RFS Volumes Should be Higher, says Industry

By Joe Gershen, Encore BioRenewables


There has been tremendous response from a variety of industry stakeholders, including the National Renderers Association (NRA), to the recent United States (US) Environmental Protection Agency (EPA) proposed rule announcing Renewable Fuel Standard (RFS) 2018-2019 renewable volume obligations (RVOs). Specifically, EPA proposed no increase to the biomass-based diesel category in 2019, currently slated for 2.1 billion gallons in 2018, which would essentially stagnate growth in the biodiesel and renewable diesel industries. In addition, EPA is proposing a cut to the 2018 advanced biofuel category, which biodiesel is also eligible for, from the current 4.28 to 4.24 billion gallons.

In comments to EPA administrator Scott Pruitt, NRA urged a higher RVO for 2018 advanced biofuels of at least 4.75 billion gallons, and 2019 biomass-based diesel RVOs of at least 2.5 billion gallons.

“The rendering industry is ready to supply increased volumes of feedstocks for biodiesel production if the EPA increases its RFS volumes in 2018 and 2019,” said Doug Smith of Baker Commodities Inc. in testimony at the agency’s public hearing in early August in Washington, DC.

In response to EPA’s concern that there may be insufficient biomass-based diesel feedstock, NRA pointed out that US renderers supply 30 percent of the feedstock used to produce domestic biodiesel and renewable diesel, and can provide an increasing volume of feedstock to support additional production. The biodiesel industry currently utilizes 30 percent of the billions of gallons of rendered animal fats and used cooking oil produced each year in the United States.

It was also made clear in NRA’s comments that a stronger RFS supports America-first, home-grown businesses and creates good American jobs while providing significant environmental benefits. Rendered feedstocks for biomass-based diesel production reduce approximately one ton of carbon emissions for every 100 gallons of fuel consumed and also significantly reduce almost all other criteria air pollutants compared to petroleum diesel.

Additionally, a strong RFS helps cities and towns avoid billions of dollars in repair and replacement costs for their water systems due to fats, oils, and grease clogs, NRA noted. A higher RFS provides an important economic incentive for renderers to collect used cooking oil so less goes down the drain, reducing damage to municipal sewer systems and fewer sanitary sewer overflows that threaten public health. 

Higher RFS volumes beyond EPA’s proposal will generate further benefits, Smith added.

“A stronger RFS will grow jobs, clean our air by reducing emissions, and promote domestic energy production,” he testified. About 3,200 new jobs are created for every 100 million additional gallons of biodiesel production.

“For consumers, substitution of biodiesel and biodiesel blends is the easiest way to achieve immediate reductions in diesel emissions,” Smith stated. “EPA has greatly underestimated the potential of the biodiesel industry to increase production given current and projected capacity.”

Anti-dumping Tariffs Imposed on Argentina and Indonesia

In late August, the US Department of Commerce (DOC) issued affirmative preliminary determinations in countervailing duty investigations, finding that exporters of biodiesel from Argentina and Indonesia received subsidies of roughly 50 to 64 percent and 41 to 68 percent, respectively, in violation of international trade rules. DOC also determined that critical circumstances exist in both investigations, allowing for collection of duties for a retroactive period of 90 days prior to publication of the preliminary determination in the Federal Register on June 5, 2017.

“The United States values its relationships with Argentina and Indonesia, but even friendly nations must play by the rules,” stated US Secretary of Commerce Wilbur Ross. “The subsidization of goods by foreign governments is something that the Trump administration takes very seriously, and we will continue to evaluate and verify the accuracy of this preliminary determination.”

The petitioner in the case is the National Biodiesel Fair Trade Coalition, an ad hoc association composed of the National Biodiesel Board (NBB) and 15 domestic biodiesel producers.

“The Commerce Department has recognized what this industry has known all along – that foreign biodiesel producers have benefited from massive subsidies that have severely injured US biodiesel producers,” NBB Chief Operating Officer Doug Whitehead said in a statement. “We’re grateful that the Commerce Department has taken preliminary steps that will allow our industry to compete on a level playing field.”

According to NBB, biodiesel imports from Argentina and Indonesia increased a combined 464 percent from 2014 to 2016, taking 18.3 percent of the market share from US manufacturers. Argentinian imports alone jumped 144 percent following the filing of the petitions in March 2017. In 2016, imports of biodiesel from Argentina and Indonesia were valued at an estimated $1.2 billion and $268 million, respectively.

