Governors' Biofuels Coalition

The biodiesel industry has produced more than 1 billion gallons for the third year in a row, according to the latest U.S. EPA production information.

Biodiesel companies produced 140 million gallons of biodiesel in September, increasing the industry’s yearly total to 1.1 billion gallons, EPA reported last week through its electronic biofuel tracking system. The numbers indicate the industry will reach a record 1.7 billion gallons before the year is over, the National Biodiesel Board said.

“This is a tremendous achievement that is a testament to the hard work of the biodiesel industry and the success of the renewable fuel standard (RFS) as an effective policy for diversifying our fuel supplies,” said Anne Steckel, vice president of federal affairs at the National Biodiesel Board, in a statement.

Biodiesel, an advanced biofuel made from soybean oil, animal fats and used cooking grease that is blended into petroleum-based gasoline, is the first EPA-designated advanced biofuel to make it to commercial-scale production. Actual production has consistently topped the annual increasing targets set by EPA; this year, the industry is on track to exceed the agency’s 1.28-billion-gallon mandate.

But whether the high production over the last three years signals that the industry could be viable without help from the federal RFS is being disputed within the biodiesel and oil industries.

The American Petroleum Institute, which is advocating that EPA keep its biodiesel target constant next year instead of raising it to reflect the increasing production, says that the high production suggests that the industry can stand on its own two feet. EPA should merely set a floor of 1.28 billion gallons next year, API says.

“They’ve got greater production capacity than what EPA is mandating,” Bob Greco, API’s director of downstream activities, said last week. “That would suggest that investors and the industry feel they can produce enough fuels to be viable. … And right now we’ve still got a floor of 1.28 billion gallons. That’s not a bad situation to be in. They have a good basis where they can continue to grow production.”

But the biodiesel board says that the industry continues to need an increasing EPA standard and the certainty it provides. Production and expansion in the industry are still closely tied to the availability of the federal biodiesel tax credit, the National Biodiesel Board says, and a strong RFS gives companies and investors a key indication that the government is still willing to invest in biofuels.

“We understand why the oil industry wants the petroleum monopoly to continue. It’s the most profitable business on Earth,” Ben Evans, a spokesman for the National Biodiesel Board, said Friday. “But right now we don’t have a free market in transportation fuels. We have a monopoly, with tremendous market obstacles and infrastructure hurdles.”

EPA is expected to come out with next year’s targets for biodiesel and other renewable fuels any day now. On Friday, the National Biodiesel Board and six biodiesel companies met with the agency and the Office of Management and Budget, which is reviewing EPA’s proposed rule, to press for a higher target next year.

A draft agency proposal circulated a couple of weeks ago indicated that EPA would keep the biodiesel target at 1.28 billion gallons. In response, the biodiesel industry last week launched an advocacy campaign aimed at the Obama administration (E&ENews PM, Oct. 23).

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