Biodiesel industry expects big 2013

Feb 8, 2013
by WLJ

The theme for the 2013 National Biodiesel Conference last week was “momentum”—a word that largely has been foreign to a U.S. biodiesel industry that has experienced seemingly endless fits and starts in recent decades.

Speaking Tuesday, Feb. 5 to hundreds of biodiesel producers and others at the biodiesel board’s conference, Chief Executive Officer Joe Jobe said he believes 2013 will feature the best of times for an industry that has seen its share of ups and downs.

“We get to do a little bit of celebrating,” he said. “A precedent is set to set a pathway for industry growth for the next 10 years. The next 10 years is an era of exciting growth. The last 10 years is like our teenage years—very high highs, very low lows.”

Jobe said biodiesel has played a role in a rural renaissance fueled by higher commodity prices from the expansion of biofuels.

Unless Washington pulls the rug out, the biodiesel industry has a lot going.

Early in 2013 the industry has taken steps to prevent fraud in the renewable identification numbers, or RINS, that hurt the biodiesel market in recent years. Oil companies and others can buy the numbers to meet Renewable Fuel Standard (RFS) obligations. Many of those companies discovered they had bought millions of dollars in fake RINS. That hurt biodiesel’s market.

The industry started the year with the renewal of the all-important $1-per-gallon biodiesel-production credit. The Environmental Protection Agency recently set the RFS for biodiesel at 1.28 billion gallons in 2013—meaning the industry that has created a market for soybeans and other oilseed crops is poised for growth. In 2012, the U.S. biodiesel industry churned out 1.1 billion gallons.

“The upside to all of that struggle is that we, as an industry, are seasoned and battle tested,” Jobe said.

“This will be the most prosperous year for the industry. The system is becoming more refined as we go along.”

He said attacks from biodiesel opponents will “keep coming and they’ll still get worse.”

Early in 2013, the oil industry has stepped up efforts to repeal the RFS that mandates the use of 36 billion gallons of biofuels by 2022, including biodiesel and other advanced biofuels.

“There is a small segment of the petrol industry that wants to misrepresent us,” Jobe said.

“We are putting you on notice right here today. Ten years from now, people will be held accountable for the truth. A decade from now, history will show who were the champs and who were the chumps.”

Washington talk

Weston J. Coulam, an attorney with Washington-based Ernst and Young, said any biodiesel industry hopes of a longer-term extension of the biodiesel tax credit would depend on a divided federal government.

Talk of tax reform, he said, will make it difficult to succeed with individual legislation aimed at such an extension.

“As long as tax reform is still out there, they will not want to address individual bills, including tax extenders,” Coulam said.

In addition, if there is a move in Congress to repeal the RFS, Coulam said it would be debated in the broader context of larger energy legislation and not as an individual bill.

“And it’s unclear how the 2014 (mid-term) election plays into that,” he said.

“It’s hard for me to see the House and Senate to have one big bill they can agree on.”

Ginny Terzano, a public relations expert with the Dewey Square Group in Washington and former press secretary to Vice President Al Gore, said President Barack Obama’s renewed talk about climate change since the November election could bode well for the biodiesel industry.

She said it is possible the administration could package together energy policy and climate change legislation, which could include a longer-term extension of the biodiesel blenders credit and expansion of the RFS.

“What Obama learned after the election is he no longer has to run for re-election again,” Terzano said.

“He also wants to look at his legacy. I really believe that the climate change and energy issues are there. But how does he do it? I think it is multi-faceted. He’s going to circumvent Congress to get things done he thinks he needs to get done. It’s not going to be easy.”

Coulam said, “Going big on some of these issues is going to be tough given the situation in Congress—with Republicans firmly controlling the House and Democrats controlling the Senate.” — Todd Neeley, DTN