Obama admin standing its ground on biodiesel rollback — industry group

Source: Amanda Peterka, E&E reporter • Posted: Friday, May 23, 2014

The Obama administration is apparently backing the reduced biodiesel target proposed by U.S. EPA last November, according to an industry group closely tracking the issue.

In a letter to President Obama yesterday, National Biodiesel Board CEO Joe Jobe said his group sees “indications” EPA plans to hold the target at 1.28 billion gallons, well below last year’s actual production of that fuel. On the other hand, he wrote, the administration seems poised to back a small increase in total advanced biofuels that refiners must use this year.National Biodiesel Board spokesman Ben Evans said in an email today the group has heard from “several people with knowledge of the decision-making process” that EPA would maintain the proposed biodiesel target.

EPA did not respond to a request for comment.

For months, the biodiesel industry and its supporters have been pushing the administration to raise the target both for biodiesel and advanced biofuels. Just last week, several Democratic senators pushed the administration to raise its proposed mandates, calling EPA’s proposal a “mistake” and the “wrong call” (E&E Daily, May 15).

A final decision to keep the biodiesel mandate at 1.28 billion gallons, even while increasing the advanced biofuel target, would have “lasting, damaging consequences,” Jobe told Obama.

A survey released last week found that the majority of U.S. biodiesel producers have already slowed production and delayed expansion plans this year because of the proposal and expiration of the industry’s $1-a-gallon tax credit (Greenwire, May 14).

“I am confident that if finalized, this EPA proposal will increase the use of carbon-based fuels, reverse the trend of using more climate-friendly, clean-burning fuels, and ultimately jeopardize the legacy of this administration,” Jobe wrote Obama.

EPA’s proposal released last November would reduce refiners’ biofuels requirements this year by 16 percent compared with the level set by the 2007 statute that created the renewable fuel standard.

For biodiesel — an advanced biofuel made from soybean oil, animal fats and used cooking grease — EPA has proposed to require at least 1.28 billion gallons of biodiesel be used in 2014 and 2015, below the industry’s actual production last year of nearly 1.8 billion gallons (E&ENews PM, Nov. 15, 2013).

EPA wrote in its rule proposal that it assumed the industry tax credit would expire at the beginning of this year and that biodiesel volumes wouldn’t far exceed 1.28 billion gallons, the standard it set in 2013 for biodiesel production. The White House also repeatedly raised concerns about the expiration of the tax credit during an interagency review (Greenwire, Jan. 6).

EPA has received thousands of comments on the rule and is expected to send a final version to the White House Office of Management and Budget for review as early as this week.

Biofuels supporters have generally been publicly confident that EPA would raise its proposed targets in the final rule, as EPA Administrator Gina McCarthy has acknowledged in multiple public appearances that her agency may have gotten the proposal wrong.

But not everybody has shared the optimism.

“I was told no one will like this rule,” Advanced Biofuels Association President Michael McAdams said at a recent industry conference about meetings he’s had with the White House and EPA.

If EPA raises the proposed advanced biofuels target of 2.2 billion gallons and does not raise the biodiesel target, Jobe wrote that the rule would lead to a “significant retreat” in biodiesel production. It would also lead to more imports of Brazilian sugar cane ethanol, which EPA has approved as an advanced biofuel, to fill the gap, he said.

“This decision would have lasting, damaging consequences for the jobs and economic activity supported by the U.S. biodiesel industry, while undermining your efforts to boost U.S. energy security through clean, domestic energy production,” Jobe wrote.

To be sure, the final numbers will likely not be known until EPA releases its final rule, likely in early summer. Advanced biofuels producers have also called on EPA to adjust its methodology and have hinted at legal action should EPA not make big changes to the rule.