EPA retreat from 2013 goal would stunt growth — industry

Source: Amanda Peterka • E&E  • Posted: Friday, February 3, 2012

Biodiesel producers are warning U.S. EPA that lowering a proposed fuel standard volume requirement next year would have “devastating” consequences for the industry, slowing the momentum that last year led to record production of the renewable fuel.

The industry is worried the agency is retreating from a proposed 1.28-billion-gallon production requirement to 1 billion gallons, the minimum level allowed under the renewable fuel standard. In December, EPA delayed the release of a final standard, saying it was still “continuing to evaluate the many comments” received from stakeholders.

Biodiesel supporters say they do not understand EPA’s delay in releasing the final amount or its apparent hesitation to increase the target for next year. Last year, biodiesel producers exceeded their target, producing nearly 1.1 billion gallons of the renewable fuel made mainly from soybean oil, recycled cooking oil and animal fats.

Given its production numbers in November and December of last year, the biodiesel industry is on track to produce as much as 1.4 billion gallons this year, but a withdrawal of support from EPA would stunt that growth, biodiesel supporters say.

“There’s no question that the production capacity is there. The biodiesel industry can do it, and there’s no question that the 1.28 can be met,” said Ben Evans, director of federal communications at the National Biodiesel Board. “It’s really surprising to us that there would be this hesitation and the potential for moving it back to a billion. To us, it would really be a devastating blow.”

The renewable fuel standard, which required the industry to produce 800 million gallons in 2011, has helped drive demand for biodiesel. Under the RFS, the United States must produce 36 billion gallons of ethanol a year by 2022 with 15 billion gallons coming from corn.

Evans said the industry’s future could be bleak without strong federal support. Plants would close and thousands of jobs would be eliminated across the country.

“It’s effectively going to shrink the industry,” said Joe Gershen, director of sales and marketing at Crimson Renewable Energy LP, a California-based biodiesel company. “We’re still a fledgling industry.”

“If [EPA] backs off that once it said it, it’s sending a signal that it’s potentially going to let this industry swing, and by swing I mean from the end of the rope,” said Gershen, who sent a Jan. 27 letter to EPA in support of the industry.

EPA did not respond to requests for comment. On Dec. 27, 2011, the agency released its final 2012 RFS requirements, which list how much each type of biofuel is expected to contribute to the standard.

Biomass-based diesel was 1 billion gallons, the minimum yearly requirement starting this year.

The final rule for next year will be released “as expeditiously as possible,” EPA said in December. Industry expects it to come out within the next month or so.

The biodiesel industry is also urging Congress to extend a $1-per-gallon tax credit that expired at the end of last year. When the credit expired in 2009 and the RFS was still in its infancy, plants were idled and biodiesel production fell 42 percent for all of 2010, according to an analysis by consultant Cardno-Entrix.

The credit is among those Congress is considering linking to the payroll tax-cut package currently in conference committee