EPA Seeks More Biodiesel Use by Nation’s Truck Fleet in 2011
This story appears in the July 19 print edition of Transport Topics.
The Environmental Protection Agency announced last week it wants the U.S. trucking industry to increase its use of biodiesel to 800 million gallons in 2011 from 650 million gallons this year.
Despite some industry projections that production has lagged after the expiration of a federal tax credit, EPA said in its July 12 renewable fuel standard proposal that the Energy Information Administration predicts average monthly biodiesel production rates in 2010 will actually exceed 2009 rates.
“For development of our final rule setting the standards for 2011, we will have more complete data with which to evaluate the progress of the biodiesel industry in meeting the 2010 volume mandate and thus its preparedness for 2011,” EPA said in its proposal.
EPA is calling for producers to blend 13.95 billion gallons of biofuels into the U.S. fuel supply, or 7.95% of all fuel consumed by U.S. vehicles and trucks. It’s an increase of 1 billion gallons from the 12.95 billion-gallon target in 2010. Of that total, 800 million gallons of biodiesel must be blended into the U.S. supply of diesel.
Despite the escalating blending requirements, the proposed biofuels standard still has a long way to go before it meets the congressionally mandated 2011 standard of producing 36 billion gallons of biofuels by 2022.
Biofuel producers have said the projected biodiesel production levels may not be achieved if Congress does not retroactively extend the $1 per gallon biodiesel tax credit, which expired at the end of 2009. Because biodiesel is more expensive to produce than regular diesel, the tax credit is needed to lower the price at the pump to keep it competitive.
Michael Frohlich, director of federal communications for the National Biodiesel Board in its Washington, D.C., office, said that after the tax credit expired, the biodiesel industry lost about 12,000 jobs. And 40 to 50 of the 173 biodiesel production plants in the country, he said, have been idled or gone out of business.
A measure to renew the tax credit was attached to a bill that would have extended unemployment benefits, but the benefits bill died in Congress. Sen. Charles Grassley (R-Iowa) has introduced a biodiesel tax credit amendment to a small business bill, but the legislation is still pending.
Although the future of the tax credit remains up in the air, NBB said last week that it was pleased EPA has increased biodiesel requirements.
“We applaud EPA for this announcement and for reaffirming the common-sense notion that we should displace petroleum diesel fuel with advanced biofuels like biodiesel,” Manning Feraci, the board’s vice president of federal affairs, said in a statement.
Natso Inc., formerly the National Association of Truck Stop Operators, said in a statement that Congress has challenged industry to meet the renewable fuels standard for biodiesel, but it noted that “even if the credit is quickly restored, the ability of industry to meet the [2010] 650 million-gallon requirement is unlikely.”
The group said that, for retailers and blenders, the “lapse of this credit and the resulting decline in customer demand undermines a retailer’s commitment to offer alternative fuels to the public.”
American Trucking Associations said it supports the voluntary use of alternative fuels to help reduce dependence on foreign oil and reduce greenhouse gas emissions. However, in a July 9 letter, ATA president Bill Graves encouraged key Senate committee leaders to adopt technology-neutral biofuel tax policies to encourage the development of more advanced second-generation biodiesel.
“The failure to ensure that renewable fuel tax incentives are technology neutral acts as a barrier to entry for new emerging alternatives and stifles innovation,” Graves wrote.
Richard Moskowitz, an ATA vice president and regulatory affairs counsel, said it makes no sense to favor “first-generation” biodiesel production over the production of more sophisticated and potentially better-performing “second- generation” renewable diesel.
“That’s what’s in the country’s best interests and what’s in the trucking industry’s best interests,” Moskowitz said.
Without the tax credit, he said, the renewable fuel standard is, in effect, a “hidden tax” on the trucking industry.
“In 2011, if the refining industry must blend 800 million gallons of biomass-based diesel — and we know that biomass diesel costs $1.50 more than petroleum diesel — that would represent a $1.2 billion cost increase on diesel fuel consumed in the United States,” Moskowitz told Transport Topics. “So we have a federal requirement to use this alternative fuel but an economic disincentive to use it.”
EPA said it will seek public comment on the fuel standard for 30 days after the proposal is formally published in the Federal Register. The agency must issue its final renewable fuel standard by Nov. 30.
Staff Reporter Michele Fuetsch contributed to this story.
