Biodiesel Celebrates Record Year, Braces for Uncertain Future

The biodiesel industry has shown its resilience through some turbulent, uncertain times, and at the end of last year, it was soaring. Ever since the federal tax credit was reinstated under the Environmental Protection Agency (EPA) Renewable Fuel Standard (RFS2), biodiesel plants that were formerly shuttered or working with skeleton staff have reopened their doors, providing job opportunities for communities across the country. All of this has led to a record 1 billion gallons in 2011.

According to the National Biodiesel Board (NBB), through July 2011, the industry had produced 475 million gallons compared with 315 million gallons in all of 2010. 

What does the record output and job growth say about the need for biodiesel? According to Ben Evans, director of federal communications with NBB, it shows biodiesel is rapidly gaining market acceptance.

“Biodiesel is growing because more people are becoming aware that it is a clean-burning fuel that’s good for the environment and creates jobs,” Evans says.

Ron Heck, vice chair of the Iowa Biodiesel Board and soybean farmer from Perry, Iowa, says the persistence and resilience of biodiesel supporters has been proven many times for more than 20 years.

“From the beginning, biodiesel supporters have needed to overcome many barriers to be able to compete with the established petroleum diesel industry, including market access, feed stock availability, engine certifications, fuel quality specifications, industry over-expansion and inconsistent federal policies,” Heck explains. “Throughout every challenge, the biodiesel industry has continued to move forward because of the dedication of the many people who know that biodiesel is America’s only commercially available advanced biofuel as defined by the RFS2, with an energy balance that is constantly improving to currently more than 5 to 1.”

According to an NBB economic study, in 2011 the biodiesel industry supported about 31,000 jobs in manufacturing, transportation, sales and agriculture. With continued federal support, that could increase to 74,000 by 2015.

“The number jobs and indirect jobs related to the biodiesel industry, like transportation, especially in smaller communities such as Ralston or Newton, Iowa, is huge,” says Scott Hedderich, director of corporate affairs with Renewable Energy Group (REG). “It’s important for farmers to stay engaged on the state and federal level.”

However, if the federal tax credit lapses in 2012, productivity would likely stall and jobs could be lost once again. Biodiesel supporters continue to work hard at making sure history isn’t repeated.

“Bills have been introduced into Congress and we have bipartisan support,” Evans says. “However, it has been a challenge moving things through Congress because the deficit demands more attention. Hopefully we can reach a deal concerning the deficit so we can address other policy issues.”

Hedderich explains that the with industry’s youth, it is in a sort of an interesting position when it comes to legislation and extending the tax credit.

“We’re not big enough that we have lots of opposition, but we’re small enough that our issue is not a must-view,” he says. “We’re poised to go. However, we may have to wait until the first or second quarter in 2012. We have to wait for other politics to fall into place, which is a similar position we were in during 2010, when lots of macro issues had to be resolved in order for our issues to get picked up.”

If the tax credit is not extended, Evans says the price of biodiesel would increase as it depends on the costs of feed stocks. The Renewable Identification Number (RIN) could help offset the increase. Implemented under RFS2, a RIN is the basic currency for the program for credits, trading and use of obligated parties and renewable fuel exporters to demonstrate compliance, as well as track the volumes of renewable fuels. It adjusts with the market; when supply is high, RINs are reduced and when supply is low, RINs increase accordingly.

“We’re realistic, but hopeful since Congress recognizes the value of the tax incentive and the effects when it’s not in place. Nobody really knows what will happen,” Evans admits. “Momentum will be stunted—it wouldn’t be 2010 levels—but trajectory will slow down.”

After five years of commercial-scale production, there are currently 150 biodiesel plants all across the country. Biodiesel may not be a mature industry, but it’s more than ready to provide the nation with advanced biofuel.

“The EPA mandated levels for biodiesel were 800 million gallons in 2011, 1 billion gallons in 2012 and 1.28 billion gallons in 2013,” Evans says. “We are showing we’re an advanced biofuel and can meet EPA requirements now and in the future.”

One way NBB is educating the country about the benefits and importance of biodiesel is through America’s Advanced Biofuel initiative. It’s biodiesel’s largest-ever public outreach effort. It kicked off last summer to raise awareness of the economic, environmental and national security benefits of the nation’s first and only EPA-designated advanced biofuel.

The multi-million dollar project included national television advertising, regional print and radio advertising, as well as an online presence. The ads’ tagline, “Biodiesel. America’s Advanced Biofuel” brought focus to the
industry’s viability.

“The Advanced Biofuel Initiative is making strides to secure biodiesel’s role in our energy future,” says Jessica Robinson, director of communications for NBB. “The industry and funders can be proud of the television spot that aired nationally during Sunday morning news talk shows, as well as print and radio products.”

Robinson says one outstanding result from the campaign is seeing third parties stand up for biodiesel and soybean farmers.

“A recent article in the Los Angeles Times featured biodiesel’s recent growth in production,” she says. “Several misinformed readers posted negative comments about biodiesel and soy’s role in the fuel production process. Instead of NBB coming to biodiesel’s defense, as it had in the past, this time an external party posted a spot-on comment correcting the misinformation, defining biodiesel as America’s Advanced Biofuel and clarifying that soybeans can be used for fuel and food. This campaign was the farmers’ vision and we are so pleased to see it at work and working.”