Editor’s Note – With the emergence of biodiesel as a new market for renderers, Render magazine has decided this area needs addressing on a regular basis. Starting with this August issue, we present to you Render’s newest column, “Biodiesel Bulletin.”
As the proposed energy bill is debated in Washington, renewable fuels such as biodiesel are poised to play a significant role. The rendering industry has effectively voiced support for biodiesel as a critical tool in addressing our nation’s dependency on foreign oil as well as a viable solution to reducing emissions and improving air quality.
In addition to advocating renewable fuels, the rendering industry must also fight for equality with plant agriculture within the fledgling biodiesel industry. To date, the total sales and resulting impact of biodiesel are barely enough to catch the attention of legislatures. However, these numbers have provided the necessary validation for biodiesel as a legitimate alternative fuel, setting the stage for aggressive growth.
Among the many recent biodiesel successes are the acknowledgement and acceptance of an American Society of Testing and Materials (ASTM) standard as well as completed Tier I and II health effects studies that further solidify a bright future. While there is plenty to be excited about with biodiesel, of equal concern is the role yellow grease and animal fat-derived biodiesel will play moving forward. A lot of the lobbying in support of biodiesel in Washington is funded by soybean interest groups. While their efforts have been critical to creating momentum for biodiesel, they are also self-serving. The above ASTM specification is feedstock neutral; however, much of the proposed subsidies for producers and end-user tax credits are specific to only “first use” feedstocks, particularly soy oil.
These subsidies, to include the Commodity Credit Corp program administered by the U.S. Department of Agriculture, create a revenue stream for producers of soy oil-derived biodiesel that is disproportionate to the commodity price variance versus yellow grease. As a result of this program, yellow grease-derived biodiesel producers are at a competitive disadvantage. In fact, producers that would prefer to produce product with yellow grease are forced to use soy oil in order to compete. Also, excise tax incentives/credits that amount to a one-cent per percentage of biodiesel are targeted for virgin feedstocks only.
The recent National Renderers Association congressional fly-in involving leaders throughout the rendering industry certainly helped in addressing these issues. However, the rendering industry must remain vigilant in its efforts to ensure a level playing field. The soybean industry’s position seems to be that the investment their industry has made to promote the domestic development and marketability of biodiesel should somehow qualify for monopoly protection. The rendering industry must ensure that comparable quality biodiesel made from animal fats and/or yellow grease should not only be recognized for their relative value, but embraced as this industry evolves.
Where Do We Go From Here?
On June 12, the House named 44 conferees to the House-Senate energy bill (H.R. 4), setting the stage for a conference to begin. The House leadership selected the conferees from the 11 committees that contributed legislation to the bill, joining the 17 Senate conferees appointed in May. Billy Tauzin (R-LA), chairman of the House Energy and Commerce Committee, will chair the conference.
There is considerable pressure for conferees to deliver a signed energy bill. But there are many complex and controversial issues encompassed in the proposed bill such as drilling for oil in the Artic National Wildlife Refuge. In addition, funding is a particular concern.
The president’s initial plan called for tax provisions of $9.5 billion over 11 years dedicated entirely to alternative and renewable fuels, conservation, energy efficiency, and emissions-free energy. According to estimates from the Joint Committee on Taxation, the House tax provisions total $36.5 billion and the Senate tax provisions total $20.6 billion over 10 years. With the projected deficit, this gap will have to narrow.
The Renewable Fuels Standard (RFS) component to the energy bill holds the most promise for biodiesel. The RFS package, announced back in February, would phase out MTBE – methyl tertiary-butyl ether, mandate that a percentage of the gasoline/diesel pool contain renewable fuel such as ethanol or biodiesel, and eliminate the two percent oxygenate standard. Ethanol has the larger role to play in reaching the five billion gallon annual target of renewable fuel consumption. However, biodiesel is the only real alternative in meeting RFS for diesel fuel. In the United States, a two percent displacement of diesel fuel would result in demand of over one billion gallons of biodiesel.
What Can You Do to Help?
Simply stated: get involved! Let your legislatures know you support RFS and biodiesel. Educate them on the rendering industry and the need for equality with plant agriculture. Write letters and ask your customers to do the same. We need your voice to be heard in Washington.
Biodiesel Bulletin - August 2002 Render