These determinations by DOC have had the expected result of effectively halting imports from Argentina and Indonesia. Government representatives from affected countries are attempting to negotiate a solution and reviewing any legal options. In September, Argentina’s Energy Ministry raised export taxes on biodiesel to 0.13 percent from 0 percent while similar duties levied by the European Union in 2013 were lifted (see next column).

Countervailing duty laws provide US businesses and workers with an internationally accepted mechanism to seek relief from the harmful effects of unfair subsidization of imports into the United States. Unless the case is postponed, DOC will announce its final countervailing duty determinations on November 7.

EU Reduces Argentinian Biodiesel Anti-dumping Duties

According to news reports, a European Union committee has voted to cut the anti-dumping duty rates on biodiesel imports from Argentina to between 4.5 and 8.1 percent beginning September 28, basically reopening the biodiesel market from Argentina to Europe. Anti-dumping duties from 22 to 25.7 percent were put in place on biodiesel from Argentina and Indonesia in November 2013 following complaints to the European Commission from European biodiesel producers. Prior to this, Argentina was the largest exporter to the European market.

Some market sources downplayed the impact the decision would have on the biodiesel market in Europe.

“Greenhouse gases won’t be high enough for this to be a huge trade-flow – it will be smaller than 2013 flows [prior to anti-dumping duties] but the market will still take some imports,” said Platts, as soybean methyl ester typically has lower greenhouse gas savings than its European counterparts. Almost all biodiesel in Argentina is produced from soybean oil.

The decision is expected to draw some criticism from European producers as Argentinian biodiesel has the potential to cut margins for domestically produced European product. The decision came just days after the United States sharply increased tariffs on imported Argentine biodiesel and following an October 2016 ruling by the World Trade Organization that European duties on biodiesel imports were too high.

Minnesota Biodiesel Blends to Double Next Summer

Minnesota Governor Mark Dayton’s administration announced in early August that it will raise biodiesel standards to a 20 percent blend (B20) by next summer, up from the current 10 percent blend. The decision was made following endorsement from the commissioners of the state’s agriculture, pollution, and commerce departments.

Minnesota has long been a leader in biodiesel standards, dating back to 2005 when the state mandated that all diesel fuel contain at least two percent biodiesel. The biodiesel industry in Minnesota currently contributes roughly $1.7 billion to the state’s economy. Three biodiesel production facilities – located in Albert Lea, Brewster, and Isanti – have a total output of about 74 million gallons of biodiesel each year.

Although the new standard will undoubtedly be popular with the state’s soybean farmers, it is likely to encounter resistance from diesel producers and the trucking industry due to concerns that there is not enough infrastructure in place to support the switch to B20. The increased blend will be sold from May to October while fueling stations will sell a 5 percent blend the rest of the year due to the extreme cold of Minnesota winters.

New York Expands Biodiesel Blend in Heating Oil

New York Governor Andrew Cuomo has signed legislation requiring Nassau, Suffolk, and Westchester counties to follow New York City’s lead in blending at least 5 percent biodiesel into all home heating oil sold beginning July 1, 2018. These three counties surround the city and represent the greater New York City Metropolitan Area.

In 2012, New York City, the largest municipal consumer of heating oil in the United States, instituted a citywide two percent biodiesel blend requirement that is set to increase to five percent on October 1, 2017. Now the entire New York City metropolitan area, representing approximately 70 percent of the state’s heating oil market, will have a 5 percent biodiesel blending requirement as of the middle of next year.

First Commercial US Biodiesel Plant Completes Expansion

Ag Processing Inc. (AGP) recently completed a major expansion at its Sergeant Bluff, Iowa, biodiesel production facility. Announced almost two years ago, the project doubles the nation’s first commercial-scale biodiesel plant, built in 1996, from 30 million gallons to 60 million gallons per year.

The expansion was coupled with construction of AGP’s new on-site soybean oil refinery that supplies feedstock to the plant. The facility now features integrated soybean processing, soybean oil refining, and large-scale biodiesel production. 

AGP owns nine soybean processing facilities across the Midwest – with its tenth currently under construction in Aberdeen, South Dakota – and three biodiesel production facilities with installed capacity totaling 150 million gallons per year.


October 2017 RENDER | back