U.S. biodiesel companies set production record in 2012

Source: Amanda Peterka, E&E reporter • Posted: Friday, January 25, 2013

U.S. companies last year produced a record amount of biodiesel, despite several fraud cases in the market and uncertainty over whether a key tax incentive would continue.

Biodiesel production last year was 1.052 billion gallons, topping a previous record in 2011 by 6 million gallons, according to data released by U.S. EPA. The level last year also tops the 1 billion production requirement set by EPA for biodiesel under the renewable fuel standard.

“These numbers reflect the ongoing growth and development of our industry and represent real jobs at plants across the country,” said Anne Steckel, vice president of federal affairs for the trade group National Biodiesel Board.

Biodiesel is an advanced biofuel made from soybean oil, animal fats or used cooking oil. Production last year reached a high in May, when companies generated nearly 115 million gallons of biodiesel. In the latter half of the year, though, production greatly declined on a month-to-month basis. In November, producers generated 69 million gallons, and in December, EPA logged 59 million gallons of biodiesel production.

The National Biodiesel Board blamed the low year-end numbers on the failure of Congress to retroactively extend the $1-per-gallon biodiesel tax incentive before the end of the year. The credit, which expired at the end of 2011 and was ultimately included in the “fiscal cliff” deal enacted at the beginning of this year, could have spurred more growth throughout 2012, Steckel said.

“It’s difficult not to wonder how much additional production and jobs could have been created if the biodiesel tax incentive had remained in place in 2012,” Steckel said. “It was a missed opportunity that significantly hurt many producers. But we are pleased that Congress reinstated the tax credit earlier this month, and we expect significant growth in 2013.”

For 2013, EPA increased the biodiesel requirement in the renewable fuel standard to 1.28 billion gallons (E&ENews PM, Sept. 14, 2012).

Refining industry groups late last year filed lawsuits over that requirement, arguing that it did not reflect current market conditions. They asked that EPA reanalyze its requirement to take into account the fraud in the credit marketplace and how last year’s drought would affect production levels (Greenwire, Nov. 21, 2011).

Refiners are also continuing to press EPA to address the fraud in the biodiesel credit marketplace that the agency set up for refiners to buy and sell credits to meet their obligations under the renewable fuel standard.

In three cases over the past year and a half, individuals produced and sold millions of dollars’ worth of fake renewable identification numbers (RINs), the unique 38-digit numbers connected to physical gallons of biodiesel. In one case, a grand jury found a Maryland man guilty of producing the fake credits.

The fraud cases prompted oil refiners to steer clear of smaller biodiesel producers and to spend millions of dollars on doing due diligence before purchasing credits. EPA has proposed a draft quality assurance plan to address the fraud, but the issue remains unresolved.