Biodiesel Industry in Shutdown Mode

Trump Administration May Consider Reallocating Biofuels Gallons Lost to Small-Refinery Waivers

Todd Neeley
By  Todd Neeley , DTN Staff Reporter
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Flint Hills Resources closed its 50-million-gallon biodiesel plant in Beatrice, Nebraska, back in July, citing economic headwinds for the decision. The industry continues to see plants come off line as a result of small-refinery waivers. (Photo courtesy Flint Hills Resources)

OMAHA (DTN) -- At what may be a critical juncture for the biodiesel industry in the United States, industry officials are scrambling to get President Donald Trump to listen to them about the state of the industry.

Much of the attention surrounding the Trump EPA's issuance of small-refinery waivers has centered on the corn-ethanol industry. However, U.S. biodiesel producers continue to suffer the consequences of lost demand for biofuels gallons waived, now totaling 4.03 billion ethanol-equivalent gallons.

Reuters reported that Trump was scheduled to meet with EPA Administrator Andrew Wheeler and U.S. Secretary of Agriculture Sonny Perdue to discuss options for boosting demand for biofuels in light of the waivers.

A report from Politico on Wednesday indicated the Trump administration is considering reallocating the biofuels volumes waived.

Renewable Fuels Association Communications Director Ken Colombini told DTN the RFS gives EPA "broad authority" on how it implements the program.

"But the regulations certainly anticipate reallocation of any gallons waived prior to the RVO (renewable volume obligation) being finalized," he said.

"In fact, the formula for determining obligated gallons includes a factor for SREs (small-refinery exemptions). The question is whether EPA can do that either retroactively or prospectively. We believe the agency could do both."


More than 300 million biodiesel gallons have been waived since 2016, sending shock waves across an industry that lost the federal blenders tax credit of $1 per gallon and works with a Renewable Fuel Standard that consistently underestimates biodiesel's growth potential.

Biodiesel plants have been shutting down across the country. National Biodiesel Board Director of Public Affairs and Federal Communications Paul Winters said 10 more plants have stopped buying feedstock and are close to shuttering. In all, there are more than 70 biodiesel plants operating across the country. Winters said about 230 million gallons of biodiesel production capacity is now off line.

On Thursday, American GreenFuels LLC, announced it was cutting production by 50% at its 40-million-gallon plant in Connecticut. The plant is the largest biodiesel plant on the East Coast. American GreenFuels already closed a biodiesel plant in Texas back in February.

The company cited uneconomical feedstock costs, the loss of the blenders credit and small-refinery waivers as the reason for its latest decision.

Raf Aviner, president of American GreenFuels, LLC and Kolmar Americas, Inc., the parent company of American GreenFuels, said in a news release, "Enough is enough, we cannot justify buying more feedstock under these market conditions. Waiting 20-plus months for Congress to act on extending the biodiesel tax credit has been unbearable, but now to have EPA gut the RFS and kill demand for biodiesel is the last straw for us."

Kevin Luddy, executive vice president and chief financial officer for American GreenFuels and Kolmar Americas, said, "the plant has been financially strapped for 20 months now, making expansion investments impossible, and we expect market conditions to worsen with the announcement of the latest small-refiner exemptions."

One week after EPA granted the latest round of waivers, World Energy announced it was closing three biodiesel plants in Pennsylvania, Georgia and Mississippi.

The company told a Pennsylvania news website that it closed the plants in response to EPA's latest round of waivers.

Click to view the news website:…

During the first week of July, Flint Hills Resources announced the closure of its 50-million-gallon biodiesel plant in Beatrice, Nebraska, pointing to tough economics as reason for the decision.

At the end of July, Ames, Iowa,-based Renewable Energy Group announced the closing of its New Boston, Texas, biodiesel plant, citing "challenging business conditions" and continued federal-policy uncertainty.

Winters said he was aware of two other biodiesel plants that have stopped production but have not announced it publicly.


Biodiesel and soybean interest groups requested a meeting with Trump to talk about the state of the industry and how the waivers are hurting producers. Read more about it here:… .

As of Thursday afternoon, NBB's Winters told DTN the White House had not responded to the request.

In a letter to Trump on Wednesday, Iowa Soybean Association president and farmer Lindsay Greiner said the latest exemptions "will hurt Iowa soybean farmers by closing yet another market we rely on --- biodiesel and renewable diesel --- and further depress the price of soybeans as more demand disappears.

"Plain and simple, the policy challenges are forcing biodiesel producers to shut their doors and lay off workers. It's becoming more difficult to understand why your administration is choosing to support higher profits for oil companies instead of providing some stability for farmers. Please understand that while we welcomed your administration's regulatory change to allow year-round use of E15, it does not expand the market for biodiesel.

"The economic pain felt by farmers in Iowa is particularly acute, as the Hawkeye state ranks first nationally in biodiesel production. The state's production capacity totals nearly 400 million gallons and provides a critical, local market for soybean oil. Moreover, biodiesel production adds 11% to cash-soybean prices or nearly 90 cents per bushel. In 2018, this provided $40 per acre in additional income for Iowa farmers and added $355 million to the value of all soybeans produced in our state.

"Farmers want markets, not handouts, and the RFS provides one of the most vital markets for farmers."

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Todd Neeley