Biodiesel Makers Oppose Call for Waivers of Renewable Fuel Production Mandates

This story appears in the Aug. 27 print edition of Transport Topics.

Biodiesel producers said they do not agree with calls for the federal government to waive ethanol and other renewable fuel production mandates because of the drought reducing the corn crop in the Midwest.

“We oppose any waivers of the [renewable fuel standard],” said Ben Evans, spokesman for the National Biodiesel Board.

The federal RFS requires that increasing levels of ethanol, biodiesel and other alternative fuels be produced annually to reduce the nation’s reliance on petroleum products.

“We don’t think it’s necessary,” Evans said of the proposed waiver, “and while this has been directed mostly at the corn ethanol section of the RFS, we oppose any waiver . . . because we think it could weaken or undermine the program.”

A coalition of dairy farmers and meat and poultry producers has petitioned the U.S. Environmental Protection Agency to have the mandated volume of all “renewable fuel, in whole or in substantial part, for the period of one year” be waived.

The petition said the drought has reduced the corn harvest needed for feed so dramatically that “corn prices have increased by nearly 40% since June, based on sharply reduced supply.”

Unlike the ethanol blended into gasoline, biodiesel for trucks does not depend on corn. Biodiesel is diesel fuel blended with products such as animal fat, cooking oil and canola and soybean oils.

“We think that the RFS has been exceedingly successful in its goals of reducing our dependence on foreign oil,” said Randy Olson, executive director of the Iowa Biodiesel Board.

Dairy and livestock producers said the drought will drive up food prices. Olson said the “real culprit” behind high food prices is the nation’s dependence on foreign oil because of a lack of “diversity” in fuel supplies.

Members of Congress and the governors of Arkansas, Georgia and North Carolina also have asked for the RFS waiver. More than 200 House members signed an Aug. 1 letter to EPA Administrator Lisa Jackson saying, “Currently, only about 31% of the corn crop is in ‘good’ or ‘excellent’ condition, representing record lows.”

In response, EPA agreed to open a 30-day comment period, during which the petitioners can make their case. EPA filed the comment notice in the Federal Register on Aug. 20, but it could take up to two weeks to appear, said agency spokeswoman Alisha Johnson.

“This notice is in keeping with EPA’s commitment to an open and transparent process to evaluate requests . . . and does not indicate any predisposition to a specific decision,” EPA said in a statement.

Evans said the biodiesel industry will have no problem meeting its 2012 RFS production mandate.

“The target is 1 billion gallons,” Evans said. “We did almost 1.1 billion last year.”

The 2013 mandated production level has not yet been published.

The biodiesel industry was downsized two years ago when Congress let lapse the $1-a-gallon tax credit that helps producers sell biodiesel at a price competitive with regular diesel. Congress reinstated the credit, then let it lapse again this year, something producers hope will change after the November elections.

Biodiesel is usually made in blends of 2% to 20% for heavy trucks, and a handful of states have mandates that require escalating percentages in terms of the blend in diesel.

Minnesota and Oregon already have moved from their initial 2% biodiesel mandate to 5%, while Washington state and Pennsylvania are still at the 2% level.

In late July, the Midwest Governors Association, led this year by Iowa Gov. Terry Branstad (R), wrote to truck manufacturers, asking that they “support the use of biodiesel blends of at least 20% . . . in all diesel-powered equipment.”

Jennifer Weaver, who directs the Biodiesel Board’s original equipment manufacturers outreach and education program, said that all but two truck manufacturers are making engines with warranties for biodiesel blends of up to 20%.

The exceptions are Paccar Inc.’s Peterbilt and Kenworth trucks, but the Biodiesel Board is currently in talks with them, Weaver said.

Paccar did not respond to a request from Transport Topics for comment.