Biodiesel Producers Idling Plants on Policy Uncertainty: Survey

Biodiesel Producers Idling Plants on Policy Uncertainty: Survey

Biodiesel tax incentive, Renewable Fuel Standard remain key issues for U.S. biodiesel industry

U.S. biodiesel stakeholders on Wednesday called for more consistent federal tax and biodiesel production policies following the release of a new National Biodiesel Board survey that found 80% of biodiesel producers scaling back production amid Renewable Fuel Standard and biodiesel tax incentive concerns.

Both an RFS scale-back and restoration of the biodiesel tax incentive are being considered this spring by the Environmental Protection Agency and the U.S. Senate, respectively.

Biodiesel tax incentive, Renewable Fuel Standard remain key issues for U.S. biodiesel industry

Sen. Heidi Heitkamp, D-N.D., and other soy-state Senators addressed the issues during a press conference Wednesday, calling on the EPA to abandon plans for an RFS roll back and expressing optimism for the reinstatement of the biodiesel tax incentive.

Heitkamp was joined by Sens. Dick Durbin, D-Ill., Maria Cantwell, D-Wash., Amy Klobuchar, D-Minn., Al Franken, D-Minn., and Joe Donnelly, D-Ind., as well as biodiesel producers and processors from across the U.S.

Related: Study Quantifies Ethanol's Impact on Job Creation, National GDP

All said the consequences of the expired biodiesel tax incentive and lower Renewable Fuel Standard Volumes could continue to eliminate jobs and stifle both economic activity and growth in the renewable fuel sector.

According to the NBB survey, two-thirds of producers said they have already reduced or anticipate reducing their workforce, and 85% have delayed or canceled expansion plans.

The producers nearly universally attributed the industry decline to the weak RFS proposal and loss of the tax incentive, NBB said.

"This industry creates real, good-paying jobs," Durbin said. "When there's uncertainty about the future of biofuels, there's uncertainty about these jobs."

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The RFS proposal, which has not yet been finalized, would establish a biodiesel standard of 1.28 billion gallons this year, down from last year's production of nearly 1.8 billion gallons, NBB said. The cuts could force many producers to close shop.

Related: Economic Data By State Supports Ethanol's Fight to Keep RFS

A final decision on RFS volumes is expected "sometime in early June," Heitkamp said. "We continue to be optimistic that there will be an adjustment."

Meanwhile, Senators this week agreed to consider a package of tax extenders, including the biodiesel tax incentive, though the timeline for a completed bill is unclear.

"We're hopeful that the [extenders] will pass the Senate … but once again we have the hurdle in the House and these haven't always been a favored provision in the House," Heitkamp said. "We'll continue to fight that fight."

If some certainty isn't offered on both the RFS and the tax extenders, biodiesel producers say they will struggle to make forward-looking decisions without long-term policy in place.

"Unless Congress and the Administration act, we will be forced to make very difficult decisions in the near future," said Jeff Haas, CEO of General Biodiesel, Seattle, Wash. "We are all slowly being bled dry, and America's growing biofuels industry may be irreparably harmed."

Amid the uncertainty, Heitkamp reminded soy growers and biodiesel producers that recovery is possible.

"We're down but we're not out … we're hoping that we'll get some changes in public policy," Heitkamp said.

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