Policies that will Help Grow the Industry
The past 12 months have been a rough time for the biodiesel industry and some believe much of the biodiesel industry’s problems are self-induced. The industry has been betting that two federal policies, a tax credit (blenders credit) and production requirement (called the Renewable Fuel Standard), would help turn things around.
The first is the reinstatement of the $1.00 gallon tax credit for blended biodiesel. This had been held up in the partisan divide in the Senate, but passed last week as part of a tax extenders package. Many plants remain idle waiting for final word on the tax credit renewal as the Senate bill must now be reconciled with the House bill from late last year. The National Biodiesel Board (NBB) has been tracking this process closely and provides regular updates. They are also leading efforts to get the blender’s credit extended for more than just one year.
The second key in growing the biodiesel industry is the Renewable Fuel Standard (RFS2). This is not limited to just biodiesel and includes corn ethanol and advanced biofuels like cellulosic ethanol. EPA was directed by Congress through the Energy Independence and Security Act of 2007 to revise and develop regulations to ensure that transportation fuel sold in the United States contains a minimum volume of renewable fuel. The RFS program will step up the required volumes of renewable fuel to 36 billion gallons by 2022.
We all know that not all biofuels are created equal. Some have negative environmental benefits. Others can be very significant in reducing greenhouse gas emissions and help move us off fossil fuels and away from foreign oil. It took EPA over 2 years to develop the rules that were released in early February 2010. Much of the debate and delay centered around how to include the thorny but important concept of “indirect land use.”
How the use of land in one place impacts the land use in others shows a growing sophistication in our understanding of how human activities ripple across the globe. It also represents a serious effort to minimize “unintended consequences.” Needless to say, it set off a firestorm of controversy with many agriculture and business interests being identified as triggering these ripple effects. NBB weighed in aggressively in the debate. One of the best forums to track the national and international efforts to define what constitutes “sustainable” is through the Roundtable on Sustainable Biofuels. The Roundtable maintains a detailed page on the bioenergy wiki that tracks much of the debate around indirect land use and energy lifecycle for many of the biofuels.
The final RFS2 rule, while not perfect, did maintain the basic structure of the indirect land use concept in greenhouse gas lifecycle analysis. The rule also broke up the different biofuels into four major categories based on the fuel’s relative greenhouse gas (GHG) reduction ability.
While there is plenty to criticize in the rule, it does represent a significant step toward reducing our dependence on fossil fuel for transportation. In the grand scheme, it is a small step, as EPA projects that the 36 billion gallons that will be produced annually by 2022 to meet the rule will only represent approximately 7-11% of the total fuel use in the U.S. that year.
Two Conferences Show Different Sides of Industry
I recently attended the NBB annual conference, held this Feburary in Grapevine, Texas. For the last several years, NBB conferences have been preceded by another conference, the Sustainable Biodiesel Summit (SBS). Myself and several SACE/CleanEnergy Biofuels (CEB) staff attended the SBS before the much larger NBB. The smaller sustainable summits have been going on since 2003, when some community-based biodiesel leaders felt that the NBB was too heavily dominated by large scale intensive agriculture interest, particularly soybean growers.
NBB was indeed started in 1992 by state soybean commodity groups who were funding biodiesel research and development programs. NBB has attempted to evolve into a more feedstock-neutral trade organization, but still retains a strong soybean perspective in the organization’s leadership.
Both conferences provide a wealth of information and insight into the rapidly evolving world on biodiesel and the larger biofuels debates. While the SBS is an independent event, there is a Sustainable Biodiesel Alliance and most of the SBS participants are also members of the Alliance. The SBS has a very different feel than NBB. It’s much smaller, for one. Around 70-80 people attended the SBS conference as compared to more than 400 people at the NBB. Also, the NBB has more glitzy stagecraft and multimedia, including a large vendor’s exhibit hall. The SBS is a lower budget, small scale interactive event. While both events where in held in Grapevine, TX, SBS was held at a small winery, as opposed to NBB, which was held at the Gaylord Texan.
Of course, NBB serves its purpose as many feel the “big stage” brings the “big players”. For example, several of the big three automakers were on hand to announce higher percentage of allowed biodiesel in their new trucks. It’s important to note that the national conference is not all show; it also has smaller focused break-out sessions that provide good information on a number of topics.
This will be a critical year for biodiesel, as the RFS2 is implemented. SACE is committed to advocating for low carbon, environmentally responsible fuel production. Biodiesel can meet these criteria if produced with these goals in mind.