US biodiesel producers have capacity to meet RFS mandates: NBB CEO

Source: By Wes Swift, Platts • Posted: Thursday, January 25, 2018

Fort Worth, Texas (Platts)–23 Jan 2018 431 pm EST/2131 GMT

The US biodiesel industry has enough capacity to meet the 2018 and 2019 blending mandates from the federal government, the head of the industry’s trade group told attendees at its annual conference Tuesday in Fort Worth, Texas.

Donnell Rehagen, CEO of the National Biodiesel Board, said domestic producers have 2.5 billion gallons/year of capacity “ready to go.” The federal Renewable Fuel Standard regulations call for 2.1 billion gallons of biomass-based diesel to be blended into US fuel stocks in both 2018 and 2019.

Rehagen’s comments came in response to Chet Thompson, the CEO of the American Fuel and Petrochemical Manufacturers, a trade group representing refiners and petrochemical companies. Thompson said at the same event that his organization supported a possible change to the RFS that would reduce the biodiesel mandate.

High tariffs against biodiesel imports from Indonesia and Argentina are expected to sharply curtail biodiesel supplies in 2018 and 2019. Thompson noted that up to one-third of biodiesel in previous years came from imports.

“Where is that biodiesel going to come from?” he said. AFPM, he said, supported reducing the biodiesel mandate to the level of domestic production.

Domestic biodiesel production peaked in 2016 at 1.569 billion gallons, according to data from the US Energy Information Administration.

Last year through October — the last month of 2017 for which data is available — US biodiesel plants generated 1.298 billion gallons, slightly ahead of the 2016 pace. EIA data pegs current annual US biodiesel output capacity at 2.340 billion gallons.

Rehagen said in remarks later in the day that his estimate of the industry’s capacity came from discussions from his members. He added that he is “100% positive” that the US can produce enough to meet the mandate without imports. Domestic biodiesel producers have not produced at higher rates due to competition with lower-cost imports, he said.

“What US producer would be maximizing their production, when all they can do is sell into a market that wants to pay them less than what it costs to make it?” Rehagan said.