Biodiesel producers say reduced RFS is hurting business

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WASHINGTON — Policy setbacks in Washington are taking a major toll on the most successful advanced biofuel in the U.S., according to a nationwide survey of biodiesel producers released Wednesday.

The survey, conducted by the National Biodiesel Board, found that nearly 80 percent of U.S. biodiesel producers have scaled back production this year and more than half have idled production at a plant altogether.

Additionally, two-thirds of producers said they have already reduced or anticipate reducing their workforce as a result of the downturn. The cutbacks come in the face of a weak Renewable Fuel Standard (RFS) proposal from the EPA and Congress’ failure to extend the biodiesel tax incentive.

Another try

Biodiesel producers and other advocates joined a group of U.S. senators at a press conference in calling for Congress and the Obama Administration to act quickly to restore the industry’s progress by supporting a strong RFS and reinstating the tax incentive.

“Inconsistency in Washington is wreaking havoc on the U.S. biodiesel industry,” said Anne Steckel, NBB’s vice president of federal affairs. “It’s not just hurting these producers. It is a setback for local economies where these plants operate, for our environment, for our national energy security, and for drivers who are tired of ever-increasing fuel prices that result from the petroleum industry’s monopoly at the pump.”

Among the other survey findings:

• 78 percent have reduced production versus 2013.
• 57 percent have idled production altogether or shut down a plant this year.
• 66 percent have reduced workforce or anticipate reducing workforce.
• 85 percent have delayed or canceled expansion plans.

Blaming RFS

The producers nearly universally attributed the industry decline to the weak RFS proposal and loss of the tax incentive. The RFS proposal, which has not yet been finalized, would establish a biodiesel standard of 1.28 billion gallons this year. That is a sharp cut from last year’s record production of nearly 1.8 billion gallons that would likely force many producers to shut their doors.

The biodiesel tax incentive expired Jan. 1, marking the third time in five years that Congress has allowed it to lapse. The incentive is included in the tax extenders bill currently under consideration in the Senate, but remains unclear when or if the incentive might be reinstated.

At a recent press conference, several biodiesel producers and senators called on the Obama Administration and Congress to restore stable policy to get the industry back on track.

“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 in Seattle. “We are all slowly being bled dry, and America’s growing biofuels industry may be irreparably harmed.”

“We made these investments because we believed in what the Administration and Congress were trying to accomplish with the Renewable Fuel Standard and because a road map was laid out for growth under the RFS for the next decade, particularly in Advanced Biofuels,” said Wayne Presby, owner of White Mountain Biodiesel in North Haverhill, N.H., discussing the growth of his business in recent years and now-delayed expansion plans. “But with this RFS proposal, and the uncertain tax policy from Congress, that expansion and the jobs that would come with it are on hold.”

Bryan Christjansen, general manager at Renewable Energy Group’s refineries in Albert Lea, Minn. and Mason City, Iowa, said “biodiesel has proven itself to be a successful homegrown, homemade fuel. If the administration chooses to go with the EPA proposal, it does not just put domestic fuel production in jeopardy, it harms local economies and billions of dollars of investments.”

About biodiesel

Made from a diverse mix of fats and oils including soybean oil, recycled cooking oil and animal fats, biodiesel is the first and only EPA-designated Advanced Biofuel to reach commercial-scale production nationwide.

Last year, the industry produced a record of nearly 1.8 billion gallons, with plants in almost every state in the country supporting some 62,200 jobs.

According to a recent study, nearly 8,000 of those jobs would be threatened by a drop in production back to 1.28 billion gallons as the EPA has proposed.

The survey of NBB members was conducted between April 14 and April 25. Fifty-four biodiesel producers from across the country participated in the survey.

4 Comments

  1. John says:

    total proof that the industry is not viable. just the idea that the government is pulling back and they start crying the sky is falling.

    • marque2 says:

      It should also be noted that in all probability more than 8000 jobs were lost in the attempt to subsidize this industry by increasing tax burdens, increasing the cost of diesel and displacing workers who are producing more efficient fuels.

      I have seen figures that 2-3 real jobs are lost for every green job gained.

      Hopefully the subsidy ends so we can get our jobs back.

    • Mark says:

      I guess that means that the oil and natural gas industries must not be viable, since we taxpayers shovel $4 Billion a year to them. If they don’t need it, then why do I have to keep throwing my money at them???

      • marque2 says:

        IG would be nice to sea some proof of your statement. Subsidies to oil gas and coal are actually quite low. Whenever I see figures like 4 billion in subsidies I find they are usually normal business expenses like depreciating capital goods.

        And then when you consider oil companies are taxed 7% more than others companies on profits and all the extra taxes on gasoline that are paid – the government comes out way ahead.

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