devastate" the industry and lead to the loss of "thousands of jobs in rural areas and severely harming" America's farmers.

"But what is equally important to understand is that these base numbers contained in EPA's original, July proposal -- 4.24 billion gallons for advanced biofuels and 2.1 billion gallons for biomass-based diesel -- are themselves so low that, if finalized, they will halt the growth of the biomass-based diesel industry," the letter said.

Although RFS volumes come from both domestic production and imports, the industry said in the letter that domestic producers currently have the capacity to produce 2.6 billion gallons of biomass-based diesel.

Biodiesel industry officials told the president that oil industry complaints about economic harm from the RFS are unfounded.

"We also understand that some refiners are continuing to complain loudly about the RFS, about RIN (renewable identification numbers) prices and about what they see as the adverse impacts on their businesses," the letter said.

"Yet strong Q3 refiner earnings reports seem to directly contradict those concerns. For example, PBF Energy, whose executives had earlier made strong statements about the potential negative impact of RIN prices on the company's earnings, just reported Q3 revenue of $5.5 billion -- a whopping 22% increase compared to the same period in 2016. The executives' prior statements were clearly overstated."

In addition, the board members said refinery owners have been aware of and had time to comply with the RFS law for a decade.

"It is not as if the 10-year-old RFS law constitutes some big surprise," the letter said. "Other companies in this space have invested in blending and distribution infrastructure or employed other compliance strategies to minimize their costs."

The board members reiterated the importance of the president's support for the biofuels industry, saying it is important for federal agencies to avoid "complacency or misunderstanding" when it comes to advancing federal policies that affect the biofuels industry.

"On a political level, we cannot overstate the significance of your support of the RFS program, both during last year's campaign, and also today in your role as president," the letter said.

"You have been a superb champion for rural America and for keeping and bringing back jobs in communities across the Midwest and beyond. We especially don't want your administration to be blindsided by any negative consequences that would inevitably result if EPA were to make a final RFS decision that is inconsistent with your support for the RFS, in particular, and for rural America more broadly."

Todd Neeley can be reached at todd.neeley@dtn.com

Follow him on Twitter @toddneeleyDTN

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Todd Neeley